OMNILYNX COMMUNICATIONS CORP, S-1, 1999-07-02

OMNILYNX COMMUNICATIONS CORP
S-1, 1999-07-02

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1999

REGISTRATION NUMBER 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

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OMNILYNX COMMUNICATIONS CORPORATION

(Exact Name of Registrant as Specified in Charter)

<TABLE>
<S> <C> <C>
DELAWARE 4813 76-0530551
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

1770 MOTOR PARKWAY, SUITE 300
HAUPPAUGE, NEW YORK 11788
(516) 582-2222
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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JOSEPH A. GREGORI
CHIEF EXECUTIVE OFFICER
OMNILYNX COMMUNICATIONS CORPORATION
1770 MOTOR PARKWAY, SUITE 300
HAUPPAUGE, NEW YORK 11788
(516) 582-2222
(Name, address, including zip code, and telephone number, including area code,
of registrant's agent for service)

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COPIES TO:

<TABLE>
<S> <C>
ROBERT G. REEDY MICHAEL L. FALTISCHEK
PORTER & HEDGES, L.L.P. PAUL RUBELL
700 LOUISIANA RUSKIN, MOSCOU, EVANS & FALTISCHEK, P.C.
HOUSTON, TEXAS 77002-2764 170 OLD COUNTRY ROAD
(713) 226-0674 MINEOLA, NEW YORK 11501
(516) 663-6600
</TABLE>

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / __________

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED SHARE PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per share.... (1) (1) $ 20,240,000 $5,627
TOTAL....................................... -- -- $ 20,240,000 $5,627
</TABLE>

(1) In accordance with Rule 457(o) under the Securities Act, the number of
shares being registered and the proposed maximum offering price per share
are not included in this table.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES EXCHANGE COMMISSION, ACTING PURSUANT TO
SAID SECTION 8(A), MAY DETERMINE.

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- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS

1,600,000 SHARES
[LOGO]
OMNILYNX COMMUNICATIONS CORPORATION
COMMON STOCK

This is OmniLynx Communications Corporation's initial public offering of
common stock. OmniLynx has recently acquired one company in the
telecommunications industry. We will also acquire two additional companies in
the same industry simultaneously with and as a condition of the closing of this
offering. OmniLynx has not conducted any operations to date except in connection
with this offering and the acquisitions of these companies.

We expect that the initial public offering price will be between $9.00 and
$11.00 per share. Prior to the offering, no public market for our common stock
existed. After the offering, we expect that the common stock will trade on the
American Stock Exchange under the symbol " ."

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN "RISK
FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS.

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<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C>
Public Offering Price................................................... $ $
Underwriting Discount................................................... $ $
Proceeds, before expenses, to OmniLynx Communications Corporation....... $ $
</TABLE>

The underwriters may also purchase up to an additional 240,000 shares at the
public offering price, less the underwriting discount, within 45 days from the
date of this prospectus to cover over-allotments.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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WESTPORT RESOURCES INVESTMENT SERVICES, INC.
WEATHERLY SECURITIES CORPORATION

, 1999
<PAGE>
[NATIONAL COVERAGE GRAPHIC]

HEADER: NATIONAL COVERAGE.

DESCRIPTION: Graphic illustration of the United States territory marked with
symbols identifying the cities in which our services are available and the
cities in which our services are planned to be made available. The name of the
city is identified beside each symbol.

CAPTION: When complete, our networks in these regions will enable us to provide
service to commercial buildings, multiple dwelling units and residential
consumers throughout our targeted regions.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary.................................................................... 3
Risk Factors.......................................................................... 8
The Company........................................................................... 20
Use of Proceeds....................................................................... 21
Dividend Policy....................................................................... 21
Capitalization........................................................................ 22
Dilution.............................................................................. 24
Selected Financial Data............................................................... 25
Management's Discussion and Analysis of Pro Forma Financial Condition and Results of
Operations.......................................................................... 28
Management's Discussion and Analysis Of Financial Condition and Results of Operations
Combined and Founding Companies..................................................... 34
Business.............................................................................. 44
Management............................................................................ 61
Certain Relationships and Related Transactions........................................ 68
Principal Stockholders................................................................ 73
Description of Capital Stock.......................................................... 76
Shares Eligible for Future Sale....................................................... 80
Underwriting.......................................................................... 83
Legal Matters......................................................................... 85
Experts............................................................................... 85
Where You Can Find More Information................................................... 86
Index to Financial Statements......................................................... F-1
</TABLE>

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FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties and assumptions about us, including, among other things:

- The successful implementation of our anticipated growth strategies;

- Our ability to integrate our founding companies and future acquisitions;

- Continual changes in the telecommunications industry and technology;

- The actions of our competitors;

- Market acceptance of our services;

- Economic and demographic trends affecting our business; and

- Future expenditures for capital projects.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.

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

You should rely only on the information contained in this prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.

------------------------
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND MAY
NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ
THE ENTIRE PROSPECTUS, INCLUDING THE FINANCIAL DATA AND RELATED NOTES, BEFORE
MAKING AN INVESTMENT DECISION. OMNILYNX COMMUNICATIONS CORPORATION HAS RECENTLY
ACQUIRED ONE COMPANY IN THE TELECOMMUNICATIONS INDUSTRY. WE WILL ALSO ACQUIRE
TWO ADDITIONAL COMPANIES IN THE SAME INDUSTRY SIMULTANEOUSLY WITH AND AS A
CONDITION OF THE CLOSING OF THIS OFFERING. THESE THREE COMPANIES ARE REFERRED TO
AS THE FOUNDING COMPANIES. EXCEPT AS OTHERWISE NOTED, THE INFORMATION IN THIS
PROSPECTUS (1) ASSUMES THAT OMNILYNX HAS ACQUIRED ALL OF THE FOUNDING COMPANIES,
(2) ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION IS NOT EXERCISED, (3)
ASSUMES AN INITIAL PUBLIC OFFERING PRICE OF $10.00 PER SHARE (THE MIDPOINT OF
THE RANGE OF ESTIMATED PUBLIC OFFERING PRICES SET FORTH ON THE COVER PAGE OF
THIS PROSPECTUS), AND (4) GIVES EFFECT TO A 1.922704 TO 1 REVERSE SPLIT OF
OMNILYNX'S COMMON STOCK IN JUNE 1999.

THE COMPANY

OmniLynx acquired ARC Networks, Inc. in June 1999. We will acquire
InfoHighway International, Inc. and AXCES, Inc. simultaneously with and as a
condition of the closing of this offering. Through these companies, we intend to
offer an extensive array of Internet and telecommunications services to
businesses and consumers. These services will initially include a combination of
high-speed Internet access and local and long distance telephone service. In the
future, we intend to offer cable television, video conferencing, secure online
shopping, online data backup, virtual private networks and other advanced data
services. We currently operate principally in New York, New Jersey, Florida,
Illinois, Texas and California.

With our DirectConnect service, we presently provide or have agreed to
provide high-speed Internet service to 30 multi-story buildings. This service is
significantly faster than dial up modem connections, yet sells for less than the
cost of a dedicated high-speed connection. We also provide Internet and
telephone services to over 10,000 access lines, and serve more than 160,000
residential customers with long distance service. We believe significant
opportunities exist to expand revenues by cross selling various products to
current customers. In addition, we intend to continue to grow in all of our
markets through the acquisition of complementary technologies or companies. We
intend to use these acquisitions to increase our Internet service provider and
competitive local exchange carrier revenues in our target markets.

Each of the founding companies has at least five years of experience in its
respective industry and a seasoned management team. Mr. Joseph A. Gregori is our
Chief Executive Officer, and has over 13 years in the telecommunications
industry. Prior to becoming ARC's Executive Vice President in 1998, he served as
Chief Operating Officer of PriCellular Corporation, a publicly traded wireless
telephone provider, and President of Nationwide Cellular Service Inc. and its
successor company, MCI Wireless. Mr. Peter F. Parrinello, our Chairman of the
Board and President, has over 25 years of experience in the telecommunications
industry. Mr. Tony Howlett, our Chief Technology Officer, founded InfoHighway
and has served as Chief Executive Officer since 1994.

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common stock offered by
OmniLynx................... 1,600,000 shares

Common stock outstanding
after this offering(1)..... 4,587,242 shares

Use of proceeds.............. We expect that the net proceeds from this offering (after
all costs and underwriting discounts and commissions, but
without exercise of the over-allotment option) will be
approximately $13.3 million. We intend to use these proceeds
for:
- repayment of certain indebtedness of OmniLynx and the
founding companies;
- capital expenditures for hardware to enable us to
serve additional buildings;
- general working capital purposes; and
- future acquisitions of telecommunications companies.

American Stock Exchange
Symbol.....................
</TABLE>

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

(1) The calculation of the number of shares of common stock outstanding after
the offering consists of:

- 1,600,000 shares to be sold in the public offering;

- 939,000 shares issued to the founders of OmniLynx and other investors; and

- 2,048,242 shares to be issued to the shareholders of the founding
companies.

The number of shares of common stock outstanding after the offering in the table
above does not include 3,585,459 shares which are issuable pursuant to
contingent common stock issue rights and various warrants, options, convertible
notes and convertible preferred stock. For a detailed description of these
additional shares, see "Capitalization."

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

RISK FACTORS

Investing in the common stock involves risks which are described in "Risk
Factors" beginning on page 8 of this prospectus.

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

"OmniLynx-TM-," "DirectConnect-TM-," "ARC Networks-TM-," "InfoHighway-TM-,"
"AXCES, Inc.-TM-" and the OmniLynx logo names and marks are our trademarks. This
prospectus contains our other product names, trade names and trademarks and
those of other organizations.

4
<PAGE>
SUMMARY PRO FORMA COMBINED FINANCIAL DATA INFORMATION

OmniLynx acquired ARC in June 1999. We will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this offering. For
financial statement presentation purposes, AXCES has been identified as the
accounting acquiror. The following table presents summary unaudited pro forma
combined financial information for OmniLynx, as adjusted for:

- the effects of the acquisition of the founding companies on a historical
basis;

- the effects of certain pro forma adjustments to the historical financial
statements;

- the consummation of the offering and our use of the estimated net
proceeds; and

- the reverse stock split.

The pro forma combined financial data does not purport to represent what our
results of operations or financial position actually would have been had these
events, in fact, occurred on the date or at the beginning of the period
indicated, nor are they intended to project our results of operations or
financial position for any future date or period. See "Selected Financial Data"
and the Unaudited Pro Forma Combined Financial Statements and the notes thereto
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
PRO FORMA COMBINED
------------------------------------
THREE MONTHS
YEAR ENDED ENDED MARCH 31,
DECEMBER 31, 1998 1999
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Revenues................................................................. $ 46,373 $ 9,947
Cost of services......................................................... 22,719 5,490
----------------- -----------------
Gross profit............................................................. 23,654 4,457
Selling, general and administrative expenses(2).......................... 21,536 4,578
Depreciation and amortization(3)......................................... 3,818 977
----------------- -----------------
Loss from operations..................................................... (1,700) (1,098)
Interest expense, net(4)................................................. (459) (72)
----------------- -----------------
Loss before income taxes................................................. (2,159) (1,170)
Provision (benefit) for income taxes(5).................................. 245 (172)
----------------- -----------------
Net loss before dividends on preferred stock............................. (2,404) (998)
Dividends on preferred stock............................................. 842 210
----------------- -----------------
Net loss applicable to common stockholders............................... $ (3,246) $ (1,208)
----------------- -----------------
----------------- -----------------
Net loss per share - basic and diluted................................... $ (0.71) $ (0.26)
----------------- -----------------
----------------- -----------------
Shares used in computing pro forma net loss per share(6)................. 4,587,242 4,587,242
----------------- -----------------
----------------- -----------------
OTHER DATA:
EBITDA(7)................................................................ $ 2,118 $ (121)
EBITDA margin(7)......................................................... 4.6% (1.2)%
Gross margin............................................................. 51.0% 44.8%
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
------------------------------------
PRO FORMA
COMBINED AS ADJUSTED(9)
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA(8):
Working capital (deficit)................................................ $ (8,379) $ 6,114
Total assets............................................................. 41,210 47,680
Total debt, including current portion.................................... 9,398 2,575
Stockholders' equity..................................................... 21,787 35,080
</TABLE>

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(1) The pro forma combined statement of operations data assume that the
acquisition of the founding companies and the offering were closed on
January 1, 1998.

(2) Reflects adjustments to salaries, bonuses and benefit amounts to reflect
those established in contractual agreements with key management personnel of
the founding companies.

(3) Reflects the amortization of excess purchase price relating to the
acquisitions which has been preliminarily allocated to an undifferentiated
pool of intangible assets to be amortized over an average period of 10 years
for pro forma purposes. Also reflects annual amortization of the customer
list acquired in connection with InfoHighway's acquisition of Eden Matrix,
an Austin, Texas-based Internet service provider operated by AMICI Online
Investments, L.L.C., in January 1999 over the estimated useful life of three
years and annual depreciation on property and equipment also acquired in the
acquisition of Eden Matrix over the estimated useful life of five years.

(4) Reflects the reduction in interest expense due to the planned repayment and
planned conversion of certain debt in connection with the acquisitions.

(5) Assumes all income is subject to a federal corporate tax rate of 34%.

(6) Includes (a) the 939,000 shares outstanding immediately prior to the
offering, (b) 2,048,242 shares to be issued to the owners of the founding
companies as consideration for the acquisitions, and (c) 1,600,000 shares to
be sold in the offering. Does not include contingent common stock or shares
issuable pursuant to warrants, options, convertible notes and convertible
preferred stock, since their effect would be antidilutive.

(7) EBITDA as used in this prospectus consists of earnings before interest,
income taxes, depreciation and amortization. Based on our experience in the
industry, we believe that EBITDA is an important tool for measuring the
performance of companies in the industry (including potential acquisition
targets) in several areas such as liquidity, operating performance and
leverage. In addition, lenders use EBITDA as a criterion in evaluating
companies in the industry. EBITDA is not a measure of financial performance
determined under generally accepted accounting principles, should not be
considered as an alternative to net income as a measure of performance or to
cash flows as a measure of liquidity, and is not necessarily comparable to
similarly titled measures of other companies. EBITDA margin is calculated by
dividing EBITDA into the total revenues generated during the indicated
period.

(8) The pro forma combined balance sheet data assume that the acquisitions of
the founding companies occurred on March 31, 1999.

(9) Adjusted for the sale of the 1,600,000 shares of common stock included in
the offering and the application of the net proceeds therefrom. See "Use of
Proceeds."

6
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION FOR THE FOUNDING COMPANIES

The following table presents certain summary historical statement of
operations data for each of the founding companies for the years ended December
31, 1996, 1997 and 1998, and the three months ended March 31, 1998 and 1999.
This information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Combined and Founding
Companies" and the financial statements and notes thereto included in this
prospectus.

AXCES, INC.

Revenues................................................... $ 8,468 $ 19,474 $ 30,280 $ 10,387 $ 5,411

Gross profit............................................... 4,508 11,471 20,391 7,523 3,558

Operating income........................................... 773 2,426 2,253 3,916 993

EBITDA..................................................... 835 2,561 2,456 3,960 1,051

INFOHIGHWAY INTERNATIONAL, INC.

Revenues................................................... 426 915 1,385 302 535

Gross profit............................................... 208 267 389 76 199

Operating loss............................................. (483) (1,389) (1,211) (326) (267)

EBITDA..................................................... (431) (1,214) (950) (257) (136)

ARC NETWORKS, INC.

Revenues................................................... 5,583 9,648 13,931 3,462 4,001

Gross profit............................................... 509 753 2,280 433 700

Operating loss............................................. (947) (2,378) (1,592) (245) (365)

EBITDA..................................................... (929) (1,942) (1,185) (90) (269)
</TABLE>

7
<PAGE>
RISK FACTORS

You should carefully consider the following factors as well as the other
information contained in this prospectus. This prospectus contains certain
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including the risk factors set forth below and elsewhere in this prospectus.

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE A LIMITED COMBINED
OPERATING HISTORY.

OmniLynx was incorporated in December 1996 and acquired ARC in June 1999. We
will acquire InfoHighway and AXCES simultaneously with and as a condition of the
closing of the offering. The pro forma combined financial results presented in
this prospectus are not necessarily indicative of actual results which might
have occurred if our operations and management teams had been combined during
the periods presented, nor are they representative of future results that will
be reported on a consolidated basis. Our prospects must be considered in light
of the risks, expenses and difficulties frequently encountered by companies in
an early stage of development, particularly those in new and rapidly evolving
markets. To address these risks, we must, among other things, rapidly expand the
geographic coverage of our services; attract and retain customers within our
existing and in new regions; increase awareness of our services; respond to
competitive developments; continue to attract, retain and motivate qualified
persons; continue to upgrade our technologies; commercialize our network
services incorporating such technologies; integrate the founding companies' back
office operations and deliver the bundled telecommunications product and
effectively manage our expanding operations. We may not be successful in
addressing such risks, and any failure on our part to do so could have a
material adverse effect on our business, prospects, operating results and
financial condition.

THERE ARE RISKS ASSOCIATED WITH THE INTEGRATION OF THE FOUNDING COMPANIES WHICH
COULD ADVERSELY AFFECT OUR BUSINESS.

The acquisition of the founding companies involves a number of risks,
including:

- the assimilation of new operations and personnel;

- integration of each founding company's respective equipment, service
offerings, networks and technologies, financial and information systems
and brand names;

- coordination of geographically separated facilities and work forces;

- coordination of their respective sales, marketing and service development
efforts; and

- maintenance of standards, controls, procedures and policies.

The process of integrating the operations of the founding companies,
including their personnel, could cause interruption of, or loss in momentum of
our business and operations activities, including those of the businesses
acquired. Further, employees of the founding companies who may be key to the
integration effort or our ongoing operations may choose not to continue to work
for us following the closing of the acquisitions.

We will incur certain expenses in connection with the integration of the
founding companies, which are not expected to be significant. However, the
actual amount of these expenses could be higher than anticipated. Factors that
could increase such costs include any unexpected employee turnover, unforeseen
delays in addressing duplicate facilities once the acquisitions have been
completed and the associated costs of hiring temporary employees, and any
additional fees and charges to obtain consents, regulatory approvals or permits.
We may not achieve the benefits and strategic objectives sought through the
acquisitions. Costs associated with the acquisitions, or liabilities and
expenses associated with the operations of the founding companies, that exceed
our expectations, could have a material adverse effect on our business,
prospects, operating results and financial condition. See "Management's

8
<PAGE>
Discussion and Analysis of Pro Forma Financial Condition and Results of
Operations--Pro Forma Liquidity and Capital Resources."

WE HAVE AND MAY CONTINUE TO EXPERIENCE NET OPERATING LOSSES IN THE IMMEDIATE
FUTURE.

Two of the three founding companies have incurred substantial historical net
operating losses and experienced negative cash flow during recent periods. As of
March 31, 1999, we had a historical combined deficit of approximately $4.2
million. The independent auditors' reports of ARC and InfoHighway contained
explanatory paragraphs describing the uncertainty as to the ability of each of
those companies to continue as a going concern. We currently intend to increase
our capital expenditures and operating expenses significantly in order to:

- integrate the founding companies;

- expand our networks to support additional expected end-users in existing
and future markets; and

- market and provide our services to a growing number of potential
end-users.

In addition, we intend to record intangible assets of $27.6 million
associated with the acquisitions. Such amounts will result in an annual
amortization charge of approximately $2.7 million for each of the next 10 years.
If the 10-day average closing price of the common stock exceeds $16.00 and
$21.00 per share, we will be required to record significant additional
intangible assets related to the contingent common stock issue rights based upon
the market value of the common stock at that time. As a result, our net income
and earnings per share will be adversely affected each of those years. See
"Management's Discussion and Analysis of Pro Forma Financial Condition and
Results of Operations-- Operations."

DUE TO VARIOUS MARKET AND ECONOMIC FACTORS, OUR FUTURE QUARTERLY OPERATING
RESULTS MAY VARY SIGNIFICANTLY. THIS MAY ADVERSELY IMPACT OUR STOCK PRICE.

Our annual and quarterly operating results may fluctuate significantly in
the future as a result of numerous factors. Factors that may affect our
operating results include:

- our ability to complete the integration of the founding companies and
achieve the expected operating efficiencies;

- our ability to successfully provide a bundled telecommunication package of
services;

- the rate at which customers subscribe to our services;

- the prices the customers pay for such services;

- customer turnover; and

- the timing and ability of incumbent local exchange carriers to provide and
construct the required central office collocation facilities should we
deploy telephone switches.

Our operating results are sensitive to the rates that we charge our end user
customers for our services and the volume commitments of those customers and the
rates we pay the underlying carriers who supply telecommunications services
directly to us. We believe our financial performance depends to a great extent
upon retaining customers and on levels of subscriber turnover, which can vary
due to a variety of factors, including price, customer service, relocation of
end-user customers and employee turnover within these customers. Additionally,
we have a limited number of long-term contracts with our customers, and we may
experience substantial customer turnover because customers may easily

9
<PAGE>
discontinue the use of our services and switch to an alternative service
provider. Furthermore, our operating results may fluctuate depending on, among
other things:

- the success of our relationships with Bell Atlantic, MCI WorldCom,
Frontier Communications, Inc., ATT/Teleport and other potential third
parties who deliver carrier services to us;

- our ability to deploy our services on a timely basis to adequately satisfy
subscriber demand;

- our ability to maintain targeted subscriber levels; and

- the mix of line orders between consumer end-users and business end-users
(which typically have higher revenues and margins).

Factors that may add to volatility in our annual or quarterly operating
results include, among others, the amount and timing of capital expenditures and
other costs relating to the expansion of our network, the introduction of new
services by us or our competitors, technical difficulties or network downtime,
general economic conditions and economic conditions specific to the
telecommunications industry. There may be delays in the commencement and
recognition of revenue because the installation of telecommunication lines to
implement certain services has lead times that are controlled by third parties.
In addition, we plan to increase operating expenses to fund operations, sales,
marketing, general and administrative activities and infrastructure, including
increased expenses associated with our relationships with Bell Atlantic, MCI
WorldCom, Frontier Communications, Inc., ATT/Teleport and other carriers. To the
extent that these expenses are not accompanied by increases in revenues, we
could experience a material adverse effect on our business, prospects, operating
results and financial condition. As a result of all of the foregoing factors, it
is likely that in some future quarter our operating results will be below the
expectations of securities analysts and investors. Such events would likely
materially adversely affect the price of our common stock. Fluctuations in
operating results may also result in volatility in the price of our common
stock.

OUR BUSINESS MODEL IS UNPROVEN AND WE MAY NOT BE SUCCESSFUL IN IMPLEMENTING OUR
BUSINESS STRATEGY. IN ADDITION, OUR PRODUCTS AND SERVICES MAY NOT ACHIEVE
SIGNIFICANT MARKET ACCEPTANCE.

We believe that we are one of the first competitive local exchange carriers
to provide high-speed digital communications services bundled with traditional
telephony services using emerging technology to commercial buildings and
multiple dwelling units. As such, our business strategy is unproven. To be
successful, we must, among other things, develop and market services that are
widely accepted by small to medium size businesses and consumers. Our
DirectConnect services have only been launched in the New York City, New York;
Houston, Dallas, Austin, Texas; Jacksonville, Florida; and Parsippany, New
Jersey metropolitan areas, and may not achieve broad commercial acceptance. The
prices we charge for certain services are in some cases higher than those
charged by our competitors for the same services. A sufficient number of
end-users may not be willing to pay the prices we charge for our services.
Additionally, prices for digital communications services have fallen
historically, and prices in the industry in general, and for the services we
offer, and plan to offer, are expected to continue to fall. We have provided,
and expect in the future to provide, price discounts to customers that commit to
multiple services. In addition, we may be required to reduce prices periodically
to respond to competition and to generate increased sales volume. Accordingly,
our business model may not be successful. The failure of our business model
would result in a material adverse effect on our business, prospects, operating
results and financial condition. See "Management's Discussion and Analysis of
Pro Forma Financial Condition and Results of Operations" and "Business--Business
Strategy."

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OUR LENGTHY SALES CYCLE FOR COMMERCIAL BUILDINGS AND MULTIPLE DWELLING UNITS
REQUIRES US TO INCUR SIGNIFICANT EXPENSES IN ADVANCE OF THE RECEIPT OF REVENUES.

Our practice of marketing to commercial buildings either through real estate
management companies or landlords has taken significant effort to date and the
sales cycle is lengthy. Further, we have targeted new construction as one of our
principal markets. This market is subject to construction delays and other
conditions beyond our control. During this lengthy sales cycle, we incur
significant expenses in advance of the receipt of revenues. Therefore, any
long-term failure to roll out our services could have a material adverse effect
on our business, prospects, operating results and financial condition. See
"Business--Customers."

WE DEPEND UPON ENTERING INTO AGREEMENTS WITH THIRD-PARTIES IN ORDER TO HOUSE AND
OPERATE CERTAIN COMPONENTS OF OUR NETWORKS WHICH ARE SUBJECT TO VARIOUS
GOVERNMENTAL REGULATIONS.

We depend upon our ability to secure certain network elements from the
various incumbent and competitive local exchange carriers to deliver our
services to our customers. Additionally, as we deploy telephone switching
equipment, we are required to physically or virtually collocate our equipment in
the incumbent local exchange carriers' central offices. However, collocation
space may not be available in the central offices requested and we may
experience initial rejections of our applications to obtain collocation space
from the incumbent local exchange carriers. The rejection of our applications
for collocation space could result in delays in and increased expenses
associated with, the roll out of our services in our target markets, which could
result in a material adverse effect on our business, prospects, operating
results and financial condition.

In order to collocate our equipment in the incumbent local exchange
carriers' central offices we will be required to enter into and implement
interconnection agreements in each of our target markets with the appropriate
incumbent local exchange carriers. These interconnection agreements govern the
relationship between us and the incumbent local exchange carriers. Since
interconnection agreements are subject to interpretation by both parties,
differences in interpretation may arise that cannot be resolved on favorable
terms to us. Also, the interconnection agreements are subject to state
commission, FCC and judicial oversight. Future modification to the terms,
conditions or prices of our future interconnection agreements by these
governmental bodies, or disputes with incumbent local exchange carriers over the
terms of the interconnection agreements generally, may have a material adverse
effect on our business, prospects, operating results and financial condition.
See "Business--Telecommunications Services--Long Distance Services."

The 1996 Telecommunications Act requires incumbent local exchange carriers
to interconnect with other carriers and to provide competitive local exchange
carriers access to their unbundled network elements. The 1996 Telecommunications
Act generally requires that interconnection charges as well as charges for
unbundled network elements be cost-based and nondiscriminatory. Our nonrecurring
and recurring monthly charges for lines may vary greatly. These rates are
subject to the approval of the appropriate state regulatory commission. The
approval process typically involves a lengthy review of the incumbent local
exchange carrier-proposed rates in each state. The ultimate rates approved
typically depend greatly on the incumbent local exchange carrier's initial rate
proposals and such factors as the geographic deaveraging/averaging policy of the
state public utility commission. These proceedings are time-consuming and will
absorb scarce resources including legal personnel and cost experts as well as
participation by our management. Consequently, we are subject to the risk that
the non-recurring and recurring charges for lines and other unbundled network
elements will increase from time to time based on new rates proposed by the
incumbent local exchange carriers and approved by state regulatory commissions.
Any of the foregoing matters could result in a material adverse effect on our
business, prospects, operating results and financial condition. See
"Business--Network Architecture and Technology," "--Government Regulation" and
"--Legal Proceedings."

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THE QUALITY OF OUR SERVICES IS DEPENDENT UPON THE QUALITY OF THE WIRING AND
EQUIPMENT USED BY THE INCUMBENT LOCAL EXCHANGE CARRIERS.

Our strategy requires us to interconnect with and use an incumbent local
exchange carrier's copper telecommunications lines to service our customers. As
such, we are dependent upon the technology and capabilities of the incumbent
local exchange carriers to meet certain telecommunications needs of our
customers and maintain our service standards. We are highly dependent on the
quality and availability of the incumbent local exchange carriers' copper lines
and the incumbent local exchange carriers' maintenance of such lines. We may not
be able to obtain the copper lines and the services we require from the
incumbent local exchange carriers or obtain such lines at quality levels, rates,
terms and conditions satisfactory to us. The failure to obtain such services or
obtain such lines at satisfactory quality levels, rates, terms and conditions
would have a material adverse effect on our business, prospects, operating
results and financial condition.

THE TELECOMMUNICATIONS SERVICES INDUSTRY IS HIGHLY COMPETITIVE AND SUBJECT TO
RAPID TECHNOLOGICAL CHANGE.

The telecommunications services industry is highly competitive, rapidly
evolving and subject to constant technological change. Our future success will
depend, in part, on our ability to effectively use leading technologies, to
continue to develop our technical expertise, to enhance our current services, to
develop new products and services that meet changing customer needs, and to
influence and respond to emerging industry standards and other technological
changes. In addition, numerous companies offer Internet, local and long distance
telephone and other telecommunication services, and we expect competition to
increase in the future. We believe that existing competitors will likely
continue to expand their service offerings to appeal to our existing or
potential customers. Many of our existing competitors have greater financial,
personnel, brand and name recognition and other resources. Moreover, we expect
that new competitors will enter the telecommunications market, and that some of
these new competitors may offer similar services to those offered by us. In
addition, the regulatory environment in which we operate is undergoing
significant change. As this regulatory environment evolves, changes may occur
that could create greater or unique competitive advantages for our current or
potential competitors, or could make it easier for other new entrants to provide
services. See "Business-- Competition."

WE MAY REQUIRE SIGNIFICANT ADDITIONAL CAPITAL FOR FUTURE ACQUISITIONS.

We cannot predict with certainty what our capital needs will be to finance
future acquisitions. We currently intend to use our common stock to fund a
portion of the purchase price of future acquisitions. If our common stock does
not maintain an acceptable price in the public markets or if potential
acquisition candidates are unwilling to accept our common stock as part of the
consideration for the sale of their businesses, we may have to use more cash to
finance our acquisition program. If we do not have enough cash resources, our
ability to make acquisitions could be limited unless we are able to obtain
additional cash through future debt or equity financings. Incurring debt would
increase our leverage and make us more vulnerable to economic downturns and
limit our ability to compete.

We intend to enter into negotiations with commercial banks to provide us
with a credit facility to be used for acquisitions, working capital, capital
expenditures and other general corporate purposes. Any such credit facility or
other debt financing will require that we make certain financial covenants which
could limit our operational and financial flexibility. We may not be able to
obtain adequate financing for our acquisition program at all or on terms we deem
acceptable. As a result, we might be unable to successfully pursue our
acquisition strategy. See "Management's Discussion and Analysis of Pro Forma
Financial Condition and Results of Operations--Pro Forma Liquidity and Capital
Resources."

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WE ARE DEPENDENT UPON THE CONTINUED GROWTH OF THE INTERNET AS A MEDIUM OF
COMMERCE AND COMMUNICATION.

Many of our current and future products and services are targeted toward
users of the Internet, which has experienced rapid growth. The market for
Internet access and related services is relatively new and characterized by
rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new product and service introductions. Our future success
will depend, in part, on our ability to effectively use leading technologies, to
continue to develop our technical expertise, to enhance our current services, to
develop new products and services that meet changing customer needs, and to
influence and respond to emerging industry standards and other technological
changes on a timely and cost-effective basis. We may not be successful in
effectively using new technologies, developing new services or enhancing our
existing services on a timely basis and such new technologies or enhancements
may not achieve market acceptance. If the market for Internet access services
fails to develop, develops more slowly than expected, or becomes saturated with
competitors, or if the Internet access and services we offer are not broadly
accepted, our business, operating results and financial condition will be
materially adversely affected.

In addition, critical issues concerning the commercial use of the Internet
remain unresolved and may impact the growth of Internet use, especially in the
business market we have targeted. Despite growing interest in the many
commercial uses of the Internet, many businesses have been deterred from
purchasing Internet access services for a number of reasons, including, among
others, inconsistent quality of service, lack of availability of cost-effective,
high-speed options, a limited number of local access points for corporate users,
inability to integrate business applications on the Internet, the need to deal
with multiple and frequently incompatible vendors, inadequate protection of the
confidentiality of stored data and information moving across the Internet, and a
lack of tools to simplify Internet access and use. In particular, a perceived
lack of security of commercial data, such as credit card numbers, has
significantly impeded commercial exploitation of the Internet to date, and there
can be no assurance that encryption or other technologies will be developed that
satisfactorily address these security concerns. Capacity constraints caused by
growth in the use of the Internet may, unless resolved, impede further
development of the Internet to the extent that users experience delays,
transmission errors and other difficulties. Further, the adoption of the
Internet for commerce and communications, particularly by those individuals and
enterprises which have historically relied upon alternative means of commerce
and communication, generally requires the understanding and acceptance of a new
way of conducting business and exchanging information. The failure of the market
for business-related Internet solutions to continue to develop would adversely
impact our business, prospects, operating results and financial condition.

IF THE MARKET FOR OUR SERVICES DOES NOT CONTINUE TO GROW, OUR BUSINESS WILL BE
MATERIALLY ADVERSELY AFFECTED.

The market for high bandwidth Internet services for small and medium-sized
businesses is in the early stages of development. Since this market is new and
because current and future competitors are likely to introduce competing
services, it is difficult to predict the rate at which this market will grow, if
at all, or whether new or increased competition will result in market
saturation. Various providers of high-speed digital communications services are
testing products from various suppliers for various applications, and no
industry standard has been broadly adopted. Certain critical issues concerning
commercial use of the Internet and remote local area network access, including
security, reliability, ease and cost of access and quality of service, remain
unresolved and may impact the growth of such services. If the market for our
services, including Internet access, fails to develop, grows more slowly than
anticipated or becomes saturated with competitors, our business, prospects,
operating results and financial condition could be materially adversely
affected. See "Business--Market Opportunity."

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ANY SYSTEM FAILURE, WHETHER FROM NATURAL DISASTER OR ANY OTHER CAUSE, COULD
CAUSE WIDESPREAD INTERRUPTIONS IN THE SERVICES WE PROVIDE.

Our operations are dependent upon our ability to support our highly complex
network infrastructure and avoid damage from fires, earthquakes, floods, power
losses, excessive sustained or peak user demand, telecommunications failures,
network software flaws, transmission cable cuts and similar events. The
occurrence of a natural disaster or other unanticipated problem at our network
operations center could cause interruptions in the services we provide.
Additionally, failure of an incumbent local exchange carrier or other service
provider, such as other competitive local exchange carrier service providers, to
provide communications capacity we require, as a result of a natural disaster,
operational disruption or any other reason, could cause interruptions in the
services we provide. Any damage or failure that causes interruptions in our
operations could have a material adverse effect on our business, prospects,
operating results and financial condition. See "Business--Network Architecture
and Technology."

HACKERS, COMPUTER VIRUSES AND OTHER DISRUPTIVE PROBLEMS COULD POSE SECURITY
RISKS AND CAUSE MATERIAL INTERRUPTIONS IN THE SERVICES WE PROVIDE.

Despite the implementation of security measures, our networks may be
vulnerable to unauthorized access, computer viruses and other disruptive
problems. Internet service providers and corporate networks have in the past
experienced, and are likely in the future to experience, interruptions in
service as a result of accidental or intentional actions of Internet users,
current and former employees and others. Unauthorized access could also
potentially jeopardize the security of confidential information stored in the
computer systems of our customers and such customers' end-users, which might
result in our liability to our customers and also might deter potential
customers. Although we have implemented security measures that are standard
within the telecommunications industry, and plan to deploy new company-developed
security measures, there can be no assurance that we will implement such
measures in a timely manner or to the degree that may be compatible with our
various customers' expectations, or that if and when implemented, such measures
will not be circumvented. Eliminating computer viruses and alleviating other
security problems may require interruptions, delays or cessation of service to
our customers and such customers' end-users, which could have a material adverse
effect on our business, prospects, operating results and financial condition.
See "Business--Network Architecture and Technology."

OUR RELIANCE ON THIRD-PARTY VENDORS INVOLVES A NUMBER OF RISKS, ANY OF WHICH
COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.

We rely and will continue to rely on outside parties to manufacture our
network equipment, such as customer premise equipment modems, network routing
and switching hardware, network management software, systems management software
and database management software. We also rely on incumbent local exchange
carriers to bill and collect for certain of our long distance customers in the
Southwestern Bell and Ameritech regions. As we sign additional service
contracts, we believe there may need to be a significant increase in the amount
of manufacturing and other services supplied by third parties in order for us to
meet our contractual commitments. We have in the past experienced supply
problems with certain of our vendors and there can be no assurance that these
vendors will be able to meet our needs in a satisfactory and timely manner in
the future or that we will be able to obtain additional vendors when and if
needed. Although we have identified alternative suppliers for technologies that
we deem critical and we are not constrained to use the same customer premise
equipment vendor in multiple regions, it could take a significant period of time
to establish relationships with alternative suppliers for critical technologies
and substitute their technologies into our networks. Our reliance on third-party
vendors involves a number of additional risks, including the absence of
guaranteed capacity and reduced control over delivery schedules, quality
assurance, production yields and costs. The loss of any of our relationships
with these suppliers could have a material adverse effect on

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our business, prospects, operating results and financial condition. See
"Business--Network Architecture and Technology."

OUR SUCCESS IS HEAVILY DEPENDENT UPON OUR RETENTION OF CERTAIN OF OUR KEY
OFFICERS AND THE HIRING OF ADDITIONAL PERSONNEL.

Our performance is dependent on the performance of our executive officers
and key employees. In particular, our senior management has significant
experience in the data communications, telecommunications and personal computer
industries, and the loss of any one of our executive officers could have a
material adverse effect on our ability to execute our business strategy
effectively. In addition, we will be dependent upon the regional general
managers for each new region we enter. Regional general managers will have
direct responsibility for sales, service and market development efforts in their
respective regions, and the loss of one could disrupt significantly the
operations in the region. Additionally, given our early stage of deployment, we
are dependent on our ability to retain and motivate high quality personnel,
especially our management. We do not have "key person" life insurance policies
on any of our employees. We currently have employment agreements with Joseph A.
Gregori, Peter Parrinello, Tony Howlett and Glenn Kramer. However, certain
others of our current key personnel may not continue to be employed by us, and
we may not be able to attract and retain technical, sales, marketing and
managerial personnel in the future. Our future success also depends on our
continuing ability to identify, hire, train and retain other highly qualified
technical, sales, marketing and managerial personnel in connection with our
expansion within our existing regions and the deployment and marketing of our
network into targeted regions. Competition for such qualified personnel is
intense, particularly in software development, network engineering and product
management. The inability to attract and retain our officers and key employees
and the necessary technical, sales, marketing and managerial personnel could
have a material adverse effect upon our business, prospects, operating results
and financial condition. See "Business--Employees" and "Management."

THE INCREASE OF CURRENT GOVERNMENTAL SURCHARGES AND FEES ON OUR GROSS REVENUES
WOULD ADVERSELY AFFECT OUR BUSINESS.

Telecommunications providers pay a variety of surcharges and fees related to
the provision of interstate and intrastate services. Interstate surcharges
include federal universal service fees, common carrier regulatory fees,
numbering administration and primary interexchange carrier charges. In addition,
state regulators impose similar surcharges and fees on intrastate services. The
division of our services between interstate services and intrastate services is
a matter of interpretation and may in the future be contested by the FCC or
relevant state commissions. A change in the characterization of the jurisdiction
of our services could cause an increase in our payment obligations. In addition,
pursuant to periodic revisions by state and federal regulators of the applicable
surcharges, we may be subject to increases in the surcharges and fees currently
paid.

OUR BUSINESS IS HIGHLY REGULATED AND MAY BE ADVERSELY AFFECTED BY FUTURE CHANGES
IN GOVERNMENTAL REGULATIONS RELATING TO OUR INDUSTRY.

Our services are subject to federal, state and local government regulation.
The 1996 Telecommunications Act, which became effective in February 1996,
introduced widespread changes in the regulation of the telecommunications
industry, including provisions to increase competition among all
telecommunications providers, including the local markets in which we operate.
The 1996 Telecommunications Act eliminates many of the pre-existing legal
barriers to competition in telecommunications service markets and establishes
basic criteria for relationships between telecommunications providers.

Among other things, the 1996 Telecommunications Act removes barriers to
entry in the local exchange telephone market by preempting state and local laws
that restrict competition and by providing competitors interconnection, access
to unbundled network elements and retail services at wholesale rates. The FCC's
primary rules interpreting the 1996 Act, which were issued on August 8, 1996,
have in

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<PAGE>
large part, been upheld by the United States Supreme Court except, as noted
earlier, with respect to the minimum list of unbundled network elements.
Additional judicial challenges to FCC rules or changes in these rules could have
a material adverse effect on our business, prospects, operating results and
financial condition.

The FCC has also simultaneously proposed additional rules requiring
incumbent local exchange carriers to provide forms of collocation and unbundled
loops to competitive local exchange carriers on more favorable terms than
previously prescribed by the FCC. The FCC has also proposed additional rules
under which incumbent local exchange carriers may offer advanced
telecommunications services. The FCC's rulings, proposals and actions thereunder
may be appealed or reconsidered, and it is uncertain whether the FCC will in
fact order more favorable collocation and loop availability for competitive
local exchange carriers.

No assurance can be given that changes to current regulations or the
adoption of new regulations by the FCC or state regulatory authorities or
legislative initiatives, such as changes to the 1996 Act, or court decisions
will not have a material adverse effect on our business, prospects, operating
results and financial condition. See "Business--Government Regulations" and
"--Legal Proceedings."

In addition, we are subject to government regulation in several respects
which could cause additional operating costs and which must be monitored for
compliance. In particular, federal and state law prohibits the practice known as
"slamming," whereby telephone companies switch a customer's local or long
distance carrier without the customer's permission. We have been involved in
several legal proceedings in various states in which we were alleged to have
been engaged in slamming. Some of those cases have been settled while others are
still pending. See "Business--Legal Proceedings." In response, we have adopted
safeguards, including new policies and procedures, to reduce significantly and
substantially the number of slamming complaints against us. There can be no
assurance that we will not be penalized again for possible slamming practices in
the future, despite our new safeguards, and that such penalty, whether in the
form of a fine or a suspension of our right to conduct business, will not have a
material adverse impact on our business, prospects, operating results and
financial condition. We must also comply with advertising and disclosure rules
relating to our sale of long distance telephone services to the public. Our
retail marketing program, which utilizes representatives to recruit retail
customers and additional representatives, is subject to state laws regulating
network marketing programs. We must be registered with the public utility
commissions of most states in order to provide telephone service in those
states. Some state commissions also must approve changes in ownership of AXCES
and ARC, as well as the issuance of the securities contemplated by this
offering. We are also subject to federal, state and local government regulations
relating to health, safety, employment, wages and working conditions. There can
be no assurance that we will receive all necessary government approvals or that
government regulations will not have a material adverse impact on our business,
prospects, operating results and financial condition.

WE MAY INCUR LIABILITY AS AN INTERNET SERVICE PROVIDER.

We are an Internet service provider. As a general matter, Internet service
providers are not subject to federal and state regulations. However, laws
governing use of the Internet, including taxation of transactions, privacy,
security, digital signatures, and encryption are continually under consideration
at the state and federal level. In particular, the law governing the liability
of online service providers and Internet access providers for participating in
the hosting or transmission of objectionable materials or information currently
remains unsettled. Under the terms of the 1996 Telecommunications Act, courts
can impose civil and criminal penalties for the use of interactive computer
services for the transmission of certain indecent or obscene communications. The
United States Supreme Court in 1997 held this provision unconstitutional as it
relates to indecent, but not obscene, communications. In October 1998, Congress
enacted the Child Online Protection Act, which requires that online material
that is "harmful" to minors be restricted. This law is currently being
challenged and on February 1, 1999 a U.S.

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District Court judge issued a preliminary injunction against enforcement of
portions of that act. The U.S. Justice Department has filed an appeal of the
February 1999 ruling. Also, some states have adopted or may adopt in the future
similar requirements. The constitutionality of such state requirements remains
unsettled at this time. In addition, several private parties have filed lawsuits
seeking to hold Internet service providers accountable for information that they
transmit, such as libelous material and copyrighted material. We cannot predict
the outcome of this litigation or the potential for the imposition of liability
on Internet service providers for information that they host, distribute or
transport. These suits and other regulations could materially change the way
ISPs must conduct business and could impact our determination to expand or
continue this business. To the extent that we become parties to future
litigation or there are new regulations, such litigation or new regulations
could have a material adverse effect on our business, prospects, operating
results and financial condition.

OTHER COMPANIES HAVE NAMES SIMILAR TO OURS.

Even though we are using the mark "OmniLynx Communications" in the United
States, other companies in many different industries have preexisting rights to
the name "OmniLynx" within defined territories. One specific company may have
the right to use the name for telecommunications services within an established
area. If any of these other companies are successful with their claims to our
name, we may be required to either obtain a license from them for the use of the
name "OmniLynx," or be required to change our name within certain defined
territories. Either result would cause us to incur additional expenses. If we
are required to change our name, we may lose the goodwill associated with the
"OmniLynx" name in these markets.

A GENERAL ECONOMIC DOWNTURN COULD CAUSE CUSTOMERS TO REDUCE THEIR EXPENDITURES
RELATED TO OUR SERVICES.

In the last few years, the general health of the economy has been relatively
strong and growing, a consequence of which has been increasing capital spending
by individuals and growing companies to keep pace with rapid technological
advances. To the extent the general economic health of the United States or of
the metropolitan areas in which we currently operate declines from recent
historically high levels, or to the extent individuals or companies fear such a
decline is imminent, such individuals and companies may reduce, in the near
term, expenditures such as those for our services. Any such decline or concern
about an imminent decline could delay decisions among certain of our customers
to roll out our services or could delay decisions by prospective customers to
make initial evaluations of our services. Such delays would have a material
adverse effect on our business, prospects, operating results and financial
condition.

MANAGEMENT AND CERTAIN STOCKHOLDERS WILL CONTROL A MAJORITY OF OUR STOCK.

Our executive officers, directors and principal stockholders together will
beneficially own approximately 63.8% of the outstanding common stock after
completion of this offering (approximately 61.6% if the over-allotment option is
exercised in full). Accordingly, these stockholders will be able to determine
the composition of our Board of Directors, will retain the voting power to
approve all matters requiring stockholder approval and will continue to have
significant influence over our affairs. This concentration of ownership could
have the effect of delaying or preventing a change in control of or otherwise
discouraging a potential acquiror from attempting to obtain control of us, which
in turn could have a material adverse effect on the market price of the common
stock or prevent our stockholders from realizing a premium over the then
prevailing market prices for their shares of common stock. See "Management" and
"Principal Stockholders."

WE MAY EXPERIENCE PROBLEMS ASSOCIATED WITH THE YEAR 2000.

Some computers, software, and other equipment include computer codes in
which calendar year data is abbreviated to only two digits. Some of these
computer systems could fail to operate properly if

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they interpret "00" to mean 1900, rather than 2000. This problem is widely known
as the "Year 2000 problem." We are highly dependent on our computer systems and
those of third party suppliers, vendors and customers. The Year 2000 problem
affects some of our computers, software, and other equipment, including the
computers which run our administrative functions. If we fail to properly
identify, correct and test our computer systems for the year 2000 problem, our
business operations could be adversely affected.

We are taking steps to remediate our Year 2000 problem. We do not believe
that the cost to remediate our Year 2000 problem will have a material adverse
effect on our operations. We believe that our computer systems will be Year 2000
compliant and will function adequately by, during and after the Year 2000. At
this time, however, we cannot assure you that our computer systems will not be
affected to some degree by the Year 2000 problem, in spite of our continuing
efforts. More importantly, we cannot assure you that the computer systems used
by our service providers such as billing vendors, telecommunications service
providers, our customers and other third parties, will function properly by the
Year 2000. A failure of our service providers to cause their computers systems
to be Year 2000 compliant could have an adverse effect on our operations. Their
Year 2000 problem could become our Year 2000 problem. See "Management's
Discussion and Analysis of Pro Forma Financial Condition and Results of
Operations--Year 2000 Compliance--Combined."

THE ABSENCE OF AN ACTIVE PUBLIC MARKET FOR OUR COMMON STOCK MAY MAKE IT
DIFFICULT FOR YOU TO RESELL YOUR SHARES AT OR ABOVE THE OFFERING PRICE, AND OUR
STOCK PRICE MAY FLUCTUATE.

Prior to this offering, there has been no public market for the common
stock, and there can be no assurance that an active public market for the common
stock will develop or be sustained after the offering. The initial public
offering price will be determined by negotiation between us and the underwriters
based upon several factors and may not be indicative of the market price of the
common stock after the offering. See "Underwriting" for a discussion of the
factors to be considered in determining the initial public offering price. The
trading price of the common stock could be subject to wide fluctuations in
response to factors included in this prospectus, many of which are beyond our
control. In addition, in recent years the stock market has experienced extreme
price and volume fluctuations. These fluctuations have had a substantial effect
on the market prices for many emerging growth companies, often unrelated to the
operating performance of the specific companies. Such market fluctuations could
adversely affect the price of our common stock.

SALES OF SUBSTANTIAL AMOUNTS OF OUR COMMON STOCK MAY ADVERSELY AFFECT OUR STOCK
PRICE AND MAKE FUTURE OFFERINGS TO RAISE CAPITAL MORE DIFFICULT.

When this offering closes, approximately 65% of the outstanding shares of
common stock will be contractually restricted from resale until the second
anniversary of this offering, unless the price of the common stock is at least
$17, at which time portions of such shares could begin to be freely tradeable as
early as the first anniversary of the offering. In addition, there are
approximately 3,585,459 shares which are issuable as contingent common stock and
pursuant to various warrants, options, convertible notes and convertible
preferred stock, 327,917 of which are automatically eligible for resale after
the first anniversary of the offering. The holders of 281,667 of those shares
can require us to register their shares for resale at any time beginning one
year after the closing of this offering. In addition, 165,000 shares of common
stock have been registered for resale by Benchmark Equity Group for a period of
90 days, which period shall begin 90 days after the closing of this offering.
Subsequent sales of these shares or the perception that those sales might occur
could materially adversely affect the price of our common stock and make it more
difficult for us to raise funds through future offerings of common stock. See
"Shares Eligible for Future Sale."

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YOU WILL EXPERIENCE IMMEDIATE, SUBSTANTIAL DILUTION IN THE NET TANGIBLE BOOK
VALUE OF THE SHARES YOU PURCHASE.

Purchasers of our common stock in this offering:

- will pay a price per share that substantially exceeds the value on a per
share basis of our assets after we subtract from those assets our
intangible assets and our liabilities;

- will contribute a majority of the funds we will need to complete our
initial acquisitions and repay indebtedness, but will own only 34.9% of
the outstanding shares of our common stock, and 30.8% of the voting
interest; and

- may experience further dilution in the net tangible value of their common
stock as a result of future issuances of common stock.

See "--We May Require Significant Additional Capital for Future Acquisitions"
and "Dilution."

WE DO NOT INTEND TO PAY CASH DIVIDENDS ON OUR COMMON STOCK IN THE NEAR FUTURE.

We have never paid cash dividends and have no plans to do so in the
foreseeable future. Our future dividend policy will be determined by our Board
of Directors and will depend upon a number of factors, including our earnings,
capital requirements and overall financial condition. See "Dividend Policy."

WE MAY ISSUE ADDITIONAL PREFERRED STOCK WHOSE TERMS COULD ADVERSELY AFFECT THE
VOTING POWER OR VALUE OF OUR COMMON STOCK.

Our certificate of incorporation authorizes us to issue, without the
approval of our stockholders, one or more classes or series of preferred stock
having such preferences, powers and relative, participating, optional and other
rights, including preferences over our common stock respecting dividends and
distributions, as our board of directors may determine. The terms of one or more
classes or series of preferred stock could adversely impact the voting power or
value of our common stock. For example, we might afford holders of preferred
stock the right to elect some number of our directors in all events or on the
happening of specified events or the right to veto specified transactions.
Similarly, the repurchase or redemption rights or liquidation preferences we
might assign to holders of preferred stock could affect the residual value of
the common stock. We currently have two series of preferred stock outstanding.
See "Description of Capital Stock--Preferred Stock."

PROVISIONS IN OUR CORPORATE DOCUMENTS AND DELAWARE LAW COULD DELAY OR PREVENT A
CHANGE IN CONTROL OF OUR COMPANY, EVEN IF THAT CHANGE WOULD BE BENEFICIAL TO OUR
STOCKHOLDERS.

The existence of some provisions in our corporate documents and Delaware law
could delay or prevent a change in control of our company, even if that change
would be beneficial to our stockholders. Our certificate of incorporation and
bylaws contain provisions that may make acquiring control of our company
difficult, including:

- provisions relating to the classification, nomination and removal of our
directors;

- provisions limiting the right to call special meetings of our board and
our stockholders;

- provisions regulating the ability of our stockholders to bring matters for
action at annual meetings of our stockholders;

- a prohibition of action by our stockholders without a meeting; and

- the authorization to issue and set the terms of preferred stock.

19
<PAGE>
THE COMPANY

OMNILYNX COMMUNICATIONS CORPORATION. Our executive offices are located at
1770 Motor Parkway, Suite 300, Hauppauge, New York 11788, and our telephone
number is (516) 582-2222. We acquired ARC in June 1999. We will acquire
InfoHighway and AXCES simultaneously with and as a condition of the closing of
the offering. The following is a description of the founding companies:

AXCES, INC. AXCES is a switchless long-distance carrier that resells
long-distance service to the low-volume urban residential user. Although AXCES
generates the vast majority of its sales from its 1+ service, it also offers
paging service, 800 service, voice-mail and calling cards. AXCES is licensed in
20 states and maintains billing operations and customers in the Southwestern
Bell Telephone region, which includes Texas, Kansas, Missouri, Arkansas and
Oklahoma as well as in the Ameritech region, which includes Illinois, Indiana,
Michigan, Wisconsin and Ohio. As of June 15, 1999, AXCES had approximately
160,000 active customers concentrated in Dallas, Houston, San Antonio and
Chicago. AXCES maintains carrier agreements with Coastal Telephone Services and
Frontier Communications as well as billing and collection agreements with
Southwestern Bell Telephone and Ameritech. AXCES outsources its call rating
function. AXCES' objective is to become a leading provider of long-distance
service and expand its product line to include local service and Internet access
to residential customers in large metropolitan areas.

INFOHIGHWAY INTERNATIONAL, INC. InfoHighway is a business oriented Internet
service provider, based in Houston, Texas. InfoHighway was founded in 1994 and
was one of the earliest Internet service providers in the nation. InfoHighway
specializes in offering a high-speed Internet access product to high-rise office
buildings in Texas, New York, New Jersey and Florida. This service, called
DirectConnect, is faster than most comparably priced offerings from our
competitors. InfoHighway offers additional value-added Internet services to the
tenants of these DirectConnect buildings. InfoHighway also provides traditional
Internet services such as dial-up Internet access, ISDN connections and web-site
hosting to businesses not in DirectConnect buildings. During January 1999,
InfoHighway acquired the operations of Eden Matrix.

ARC NETWORKS, INC. ARC is a competitive local exchange carrier based in New
York and has been in business since 1993. ARC offers local phone service, long
distance, cabling and other network services to customers primarily in the New
York metropolitan area. ARC was founded as a division of Avionics Research
Corporation, an engineering firm that has provided design and engineering
services for over 40 years. ARC works within its customer's existing
communications infrastructure to offer an extensive array of services from
consulting services to complete turnkey telecommunication systems. Customers can
use ARC in conjunction with their existing providers or choose to receive all of
their telecommunications services on a single bill from ARC. ARC's sales force
and consultants work with clients to supply the most appropriate, cost-effective
telecommunications solutions. They have an extensive client list from a wide
spectrum of industries. They provide service to over 20 of Manhattan's most
prominent high-rise buildings and many brand name clients. Their mission is to
provide the highest level of customer satisfaction by offering quality service,
dependability and diversity at competitive prices.

20
<PAGE>
USE OF PROCEEDS

The net proceeds we will receive from the offering, after deducting
estimated underwriting discounts and commissions and offering expenses, are
estimated to be approximately $13.3 million assuming an initial public offering
price of $10.00 per share ($15.4 million if the underwriters exercise their
over-allotment option in full.)

We anticipate that the $13.3 million of net proceeds of this offering will
be used to repay $6.8 million of indebtedness of OmniLynx and the founding
companies. We anticipate that the remaining $6.5 million of the net proceeds
will be used for:

- capital expenditures for hardware to enable us to serve additional
buildings;

- general working capital purposes; and

- future acquisitions.

We believe that the net proceeds of this offering will be sufficient to fund
our aggregate capital expenditures and working capital requirements, including
operating losses, for the foreseeable future. The amounts we actually expend for
these purposes may vary significantly depending upon a number of factors,
including future revenue growth, if any, capital expenditures and the amount of
cash generated by our operations. Additionally, if we determine it would be in
our best interest, we may increase or decrease the number, selection and timing
of entry of our targeted regions. Accordingly, our management will retain broad
discretion in the allocation of the net proceeds remaining after the repayment
of indebtedness in connection with the acquisitions. Although we may use a
portion of the net proceeds to pursue possible acquisitions of businesses,
technologies or products complementary to our current operations in the future,
there are no present understandings, commitments or agreements with respect to
any such acquisitions. Pending use of such net proceeds for the above purposes,
we intend to invest such funds in short-term, interest-bearing, investment-grade
securities. See "Risk Factors--We May Require Significant Additional Capital for
Future Acquisitions" and "Management's Discussion and Analysis of Pro Forma
Financial Condition and Results of Operations."

DIVIDEND POLICY

- our financial condition and performance;

- our cash needs and expansion plans;

- income tax consequences; and

- the restrictions Delaware and other applicable laws and our credit
arrangements then impose.

21
<PAGE>
CAPITALIZATION

The following table sets forth the cash, short-term debt and current
maturities of long-term debt and capitalization as of March 31, 1999:

- on a pro forma combined basis to give effect to the acquisition of the
founding companies and the acquisition of Eden Matrix, and

- on a pro forma combined basis as adjusted to give effect to the offering
and the application of the estimated net proceeds.

See "Use of Proceeds" and Unaudited Pro Forma Combined Financial Statements
and the related notes thereto included elsewhere in this prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------
PRO FORMA AS
COMBINED ADJUSTED
----------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................................ $ 2,095 $ 8,631
----------- ---------
----------- ---------
Short-term debt and current maturities of long-term debt (1)............. 9,389 1,366
Long-term debt, less current maturities.................................. 9 1,209
Stockholders' equity
Preferred stock, $.0001 par value, 3,000,000 shares authorized:
Series A, 121,667 shares issued and outstanding, pro forma and as
adjusted........................................................... -- --
Series B, 60,000 shares issued and outstanding, pro forma and as
adjusted........................................................... -- --
Common stock, $.0001 par value, 25,000,000 shares authorized;
2,987,242 shares issued and outstanding, pro forma; and 4,587,242
shares issued and outstanding, as adjusted (2)..................... -- --
Additional paid-in capital............................................. 21,849 35,169
Deficit................................................................ (62) (89)
----------- ---------
Total stockholders' equity........................................... 21,787 35,080
----------- ---------
Total capitalization............................................... $ 31,185 $ 37,655
----------- ---------
----------- ---------
</TABLE>

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

(1) For a description of our debt, see the Notes to Unaudited Pro Forma Combined
Financial Statements and the Notes to the Financial Statements of the
founding companies included elsewhere herein.

(2) The calculation of the number of shares of common stock outstanding after
the offering in the table above consists of:

- 1,600,000 shares to be sold in the public offering;

- 939,000 shares issued to the founders of OmniLynx and other investors; and

- 2,048,242 shares to be issued to the shareholders of the founding
companies.

The number of shares of common stock outstanding after the offering in the
table above does not include:

- 727,511 shares issuable as contingent consideration to our management and
other investors and the previous shareholders of ARC and InfoHighway based
upon the performance of our common stock beginning 90 days after the
completion of this offering (approximately one half of these shares are
issuable when the common stock reaches a 10-day average of $16 per share,
and the remaining one half are issuable when the common stock reaches a
10-day average of $21 per share);

22
<PAGE>
- 600,000 shares issuable upon conversion of our Series B Preferred Stock
which will be issued to the shareholders of AXCES at a conversion price of
$15 per share;

- 600,000 shares issuable upon exercise of options at $8 per share which
were granted to certain members of our management in connection with the
acquisition of ARC;

- 573,333 shares issuable upon exercise of warrants at $8 per share which
were issued in connection with certain bridge loans to OmniLynx prior to
the offering;

- 291,000 shares issuable upon exercise of options at $10 per share which
will be issued to certain members of our management and board of directors
upon consummation of the offering;

- 206,250 shares issuable upon conversion of a convertible promissory note
issued to a former debtholder of ARC at a conversion price of $8 per
share;

- 160,000 shares issuable upon exercise of warrants at $12 per share which
will be issued to the representative of the underwriters in connection
with this offering (184,000 if the underwriters exercise their
over-allotment option in full);

- 159,000 shares issuable upon exercise of options at $5 per share which
will be issued to our management upon consummation of the offering;

- 121,667 shares issuable upon conversion of our Series A Preferred Stock
which was issued to a former debtholder of ARC at a conversion price of
$10 per share;

- 90,000 shares issuable upon exercise of warrants at $8 per share which
were issued to a former debtholder of ARC;

- 36,185 shares issuable upon conversion of warrants at $5.71 which were
issued to a consultant prior to the offering (26,005 of these warrants
have already vested, 5,090 of these warrants vest when the common stock
reaches a 10-day average of $16 per share, and the remaining 5,090 of
these warrants vest when the common stock reaches a 10-day average of $21
per share); and

- 20,513 shares issuable upon conversion of warrants at $121.853 per share
which were issued to former warrant holders of ARC.

23
<PAGE>
DILUTION

The deficit in our pro forma combined net tangible book value as of March
31, 1999 was approximately $(6.5) million, or approximately $(2.18) per share,
after giving effect to the acquisitions and the acquisition of Eden Matrix but
before giving effect to the offering. The deficit in pro forma net tangible book
value per share represents the amount by which our pro forma total liabilities
exceed our pro forma net tangible assets as of March 31, 1999, divided by the
number of shares to be outstanding after giving effect to the acquisitions and
the acquisition of Eden Matrix. After giving effect to the sale of the 1,600,000
shares offered hereby and deducting the estimated underwriting discount and
estimated offering expenses payable by us, our pro forma net tangible book value
as of March 31, 1999 would have been approximately $6.8 million, or
approximately $1.48 per share, based on an assumed initial public offering price
of $10.00 per share (the midpoint of the estimated initial public offering price
range). This represents an immediate increase in pro forma net tangible book
value of approximately $3.66 per share to existing shareholders and an immediate
dilution of approximately $8.52 per share to new investors purchasing shares of
this offering. The following table illustrates this per share pro forma
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............................. $ 10.00
Pro forma net tangible book value (deficit) per share before this
offering................................................................ $ (2.18)
Increase per share attributable to new investors............................ 3.66
---------
As adjusted pro forma net tangible book value per share after the
offering.................................................................. 1.48
---------
Dilution per share to new investors......................................... $ 8.52
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1999,
the difference between the existing stockholders and new investors with respect
to the number of shares of common stock purchased from us, the total
consideration paid and the average price per share paid at an assumed initial
public offering price of $10.00 per share (before deducting estimated
underwriting discounts and commissions and offering expenses payable by us):

<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION AVERAGE
----------------------- ------------- PRICE PER
NUMBER PERCENT AMOUNT SHARE
---------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
Existing stockholders........................................... 2,987,242 65.1% $ (6,525,000 (1) $ (2.18)
New investors................................................... 1,600,000 34.9% 16,000,000 $ 10.00
---------- ----- -------------
Total........................................................... 4,587,242 100.0% $ 9,475,000
---------- ----- -------------
---------- ----- -------------
</TABLE>

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

(1) Total consideration paid by existing stockholders represents our pro forma
combined stockholders' equity less pro forma combined goodwill and other
intangible assets, in each case before giving effect to the post acquisition
adjustments set forth in the Unaudited Pro Forma Combined Balance Sheet of
OmniLynx and the founding companies included herein.

The foregoing table assumes no exercise of the over-allotment option and no
exercise of stock options or warrants outstanding. To the extent options and
warrants are subsequently exercised, there will be further dilution to new
investors. See "Management" and Notes to Unaudited Pro Forma Combined Financial
Statements.

24
<PAGE>
SELECTED FINANCIAL DATA

OmniLynx acquired ARC in June 1999. We will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this offering. OmniLynx
has not conducted any operations to date, except in connection with this
offering and the acquisitions. For financial statement presentation
purposes, AXCES has been identified as the accounting acquiror. The following
selected historical financial data for AXCES for the years ended December 31,
1994, 1995, 1996, 1997 and 1998, and as of December 31, 1994, 1995, 1996, 1997
and 1998 have been derived from the audited financial statements of AXCES. The
following selected historical financial data for AXCES for the three months
ended March 31, 1998 and 1999, and as of March 31, 1999 have been derived from
the unaudited financial statements of AXCES which have been prepared on the same
basis as the audited financial statements and, in the opinion of AXCES, reflects
all adjustments consisting of normal recurring adjustments, necessary for a fair
presentation of such data. Our summary unaudited pro forma financial information
presents certain data, as adjusted for:

- the effects of the acquisition of the founding companies on a historical
basis;

- the effects of certain pro forma adjustments to the historical financial
statements;

- the closing of the offering and the application of the proceeds therefrom;
and

- the effects of the reverse stock split.

Our pro forma financial data do not purport to represent what our results of
operations or financial position actually would have been had these events, in
fact, occurred on the date or at the beginning of the period indicated, nor are
they intended to project our results of operations or financial
position for any future date or period. See the Unaudited Pro Forma Combined
Financial Statements and the notes thereto included elsewhere in this
prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1994 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
AXCES:
Revenues................................. $ 667 $ 2,691 $ 8,468 $ 19,474 $ 30,280 $ 10,387 $ 5,411
Cost of services......................... 441 1,606 3,960 8,003 9,889 2,864 1,853
--------- --------- --------- --------- --------- --------- ---------
Gross profit............................. 226 1,085 4,508 11,471 20,391 7,523 3,558
Selling, general and administrative
expenses............................... 203 823 3,674 8,910 17,934 3,563 2,507
Depreciation and amortization............ 1 7 61 135 204 44 58
--------- --------- --------- --------- --------- --------- ---------
Income from operations................... 22 255 773 2,426 2,253 3,916 993
Interest income (expense), net........... -- (11) 37 (19) (208) (56) (3)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes............... 22 244 810 2,407 2,045 3,860 990
Provision (benefit) for income taxes..... 1 74 279 837 (917) (917) --
--------- --------- --------- --------- --------- --------- ---------
Net income............................... $ 21 $ 170 $ 531 $ 1,570 $ 2,962 $ 4,777 $ 990
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
PRO FORMA COMBINED
------------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED
1998 MARCH 31, 1999
-------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE
AND PER SHARE AMOUNTS)
<S> <C> <C>
PRO FORMA COMBINED STATEMENT OF OPERATIONS DATA (1):
Revenues.................................................. $ 46,373 $ 9,947
Cost of services.......................................... 22,719 5,490
-------------- --------------
Gross profit.............................................. 23,654 4,457
Selling, general and administrative expenses (2).......... 21,536 4,578
Depreciation and amortization (3)......................... 3,818 977
-------------- --------------
Loss from operations...................................... (1,700) (1,098)
Interest expense, net (4)................................. (459) (72)
-------------- --------------
Loss before income taxes.................................. (2,159) (1,170)
Provision (benefit) for income taxes (5).................. 245 (172)
-------------- --------------
Net loss before dividends on preferred stock.............. $ (2,404) $ (998)
Dividends on preferred stock.............................. 842 210
-------------- --------------
Net loss applicable to common stockholders................ $ (3,246) $ (1,208)
-------------- --------------
-------------- --------------
Net loss per share--basic and diluted..................... $ (0.71) $ (0.26)
-------------- --------------
-------------- --------------
Shares used in computing pro forma net loss per share
(6)..................................................... 4,587,242 4,587,242
-------------- --------------
-------------- --------------
OTHER DATA:
EBITDA.................................................... 2,118 $ (121)
EBITDA margin............................................. 4.6% (1.2)%
Gross margin.............................................. 51.0% 44.8%
</TABLE>

<TABLE>
<CAPTION>
AXCES
------------------------------------------------------- AS OF MARCH 31, 1999 (UNAUDITED)
-------------------------------------
AS OF DECEMBER 31, PRO FORMA
------------------------------------------------------- AXCES COMBINED AS ADJUSTED
1994 1995 1996 1997 1998 ACTUAL (7) (8)
----- --------- --------- --------- --------- --------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)..... $ 49 $ 127 $ 391 $ 1,538 $ 4,706 $ 5,703 $ (8,379) $ 6,114
Total assets.................. 81 919 2,235 4,735 8,269 7,063 41,210 47,680
Total debt, including current
portion..................... -- 130 19 63 1,734 -- 9,398 2,575
Stockholders' equity.......... 34 204 736 2,306 5,268 6,258 21,787 35,080
</TABLE>

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

(1) Assumes the acquisition of the founding companies and the offering were
closed on January 1, 1998.

(2) Reflects adjustments to salaries, bonuses and benefit amounts to reflect
those established in contractual agreements with key management personnel of
the founding companies.

(3) Reflects the amortization of excess purchase price relating to the
acquisition of the founding companies which has been preliminarily allocated
to an undifferentiated pool of intangible assets to be amortized over an
average period of 10 years for pro forma purposes. Also reflects annual
amortization of the customer list acquired in connection with InfoHighway's
acquisition of Eden Matrix in January 1999 over the estimated useful life of
three years and annual depreciation on

26
<PAGE>
property and equipment also acquired in the acquisition of Eden Matrix over
the estimated useful life of five years.

(4) Reflects the reduction in interest expense due to the planned repayment and
planned conversion of certain debt in connection with the acquisitions.

(5) Assumes all income is subject to a federal corporate tax rate of 34%.

(6) Includes (a) the 939,000 shares outstanding immediately prior to the
offering, (b) 2,048,242 shares to be issued to the owners of the founding
companies, and (c) 1,600,000 shares to be sold in the offering. Does not
include contingent common stock or shares issuable pursuant to warrants,
options, convertible notes and convertible preferred stock since their
effect would be anti-dilutive.

(7) The pro forma combined balance sheet data assume that the acquisition of the
founding companies occurred on March 31, 1999.

(8) Adjusted for the sale of the 1,600,000 shares of common stock included in
the offering and the application of the net proceeds therefrom. See "Use of
Proceeds."

27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PRO FORMA
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Unaudited
Pro Forma Combined Financial Statements and related notes thereto and "Selected
Financial Data" appearing elsewhere in this prospectus.

SUMMARY

We were formed to become a leading provider of Internet, data and
telecommunications solutions to businesses and consumers. Prior to the
acquisition of ARC, we had conducted no operations. We acquired ARC in June
1999. We will acquire InfoHighway and AXCES simultaneously with and as a
condition of the closing of this offering. Our services include high-speed
Internet access, local phone services with innovative features, long distance
service at competitive rates, and other value added Internet services that are
under development. On a pro forma basis, the combined operations generated
revenues of $46.4 million and $9.9 million for the year ended December 31, 1998
and the three months ended March 31, 1999, respectively.

We intend to integrate these businesses and their operations and
administrative functions. This integration process may present opportunities to
reduce costs through the elimination of duplicative functions and through
economies of scale, but will necessitate additional costs and expenditures for
corporate management and administration. The founding companies have been
managed throughout the periods discussed below as independent private companies,
and their results of operations reflect different tax structures (S Corporation
and C Corporations) which have influenced, among other things, their historical
levels of owners' compensation. Except for the compensation and benefits
reductions aggregating $2.6 million for the year ended December 31, 1998 and
$28,000 for the three months ended March 31, 1999, as provided for in agreements
entered into in connection with the acquisition of the founding companies, no
such cost savings were reflected in the pro forma results of operations data. We
will also incur corporate expenses related to being a public company,
implementation of an acquisition program and systems integration. These various
costs and possible cost savings may make comparison of pro forma operating
results not comparable to, nor indicative of, future performance.

ORGANIZATION

We will acquire the founding companies for an aggregate consideration of
approximately $28.7 million (including consideration to consummate the
acquisition of Eden Matrix), assuming an initial public offering price of $10.00
per share, as described in the following table:

<TABLE>
<CAPTION>
CONTINGENT COMMON
PREFERRED
COMMON STOCK STOCK STOCK
--------------------- ---------------------- ----------
VALUE OF VALUE OF VALUE OF
ACQUISITION SHARES SHARES SHARES SHARES SHARES
- ---------------------------------------- --------- ---------- --------- ----------- ----------
AXCES................................... 700,000 $6,300,000 -- $ -- $9,000,000
<S> <C> <C> <C> <C> <C>
InfoHighway............................. 958,166 8,623,494 235,878 -- --
ARC..................................... 390,076 3,510,684 152,672 -- 1,216,674
--------- ---------- --------- ----- ----------
Total................................... 2,048,242 $18,434,178 388,550 $ -- $10,216,674
--------- ---------- --------- ----- ----------
--------- ---------- --------- ----- ----------
</TABLE>

The value of the common shares has been determined using an estimated fair
value of $9.00 per share, which represents a discount of ten percent from the
assumed initial public offering price of $10.00 per share (the midpoint of the
range of estimated actual public offering prices set forth on the cover page of
this prospectus) due to restrictions on the sale and transferability of the
shares issued.

The estimated purchase price for the acquisitions is based upon preliminary
estimates and is subject to certain purchase price adjustments at and following
closing. In the opinion of management, the final allocation of the purchase
price will not materially differ from these preliminary estimates.

28
<PAGE>
The closing of the acquisitions is subject to certain customary conditions,
including the accuracy of the representations and warranties made by the
founding companies, the performance of their respective covenants in the
agreements and the nonexistence of a material adverse change in the results of
operations, financial condition or business of each founding company.

OPERATIONS

REVENUES. Our revenues are derived from two principal sources, namely
Internet services and telecommunication services.

INTERNET SERVICES. Internet services fall into two categories:
DirectConnect Internet access and standard Internet services. DirectConnect
is a high-speed Internet service offered in office buildings in Texas, New
York, New Jersey and Florida. DirectConnect service provides building
tenants access to a shared high-speed dataline. The DirectConnect service
provides several benefits over traditional dial-up services, including
higher speed, continuous connection, fewer technical problems, lower cost,
increased security and greater usability.

Standard Internet services include access to the Internet over regular
dial-up telephone lines, as well as rapid access to the Internet via
high-speed technologies such as dedicated facilities including T-1 and ISDN
and Frame-Relay. We also establish e-mail addresses for our customers, as
well as provide web site hosting services.

Internet services are typically billed to a customer at an established
rate per service offering pursuant to a contract. Contract terms range from
one month to one year. Revenue is recognized over the period that services
are rendered.

TELECOMMUNICATION SERVICES. Service offerings include local phone
service, private data and voice lines, long distance, cabling and other
network services to customers primarily in the New York metropolitan area
and across several major cities in Texas and Illinois. In our business
segment, we work within our customers' existing communications
infrastructure to offer an extensive array of services from consulting to
complete turnkey telecommunications systems. Services are offered through
contracts with a variety of incumbent and competitive local exchange
carriers.

For local and long distance telephone service, revenue is recognized as
service is provided to customers. Revenue from our data cable installation
services is recognized using the percentage of completion method, measured
by the percentage of cost incurred to date to the total estimated cost for
each contract. Revisions in cost estimates and recognition of losses, if
any, on these contracts are reflected in the accounting period in which the
facts become known.

COST OF SERVICES AND GROSS PROFIT. Cost of services consists primarily of
long distance telephone and network charges, salaries and benefits for operating
personnel and technical support staff. Gross profit percentages vary among the
founding companies, primarily because of the differences in local market demand
and competition as well as differences in the mix of products and services. The
founding companies' gross profit percentages for telecommunication services has
differed significantly among the founding companies, and has ranged from
approximately 8% to 67% in recent years.

GOODWILL AND OTHER INTANGIBLE ASSETS. In July 1996, the SEC issued Staff
Accounting Bulletin No. 97 relating to business combinations immediately prior
to an initial public offering. Staff Accounting Bulletin No. 97 requires that
these combinations be accounted for using the purchase method of accounting.
Under the purchase method, the founding company whose owners receive the largest
portion of voting rights in the combined enterprise is presumed to be the
accounting acquiror. Accordingly, AXCES has been designated as the accounting
acquiror. As a result of the acquisitions of the founding companies, the excess
of the consideration paid over the fair value of the net assets to be acquired
for the founding companies other than the accounting acquiror has been
preliminarily allocated to an undifferentiated pool of intangible assets. We
intend to obtain independent appraisals of the founding

29
<PAGE>
companies for purposes of determining values under purchase accounting for the
tangible and intangible net assets acquired. Upon completion of the appraisals
and in accordance with the terms thereof, the intangible assets in the pool will
be allocated to the appropriate asset classifications, including customer lists,
non-compete agreements, and goodwill and will be amortized over the appropriate
useful lives of the individual intangible assets. Until such time as the
appraisals are finalized, the pool of intangible assets will be amortized over
an average period of 10 years which represents management's best estimation for
the average useful life of the intangible assets.

S CORPORATION ELECTIONS. Prior to the acquisition of AXCES, its parent
company, MTM, elected to be treated as an S Corporation, and elected to have
AXCES treated as a qualified subchapter S Corporation, under the Internal
Revenue Code of 1986, as amended. Following the acquisition of AXCES, it will be
subject to federal and state income taxes. In general, a qualified subchapter S
Corporation and its parent S Corporation's are not treated as a separate taxable
entity, and their respective gains, income, losses and separately stated tax
items are taxed to the parent S Corporation's shareholders on a pro rata basis.
In connection with the acquisition of AXCES, its qualified subchaper S
Corporation status will terminate. Prior to the acquisition, AXCES will make
distributions to MTM in an aggregate amount not to exceed $6.5 million,
provided, that such distributions do not reduce working capital below $0.6
million. AXCES' working capital as of March 31, 1999 was $5.7 million. The
distributions are to be funded by up to $3.0 million in borrowings (which will
be repaid from the proceeds of the offering) and cash balances of AXCES.

INCOME TAXES. We have adopted the liability method of accounting for income
taxes in accordance with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Deferred income taxes are recognized for temporary
differences between financial statement and income tax bases of assets and
liabilities and net operating loss carryforwards, and is measured using enacted
tax rates expected to apply to taxable income in the years in which these
temporary differences are expected to be recovered or settled.

PRO FORMA RESULTS OF OPERATIONS

We acquired ARC in June 1999. We will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this offering. The
following summary unaudited pro forma financial information presents certain
data for OmniLynx, as adjusted for (1) the effects of the acquisitions on a
historical basis, (2) the effects of certain pro forma adjustments to the
historical financial statements, and (3) the closing of the offering and the
application of the proceeds therefrom. See "Selected Financial Information" and
the Unaudited Pro Forma Combined Financial Statements and the notes thereto
included elsewhere in this prospectus.

30
<PAGE>
PRO FORMA COMBINED STATEMENT OF OPERATIONS DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER THREE MONTHS ENDED
31, 1998 MARCH 31, 1999
-------------------- --------------------
AMOUNT % AMOUNT %
--------- --------- --------- ---------
(UNAUDITED, $ IN THOUSANDS EXCEPT NUMBER
OF SHARES AND PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................ $ 46,373 100.0% $ 9,947 100.0%
Cost of services.................................... 22,719 49.0 5,490 55.2
--------- --------- --------- ---------
Gross profit........................................ 23,654 51.0 4,457 44.8
Selling, general and administrative expenses........ 21,536 46.5 4,578 46.1
Depreciation and amortization....................... 3,818 8.2 977 9.8
--------- --------- --------- ---------
Loss from operations................................ (1,700) (3.7) (1,098) (11.1)
Interest expense, net............................... (459) (1.0) (72) (0.7)
--------- --------- --------- ---------
Loss before income taxes............................ (2,159) (4.7) (1,170) (11.8)
Provision (benefit) for income taxes................ 245 0.5 (172) (1.7)
--------- --------- --------- ---------
Net loss............................................ (2,404) (5.2) (998) (10.1)
Preferred dividend requirement...................... 842 1.8 210 2.1
--------- --------- --------- ---------
Net loss available to common stockholders........... $ (3,246) (7.0) $ (1,208) (12.2)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per share--basic and diluted............... $ (0.71) $ (0.26)
--------- ---------
--------- ---------
Shares used in computing pro forma net loss per
share-- basic and diluted........................... 4,587,242 4,587,242
--------- ---------
--------- ---------
</TABLE>

PRO FORMA LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999, on a pro forma basis after giving effect to the
acquisition of the founding companies, the acquisition of Eden Matrix, and the
closing of the offering and the application of its net proceeds, we would have
had an aggregate of $8.6 million of cash and cash equivalents, working capital
of $6.1 million, and long-term debt net of current maturities of $1.2 million.

We intend to increase capital expenditures and operating expenses in order
to integrate the founding companies, expand networks to support additional
expected end-users in existing and future markets and to market and provide
services to a growing number of potential end-users. Current capital resources,
including the proceeds of this offering, are anticipated to be sufficient to
fund aggregate capital expenditures and working capital requirements, including
operating losses, if any, for the foreseeable future.

Future acquisitions may require significant capital. We cannot predict with
certainty what our capital needs will be for future acquisitions. We currently
intend to use our common stock to fund a portion of the purchase price of future
acquisitions. If our common stock does not maintain an acceptable price in the
public markets or if potential acquisition candidates are unwilling to accept
our common stock as part of the consideration for the sale of their businesses,
we may have to use more cash to finance our acquisition program. If we do not
have enough cash resources, our ability to make acquisitions could be limited
unless we are able to obtain additional cash through future debt or equity
financings. Incurring debt would increase our leverage and make us more
vulnerable to economic downturns and limit our ability to compete.

31
<PAGE>
our acquisition program at all or on terms we deem acceptable. As a result, we
might be unable to successfully pursue our acquisition strategy.

INFLATION

Due to the relatively low level of inflation experienced in 1998, inflation
did not have a significant effect on the pro forma results of our operations in
1998. However, there can be no assurances that our business will not be affected
by inflation in the future.

YEAR 2000 COMPLIANCE--COMBINED

Many software applications, computer hardware and related equipment and
systems that use embedded technology, such as microprocessors, rely on two
digits rather than four digits to represent years in performing computations and
decision-making functions. These programs, hardware items and systems may fail
on January 1, 2000 or earlier because they misinterpret "00" as the year 1900
rather than 2000. These failures could have an adverse effect on us because of
our direct dependence on our own applications, equipment and systems and our
indirect dependence on those of third parties.

Our Year 2000 program consists of the following phases:

- identifying all items that may be affected by the Year 2000;

- investigating those items for Year 2000 compliance;

- assessing the potential impact of Year 2000 noncompliance;

- designing solutions for noncompliant items;

- repairing and replacing any noncompliant items and testing those
improvements; and

- contingency planning.

Each company we are acquiring has assigned one or more individuals in its
organization Year 2000 responsibility. We have also assigned an individual
overall Year 2000 responsibility to track and coordinate the efforts of the
individual companies. Each of the founding companies has completed
identification of its mission-critical information technology hardware and
software, including business applications, operations software, service
providers and product suppliers that may be affected by the Year 2000. We have
determined that the potential impact of embedded technologies on the founding
companies is not substantial.

We are also contacting various third parties to obtain representations and
assurances that their hardware, embedded technology systems and software which
we use or will impact us are, or will be modified on a timely basis to be, Year
2000 compliant. We have contacted all of our primary vendors based on their
importance to our business. These third parties include telecommunications and
billing companies. The founding companies began contacting these third parties
as early as 1998 and have received responses from approximately 50% to date. All
the third parties that have responded have stated that they are or expect to be
Year 2000 compliant by the end of 1999. We expect to have this part of our
program completed by the fourth quarter of 1999. To date, our costs associated
with assessing and monitoring the progress of third parties in resolving their
Year 2000 issues have not been significant, and we do not expect to incur any
material costs in the future relating to this aspect of our Year 2000 program.

All of the founding companies are in the solution design phase of their
efforts to determine whether noncompliant information hardware and software
systems can be repaired or replaced. We estimate that we have completed
approximately 90% of this phase and expect to complete it by the fourth quarter
of 1999.

As part of the acquisitions, we are replacing some of their financial and
other systems in order to obtain internal consistency. Some systems we are
replacing happen not to be Year 2000 compliant, but

32
<PAGE>
we would replace them in all events this year and are not including the cost of
their replacements as a part of our Year 2000 program.

We have decided not to develop formal budgets or perform detailed analysis
of the costs associated with this effort. We based this decision on the low
number of systems that comprise our technical environment and the fact that our
Year 2000 efforts are being addressed during the normal course of business. To
date, our external costs of our Year 2000 program have not been significant and
we do not expect to incur significant costs in the future. We have not deferred
other information technology projects because of our Year 2000 efforts.

We have begun a formal analysis of various failure scenarios, their
potential impact and possible contingency plans. We expect that we will have
completed the development of the necessary contingency plans by the fourth
quarter of 1999 and that these will primarily consist of replacing noncompliant
third-party suppliers and service providers, and developing backup procedures to
handle the failure of any of our internal systems.

We do not anticipate any material adverse effect from Year 2000 failures,
but we cannot guarantee that we will achieve total compliance. Factors that give
rise to this uncertainty include our possible failure to identify all
susceptible systems, noncompliance by third parties whose systems and operations
impact us and a possible loss of technical resources to perform the work.

Our most likely worst-case Year 2000 noncompliance scenarios are:

- failures of an incumbent local exchange carrier or other service provider;

- equipment failures;

- an interruption in our ability to bill or collect amounts due from
customers; and

- loss of accurate accounting records.

Depending on the length of any noncompliance or system failure, any of these
situations could have a material adverse impact on our ability to serve our
customers in a timely manner and result in lost business and revenues or
increased costs.

This disclosure is subject to protection under the Year 2000 Information and
Readiness Disclosure Act of 1998, Public Law 105-271, as a "Year 2000 Statement"
and "Year 2000 Readiness Disclosure" as that Act defines those terms.

RECENT ACCOUNTING PRONOUNCEMENTS

In November 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which established accounting and reporting
standards for derivative instruments and hedging activities. It requires that
entities recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
provisions of this statement are effective for all fiscal quarters of all fiscal
years beginning after June 15, 1999. The Financial Accounting Standards Board
recently issued Statement of Financial Accounting Standards No. 135, "RESCISSION
OF FASB STATEMENT NO. 75 AND TECHNICAL CORRECTIONS." The Statement is effective
for financial statements issued for fiscal years ending after February 15, 1999.
We believe that these standards will not have a material impact on our financial
statements or disclosures thereto.

Statement of Position No. 98-5, "REPORTING ON THE COSTS OF START-UP
ACTIVITIES," requires all start-up and organizational costs to be expensed as
incurred. It also requires all remaining historically capitalized amounts of
these costs existing at the date of adoption to be expensed and reported as the
cumulative effect of a change in accounting principles. Statement of Position
No. 98-5 is effective for all fiscal years beginning after December 31, 1998. We
believe that the adoption of Statement of Position No. 98-5 will not have a
material impact on their financial statements or disclosures thereto.

33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMBINED AND FOUNDING COMPANIES

The following discussions should be read in conjunction with the financial
statements of the founding companies and related notes appearing elsewhere in
this prospectus.

COMBINED FOUNDING COMPANIES GROSS PROFIT DATA

The following unaudited combined financial information does not purport to
present the combined historical results of operations of the founding companies
in accordance with generally accepted accounting principles, but represents
merely a summation of the revenues, cost of services, and gross profit of the
individual founding companies. The historical combined results as shown below
will not be comparable to, and are not necessarily indicative of, anticipated
post-combination results for a number of reasons, including:

- the founding companies were not under common control or management during
the periods presented;

- using the purchase method of accounting, we will revalue the assets
acquired and liabilities assumed at their fair market value and record
goodwill and other intangible assets to be amortized in future periods;

- we will incur additional costs for corporate management and the costs
associated with being a publicly-traded company; and

- we anticipate increased revenues and cost savings once we begin operating
as a combined entity.

The following table sets forth certain historic combined data and such data
of the founding companies as a percentage of revenues for the periods indicated:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------- ------------------------------------------
1996 1997 1998 1998 1999
-------------------- -------------------- -------------------- -------------------- --------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............ $ 14,477 100% $ 30,037 100% $ 45,595 100% $ 14,151 100% $ 9,947 100%
Cost of services.... 9,252 64% 17,546 58% 22,535 49% 6,119 43% 5,490 55%
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Gross profit........ $ 5,225 36% $ 12,491 42% $ 23,060 51% $ 8,032 57% $ 4,457 45%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998

REVENUES. Combined revenues declined $4.2 million, or 30%, from $14.1
million in 1998 to $9.9 million in 1999. The revenue shortfall was due to a $5.0
million decrease in revenues generated at AXCES as discussed below.

GROSS PROFIT. Combined gross profit decreased $3.5 million, or 45%, from
$8.0 million in 1998 to $4.5 million in 1999. Overall combined gross profit as a
percentage of combined revenues was 57% and 45% for the three months ended March
31, 1998 and 1999, respectively.

COMPARISON OF 1998, 1997 AND 1996

REVENUES. Combined revenues increased $15.6 million, or 52%, from $30.0
million for 1997 to $45.6 million for 1998. Combined revenues increased $15.6
million, or 107%, from $14.5 million in 1996 to $30.0 million in 1997. This
increase was primarily attributable to revenue growth experienced at AXCES and
secondarily due to growth in ARC's operations.

34
<PAGE>
GROSS PROFIT. Combined gross profit increased $10.6 million, or 85%, from
$12.5 million for 1997 to $23.1 million for 1998. Combined gross profit
increased $7.3 million, or 139%, from $5.2 million for 1996 to $12.5 million for
1997. Overall combined gross profit as a percentage of combined revenues was
36%, 42%, and 51% in 1996, 1997 and 1998, respectively. The increase in combined
gross profit was primarily due to significant margin improvement experienced at
AXCES.

COMBINED LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth selected unaudited cash flow information for
OmniLynx on a combined historical basis:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities.............. $ 88 $ (814) $ (2,430) $ 450 $ 2,594
Net cash used in investing activities............................ (797) (941) (980) (49) (141)
Net cash provided by (used in) financing activities.............. 1,146 1,430 3,607 160 (1,026)
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and equivalents.................. $ 437 $ (325) $ 197 $ 561 $ 1,427
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

For the three months ended March 31, 1999, on a combined basis, operating
activities generated $2.6 million of cash due primarily to increased collections
of accounts receivable and federal income tax receivables by AXCES. Combined net
cash used in investing activities approximated $0.2 million, primarily from
investments in property and equipment. Combined financing activities consumed
$1.0 million due primarily to $1.7 million of debt repayments on short-term debt
at AXCES which offset short-term borrowings at InfoHighway and ARC.

For the year ended December 31, 1998, on a combined basis, operating
activities consumed $2.4 million of cash due primarily to net losses generated
by InfoHighway and ARC, and higher investments in accounts receivable across all
companies. Combined net cash used in investing activities approximated $1.0
million, primarily for a strategic telecommunication acquisition and purchases
of property and equipment. Combined net cash provided by financing activities
totaled $3.6 million, due to debt and equity financings from various sources
including private placement offerings, commercial bank lendings, and related
party transactions.

For the year ended December 31, 1997, on a combined basis, operating
activities consumed $0.8 million of cash for the same reasons noted above for
1998. Combined net cash used in investing activities approximated $0.9 million
due primarily to purchases of property and equipment and repayment of notes to
related parties. Combined financing activities generated $1.4 million primarily
through common stock issuances, proceeds from notes payable to shareholders, and
other related party financings.

For the year ended December 31, 1996, operating activities generated
break-even cash flow as negative operating cash flows incurred by InfoHighway
and ARC were offset by positive operating cash flow by AXCES. Combined net cash
used in investing activities approximated $0.8 million due principally to
purchases of property and equipment. Combined financing activities generated
$1.1 million primarily through various debt financings and common stock
issuances.

At March 31, 1999 on a combined basis, we had an aggregate of $0.2 million
of cash and cash equivalents, and a working capital deficit of $8.4 million.

We intend to increase capital expenditures and operating expenses
significantly in order to integrate the founding companies, expand networks to
support additional expected end-users in existing and future markets and to
market and provide services to a growing number of potential end-users.

35
<PAGE>
Current capital resources, including the proceeds of this offering, are
anticipated to be sufficient to fund aggregate capital expenditures and working
capital requirements, including operating losses, for the foreseeable future.

Our expansion through acquisitions may require significant capital. We
cannot predict with certainty what our capital needs will be for future
acquisitions. We currently intend to use our common stock to fund a portion of
the purchase price of future acquisitions. If our common stock does not maintain
an acceptable price in the public markets or if potential acquisition candidates
are unwilling to accept our common stock as part of the consideration for the
sale of their businesses, we may have to use more cash to finance our
acquisition program. If we do not have enough cash resources, our ability to
make acquisitions could be limited unless we are able to obtain additional cash
through future debt or equity financings. Incurring debt would increase our
leverage and make us more vulnerable to economic downturns and limit our ability
to compete.

We intend to enter into negotiations with a group of commercial banks to
provide us with a credit facility to be used for acquisitions, working capital,
capital expenditures and other general corporate purposes. Any such credit
facility or other debt financing will require that we make certain financial
covenants which could limit our operational and financial flexibility. We cannot
guarantee that we will be able to obtain financing for our acquisition program
or, if available, that it will be available on terms we deem acceptable. As a
result, we might be unable to successfully pursue our acquisition strategy. See
"Management's Discussion and Analysis of Pro Forma Financial Condition and
Results of Operations--Pro Forma Liquidity and Capital Resources."

AXCES, INC.

RESULTS OF OPERATIONS

The following table sets forth certain historical financial data of AXCES
and that data as a percentage of revenues for the periods indicated (dollars in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------- -------------------------------
1996 1997 1998 1998 1999
-------------------- -------------------- -------------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............... $ 8,468 100% $ 19,474 100% $ 30,280 100% $ 10,387 100% $ 5,411
Cost of services....... 3,960 47% 8,003 41% 9,889 33% 2,864 28% 1,853
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Gross profit........... 4,508 53% 11,471 59% 20,391 67% 7,523 72% 3,558
SG&A expenses.......... 3,674 43% 8,910 46% 17,934 59% 3,563 34% 2,507
Depreciation and
amortization......... 61 1% 135 1% 204 1% 44 -- 58
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating income....... $ 773 9% $ 2,426 12% $ 2,253 7% $ 3,916 38% $ 993
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

<CAPTION>
<S> <C>
Revenues............... 100%
Cost of services....... 34%
---------
Gross profit........... 66%
SG&A expenses.......... 47%
Depreciation and
amortization......... 1%
---------
Operating income....... 18%
</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998

REVENUES. Revenues decreased $5.0 million from $10.4 million in 1998 to
$5.4 million in 1999. The decrease in revenues can be attributed primarily to:
(1) loss of all GTE accounts due to a changing relationship with our carriers
which eliminated our ability to bill GTE customers under our carriers' billing
contracts, (2) elimination of Texas state line charges and (3) development of
our proprietary verification system which delayed the switching of new accounts
and reduced the number of accounts being switched. As a result of these factors,
AXCES undertook a change in its marketing strategy to focus on increasing sales
to its more profitable customers and reducing sales to its less profitable
customers.

GROSS PROFIT. Gross profit decreased $4.0 million from $7.5 million in 1998
to $3.5 million in 1999. Overall gross profit as a percentage of revenues was
72% and 66% in 1998 and 1999, respectively. The

36
<PAGE>
decrease in the gross profit can be attributed to: (1) loss of all GTE accounts
due to a changing relationship with our carriers which eliminated our ability to
bill GTE customers under our carriers' billing contracts, (2) elimination of
Texas state line charges, and (3) development of our proprietary verification
system which delayed the switching of new accounts and reduced the number of
accounts being switched.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $1.0 million or 30% from $3.5 million in 1998
to $2.5 million in 1999. The significant decrease in expense levels was due
primarily to: (1) a $0.6 million accrual of performance bonuses for the owners
in 1998 and (2) significant changes in our marketing strategy which reduced
selling expenses by 43%.

COMPARISON OF 1998, 1997 AND 1996

REVENUES. Revenues increased $10.8 million, or 55%, from $19.5 million in
1997 to $30.3 million in 1998. Revenues increased $11.0 million, or 130%, from
$8.5 million in 1996 to $19.5 million in 1997. The significant revenue increases
experienced over these periods were primarily attributable to growth in customer
base resulting from: (1) new office openings, (2) expanded sales force, (3)
intensified sales and marketing campaigns, and (4) new user fees in 1998
associated with various state and federal assessments.

GROSS PROFIT. Gross profit increased $8.9 million from $11.5 million in
1997 to $20.4 million in 1998. Gross profit increased $7.0 million from $4.5
million in 1996 to $11.5 million in 1997. Overall gross profit as a percentage
of revenues was 53%, 59% and 67% in 1996, 1997 and 1998, respectively. Gross
profit percentages have improved dramatically over recent years due to: (1) cost
synergies resulting from expanding the customer base from approximately 9,600
customers at December 31, 1995 to 160,000 customers at December 31, 1998, (2)
new user fees in 1998 associated with various state and federal assessments, (3)
successful sales and marketing efforts, and (4) improved pricing on service
offerings.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $9.0 million, or 101%, from $8.9 million in
1997 to $17.9 million in 1998. The significant increase in expense levels was
due primarily to: (1) a $2.4 million increase in compensation, benefits and
performance bonuses received by the owners during 1998, (2) a $2.1 million
increase in sales and marketing-related expenses due to higher personnel costs
resulting from higher average headcount in sales force and increased exhibit
space rentals and other promotional expenses, and (3) growth in personnel and
administrative expenses overall across most functional areas due to the
sustained growth in operations.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth selected information from AXCES' statements
of cash flows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities................ $ 762 $ 269 $ (1,249) $ 23 $ 3,207
Net cash used in investing activities.............................. (260) (642) (348) -- (26)
Net cash provided by (used in) financing activities................ (110) 43 1,670 (6) (1,734)
--------- --------- --------- --- ---------
Net decrease in cash and equivalents............................... $ 392 $ (330) $ 73 $ 17 $ 1,447
--------- --------- --------- --- ---------
--------- --------- --------- --- ---------
</TABLE>

37
<PAGE>
For the three months ended March 31, 1999, operating activities generated
$3.2 million of cash due primarily to increased collections of accounts
receivable and federal income tax receivables of $2.1 million and $0.7 million,
respectively. Investing activities were minimal and consisted of property and
equipment purchases net of retirements. Financing activities consumed $1.7
million due to repayments of short-term debt.

For the three months ended March 31, 1998, operating activities were
break-even as positive operating cash flow was offset by increases in accounts
receivable and related party receivables in the amounts of $3.9 million and $1.8
million, respectively. Financing activities were minimal and consisted of
repayments of long-term debt.

For the year ended December 31, 1998, operating activities consumed $1.2
million of cash as positive cash flow from operations was offset by a
significant investment in working capital, including increases of $7.2 million
and $0.7 million in accounts receivable and tax refund receivables,
respectively. Net cash used in investing activities totaled $0.3 million,
consisting of purchases of property and equipment and note issuances to related
parties of $0.1 million and $0.2 million, respectively. Financing activities
generated $1.7 million consisting of a $1.0 million short-term note payable to
an independent third party lender and a $0.7 million short-term bank line of
credit.

For the year ended December 31, 1997, operating activities generated $0.3
million of cash as positive cash flow from operations was largely offset by
investments in various working capital accounts, primarily a $3.8 million
increase in accounts receivable. Net cash consumed by investing activities
totaled $0.6 million, including purchases of property and equipment and
issuances of notes to related parties of $0.4 million and $0.2 million,
respectively. Minimal financing activities occurred during 1997 as $0.06 million
was raised from proceeds of long-term notes payable and principal payments on
long-term debt totaled $0.02 million.

For the year ended December 31, 1996, operating activities generated $0.8
million of cash as positive cash flow from operations was partially offset by
investments in working capital, including a $1.1 million increase in accounts
receivable. Investing activities, consisting of purchases of property and
equipment, totaled $0.3 million. Financing activities consumed $0.1 million due
primarily to payments on a note payable to a vendor.

AXCES expects to be able to fund its cash needs such as working capital
through cash it generates from its operations. AXCES generally funds its
purchases of property and equipment with internally generated cash or debt.

INFOHIGHWAY INTERNATIONAL, INC.

RESULTS OF OPERATIONS

The following table sets forth certain historical financial data of
InfoHighway International, Inc. and that data as a percentage of revenues for
the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------- -------------------------------
1996 1997 1998 1998 1999
-------------------- -------------------- -------------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 426 100% $ 915 100% $ 1,384 100% $ 302 100% $ 535
Cost of services........ 218 51% 648 71% 995 72% 226 75% 336
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Gross profit............ 208 49% 267 29% 389 28% 76 25% 199
SG&A expenses........... 639 150% 1,481 162% 1,339 97% 333 110% 335
Depreciation and
amortization.......... 52 12% 175 19% 261 19% 69 23% 131
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating loss.......... $ (483) (113%) $ (1,389) (152%) $ (1,211) (88%) $ (326) (108%) ($ 267)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

<CAPTION>
<S> <C>
Revenues................ 100%
Cost of services........ 63%
---------
Gross profit............ 37%
SG&A expenses........... 63%
Depreciation and
amortization.......... 24%
---------
Operating loss.......... (50%)
</TABLE>

38
<PAGE>
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998

REVENUES. Revenues increased $0.2 million, or 77%, from $0.3 million in
1998 to $0.5 million in 1999. The significant revenue increases experienced over
these periods were primarily attributable to the following: (1) consummation of
the acquisition of Eden Matrix during January 1999, and (2) overall growth in
demand for Internet access services.

GROSS PROFIT. Gross profit increased $0.1 million from $0.1 million in 1998
to $0.2 million in 1999. Overall gross profit as a percentage of revenues was
25% and 37% for 1998 and 1999, respectively. The improvement in gross profit
percentages was due to efficiencies derived from the full integration of several
1997 acquisitions during 1998 and improved product pricing.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses totaled $0.3 million for each of the periods presented.
Despite growth in personnel headcount, expense levels remained constant due to
expense efficiencies upon the full integration during 1998 of acquisitions
consummated during 1997.

COMPARISON OF 1998, 1997 AND 1996

REVENUES. Revenues increased $0.5 million, or 51%, from $0.9 million in
1997 to $1.4 million in 1998. Revenues increased $0.5 million, or 115%, from
$0.4 million in 1996 to $0.9 million in 1997. The significant revenue increases
experienced over these periods were primarily attributable to the following: (1)
overall growth in demand for Internet access services, (2) revenue contributions
from the acquisition of several Internet service providers located in Texas and
California during 1997, and (3) the introduction of the DirectConnect service
offering during 1997. DirectConnect is a high-speed Internet service currently
offered in office buildings in Texas, New Jersey and Florida, which provides
building tenants access to a shared high-speed dataline. The DirectConnect
service provides several benefits over traditional dial-up services, including
continuous connection, faster connection speeds, fewer technical problems, lower
cost, increased security and greater usability.

GROSS PROFIT. Gross profit increased $0.1 million from $0.3 million in 1997
to $0.4 million in 1998. Gross profit increased from $0.2 million in 1996 to
$0.3 million in 1997. Overall gross profit as a percentage of revenues was 49%,
29% and 28% in 1996, 1997 and 1998, respectively. Gross profit percentages
declined from 1996 to 1998 due to significant increases in technical support
staff and higher communication costs as InfoHighway expanded its network.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $0.2 million, or 10%, from $1.5 million in
1997 to $1.3 million in 1998. The decline in expenses was primarily attributable
to higher expense levels experienced during 1997 for specific expenses
including: (1) non-recurring stock compensation charges, (2) higher expenses
incurred on the closing of equity offerings, and (3) duplicative network and
staffing costs on acquisitions prior to full integration into InfoHighway.
Selling, general and administrative expenses increased $0.8 million, or 132%,
from $0.6 million in 1996 to $1.5 million in 1997. The increase in expenses was
reflected across most expense categories, due primarily to increased personnel
costs to support revenue growth and the specific 1997 expenses noted above.

39
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth selected information from InfoHighway's
statements of cash flows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities................... $ (250) $ (604) $ (587) $ 29 $ (136)
Net cash used in investing activities................................. (121) (216) (147) (31) (84)
Net cash provided by financing activities............................. 353 820 734 2 220
--------- --------- --------- --------- ---------
Net decrease in cash and equivalents.................................. $ (18) $ -- $ -- $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

For the three months ended March 31, 1999, operating activities consumed
$0.1 million as the net loss from operations was partially offset by increases
in working capital liabilities, primarily deferred revenues and accrued
expenses. Investing activities consumed $0.08 million due to purchases of
certain intangible assets and property and equipment. Financing activities
generated $0.2 million due to short-term borrowings.

For the three months ended March 31, 1998, operating activities approximated
break-even results as negative operating cash flow was offset by reductions in
the working capital position, primarily pertaining to accounts payable and
deferred revenues. Investing activities were minimal and pertained primarily to
purchases of property and equipment. Financing activities approximated
break-even results as unit offering proceeds were offset by payments on capital
leases.

For the year ended December 31, 1998, operating activities consumed $0.6
million as the net loss from operations was partially offset by a $0.3 million
increase in accounts payable and accrued expenses. Net cash used in investing
activities totaled $0.1 million due primarily to purchases of property and
equipment. Financing activities generated $0.7 million of cash flow, including
$0.5 million of proceeds from a unit offering of debt and equity securities and
$0.5 million of proceeds from a note payable executed with Trident III during
the fourth quarter, which served to offset net payments of notes payable to
shareholders and repayments of capital lease obligations in the amounts of $0.2
million and $0.1 million, respectively.

For the year ended December 31, 1997, operating activities consumed $0.6
million as the net loss from operations was partially mitigated by increases in
accounts payable and deferred revenues totaling $0.4 million. Approximately $0.2
million was incurred on investing activities for the purchase of property and
equipment. Financing activities generated $0.8 million consisting of $0.2
million of net proceeds from notes payable to shareholders and $0.6 million from
common stock issuances under private placement offerings.

For the year ended December 31, 1996, operating activities consumed $0.3
million as the net loss from operations was partially offset by increases in
accounts payable and deferred revenues totaling $0.2 million. Investing
activities, consisting of purchases of property and equipment, totaled $0.1
million. Financing activities consisted of common stock issuances which raised
$0.4 million in capital for the year.

Since its inception, InfoHighway has suffered losses and negative cash flows
from operations and has a working capital deficit and stockholders' deficit that
raise substantial doubt about its ability to continue as a going concern. Its
ability to continue as a going concern is dependent upon the success of its
marketing efforts, its ability to produce sufficient margins to cover operating
and overhead expenses and its access to sufficient funding to enable it to
continue operations.

40
<PAGE>
ARC NETWORKS, INC.

RESULTS OF OPERATIONS

The following table sets forth certain historical financial data of ARC and
that data as a percentage of revenues for the periods indicated (dollars in
thousands):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------- -------------------------------
1996 1997 1998 1998 1999
-------------------- -------------------- -------------------- -------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues............... $ 5,583 100% $ 9,648 100% $ 13,931 100% $ 3,462 100% $ 4,001
Cost of services....... 5,074 91% 8,895 92% 11,651 84% 3,029 88% 3,301
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Gross profit........... 509 9% 753 8% 2,280 16% 433 12% 700
SG&A expenses.......... 1,439 26% 2,695 28% 3,465 24% 523 15% 968
Depreciation and
amortization......... 17 -- 436 5% 407 3% 155 4% 97
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Operating loss......... $ (947) (17%) $ (2,378) (25%) $ (1,592) (11%) $ (245) (7%) $ (365)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

<CAPTION>
<S> <C>
Revenues............... 100%
Cost of services....... 83%
---------
Gross profit........... 17%
SG&A expenses.......... 24%
Depreciation and
amortization......... 2%
---------
Operating loss......... (9%)
</TABLE>

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998

REVENUES. Revenues increased $0.5 million, or 16%, from $3.5 million in
1998 to $4.0 million in 1999. Long distance and local telephone revenues
increased $0.6 million, or 26%, from $2.3 million in 1998 to $2.9 million in
1999. The increase is a result of greater market penetration into the local
telephone market, principally New York City, through ARC's reseller programs
with Teleport Communications Group and Winstar Communications, both competitive
local exchange carriers, and with Bell Atlantic, the incumbent local exchange
carrier, which began in April 1997. Also contributing was the aggressive
marketing of ARC's long distance telephone service. Data cabling revenues
remained unchanged at $1.1 million.

GROSS PROFITS. Gross profit increased $0.3 million, or 62%, from $0.4
million in 1998 to $0.7 million in 1999. Overall gross profit as a percentage of
revenues was 12.5% and 17.5% in 1998 and 1999, respectively. Gross profit on
long distance and local telephone revenue increased $0.3 million, or 369%, from
$0.1 million in 1998 to $0.4 million in 1999. Gross profit on data cabling
revenues decreased $0.1 million, or 25%, from $0.4 million in 1998 to $0.3
million in 1999.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $0.4 million, or 79%, from $0.5 million in
1998 to $0.9 million in 1999. These increases were primarily due to increased
personnel costs associated with revenue growth, establishment of a customer
service operation, the cost of external billing services associated with long
distance and local telephone revenues and administrative and accounting costs.
Selling, general and administrative expenses as a percent of revenues were 15%
and 24% in 1998 and 1999, respectively.

COMPARISON OF 1998, 1997 AND 1996

REVENUES. Revenues increased $4.3 million, or 44%, from $9.6 million in
1997 to $13.9 million in 1998. Revenues increased $4.0 million, or 73%, from
$5.6 million in 1996 to $9.6 million in 1997. Long distance and local telephone
revenues increased $2.7 million, or 38%, from $7.2 million in 1997 to $9.9
million in 1998. Long distance and local telephone revenues increased $2.8
million, or 64%, from $4.4 million in 1996 to $7.2 million in 1997. The increase
in both periods is a result of greater market penetration into the local
telephone market, principally New York City, through ARC's reseller programs
with Teleport Communications Group and Winstar Communications, both competitive
local exchange carriers, and with Bell Atlantic, the incumbent local exchange
carrier, which began in April 1997. Also contributing was the aggressive
marketing of ARC's long distance telephone service. Data cabling revenues
increased $1.6 million, or 64%, from $2.5 million in 1997 to $4.1 million in
1998.

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<PAGE>
Data cabling revenues increased $1.3 million, or 108%, from $1.2 million in 1996
to $2.5 million in 1997. Revenues in both periods increased principally as a
result of services to New York State in connection with updating its buildings
for computers and Internet services. ARC also was a subcontractor to Mitel
Systems, Inc. who was the primary contractor with New York City schools to
rewire classrooms for computer and Internet services.

GROSS PROFITS. Gross profit increased $1.5 million, or 203%, from $0.8
million in 1997 to $2.3 million in 1998. Gross profit increased $0.3 million, or
48%, from $0.5 million in 1996 to $0.8 million in 1997. Overall gross profit as
a percentage of revenue was 9.1%, 7.8% and 16.4% in 1996, 1997 and 1998,
respectively. Gross profit on long distance and local telephone revenues
increased $0.8 million, or 800%, from $0.1 million in 1997 to $0.9 million in
1998. Gross profit on long distance and local telephone revenues decreased $0.2
million, or 67%, from $0.3 million in 1996 to $0.1 million in 1997. Our total
gross profit and gross profit for the long distance and local telephone market
decreased in 1997 as a result of unfavorable performance in ARC's discontinued
prepaid telephone debit card operation. Gross profit on data cabling revenues
increased $0.7 million, or 100%, from $0.7 million in 1997 to $1.4 million in
1998. Gross profit on data cabling revenues increased $0.5 million, or 250%,
from $0.2 million in 1996 to $0.7 million in 1997.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $0.8 million, or 29%, from $2.7 million in
1997 to $3.5 million in 1998. Selling, general and administrative expenses
increased $1.3 million, or 87%, from $1.4 million in 1996 to $2.7 million in
1997. These increases were primarily due to increased personnel costs associated
with revenue growth, establishment of a customer service operation, the cost of
external billing services associated with long distance and local telephone
revenue and administrative and accounting costs. Selling, general and
administrative expenses as a percent of revenue were 26%, 28% and 24% in 1996,
1997 and 1998, respectively. In 1997, ARC recorded a loss on an impaired asset
of $0.4 which was the primary cause of the increase in the 1997 percentage of
revenue.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth selected information from ARC's statements of
cash flows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities.................... $ (424) $ (479) $ (594) $ 398 $ (410)
Net cash used in investing activities.................................. (416) (83) (485) (18) (31)
Net cash provided by financing activities.............................. 903 567 1,203 164 388
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and equivalents........................ $ 63 $ 5 $ 124 $ 544 $ (53)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

For the three months ended March 31, 1999, ARC used cash in operating
activities of $0.4 million. ARC also incurred a net loss of $0.5 million which
was offset by non-cash items of $0.2 million and a net decrease in other working
capital accounts of $0.2 million. Net cash used in investing activities of $0.03
million was primarily for the acquisition of office equipment such as computers.
Net cash provided by financing activities of $0.4 million was the result of an
increase in debt financing received from a related party.

For the three months ended March 31, 1998, ARC generated $0.4 million,
primarily by an increase in interim billings in excess of costs and earnings of
$1.2 million and non-cash items of $0.2 million offset by a net loss of $0.4
million and a decrease in other working capital accounts of $0.5 million. Net

42
<PAGE>
cash used by investing activities of $0.02 million was for office equipment such
as personal computers. Net cash provided by financing activities of $0.2 million
was due to an increase in funding from ARC's former asset based lender.

For the year ended December 31, 1998, ARC used cash in operating activities
of $0.6 million. ARC also incurred a net loss of $1.9 million which was offset
by non-cash items of $0.9 million and a net decrease in other working capital
accounts of $0.4 million, including a $1.5 million reserve on disputed amounts
under contract. Net cash used in investing activities of $0.5 million was
primarily for the acquisition of a long distance telephone customer base of $0.4
million. Net cash provided by financing activities of $1.2 million was primarily
the result of a $2.0 million debt refinancing received from a related party
offset by debt repayments of $0.8 million.

For the year ended December 31, 1997, ARC used cash in operating activities
of $0.5 million. ARC also incurred a net loss of $2.7 million which was offset
by non-cash items of $0.8 million including a write down of $0.4 for an impaired
asset in ARC's prepaid telephone calling card operation and a $1.4 million
decrease in other working capital accounts. Net cash used for investing
activities of $0.1 was for office equipment such as personal computers. Net cash
provided by financing activities of $0.6 million was due to $0.9 million of
loans received to support its operating activities offset by debt repayments of
$0.3 million.

For the year ended December 31, 1996, ARC used cash in operating activities
of $0.4 million. ARC also incurred a net loss of $1.1 million which was
partially offset by non-cash items of $0.1 million and a net decrease in other
working capital accounts of $0.6 million. Net cash used in investing activities
of $0.4 million was for the acquisition of telephone switching equipment. Net
cash provided by financing activities of $0.9 million resulted from $0.4 million
in loans received from related parties to support its operating activities and
$0.4 million to acquire equipment.

Since its inception, ARC has suffered losses and negative cash flows from
operations and has a working capital deficit and stockholders' deficit that
raise substantial doubt about its ability to continue as a going concern. Its
ability to continue as a going concern is dependent upon the success of its
marketing efforts, its ability to produce sufficient margins to cover operating
and overhead expenses and its access to sufficient funding to enable it to
continue operations.

43
<PAGE>
BUSINESS

OVERVIEW

We acquired ARC in June 1999. We will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this offering. Through
these companies, we intend to offer an extensive array of Internet and
telecommunications services to businesses and consumers. These services will
initially include a combination of high-speed Internet access, and local phone
and long distance telephone service. In the future, we intend to offer cable
television, video conferencing, secure online shopping, online data backup,
virtual private networks and other advanced data services. We currently operate
principally in New York, New Jersey, Florida, Illinois, Texas and California.

The combination of these three companies creates an extensive product mix,
and produces efficiencies by combining sales and marketing efforts, back office
operations and customer service. Our complementary product lines will enable us
to become a full service telecommunications company. We will offer both bundled
services for customer convenience and a wide array of unbundled services for
specific applications. We intend to service both residential and commercial
end-users, providing us with a balance between the long sales cycle of the
complex bundled services sold to corporations and the mass marketing efforts
that enjoy a short sales cycle in the less complex residential arena.

We currently offer a broad range of Internet and telecommunication services
including high speed Internet access, local phone service, long distance, and
other value added data services. Combining ARC's competitive local exchange
carrier expertise with InfoHighway's Internet and data background and AXCES'
marketing experience in the resale of telecommunications services, we will be
able to offer an integrated "single bill" solution for customer phone and
Internet needs. By using new technology, we will be able to offer traditional
telecommunication services at a competitive price as well as new data services
not currently available through traditional carriers.

In addition, we intend to continue to grow in all of our markets through the
acquisition or merger of complementary technology or service companies. This
could significantly increase Internet service provider and competitive local
exchange carrier revenues in our target markets.

Our objective is to become a leading provider of long-distance service and
expand our product line to include local service and Internet access to low
volume residential customers in large metropolitan areas. In order to achieve
this goal, we will continue to emphasize the following key elements of our
operating strategy:

- Continue to develop effective marketing campaigns that offer high value to
potential customers through customized telecommunications offerings,

- Focus on maintaining a highly efficient direct sales effort with direct
contact with our end user customers,

- Develop new promotional packages that integrate both local telephone
service and Internet access to our target market and,

- Expand our product offering to additional cities consistent with our
acquisition strategy.

44
<PAGE>
these acquisitions to increase our Internet service provider and competitive
local exchange carrier revenues in our target markets.

Low-volume urban residential users presently account for a significant
portion of the overall market. We believe this segment of the market is
extremely attractive and has been largely underserved by many interexchange
carriers. In addition, we believe low-volume urban residential users are more
receptive to direct sales programs and more likely to be influenced by
promotional items. We also believe these customers are more likely to switch
long-distance service providers.

MARKET OPPORTUNITY

There is significant market opportunity for our services through the opening
up of the telecommunications market brought about by the Telecommunications Act
of 1996, the growing demand for high speed digital communications bandwidth, and
the emergence of new technologies such as digital subscriber line and virtual
private networks.

We believe that the following market conditions support our business
strategy:

- Demand for Internet service, particularly high-speed Internet for
corporate applications and residential users is increasing.

- There is increasing demand by companies and individuals for buildings that
provide access to an advanced telecommunications infrastructure.

- The growing supply of available bandwidth, which should continue to grow
through the deployment of new technologies, is creating a buyer's market
for wholesale bandwidth.

- Individuals and businesses currently purchase Internet, data and
telecommunications services from many different vendors.

- There is a demand for an alternative to the complexity of the current
voice/data/Internet supplier mix, and for an alternative to traditional
monopoly providers of local phone service.

- There is a large segment of the current telecommunications marketplace
that is underserved by existing independent and competitive local exchange
carriers due to past credit issues or unfamiliarity with the procedures
involved in obtaining service. These market segments will pay above
average rates for access to both basic and enhanced communications
services.

Our goal is to attract customers in our target market segments with a
unified product offering high-speed Internet and telecommunications service from
one vendor whose focus is on customer service, market sensitive pricing and
superior performance. We believe we can meet this goal, in part, because of the
market conditions and rate of growth in the telecommunications industry. The
Internet is experiencing explosive growth at a rate of over 100% per year
worldwide. Currently, over 147 million people use the Internet and that number
is expected to be over 320 million by the end of the year 2000 according to
Computer Almanac Industry, Inc 1998. Furthermore, businesses are embracing the
Internet in record numbers. In 1998, 36% of businesses were online with
projected growth to 88% by 2001. We believe the unique requirements of business
data and communications traffic will continue to

45
<PAGE>
drive high-speed Internet demand. Additionally, the Telecommunications Act of
1996 deregulated the telecommunications industry by mandating that competitive
local exchange carriers be allowed to provide competitive services using the
existing networks and infrastructure of the incumbent local exchange carriers.
Our goal is to take advantage of these expanded markets and increased
opportunities to compete and become a leading provider in our target markets
with a bundle of high speed Internet, local voice, long distance and other
telecommunications services. We believe that by making a variety of services
available we will be able to sell some or all of our services to various
customers in our markets. In addition, by marketing and using integrated billing
and customer service, we believe that there will be significant opportunity to
cross sell and increase the penetration of our other services.

BUSINESS STRATEGY

Our objective is to become one of the leading providers of bundled high
speed Internet service, data services and telecommunications service in each of
the markets in which we operate. Through the founding companies, we currently
have offices or facilities in the following markets: San Diego, New York, New
Jersey, Houston, Dallas, San Antonio, Jacksonville and Chicago. We intend to
combine our high speed Internet data products with our local and long distance
products and deliver this telecommunications bundle to new and existing
customers. Additionally, we expect to purchase switching facilities to further
improve our operating margins and begin to establish our position as a
facilities-based provider. We believe there is significant demand for our
products, including the bundling thereof, which will deliver a single-sourced
telecommunications package to our DirectConnect and residential niche markets.
New technologies such as the emergence of high speed Internet data products
coupled with alternatives to traditional telecommunications service as provided
by the regional Bell operating companies are driving this demand. We plan on
implementing the following business strategy:

MARKET PENETRATION STRATEGY. We are pursuing a strategy of providing
service to our DirectConnect and residential niche markets by targeting
highly populated, multi-tenant business and residential buildings in major
U.S. cities where there is significant demand for dedicated, high-speed
Internet access services, where we can deliver our local and long distance
product offerings at attractive margins. Additionally, as we reach
successful penetration of these markets, we will then deploy telephone
switches to further enhance our operating margins through the utilization of
unbundled network elements. Our approach will be to target niche markets and
highly populated, multi-tenant buildings by negotiating agreements directly
with the landlords or managing agents of such buildings and delivering a
bundle of services to the tenants to better serve their needs and offer
discounts on such services to create more value to the end user.

FOCUS ON HIGH-SPEED INTERNET SERVICES. We intend to focus on our
DirectConnect Internet product, which offers high-speed Internet access to
tenants of high rise office and residential buildings located in selected
cities around the country. This service, called DirectConnect, is provided
by installing data switches in buildings pursuant to a contract with the
owner of the building. We offer individual tenants of the building Internet
access at speeds near those achieved if they had dedicated T-1 lines and
will be able to provide local and long distance phone service to the tenants
as well. For those customers that sign up for more than one of our services,
additional discounts will be offered across selected product lines. In this
manner, we expect to be able to provide a highly competitive bundle of
Internet and telecommunications services to our end-users.

LEVERAGE THE ECONOMICS OF SUCCESS-BASED PENETRATION. To date, we have
only installed data switches for high-speed Internet access after a building
has been signed under contract, thereby limiting our exposure to capital
expenditures. It is our intention to deploy telephone switches only after we
have successfully penetrated our key markets, thereby postponing capital
expenditures until we are well marketed in an area and largely
success-based.

46
<PAGE>
PROVIDE A SUPERIOR PRODUCT AND SERVICE SOLUTION. We believe that we can
build a significant competitive position by providing a comprehensive
product offering and service solution to our customers. We undertake to
provide all of the necessary product and service elements required to
establish and maintain high-speed Internet and telecommunication services in
our target markets, including:

- providing a service that is superior to other competitors in terms of
speed and responsiveness at a price point that is equal to or lower
than competitive offerings at every service level;

- provisioning all local and long distance service required to initiate
service providing a single point of contact and hassle free install;

- providing all billing and customer service functions on a 24
hour-a-day, 7 day-a-week basis; and

- by providing a responsive, customer-oriented approach to our business
that will distinguish us from traditional phone companies and new
competitors.

ACQUIRE SELECT COMPETITORS IN TARGET MARKETS TO ACCELERATE GROWTH AND
MARKET PENETRATION. The founding companies have in the past acquired small
competitors involved in the Internet service industry and have undertaken
the purchase of a customer base in the telephone sector where it was
determined to be of strategic importance. We intend to continue to seek out
opportunities where we believe that acquisitions provide for either valuable
customer bases and/or accelerated access into a desired market. We believe
that acquisitions can be a valuable part of our overall strategy to expand
our business offerings and achieve faster entry into new markets.

INTERNET SERVICES

DIRECTCONNECT INTERNET SERVICES

We have created a service called DirectConnect to pursue a significant niche
opportunity in the business and high-end residential market. DirectConnect is a
high-speed Internet service offered in office buildings in Texas, New York, New
Jersey and Florida. DirectConnect service provides building tenants access to a
shared high-speed data line. Few tenants can afford the cost of this line by
themselves, but by aggregating traffic and taking advantage of the fact that
most Internet connections are idle much of the time, the tenant experiences very
fast access for a fraction of the cost. The current implementation of
DirectConnect uses a T-1 data line that sends and receives data at 1.54 MBPS,
which is up to 24 times faster than a standard 56K modem. We intend to deploy
T-3 and digital subscriber line technology in the markets in which we operate as
they become available.

The DirectConnect service provides several benefits over traditional dial-up
services:

- CONTINUOUS CONNECTION. The customer never receives a busy signal since
it is always connected through a network connection rather than a
modem. This is ideal for customers accessing stock tickers, news
updates and other information that require a dedicated connection.

- FEWER TECHNICAL PROBLEMS. Over 90% of technical problems encountered
by Internet users today are modem related. With DirectConnect, a
network card provides a continuous connection, and since there is no
modem involved, most connection problems are eliminated.

- LOWER COST. DirectConnect provides much faster connection speeds at
significantly lower cost than other alternatives such as ISDN or
dedicated T-1.

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<PAGE>
- INCREASED SECURITY. As part of the DirectConnect service, a basic
firewall service is provided at each site to keep unwanted hackers and
other visitors out of customer's networks. Additional protection is
available for a fee.

- GREATER USABILITY. Because of the higher speeds, clients can use
additional services that are not practical at lower speeds, such as
video-conferencing, virtual private networks and online data backup. We
already offer data backup, and plan to introduce video conferencing and
virtual private networks as such technology becomes available.

VALUE ADDED INTERNET SERVICES

We are also developing a number of value added services that will be offered
to the DirectConnect clients. The nature of the high-speed connection will allow
us to provide unique services that will differentiate us from other companies
providing similar services. These services should also have the effect of
increasing client retention, as customers are not currently able to get this
combination of services elsewhere. These services include:

ONLINE DATA BACKUP. We are able to provide secure online data backup for
clients using the DirectConnect service. Utilizing our network at night when
bandwidth usage is very low, a central backup computer, currently provided on
contract to InfoHighway, remotely contacts the client's server and downloads
files onto archival storage over the DirectConnect link. The files are encrypted
for security purposes. The benefit of this service is that no personnel or
hardware is required at the customer site. Additionally, the backup data is
off-site and thus protected from a catastrophic loss such as fire or flood.
Finally, the stored data is available immediately online. The customer can
restore or recall the data instantly with the click of a mouse as compared to
off-site alternatives which require shipping of physical tapes.

VIRTUAL PRIVATE NETWORKS. More and more companies are recognizing the value
of using the Internet for inter-office communications versus using expensive
private data lines. However, there are security concerns when using the public
Internet to transmit sensitive corporate data. With the DirectConnect service,
the customer can connect two physically separate networks without transmitting
the sensitive data across the public Internet. The information would flow across
our private Intranet allowing for much faster transmission times and security.

INTERNET TELEPHONE. As the underlying technology permits, we plan to offer
Internet telephone services such as long distance and local dial tone using
voice over Internet technology to our DirectConnect customers. These services
may offer additional revenue and further cement the customer relationship.

TELECOMMUNICATIONS SERVICES

LOCAL AND REGIONAL TELEPHONE SERVICE

As a result of the Telecommunications Act of 1996, the regional bell
operating companies were required to sell at wholesale rates their local
telephone services to other telecommunications carriers. A customer may now keep
his existing local exchange carrier service and have it provided by ARC at a
discounted rate. ARC entered the local telephone market in 1993, when it
recognized the potential in the local market with over $100 billion of annual
recurring revenue and the marketing advantage provided by offering local service
as a part of a bundle of discounted telecommunications services. We offer an
extensive array of local services. We have the ability to install local service
facilities at a discount to and that bypass the incumbent local exchange
carrier.

As we expand our role in the local market, the focus will be on expanding
services offered and increasing profit margins. To accomplish this, we have
received competitive local exchange carrier status

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with the Public Service Commission in New York. This will allow us to purchase
unbundled network elements from the incumbent local exchange carrier and to
reduce costs and increase the flexibility of who provides each element of the
phone network. It is our intention to continue to obtain competitive local
exchange carrier certification in various other states that we choose to enter.

Since 1993, we have been providing alternate local telephone, wide area
network, and private line services to large corporate customers in the
metropolitan New York City area. These services offer reliable
disaster-resistant local and regional calling as well as access to long distance
carriers. In addition to adding diversity to a subscriber network, we have been
successful in providing significant savings to its customers.

LONG DISTANCE SERVICE

Today's subscribers are bombarded with various types of calling plans from
long distance companies. However, the restrictions and billing methods with most
of these promotions may raise the actual costs of the service. We offer a
straight forward long distance service for either a switched or dedicated
customer. The billing rate is a competitive flat rate, seven days a week, which
is billed in six second increments. We entered the long distance market in
response to demand from our customers for full service providers who could
deliver a bundle of telecommunications services. In addition to traditional
nationwide long distance, we have taken the initiative to offer new
international calling plans for our customers. Further, we offer our customers
dedicated facilities, such as T-1s, to allow access to our point of presence at
60 Hudson St. in New York City to allow for connection directly to an
international long distance carrier whose service we resell.

We are exploring opportunities with international telephone companies as
they prepare for deregulation of worldwide telecommunications services.
Currently, we have a collocation arrangement with an international carrier that
gives us access to the carrier's facilities in New York and Los Angeles and the
option to purchase international usage at the largest carrier discount
available.

Additionally, we are exploring arrangements with certain competitive local
exchange carriers to provide dedicated access to our local central office. This
will allow us to sell a bundled service of long distance services and to offer
discounted dedicated rates when providing local services from the competitive
local exchange carriers' facilities. In this manner, very competitive rates can
be offered when using our local phone service. We also offer combined billing
and management reports for our local and long distance services. We are
constantly seeking new markets and alliances as the telecommunications industry
continues to evolve and change pursuant to the effects of deregulation.

We also offer a competitive flat rate with a monthly fee to residential
customers who might not otherwise have been able to obtain a long distance
service as well as to customers attracted to our convenient payment plan. We are
currently licensed to provide our service in 20 states and do so to over 160,000
customers monthly. We have also recently begun to offer paging services to our
customers as the first of other related products that we intend to distribute to
this customer base.

As a non-facilities based provider, our focus has been on sales and
marketing and attracting large numbers of customers through our promotional
service offerings. We believe that our successful marketing techniques in the
residential market, coupled with both local telephone service and Internet
access will prove to be an even more attractive offering to this market segment.
Through our direct sales force we intend to solicit residential customers with
various promotional offerings, including competitive flat rate minute pricing
plans. We attribute our success to maintaining control over the sales and
marketing campaigns through our direct sales force, direct contact with the
end-user customer and focusing our efforts on marketing programs that appeal to
various urban residential and ethnic customers. We also intend to create
customer interest in our products by promoting to a special or niche interest in
our prospective target market by offering a low promotional price point on a
particular portion of our service offering. We believe that this segment of the
marketplace, specific niches of

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the urban residential population are underserved and through creative marketing
campaigns including such promotions as special low rates to international
countries will allow us to be successful in marketing to these customer groups.

We believe that with our marketing experience and the availability of
additional telephone products including local service and Internet access, we
will have an attractive marketing package to sell to our target market. To date,
our sales force has primarily sold our long distance products in Texas and
Illinois. Through the combination of the founding companies we will begin to
expand upon our product offering and open new markets consistent with our
expansion plans.

Currently, our sales force consists of approximately 50 employees who
utilize various sales methods in reaching prospective customers. One of our
principal methods of reaching our prospective customers is to take temporary
space such as kiosks or counter space in large retail traffic areas such as
malls, supermarkets, and fairs and promote our products directly. In this manner
we are able to reach a large prospective audience without the high fixed selling
costs associated with long-term store leases and related overhead. Additionally,
this approach allows us to capitalize on successful marketing programs and sign
up large numbers of customers. To the extent that a promotional offering does
not have the expected appeal, we are able to modify such and remarket it within
days to the same prospective audience.

Our core product offering is 1 + long-distance service. We also provide
paging service, 800 service, voice-mail and calling cards, although these
products and services represent a small percentage of total sales. We offer our
long distance service through approximately 30 different pricing plans. However,
we generate the vast majority of our sales from several pricing plans. One of
our plans bills a flat rate of $6.95 per month plus 9.9 CENTS per minute for
interstate calls and our standard rate for intrastate calls. International calls
are billed at varying prices based on the day and time, as well as the
destination of the call.

We intend to develop additional products and services. In addition to
prepaid calling cards, we will offer a special rate plan for customers who make
a high number of calls to one primary international destination. This plan will
initially be offered to customers with a high number of calls to Mexico. The
success of this initial roll-out will determine the other countries to which we
will provide these services.

LOCAL AREA NETWORKING (LAN) AND CABLING

We provide the services of highly specialized fiber optic technologists, as
well as equipment and cable installation, including outside plant. Through ARC,
we established an early reputation as an industry expert in this field and were
involved in the early 1990's to resolve technical difficulties with the newly
installed fiber crossing the Hudson River into New York City. ARC has a long
history of being an industry leader in providing network design and
installation. We provide customer solutions for premise network wiring, local
and wide area networks and system integration. We presently have a network
wiring contract with the State of New York Office of General Services. This
contract enables various state agencies to purchase service directly from us
without the traditional bid process. Under this agreement, we have made strides
in the education market where the Federal Government E Rate program has financed
enhanced data infrastructure in schools and created business arrangements with
companies in various parts of the country to support these needs.

BUNDLED SERVICES

We have the ability to offer all the above services bundled together and
offer volume discounts and one-stop shopping for both businesses and residential
customers. This bundling offers additional marketing opportunities as well as
convenience for the customer. Commercial customers have the option of purchasing
local, long distance and dedicated Internet access services over the same local
loop delivered to their office. There are few competitive local exchange
carriers or other providers in

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the country offering this range of services. Residential customers can purchase
a unique high-speed Internet access product as well as local phone service, and
long distance in buildings serviced by us. This capability is an effective
marketing tool and provides the company with a significant identity separate and
distinct from others in the highly competitive telecommunications marketplace.

SALES AND MARKETING

Our marketing goal is to provide a wide range of Internet and
telecommunications-related services to our DirectConnect and residential niches
in our target markets. We have initially targeted principal cities in Illinois,
New York, New Jersey, Florida, Texas and California. We currently have a
presence and a customer base in these locations because they contain a large
part of the population and most of the major markets. The business market is
targeted due to the low penetration of this market for Internet services and the
potential for cross-selling additional services. The residential market is
targeted because it provides large numbers of customers who have historically
been infrequent users of telecommunications products due to credit problems or
unfamiliarity with the procedures involved in obtaining service. Currently less
than 50% of this market is connected to the Internet. This provides us with an
enormous opportunity to expand our penetration in both of these niches.

We plan to leverage our high-speed Internet services as a way to establish
relationships with businesses and consumers alike. The Internet is creating huge
opportunities for businesses and, in fact, is changing the way business is done.
Once only an idea, e-commerce is projected to grow to $400 billion by the year
2002, reflecting a 1997 to 2002 compound annual growth rate of 103% (Source: IDC
Corp.). By capitalizing on this huge market opportunity, we will use our
Internet offering as our lead product and then, after successfully reaching our
targeted customer, cross-sell our telecommunications products. Because almost
all businesses already purchase local phone service and long distance, we will
then market our services as an additional opportunity to save money, as an
alternative to the incumbent local exchange carriers and as a chance to have one
provider handle the business's account. Many businesses have yet to get on the
Internet and by using our high-speed, competitively priced Internet product to
establish a relationship with the customer, the salesperson can then expand the
sale to include all of our telecommunications services.

In the case of the residential market, we believe that providing access to
basic telephone service at prices below the regional Bell operating companies
bundled with an Internet service will be extremely attractive. Though current
penetration of Internet service is low in our residential market, we believe
that the advent of extremely low cost personal computers coupled with the desire
of lower income persons for the entertainment and educational opportunities
afforded by the Internet will drive demand. By bundling this product with local
service and long distance, we believe that we will be able to dramatically
increase customer retention and cross-selling opportunities.

CUSTOMERS

In our Internet service sector, we presently provide or have agreed to
provide service to 30 buildings who subscribe to our high-speed Internet
product. We have successfully sold to and serviced a significant number of
prestigious clients. We are also involved in a pilot project with Bell Atlantic
as a marketing agent to deliver a bundle of Internet and telecommunications
products to luxury high rise multiple dwelling units in New York. The following
is a partial list of the telecommunications customers serviced by us:

Avis
Century 21
New York Daily News
Bronx Community College
New York Transit Authority
Daiwa Securities America, Inc.

DKNY
J. Crew Inc.
Lehman College
Lord and Taylor
CUNY Law School
Winstar Wireless Inc.

IONA College
Queens College
The MONY Group
United Jewish Appeal
Harper Collins Publishing

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In our residential market, we currently service over 160,000 customers on a
monthly basis with our long distance products. We have recently introduced a
paging product and feel that the ability to offer additional products to the
base including local service and Internet access will both increase customer
retention and increase revenue per customer.

INTEGRATION STRATEGY

The acquisition of the founding companies creates marketing and operational
strengths that will allow us to bring a complete communications solution to our
customers. Cross-selling opportunities among each of the founding companies'
existing customer bases create significant revenue potential. Technical
integration of the network will allow us to provide combined services over the
same wire, which will cut costs and allow us to stay ahead of the competition in
terms of price and offerings. Billing integration will allow for single bill
capability that will greatly increase convenience for customers. By combining
telecommunications purchasing, volume discounts can be achieved with major
carriers and other strategic partners. Finally, by combining certain operations
and back-office functions, additional cost savings and economies of scale will
be achieved.

It is expected that initially, bundled and cross-marketed services from the
founding companies will be provided on different networks. In the early stages
of integration, we anticipate that we will consolidate our telecommunications
service offerings to take advantage of maximizing vendor discounts. In the
future, as we install state-of-the-art switches and digital subscriber line
technologies that support voice over Internet protocol, it will be possible to
begin providing these services over the same wire. Additionally, we may consider
the purchase of switches that will allow us to begin providing proprietary long
distance and local service, rather than purchasing unbundled network elements
and reselling the incumbent local exchange carrier and competitive local
exchange carrier services.

The acquisition of the founding companies involves a number of risks. See
"Risk Factor--There Are Risks Associated With The Integration of The Founding
Companies Which Could Adversely Affect Our Business."

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NETWORK ARCHITECTURE AND TECHNOLOGY

The key design principles of our network are intended to provide:

HIGH-SPEED CONNECTION. Our DirectConnect service was developed to provide a
high-speed connection to business and individuals within high-rise office and
apartment buildings. This service provides a connection that is up to 24 times
faster than a 56K modem. Since it is always connected, DirectConnect avoids many
of the technical problems associated with dial-up connections. It is also more
secure from intrusion from unauthorized users. The service is marketed at a
price that is significantly lower than other high-speed alternatives such as
ISDN or dedicated T-1 service.

REDUNDANCY AND BACKUP. Our network is built to provide maximum uptime for
corporate users. These users depend much more heavily on the Internet than
low-end consumer users. In many cases, the Internet represents a critical part
of their business. Therefore, we have built a network that experiences minimal
downtime. It maintains multiple connections into Tier 1 Internet backbone
providers to ensure connectivity even when a major provider goes down. It also
maintains all of its data on servers that are backed up by an online data back
up system. This means that in the event of a server outage, data can be
immediately recovered and that data loss and customer downtime are minimized.
Finally, we maintain hot spares in our primary computer center so that any
equipment outage is generally not noticed by customers.

SCALABLE AND EXPANDABLE NETWORK. We have built our network with the maximum
amount of flexibility and scalability in mind. As we grow rapidly, we must be
able to add links to our network and expand its bandwidth capability rapidly.
Through an agreement with Level 3, a major carrier and Tier 1 provider, we are
able to rapidly expand our network and, if necessary, increase bandwidth on any
given link. Generally, bandwidth can be increased on any given link within 48
hours of being requested. We are also installing equipment that allows
upgradability to new features and allows us to offer new services in the future.
We use servers from Ascend Communications which can be upgraded to provide
virtual private networks, digital subscriber lines and even voice over Internet
protocol. Our digital subscriber line vendor of choice, AccessLAN, offers
upgradability to provide virtual private network and voice over Internet
protocol as well as frame relay services.

COMPETITION

The markets for business and consumer telecommunications and data services
are intensely competitive and we expect that such markets will become
increasingly competitive in the future. Our most immediate potential competitors
are the incumbent local exchange carriers, interexchange carriers, Internet
service providers, online service providers, wireless data service providers and
other competitive local exchange carriers. Many of these competitors are
offering, or may soon offer, technologies and services that directly compete
with some or all of our high-speed digital services. Such technologies include
ISDN, digital subscriber line, wireless data and cable modems. The principal
bases of competition in our markets include transmission speed, reliability of
service, breadth of service availability, price/performance, network security,
ease of access and use, content bundling, customer support, brand recognition,
operating experience, capital availability and exclusive contracts. We believe
that we compare unfavorably with our competitors with regard to, among other
things, brand recognition, operating experience, exclusive contracts, and
capital availability. Many of our competitors and potential competitors have
substantially greater resources than do we and there can be no assurance that we
will be able to compete effectively in our target markets.

INCUMBENT LOCAL EXCHANGE CARRIERS. All of the largest incumbent local
exchange carriers present in our target markets are conducting technical and/or
market trials or have entered into commercial deployment of the digital
subscriber line based services. We recognize that each incumbent local exchange
carrier has the potential to quickly overcome many of the issues that we believe
have slowed their wide deployment of digital subscriber line services in the
past. The incumbent local exchange

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carriers represent strong competition in all of our target service areas. The
incumbent local exchange carriers have an established brand name and reputation
for high quality in their service areas, possess sufficient capital to deploy
digital subscriber line equipment rapidly, have their own copper lines and can
bundle digital data services with their existing analog voice services to
achieve economies of scale in serving customers. Certain of the incumbent local
exchange carriers have aggressively priced their consumer digital subscriber
line services as low as $30-$40 per month, placing pricing pressure on our
DirectConnect services. The incumbent local exchange carriers are in a position
to offer service from collocation spaces where we are unable to secure
collocation space and offer service because of asserted or actual space
restrictions, which provides the incumbent local exchange carriers with a
potential competitive advantage compared with us. Accordingly, we may be unable
to compete successfully against the incumbent local exchange carriers, and any
failure to do so would materially and adversely affect our business, prospects,
operating results and financial condition. See "Risk Factors-- The
Telecommunications Industry is Highly Competitive and Subject to Rapid
Technological Change."

CABLE MODEM SERVICE PROVIDERS. Cable modem service providers such as @Home
Network and MediaOne (and their respective cable partners) are deploying
high-speed Internet access services over hybrid fiber and coaxial cable
networks. Where deployed, these networks provide similar and in some cases
higher-speed Internet access and remote local access network access than we
provide. They also offer these services at lower price points than our
DirectConnect services and target residential consumers, as well as business
customers. They achieve these lower price points in part by offering a consumer
grade of service, which shares the bandwidth available on the cable network
among multiple end-users. This architecture is well-suited to compete with our
consumer Internet market but is less well-suited to our markets for business
Internet access and remote local access network access where guaranteed
bandwidth, symmetric upstream and downstream bandwidth and network security
issues are more important than in the consumer market. In addition, different
regions within a metropolitan area may be served by different cable modem
service providers, making it more difficult to offer the blanket coverage
required by potential business and remote local area networks access customers.
Also, much of the current cable infrastructure in the U.S. must be upgraded to
support cable modems, a process which we believe is significantly more expensive
and time-consuming than the deployment of traditional networks. Actual or
prospective cable modem service providers competition may have a significant
negative effect on our ability to secure customers and may create downward
pressure on the prices we can charge for our services.

NATIONAL LONG DISTANCE CARRIERS. Interexchange carriers, such as AT&T,
Sprint, MCI WorldCom and Qwest have deployed large-scale Internet access
networks and asynchronous transfer mode networks, sell connectivity to
businesses and residential customers, and have high brand recognition. They also
have interconnection agreements with many of the incumbent local exchange
carriers and a number of collocation spaces from which they are currently
offering or could begin to offer competitive long distance services.

FIBER-BASED COMPETITIVE LOCAL EXCHANGE CARRIERS. Companies such as Teleport
Communications Group, Inc. (acquired by AT&T), Brooks Fiber Properties, Inc.
(acquired by WorldCom) and MFS (acquired by MCI WorldCom) have extensive fiber
networks in many metropolitan areas primarily providing high-speed digital and
voice circuits to large corporations. They also have interconnection agreements
with the incumbent local exchange carriers pursuant to which they have acquired
collocation space in many markets targeted by us. These companies are modifying
or could modify their current business focus to include residential and small
business customers using digital subscriber lines in combination with their
current fiber networks.

INTERNET SERVICE PROVIDERS. Internet service providers such as BBN
(acquired by GTE), UUNET Technologies (acquired by WorldCom), Earthlink
Networks, Concentric Network, Mindspring Enterprises, Netcom On-Line
Communication Services and PSINet provide Internet access to residential and

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business customers, generally using the existing public switched telephone
network at ISDN speeds or below. Some Internet service providers such as UUNET
Technologies in California and New York, HarvardNet Inc. and InterAccess have
begun offering digital subscriber line services.

ONLINE SERVICE PROVIDERS. Online service providers include companies such
as America Online, CompuServe (acquired by AOL), MSN (a subsidiary of Microsoft
Corp.) and WebTV (acquired by Microsoft Corp.) that provide, over the Internet
and on proprietary online services, content and applications ranging from news
and sports to consumer video conferencing. These services are designed for broad
consumer access over telecommunications-based transmission media, which enable
the provision of digital services to the significant number of consumers who
have personal computers with modems. In addition, they provide Internet
connectivity, ease-of-use and consistency of environment. Many of these online
service providers have developed their own access networks for modem
connections.

WIRELESS AND SATELLITE DATA SERVICE PROVIDERS. Wireless and satellite data
service providers are developing wireless and satellite-based Internet
connectivity. We may face competition from terrestrial wireless services,
including 2 and 28 Gigahertz wireless cable systems (Multi-channel Microwave
Distribution System and Local Multi-channel Distribution System), and 18 and 39
Gigahertz point-to-point microwave systems. For example, the FCC has adopted new
rules to permit multi-channel microwave distribution system licensees to use
their systems to offer two-way services, including high-speed data, rather than
solely to provide one-way video services. The FCC also recently auctioned
spectrum for local multi-channel distribution system services in all markets.
This spectrum is expected to be used for wireless cable and telephony services,
including high-speed digital services. In addition, companies such as Teligent
Inc., Advanced Radio Telecom Corp. and WinStar Communications, Inc., hold
point-to-point microwave licenses to provide fixed wireless services such as
voice, data and video conferencing.

We also may face competition from satellite-based systems. Motorola
Satellite Systems, Inc., Hughes Communications (a subsidiary of General Motors
Corporation), Teledesic and others have filed applications with the FCC for
global satellite networks which can be used to provide broadband voice and data
services, and the FCC has authorized several of these applicants to operate
their proposed networks.

OTHER COMPETITIVE LOCAL EXCHANGE CARRIERS. Other companies such as Rhythms
NetConnections and NorthPoint Communications offer high-speed digital services
similar to ours. The 1996 Act specifically grants competitive local exchange
carriers the right to negotiate interconnection agreements with the incumbent
local exchange carriers. Further, the 1996 Act allows competitive local exchange
carriers to enter into interconnection agreements which can be and are identical
to other competitors.

We seek the following strategic benefits in each selected market that we
enter:

- securing and retaining customers before the same high-speed services are
available from others,

- engendering end-user loyalty through superior coverage and high customer
satisfaction; and

- capturing the largest customer base and thereby achieving economies of
scale sufficient to drive down prices and develop a leadership position.

We may not be able to achieve these benefits if substantial competition from
any of the foregoing competitors exists or develops in our markets.

GOVERNMENT REGULATION

OVERVIEW. Our services are subject to a extensive federal and state
regulations. The FCC has jurisdiction over all our services and facilities to
the extent that we provide interstate and international telecommunications
services. To the extent we provide identifiable intrastate services, our
services and facilities are subject to state regulations. In addition, local
municipal government authorities also assert jurisdiction over our facilities
and operations. The jurisdictional reach of the various federal, state and

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local authorities is subject to ongoing controversy and judicial review, and we
cannot predict the outcome of such review.

FEDERAL REGULATION. Our provision of telecommunications services must
comply with the requirements of the Communications Act of 1934, as amended by
the 1996 Telecommunications Act, as well as regulations promulgated by the FCC
under the statute. The 1996 Act eliminates many of the pre-existing legal
barriers to competition in the telecommunications and video programming
communications businesses, preempts many of the state barriers to local
telecommunications service competition that previously existed in state and
local laws and regulations, and sets basic standards for relationships between
telecommunications providers. The law delegates to the FCC and the states broad
regulatory and administrative authority to implement the 1996 Act.

Among other things, the 1996 Act removes barriers to entry in the local
telecommunications market by preempting state and local laws that are barriers
to competition and by requiring incumbent local exchange carriers to provide
nondiscriminatory access and interconnection to potential competitors, such as
cable operators, wireless telecommunications providers, interexchange carriers
and competitive local exchange carriers such as us.

On January 25, 1999, the United States Supreme Court rejected the FCC's
implementation of the network element unbundling obligations, including the
minimum set of network elements incumbent local exchange carriers must make
available to competitive local exchange carriers. In response to the court, the
FCC has instituted a rulemaking seeking comments on how the FCC should identify
such network elements and whether network elements used to provide advanced
services should be unbundled. For instance, the FCC is considering imposing
additional obligations on the incumbent local exchange carriers to allow
competitive local exchange carriers to provide access, including higher speed
services through local loops that involve digital loop carrier systems.

Regulations promulgated by the FCC under the 1996 Act specify in greater
detail the requirements of the 1996 Act imposed on the incumbent local exchange
carriers among other things, to open their networks to competition by providing
competitors interconnection, collocation space, access to unbundled network
elements, retail services at wholesale rates and nondiscriminatory access to
telephone poles, ducts, conduits, and rights-of-way. As a result of these
changes, companies such as us are now able to interconnect with the incumbent
local exchange carriers in order to provide local telephone exchange services
and to use portions of the incumbent local exchange carriers existing network to
offer new and innovative services such as those we are currently offering.

The 1996 Act also allows the regional Bell operating companies to enter the
long distance market within their own local service regions upon meeting certain
requirements. To date, the FCC has rejected each Regional Bell Operating
Company's attempts to provide long distance service and it is uncertain when
they will grant the first request. The timing of the various Regional Bell
Operating Companies in-region long distance entry will likely affect the level
of cooperation we receive from each of the regional Bell operating companies.

In addition, the 1996 Act provides relief from the earnings restrictions and
price controls that have governed the local telephone business for many years.
Incumbent local exchange carriers tariff filings at the FCC have been subjected
to increasingly less regulatory review. However, precisely when and to what
extent the incumbent local exchange carriers will secure pricing flexibility or
other regulatory freedom for their services is uncertain. For example, under the
1996 Act, the FCC is considering eliminating certain regulations that apply to
the incumbent local exchange carriers' provision of services that are
competitive with ours. The timing and the extent of regulatory freedom and
pricing flexibility and regulatory freedom granted to the incumbent local
exchange carriers will affect the competition we face from the incumbent local
exchange carriers competitive services.

Finally, the 1996 Act allows the FCC to take explicit regulatory action in
order to encourage the deployment of advanced services to all Americans. In
August 1998, the FCC released an Order and a

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Notice of Proposed Rulemaking proposing additional regulations it believes are
required to ensure this goal. These rules would place conditions on the ability
of the incumbent local exchange carriers to offer digital subscriber line
services on an unregulated basis through a separate affiliate. In addition, the
FCC has proposed rules that would provide us an enhanced ability to gain
collocation space in incumbent local exchange carriers' collocations. While we
believe that these proposed rules are advantageous to us, there can be no
guarantee that the actual regulations, when and if implemented, will enhance our
ability to compete.

Any changes in applicable federal law and regulations, in particular,
changes in the interconnection obligations of incumbent local exchange carriers,
the prospective entry of the Regional Bell Operating Companies into the
in-region long distance business and grant of regulatory freedom and pricing
flexibility to the incumbent local exchange carriers, could have a material
adverse impact on our business prospects, operating results and financial
condition. To date, the FCC has not asserted jurisdiction over companies that
provide Internet access services. However, the FCC is considering a petition
that seeks to require providers of Internet telephone services to pay access
charges.

STATE REGULATION. To the extent we provide identifiable intrastate services
or have otherwise submitted to the jurisdiction of the relevant state
telecommunications regulatory commissions, we are subject to such jurisdiction.
To date, we are authorized under state law to operate as a competitive local
exchange carrier in New York, Florida, Michigan and Connecticut and intend to
obtain authorization in the other states necessary to cover our target regions.
We are also authorized to provide intrastate long distance services in
approximately 20 states. Some of the states in which we hold competitive local
exchange carrier and long distance licenses must approve the changes in
ownership of ARC and AXCES, as well as the issuance of the securities
contemplated in this offering.

LOCAL GOVERNMENT REGULATION. In certain instances, we may be required to
obtain various permits and authorizations from municipalities in which we
operate our own facilities. Whether various actions of local governments over
the activities of telecommunications carriers such as us, including requiring
payment of franchise fees or other fees for access to public rights-of-way, pose
barriers to entry for competitive local exchange carriers, and which may be
preempted by the FCC is the subject of litigation. Although we rely primarily on
the unbundled network elements of the incumbent local exchange carriers, in
certain instances, we will deploy our own facilities, and therefore may need to
obtain certain municipal permits or other authorizations. The actions of
municipal governments in imposing conditions on the grant of permits or other
authorizations or their failure to act in granting such permits or other
authorizations could have a material adverse effect on our business, prospects,
operating results and financial condition.

The foregoing does not purport to describe all present and proposed federal,
state and local regulations and legislation affecting the telecommunications
industry. Other existing federal regulations are currently the subject of
judicial proceedings, legislative hearings and administrative proposals, which
could change, in varying degrees, the manner in which communications companies
operate in the U.S. The ultimate outcome of these proceedings, and the ultimate
impact of the 1996 Act or any final regulations adopted pursuant to the 1996 Act
on us or our business cannot be determined at this time but may well be adverse
to our interests. We cannot predict the impact, if any, that future regulation
or regulatory changes may have on our business and there can be no assurance
that such future regulation or regulatory changes will not have a material
adverse effect on our business, prospects, operating results and financial
condition. See "Risk Factors--We Depend Upon Entering Into Agreements with Third
Parties in Order to House and Operate Certain Components of Our Network Which
Are Subject to Various Government Regulations" and "--Our Business is Highly
Regulated and May Be Adversely Affected by Future Changes in Governmental
Regulations Relating to Our Industry."

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The law governing the liability of online service providers and Internet
access providers for participating in the hosting or transmission of
objectionable materials or information currently remains unsettled. Under the
terms of the 1996 Telecommunications Act, courts can impose civil and criminal
penalties for the use of interactive computer services for the transmission of
certain indecent or obscene communications. The United States Supreme Court in
1997 held this provision unconstitutional as it relates to indecent, but not
obscene, communications. In October 1998, Congress enacted the Child Online
Protection Act, which requires that online material that is "harmful" to minors
be restricted. This law is currently being challenged and on February 1, 1999 a
U.S. District Court judge issued a preliminary injunction against enforcement of
portions of that act. The U.S. Justice Department has filed an appeal of the
February 1999 ruling. Also, certain states have adopted and other states may
adopt similar requirements in the future. The constitutionality of such state
requirements remains unsettled at this time. In addition, several private
parties have filed lawsuits seeking to hold Internet service providers
accountable for information that they transmit, such as libelous material and
copyrighted material. We cannot predict the outcome of this litigation or the
potential for the imposition of liability on Internet service providers for
information that they host, distribute or transport. These suits and other
regulations could materially change the way Internet service providers must
conduct business and could impact our determination to expand or continue this
business. To the extent that we become parties to future litigation, such
litigation could have a material adverse effect on our business, prospects,
operating results and financial condition.

INTELLECTUAL PROPERTY

We regard our products, services and technology as proprietary and will
attempt to protect it with copyrights, trademarks, trade secret laws,
restrictions on disclosure and other methods. There can be no assurance these
methods will be sufficient to protect our technology. We also generally enter
into confidentiality or license agreements with our employees and consultants,
and generally control access to and distribution of our documentation and other
proprietary information. Despite these precautions, it may be possible for a
third party to copy or otherwise obtain and use our products, services or
technology without authorization, or to develop similar technology
independently. In addition, effective copyright, trademark and trade secret
protection may be unavailable or limited in certain foreign countries. There can
be no assurance that the steps we have taken and will take will prevent
misappropriation or infringement of our technology. In addition, litigation may
be necessary in the future to enforce our intellectual property rights, to
protect our trade secrets or to determine the validity and scope of the
proprietary rights of others. Such litigation could result in substantial costs
and diversion of resources and could have a material adverse effect on our
business, prospects, operating results and financial condition.

EMPLOYEES

As of May 31, 1999, we had 166 employees (excluding temporary personnel and
consultants), employed in engineering, sales, marketing, customer support and
related activities, and general and administrative functions. None of our
employees is represented by a labor union, and we consider our relations with
our employees to be good. Our ability to achieve our financial and operational
objectives depends in large part upon the continued service of our senior
management and key technical, sales, marketing and managerial personnel, and our
continuing ability to attract and retain highly qualified technical, sales,
marketing and managerial personnel. Competition for such qualified personnel is
intense, particularly in software development, network engineering and product
management.

FACILITIES

Our facilities are all located in the United States and consist of eight
leased facilities. We lease our corporate headquarters office in Hauppauge, New
York and lease a sales office from a related party in New York City on a
month-to-month basis, and have two branch offices under lease in Houston, Texas.

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(See "Certain Relationships and Related Transactions") We lease sales offices in
San Antonio and Dallas, Texas, and Chicago, Illinois. We have a warehouse for
our data cabling operations in Hauppauge, New York under lease. Our current
leases have remaining terms ranging from less than six months to four years.

We consider our current facilities adequate for our current needs and
believe that suitable additional or replacement space will be available, as
needed, to accommodate further physical expansion of our operations or
relocation.

LEGAL PROCEEDINGS

From time to time we may be involved in litigation that arises in the normal
course of business operations. As of the date of this prospectus and except as
described below, we are not a party to any litigation that we believe could
reasonably be expected to have a material adverse effect on our business or
results of operations.

ARC

In January 1999, ARC was served with a summons from the State Supreme Court
of New York, County of New York, by Mitel Telecommunications Systems, Inc., for
a breach of contract claim in the amount of $1,715,000 relating to cabling and
installation services for which ARC has been paid in full. As is customary, ARC
recorded this payment as a liability for unearned contracts. ARC believes the
action is without merit and filed a motion to dismiss the action based on
numerous defenses available to it. In addition, ARC continues to perform all
requested services under the contract from Mitel with Mitel's consent, thereby
reducing the liability over time. As of March 31, 1999, ARC estimates that its
maximum exposure resulting from this claim was $1,394,000 and has reduced the
liability to that amount. Since that time, as additional contract work has been
performed, ARC has further reduced the liability to approximately $1 million. In
June 1999, Mitel amended its summons to include Consolidated Technology Group,
Ltd., SIS Capital Corp., Technology Acquisitions, Ltd., and the officers,
directors and shareholders of ARC, Consolidated, SIS and Technology
Acquisitions, Ltd. Consolidated and SIS were parent companies of ARC prior to
its acquisition in June 1999. Technology Acquisitions is controlled by Benchmark
Equity Group and acquired 67% of ARC prior to our acquisition of ARC.

In March 1999, ARC was served with a summons from the State Supreme Court of
New York, County of Orange, by an employee of a customer of ARC located in
Thiells, N.Y., for $1,000,000. The employee claims to have fallen over wiring
which was negligently installed by ARC. ARC has a liability insurance policy
which should provide sufficient coverage in the event the plaintiff's claim is
successful. ARC believes the action is without merit and filed a motion to
dismiss the action based on numerous defenses available to it.

AXCES

The Public Utility Commission of Texas, or PUC, and the Office of the
Attorney General for the State of Texas brought claims under the Texas Deceptive
Trade Practices Act alleging that AXCES engaged in the practice known as
slamming. Slamming involves the unauthorized change of a customer's long
distance service. The Texas Attorney General sought to restrain certain
marketing practices and to assess damages. The case was settled in June 1998 for
$155,000 and while the settlement did not constitute an admission of liability
on AXCES' part, AXCES did agree to comply with the rules promulgated by the PUC.
The settlement agreement required a payment of approximately $150,000 which has
been paid.

In May 1999, the PUC informed AXCES that it had received additional
complaints concerning slamming allegations, and that it was seeking
administrative penalties of approximately $400,000.

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AXCES intends to vigorously contest this matter, and believes these claims are
without merit and covered by the prior settlement with the PUC.

Similar claims were brought against AXCES in early 1998 by the Attorneys
General of Illinois, Oklahoma, Kansas, and Missouri. Inquiries were also
received from the Attorneys General of Arkansas and Wisconsin regarding
allegations of slamming. AXCES settled with the Illinois Attorney General in
March 1999 for $50,000. The settlement amount is included in accrued liabilities
at December 31, 1998.

The remaining suits request, amongst other things, fines, restitution and
loss of ability to conduct business in these states. AXCES believes these claims
are without merit, that it has meritorious defenses to them and intends to
vigorously defend itself against these claims.

In addition, AXCES was named a defendant in two suits seeking class action
certification. Both cases involve allegations of slamming, and in one case the
alleged class includes Spanish-speaking individuals in the Brownsville, Texas,
area. No amount of damages is set forth in the pleadings and the number of
persons potentially affected is also not presently estimable. Both suits are in
the preliminary phases of discovery, and management of AXCES intends to
vigorously contest them.

AXCES and one of its officers have also been sued by a former employee for
violation of wage and hour laws, wrongful termination and tortious interference
with employment. This case is in the preliminary phases of discovery. AXCES
believes that this claim is without merit and intends to vigorously contest this
case.

Pursuant to the AXCES acquisition agreement, MTM and its owners have agreed
to indemnify us for any damages incurred in connection with pending litigation
and administrative proceedings on the same basis as we are indemnified for any
breaches of representations and warranties made by AXCES in the acquisition
agreement except that the indemnity does not cover attorneys' fees and
litigation costs. Because of this, MTM and its owners will be required to
indemnify us for breaches of representations and warranties in the acquisition
agreement and liabilities incurred in the pending litigation to the extent that
such amounts exceed, in the aggregate, $200,000, and for any tax liability of
AXCES, MTM and its owners that exceeds $1.6M in the aggregate. However, the
indemnification threshold related to litigation shall increase to the extent of
AXCES' net income plus noncash expenses for the period from May 1, 1999 until
the closing of the acquisition, less any amounts used to pay agreed settlements
of the scheduled litigation. The aggregate liability of MTM and its owners may
not exceed the value of the shares of OmniLynx common stock issued to MTM on the
closing, plus the value of the shares of OmniLynx common stock issuable on
conversion of the Series B Preferred Stock (assuming conversion occurred on
consummation of this offering). The value of each share of OmniLynx common stock
is set at the initial public offering price. In addition, the aggregate
liability of any owner of MTM may not exceed $2,000,000.

IN GENERAL

The founding companies have also been subject to other legal proceedings
which have arisen in the ordinary course of business and have not been fully
adjudicated. In addition, we routinely receive inquiries from state and federal
regulatory authorities concerning consumer billing complaints which we respond
to. Although there can be no assurance as to the ultimate disposition of these
matters and the proceedings disclosed above, in the opinion of management, based
upon information available at this time and the availability of indemnification
from AXCES discussed above, the cost of defense or settlement of these actions,
individually or in the aggregate, will not have a material adverse effect on our
financial position or results of operations.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages, and positions of our directors and
executive officers. All directors hold office until their successors are duly
elected and qualified and all executive officers hold office at the pleasure of
the Board of Directors.

<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION CLASS
- --------------------------------------------- --- --------------------------------------------- -------------
<S> <C> <C> <C>
Joseph A. Gregori........................... 45 Chief Executive Officer and Director Class III
*Peter Parrinello............................ 50 Chairman, Board of Directors and President Class III
*Tony Howlett................................ 30 Chief Technical Officer
*Glenn Kramer................................ 52 President of Internet Services and Director Class I
John Vanderhider............................ 40 Chief Financial Officer
*Harry Bennett (1)(2)........................ 54 Director Class II
Christopher Efird (1)....................... 35 Director Class I
*Weatherly Nominee (1)(2).................... -- Director Class II
*Michael Macaluso............................ 47 Director Class III
</TABLE>

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

* Appointment will become effective upon closing of this offering.

(1) Member of the Compensation Committee.

(2) Member of the Audit Committee.

JOSEPH A. GREGORI. Mr. Gregori became our Chief Executive Officer and a
director upon consummation of the acquisition of ARC in June 1999. Over the last
25 years, Mr. Gregori has had extensive business experience in the wireless
telecommunications industry and public accounting. Prior to joining ARC in June
1998, Mr. Gregori was Chief Operating Officer for PriCellular Corp., (d/b/a,
Cellular One), an AMEX listed rural cellular telephone provider. Mr. Gregori
joined PriCellular in September 1996 and served as COO until June 1998, when
PriCellular was acquired by American Cellular Corp. From 1986 through April of
1996, Mr. Gregori was employed by Nationwide Cellular Service, Inc., a Nasdaq
listed reseller of cellular telephone service. Mr. Gregori served in a number of
senior positions, including VP of Operations, COO and finally as President.
Nationwide Cellular was acquired by MCI in October of 1995 and Mr. Gregori
served as president of MCI Wireless until he resigned his position in April
1996. Mr. Gregori began his professional career in public accounting and worked
in the audit department of Deloitte Touche (formerly Touche Ross) as a senior
manager. He is an honors graduate (Magna Cum Laude) of Adelphi University and is
a CPA.

PETER PARRINELLO. Mr. Parrinello will become our Chairman of the Board and
President upon the consummation of this offering. CEO and founder of ARC, Mr.
Parrinello was formerly Executive Vice President of Avionics Research
Corporation, where he established the engineering firm's telecommunications
division. In 1993, this division took the name of ARC and became one of the
first re-sellers of local telephone service in the United States. Mr.
Parrinello's background in telecommunications spans over twenty-five years
starting with Military Networks in Southeast Asia in the late 1960's and early
70's. His professional career began at New York Telephone in Central Office
Operations in 1971 and later moved to Litton Industries during the establishment
of the interconnect industry in 1972. Mr. Parrinello started with Tel Plus in
1975 during the inception of that company and served to develop new markets.
Seimens Corporation later acquired TelPlus. Mr. Parrinello received his BS at
New York Institute of Technology at Old Westbury (Cum Laude), in Electrical
Engineering and Business Administration.

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TONY HOWLETT. Mr. Howlett will become our Chief Technical Officer upon
consummation of the acquisition of InfoHighway. Mr. Howlett founded InfoHighway
in 1994 and was one of the principal shareholders of InfoHighway. Previously,
from April 1993 to July 1994 he was the owner of Howlett Consulting Company, a
database and networking consulting firm, and a sales engineer from 1989 to 1993
for MCP, a personal computer reseller providing networking technologies to
Fortune 1000 firms. He was a contributing editor to Texas Computing Magazine.
Mr. Howlett holds a BBA in Management Information Systems from the University of
Houston.

GLENN KRAMER. Mr. Kramer will become our President of Internet Services and
a director upon consummation of the acquisition of InfoHighway. Mr. Kramer, a
25-year veteran of the computer industry, has served in a number of management
capacities throughout his career. He served as Southern Regional Manager for SCM
Corporation from 1970 to 1972, as Marketing Manager for National Business &
Security Systems, Inc. from 1972 to 1976 and 1978 to 1987, and as Eastern
Regional Manager of Mylee Digital Sciences, Inc. from 1976 to 1978. As the
President and CEO of Classic Configurations, Inc. from 1987 to 1996, he was the
architect of a national computer dealer franchise. He has also served as a
consultant to a number of industry leaders such as Hewlett Packard, Digital,
Novell, and MicroAge. Mr. Kramer attended the University of Maryland where he
pursued a liberal arts education.

JOHN VANDERHIDER. Mr. Vanderhider will become our Chief Financial Officer
upon consummation of the acquisitions. Since December 1997, Mr. Vanderhider has
served as founding principal of an outsource services company named OutSourcers
which provides consulting services to transition stage companies, particularly
in the areas of mergers and acquisitions. Mr. Vanderhider has extensive
experience in the execution of mergers and acquisitions and in public and
private debt and equity financings. From 1994 through 1997, Mr. Vanderhider
served as Director of Finance and Accounting for BSG Corporation, a leading
systems integrator. Prior to this time, Mr. Vanderhider held various officer
positions with several public companies. Mr. Vanderhider graduated with highest
honors from Texas A&M University in 1981 with a BBA in Accounting. Mr.
Vanderhider is a certified public accountant.

HARRY BENNETT. Mr. Bennett will become a director upon consummation of this
offering. Mr. Bennett has served as Chairman and Chief Executive Officer of
TelaLink Network, Ltd. since 1998. Mr. Bennett served as Executive Vice
President, Local Services for AT&T from 1993 to 1998. During his 25-year career
with AT&T, he was responsible for the phone giant's move into local service
markets across the United States after passage of the Telecommunication Act of
1996. Bennett was named to this position January 1, 1996, and was responsible
for local services activities in both the consumer and business markets.
Previously, Bennett had been vice president and general manager for AT&T's
IntraLATA/Local Markets organization, where he led AT&T's activities in
IntraLATA and local access markets, developing new markets to increase AT&T's
revenues from sources other than its traditional long-distance services base.
Bennett joined AT&T in 1973 as an operations supervisor in Washington, D.C. He
later served as National Account Manager in Chicago and then Division
Manager--Market Management at AT&T Communications. Bennett joined the
headquarters marketing team in 1985 and was later promoted to Director--Market
Management Center, Service Vice President. A 1968 graduate of the U.S. Military
Academy at West Point, Bennett earned a master's degree in management from the
Massachusetts Institute of Technology, where he was a Sloan Fellow.

CHRISTOPHER EFIRD. Mr. Efird has served as one of our directors since April
1997. Mr. Efird is a principal of Benchmark Equity Group, Inc., one of our
principal stockholders, where his duties include the origination and management
of consolidation and restructuring transactions. Since joining Benchmark at
inception in April 1994, Mr. Efird has participated in the execution of mergers
and acquisitions of domestic and international companies, as well as the
completion of new public equity offerings for the firm's clients. Mr. Efird is a
graduate of Texas A&M University and holds a Masters of Arts degree

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from Sam Houston State University with a concentration in the quantitative
analysis of the political risk faced by international companies.

[BIO OF DIRECTOR TO BE NOMINATED BY WEATHERLY TO BE PROVIDED BY AMENDMENT]

MICHAEL MACALUSO. Mr. Macaluso will become a director upon consummation of
this offering. Mr. Macaluso founded International Printing & Publishing in 1989
and served as President and a director of that company until 1998. International
Printing was a joint venture between Mr. Macaluso and Touche Holdings, a partner
investment fund for a large accounting firm. International Printing recently
merged with another company to form Page/International Communications, a large
sheet-fed printing operation located in Texas. He serves as a director of this
new company. Mr. Macaluso became a principal and a director at AXCES in 1997. He
holds a seat on the board and owns 25% of MTM Holdings Corporation, the parent
company of AXCES. A graduate of Canisius College, Mr. Macaluso played
professional basketball and attended graduate school at Golden Gate University
in San Francisco. He brings both operational and M&A experience to our board.

CLASSIFIED BOARD

Our Board of Directors is divided into three classes, each of which,
following a transition period, will serve for three years, with one class being
elected each year at our annual stockholders' meeting. During the transitional
period, the terms of the Class I directors will expire at the 2000 annual
meeting, while the terms of the Class II directors and the Class III directors
will expire at the 2001 and 2002 annual meetings, respectively. Classification
of our Board of Directors could have the effect of lengthening the time
necessary to change the composition of a majority of the members comprising the
Board. In general, at least two annual meetings of stockholders will be
necessary for stockholders to effect a change in a majority of the members of
the Board.

COMMITTEES OF THE BOARD OF DIRECTORS

In June 1999, the board of directors established a compensation committee
and an audit committee. The compensation committee makes recommendations
concerning salaries and incentive compensation of our employees and consultants
and administers our stock option plan. The audit committee reviews, acts on and
reports to the board of directors with respect to various auditing and
accounting matters, including reviewing our audit policies, overseeing the
engagement of our independent auditors and developing our financial strategies.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to June 1999, we had no separate compensation or stock option
committee or other board committee performing equivalent functions, and these
functions were performed by our board of directors. In June 1999, we established
compensation, audit and executive committees of our board of directors. The
compensation committee is composed of non-employee directors. See "--Committees
of the Board of Directors."

DIRECTOR COMPENSATION

All non-employee directors are reimbursed for travel and other related
expenses incurred in attending meetings of the board of directors. In addition,
each non-employee director serving on the board of directors will be granted
options to purchase 10,000 shares of common stock upon his initial appointment
to the Board, and will receive 10,000 additional options upon the date of the
first board meeting in the second calendar quarter of each year pursuant to our
option plan. The options will vest immediately and will have an exercise price
equal to the fair market value of the common stock on the date of grant.

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EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS

We had not conducted any operation other than activities related to the
acquisition of the founding companies prior to the consummation of this
offering, and have not paid any compensation to our executive officers. As of
the closing of this offering, we will enter into the following employment
agreements with our executive officers:

<TABLE>
<CAPTION>
NAME SALARY POSITION
- -------------------------------------------------- ---------- --------------------------------------------------
<S> <C> <C>
Joseph A. Gregori................................. $ 150,000 Chief Executive Officer
Peter Parrinello.................................. $ 160,000 Chairman of the Board and President
Tony Howlett...................................... $ 120,000 Chief Technical Officer
Glenn Kramer...................................... $ 120,000 President of Internet Services
</TABLE>

The following summary of the employment agreements of these executives and
key officers does not purport to be complete and is qualified by reference to
them, a form of which has been filed as an exhibit to the registration statement
of which this prospectus is a part. Each of these agreements entitles the
employee to participate in all of our employee benefit plans in which other
members of our management participate. Each of these agreements is for an
initial term of three years from the closing of this offering, subject to our
right to terminate the employee's employment at any time after one year. If we
terminate the employee's employment for any reason other than for cause (as
defined), voluntary resignation or death, the employee will be entitled to the
payment of any annual base salary and continuation of health insurance benefits
for six months. Each employment agreement contains a covenant limiting
competition with us following the termination of employment for a period of the
longer of one year after commencement of the employment agreement or one year
after employment terminates.

Under the agreements, "cause" is defined as a determination by the Board of
Directors that:

- the employee has breached the agreement;

- the employee has willfully failed to substantially perform his duties
thereunder or failed to follow the directives of the Board of Director; or

- the employee has willfully engaged in misconduct which is materially
injurious to OmniLynx.

In addition, we issued stock options as follows:

<TABLE>
<CAPTION>
EXERCISE
NAME OPTIONS PRICE
- ---------------------------------------------------------------------------------------- --------- -------------
<S> <C> <C>
Joseph A. Gregori....................................................................... 300,000 $ 8.00
113,443 $ 10.00
66,557 $ 5.00
Peter Parrinello........................................................................ 300,000 $ 8.00
47,267 $ 10.00
27,733 $ 5.00
</TABLE>

The options at $8.00 per share vested one-third in June 1999, and vest an
additional one-third in June 2000 and 2001. The options at $10.00 per share vest
ratably each month over the three-year period from the closing of this offering.
The options at $5.00 per share all vest on the closing of this offering.

INCENTIVE PLAN

The description below summarizes all material features of our 1999 Stock
Incentive Plan. The summary is not complete and is qualified by reference to the
Incentive Plan, a copy of which has been filed as an exhibit to the registration
statement of which this prospectus is a part.

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GENERAL. The objectives of our Incentive Plan, which has been approved by
our board of directors, are to attract and retain selected key employees,
consultants and outside directors, encourage their commitment, motivate their
performance, facilitate their obtaining equity ownership interests (aligning
their personal interests to those of our shareholders) and enable them to share
in our long-term growth and success.

SHARES SUBJECT TO INCENTIVE PLAN. Under the Incentive Plan, we may issue
Incentive Awards (defined below) covering at any one time an aggregate of
1,500,000 shares of common stock. No more than 1,500,000 shares of common stock
will be available for incentive stock options. The number of securities
available under the Incentive Plan and outstanding incentive awards are subject
to adjustments to prevent enlargement or dilution of rights resulting from stock
dividends, stock splits, recapitalization or similar transactions or resulting
from a change in applicable laws or other circumstances.

ADMINISTRATION. The Incentive Plan will be administered by the compensation
committee of our board of directors. The committee consists only of non-employee
directors, each of whom is (1) an "outside director" under Section 162(m) of the
Internal Revenue Code and (2) a "non-employee director" under Rule 16b-3 under
the Exchange Act. The committee may delegate to our chief financial officer or
other senior officers its duties under the Incentive Plan, except for the
authority to grant incentive awards or take other action on persons who are
subject to Section 16 of the Exchange Act or Section 162(m) of the Internal
Revenue Code. In the case of an incentive award to an outside director, the
entire board of directors acts as the committee. Subject to the express
provisions of the Incentive Plan, the committee is authorized to, among other
things, select grantees under the Incentive Plan and determine the size,
duration and type, as well as the other terms and conditions (which need not be
identical), of each incentive award. The committee also construes and interprets
the Incentive Plan and any related agreements. All determinations and decisions
of the committee are final, conclusive and binding on all parties. We will
indemnify members of the committee against any damage, loss, liability, cost or
expenses in connection with any claim by reason of any act or failure to act
under the Incentive Plan, except for an act or omission constituting willful
misconduct or gross negligence.

ELIGIBILITY. Key employees, including our officers (whether or not they are
directors), consultants and non-employee directors are eligible to participate
in the Incentive Plan. A key employee generally is any of our employees who, in
the committee's opinion, is in a position to contribute materially to our
growth, development and financial success.

TYPES OF INCENTIVE AWARDS. Under the Incentive Plan, the Committee may
grant incentive awards which can be any of the following:

- incentive stock options as defined in Section 422 of the Internal Revenue
Code,

- nonstatutory stock options,

- shares of restricted stock, and

- other stock-based awards.

Incentive stock options and nonstatutory stock options together are called
"options." The terms of each incentive award will be reflected in an incentive
agreement between us and the participant.

OPTIONS. Generally, options must be exercised within 10 years of the grant
date. Incentive stock options may be granted only to employees, and the exercise
price of each incentive stock options may not be less than 100% of the fair
market value of a share of our common stock on the date of grant. The committee
has the discretion to determine the exercise price of each nonstatutory stock
option granted under the Incentive Plan. To the extent that the aggregate fair
market value of shares of our common stock for which incentive stock options are
exercisable for the first time by any employee during any calendar year exceeds
$100,000, those options must be treated as nonstatutory stock options.

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The exercise price of each option is payable in cash or, in the committee's
discretion, by the delivery of shares of common stock owned by the optionee, or
the withholding of shares that would otherwise be acquired on the exercise of
the option, or by any combination of the two.

An employee will not recognize income for federal income tax purposes at the
time an incentive stock option is granted, or on the qualified exercise of an
incentive stock option, but instead will recognize capital gain or loss (as
applicable) upon the subsequent sale of shares acquired in a qualified exercise.
The exercise of an incentive stock option is qualified if a participant does not
dispose of the shares acquired by the participant's exercise within two years
after the incentive stock option grant date and one year after the exercise
date. We are not entitled to a tax deduction for the grant or qualified exercise
of an incentive stock option.

An optionee will not recognize income for federal income tax purposes, nor
will we be entitled to a deduction, when a nonstatutory stock option is granted.
However, when a nonstatutory stock option is exercised, the optionee will
recognize ordinary income in an amount equal to the difference between the fair
market value of the shares received and the exercise price of the nonstatutory
stock option, and we will generally recognize a tax deduction in the same amount
at the same time.

This summary is not a complete statement of the relevant provisions of the
Internal Revenue Code, and does not address the effect of any state, local or
foreign taxes.

RESTRICTED STOCK. Restricted stock may be subject to a substantial risk of
forfeiture, a restriction on transferability or rights of repurchase or first
refusal on our behalf, as determined by the committee. Unless the committee
determines otherwise, during the period of restriction, the grantee will have
all other rights of a stockholder, including the right to vote and receive
dividends on the shares.

OTHER STOCK-BASED AWARDS. Other stock-based awards are awards denominated
or payable in, valued in whole or in part by reference to, or otherwise related
to, shares of our common stock. Subject to the terms of the Incentive Plan, the
committee may determine any terms and conditions of other stock-based awards,
provided that, in general, the amount of consideration we receive shall be
either (1) no consideration other than services actually rendered or to be
rendered (in the case of the issuance of shares) or (2) in the case of an award
in the nature of a purchase right, consideration (other than services rendered)
at least equal to 50% of the fair market value of the shares covered by such
grant on the grant date. Payment or settlement of other stock-based awards will
be in shares of common stock or in other consideration related to such shares.

OTHER TAX CONSIDERATIONS. Upon accelerated exercisability of options and
accelerated lapsing of restrictions upon restricted stock or other Incentive
Awards in connection with a "change in control" (as defined in the Incentive
Plan), certain amounts associated with such incentive awards could, depending
upon the individual circumstances of the participant, constitute "excess
parachute payments" under Section 280G of the Internal Revenue Code. Such a
determination would subject the participant to a 20% excise tax on those
payments and deny us a corresponding deduction. The limit on deductibility of
compensation under Section 162(m) of the Code is also reduced by the amount of
any excess parachute payments. Whether amounts constitute excess parachute
payments depends upon, among other things, the value of the Incentive Awards
accelerated and the past compensation of the participant.

Taxable compensation earned by executive officers who are subject to Section
162(m) of the Code with respect to incentive awards is subject to certain
limitations set forth in the Incentive Plan. Those limitations are generally
intended to satisfy the requirements for "qualified performance-based
compensation," but we may not be able to satisfy these requirements in all
cases, and we may, in our sole discretion, determine in one or more cases that
it is best not to satisfy these requirements even if we can.

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<PAGE>
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL. Except as otherwise
provided in the applicable incentive agreement, if a participant's employment or
other service with us (or our subsidiaries) is terminated other than due to his
death, disability, retirement or for cause (each term being defined in the
Incentive Plan), his then exercisable options will remain exercisable until the
earlier of their expiration date or 90 days after termination. If this
termination is due to disability or death, his then exercisable options will
remain exercisable until the earlier of their expiration date or one year
following termination. On retirement, his then exercisable options will remain
exercisable for six months (except for incentive stock options, which will
remain exercisable for three months). On a termination for cause, all his
options will expire at the opening of business on the termination date.

If we undergo a change in control, any restrictions on restricted stock and
other stock-based awards may be deemed satisfied, all outstanding options may
become immediately exercisable and any other stock-based awards may become fully
vested and deemed earned in full, all at the discretion of the committee. These
provisions could in some circumstances have the effect of an "anti-takeover"
defense because, as a result of these provisions, a change in control could be
more difficult or costly.

INCENTIVE AWARDS NONTRANSFERABLE. No incentive award may be assigned, sold
or otherwise transferred by a participant, other than by will or by the laws of
descent and distribution, or be subject to any lien, assignment or charge;
provided, that, the committee may permit nonstatutory stock options to be
transferred to the participant's immediate family or trusts or partnerships
established exclusively for the benefit of his immediate family. An incentive
award may be exercised during the participant's lifetime only by the
participant, the participant's legal guardian or a permitted transferee.

AMENDMENT AND TERMINATION. Our board of directors may amend or terminate
the Incentive Plan at any time. However, the Incentive Plan may not be amended,
without shareholder approval, if the amendment would (1) increase the number of
shares of common stock which may be issued under the Incentive Plan, except in
connection with a recapitalization of our common stock, (2) amend the
eligibility requirements for employees to purchase our common stock under the
Incentive Plan, or (3) extend the term of the Incentive Plan. Without a
participant's consent, no termination or amendment of the Incentive Plan shall
adversely affect in any material way any outstanding incentive award previously
granted to him.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ORGANIZATION OF OMNILYNX

We were initially capitalized with $1,000 provided by Benchmark Equity
Group, Inc. for 939,000 shares of common stock. Benchmark Equity Group, Inc. is
a Delaware corporation whose president and sole shareholder is Frank DeLape. In
August 1998, Benchmark transferred 236,203 of the 939,000 shares by gift to the
following: Emerging Ventures L.L.C.--97,260 shares; Christopher H. Efird--
115,429 shares; and Jeffrey W. Tomz--23,514 shares. Emerging Ventures L.L.C. is
a Delaware limited liability company of which Benchmark is the manager and a 1%
interest holder and Trident III, L.L.C. is a 33% interest holder. Mr. Efird is
one of our current directors. Mr. Tomz served as a director until June 1999.

In June 1999 and in connection with the acquisitions of the founding
companies, we issued contingent stock issue rights representing up to a total of
277,372 shares of common stock to the following: Benchmark--up to 158,363
shares; Emerging Ventures, L.L.C.--up to 38,067 shares; Mr. Efird--up to 67,243
shares; and Mr. Tomz--up to 13,699 shares. Approximately one-half of these
shares are issuable, if at any time within three years of the issuance of those
contingent stock issue rights, when the common stock reaches a 10-day average of
$16.00 per share. The remaining one-half are issuable, if at any time within
three years of the issuance of the contingent stock issue rights, the common
stock reaches a 10-day average of $21.00 per share.

In September 1998, we entered into a letter agreement with Benchmark. Under
the terms of the agreement, Benchmark agreed to serve as our non-exclusive agent
in connection with an acquisition or disposition by us for a term of two years.
Benchmark's fee under the agreement is equal to five percent of the first $5
million of aggregate consideration, four percent of the second $5 million of
aggregate consideration, three percent of the third $5 million of aggregate
consideration, and two percent of any consideration over $15 million in the
aggregate paid in connection with an Eligible Transaction, as defined, with a
minimum fee of $100,000. The acquisitions of ARC, AXCES and InfoHighway are
excluded from the fee requirement of the agreement, as amended.

In September 1998, we entered into a consulting agreement with Benchmark
which provided for, among other things, a monthly consulting fee of $14,000 for
a two year period and reimbursement of expenses incurred during the course of
the consulting engagement. In June 1999, the consulting agreement was amended to
waive any accrued or future consulting fees and to recognize the aggregate
amount of expenses to be reimbursed as of that date to be $105,000.

During the first quarter of 1999, we entered into an agreement with John
Vanderhider, our chief financial officer, for services to be rendered in
conjunction with the offering. The agreement, as amended, provided for, among
other things, the granting of five-year exercisable warrants to purchase 86,844
shares of our common stock at $5.71 per share in exchange for services rendered.
Warrants for 7,237 shares of common stock vest each month over a period of
twelve months starting in February 1999. Of the warrants for 7,237 shares, (1)
warrants for 5,201 shares are immediately exercisable upon vesting, (2) warrants
for 1,018 shares are exercisable when the common stock has closed at a price of
at least $16.00 per share for 10 consecutive trading days, and (3) warrants for
1,018 shares are exercisable when the common stock has closed at a price of at
least $21.00 per share for 10 consecutive trading days.

In March 1999, we issued a $100,000 13% promissory note to Trident III,
L.L.C., maturing at the earlier of March 1, 2000 or the closing of an outside
financing, as defined, by us with

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<PAGE>
minimum gross proceeds of $500,000. Trident III, L.L.C. also received warrants
to purchase an aggregate of 100,000 shares of common stock at an exercise price
of $8.00 per share subject to certain provisions and terms. The warrants have a
term of five years and have registration rights. In June 1999, we repaid this
note out of the proceeds of the $1.5 million June promissory note offering
described below.

In April 1999, we issued a $100,000 13% promissory note to Trident III,
L.L.C., maturing at the earlier of April 5, 2000 or the closing of an outside
financing, as defined, by us with minimum gross proceeds of $500,000. Trident
III, L.L.C. also received warrants to purchase an aggregate of 50,000 shares of
common stock at an exercise price of $8.00 per share subject to certain
provisions and terms. The warrants have a term of five years and have
registration rights. In June 1999, we repaid this note out of the proceeds of
the $1.5 million June promissory note offering described below.

THE ACQUISITIONS

We acquired ARC in June 1999. We will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this offering. Subject
to certain adjustments described below, the aggregate consideration we will pay
to acquire the founding companies consists of 2,048,242 shares of common stock,
388,550 shares of contingent common stock issue rights and $10,216,674 in Series
A and Series B Preferred Stock. We will also repay an aggregate of approximately
$6.8 million of indebtedness of OmniLynx and the founding companies with the
proceeds of the offering.

The consideration we are paying for each founding company was determined by
arm's length negotiations between us and a representative of that founding
company. Subject to certain adjustments described below, the following table
sets forth for each founding company the consideration we will pay to its
stockholders in the acquisitions in cash, shares of common stock, shares of
contingent common stock and shares of Series A and Series B Preferred Stock.

<TABLE>
<CAPTION>
CONTINGENT COMMON STOCK PREFERRED
COMMON STOCK STOCK
--------------------- ------------------------ -------------
VALUE OF VALUE OF VALUE OF
ACQUISITION SHARES SHARES SHARES SHARES SHARES
- ------------------------------------------------------- --------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
AXCES.................................................. 700,000 $6,300,000 -- $ -- $ 9,000,000(1)
InfoHighway............................................ 958,166 8,623,494 235,878(3) -- --
ARC.................................................... 390,076 3,510,684 152,672 -- 1,216,674(2)
--------- ---------- ----------- ----- -------------
Total.................................................. 2,048,242 $18,434,178 388,550 $ -- $ 10,216,674
--------- ---------- ----------- ----- -------------
--------- ---------- ----------- ----- -------------
</TABLE>

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

(1) This amount represents 60,000 shares of Series B 8% Cumulative Convertible
Preferred Stock valued at $150.00 per share.

(2) This amount represents 121,667 shares of Series A 10% Convertible Preferred
Stock valued at $10.00 per share.

(3) All of the contingent common stock issue rights issued to the former
shareholders of InfoHighway, except for 81,425 which were issued to Trident
III, L.L.C, are subject to pro rata reduction if InfoHighway fails to
maintain certain monthly revenue levels prior to the closing of this
offering.

For a detailed description of the contingent common stock issue rights and
the Series A and Series B Preferred Stock, see "Shares Eligible For Future Sale"
and "Description of Capital Stock."

We will repay an aggregate of approximately $1.95 million of our
indebtedness when the offering closes. In addition, indebtedness of ARC and
InfoHighway of approximately $0.75 million and $1.1 million, respectively, will
be repaid when the offering closes, and indebtedness of ARC and InfoHighway of
approximately $2.4 million and $0.05 million will be assumed and paid over time,
respectively. Additionally, we will repay up to $3.0 million of debt of AXCES as
described below.

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<PAGE>
Prior to the closing of the acquisition, AXCES may incur up to $3.0 million
of debt the proceeds of which may only be used for distribution to MTM Holdings
Corporation, its sole shareholder prior to this offering. AXCES may distribute
to its owner prior to closing of the acquisitions up to $6.5 million in cash,
including the loan proceeds, provided that the distributions do not decrease
AXCES' working capital below a minimum level. The minimum level is an amount
equal to (1) $600,000, plus (2) the amount of AXCES' net income plus noncash
expenses for the period from May 1, 1999 to the closing date of the
acquisitions, minus (3) the amount of AXCES' net income and noncash expenses in
that period used to settle the litigation shown on the schedule of litigation
involving AXCES attached to the acquisition agreement.

Following the closing of the acquisition, AXCES will pay, or OmniLynx will
cause AXCES to pay, certain tax liabilities of AXCES, MTM and its former
shareholders attributable to AXCES' operations from January 1, 1999 through the
closing date and any fees and expenses of counsel engaged to give advice on
methods to decrease that tax liability. Portions of the tax liability may be
payable over time. Our obligation to pay the tax liability and fees and expenses
of counsel may not exceed $1.6 million in the aggregate or $400,000 in any
calendar quarter. Any amount of tax liability and costs and expenses of counsel
exceeding $1.6 million in the aggregate must be paid by MTM and its owners.

The closing of the AXCES and InfoHighway acquisitions are subject to
customary conditions. These conditions include, among others: the accuracy on
the closing date of the acquisitions of the representations and warranties made
by the founding companies, their principal stockholders and OmniLynx; the
performance of each of their respective covenants included in the agreements
relating to the acquisitions; and nonexistence of a material adverse change in
the result of operations, financial condition or business of each founding
company. We can give no assurance that the conditions to the closing of all
acquisitions will be satisfied or waived or that each of the acquisitions will
close.

The acquisition agreements for AXCES and InfoHighway may be terminated,
under certain circumstances, prior to the closing of this offering:

- by the mutual consent of our board of directors and the boards of
directors of AXCES or InfoHighway;

- by AXCES or InfoHighway, their respective stockholders or us, if the
offering and the acquisition of AXCES or InfoHighway are not closed by
October 31, 1999;

- by us if the schedules to the acquisition agreement are amended to reflect
a material adverse change in AXCES or InfoHighway; or

- by AXCES or InfoHighway, their respective stockholders or us, if a
material breach or default under the agreement by one party occurs and is
not waived by the other party.

Pursuant to the acquisition agreements, certain stockholders of each of the
founding companies have agreed not to compete with us for a period of two or
three years commencing on the date of closing of the acquisitions. For
information regarding the employment agreements to be entered into by certain
key officers of the founding companies, see "Management--Executive Compensation;
Employment Agreements."

In connection with the acquisitions, OmniLynx will grant certain
registration rights to former stockholders of the founding companies. However,
these are subject to provisions in the acquisition agreements that restrict the
transfer of certain percentages of common stock for up to two years depending
upon the performance of the common stock. See "Shares Eligible for Future Sale."

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<PAGE>
ACQUISITIONS INVOLVING CERTAIN OFFICERS, DIRECTORS AND STOCKHOLDERS

Persons who are or will become directors, executive officers, or beneficial
owners of 5% or more of our common stock will receive the following
consideration in the acquisitions for their equity interests in the founding
companies.

<TABLE>
<CAPTION>
CONTINGENT COMMON STOCK
PREFERRED
COMMON STOCK ISSUE RIGHTS STOCK
---------------------- -------------------------- ---------
VALUE OF VALUE OF VALUE OF
ACQUISITION SHARES SHARES SHARES SHARES SHARES
- ------------------------------------------------------------ ----------- --------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Peter Parrinello............................................ 39,060 $ 351,540 15,289 -- $ --
Tony Howlett................................................ 114,598 1,031,382 23,596 -- --
Glenn Kramer................................................ 44,076 396,684 9,075 -- --
Michael Macaluso............................................ 175,000 1,575,000 -- -- 2,250,000
----------- --------- ----------- --- ---------
Total..................................................... 372,734 $3,354,606 47,960 -- $2,250,000
----------- --------- ----------- --- ---------
----------- --------- ----------- --- ---------
</TABLE>

REAL ESTATE AND OTHER TRANSACTIONS

ARC occupies space leased by Consolidated Technology Group, Ltd. in New York
City. There is no formal lease agreement between Consolidated and ARC. Rent is
charged by SIS Capital Corp., a Delaware corporation and wholly owned subsidiary
of Consolidated, to ARC which amounted to $23,153, $27,752 and $14,066 for the
years ended December 31, 1996, 1997 and 1998, respectively.

In connection with the acquisition of ARC, $750,000 of the outstanding
balance of approximately $2.4 million on March 31, 1999 on the revolving line of
credit due to Consolidated will be repaid with the proceeds from the offering.
The balance of the revolving line of credit of $1.65 million was exchanged for a
14% convertible note of which $450,000 matures in January 2000, and the
remaining $1.2 million matures in June 2000 if not previously converted. The
outstanding balance of this note is convertible into shares of common stock at
$8.00 per share at Consolidated's option at any time. In addition, Consolidated
has been issued five-year exercisable warrants to purchase 90,000 shares of
common stock at $8.00 per share in exchange for the delaying of debt.
Consolidated was granted piggy back registration rights with respect to the
shares issuable upon conversion of the note and exercise of the warrants. See
"Description of Capital Stock--Registration Rights" and "Shares Eligible for
Future Sale."

AXCES purchases printing services from Page/IPP Communications, L.L.C., a
company in which MTM Holdings Corporation owns a 30% interest, from time to
time. During 1998 and 1997, AXCES purchased printing services totaling $281,660
and $284,660, respectively, from Page/IPP. Amounts due Page/IPP at December 31,
1997 and 1998 were $16,583 and $66,265, respectively. MTM is owned as follows:
25% by Michael Macaluso, a director and 5% beneficial owner of OmniLynx; 37.5%
by Michael Avignon, a 5% beneficial owner of OmniLynx; and 37.5% by Timothy
Till, a 5% beneficial owner.

In connection with the acquisition, $499,250 owed by InfoHighway to Trident
III, L.L.C., pursuant to a loan agreement dated September 18, 1998, will be
repaid from the proceeds of the offering.

AXCES entered into a consulting agreement with MTM Holdings Corporation, the
previous sole shareholder of AXCES. The consulting agreement is effective on the
closing of this offering and has a three year term subject to early termination
rights held by both parties. MTM Holdings has been engaged to seek out
acquisition targets for us in addition to providing other services towards the
consummation of these acquisitions. The agreement provides for a $115,000 annual
retainer, payable in equal monthly installments, and a commission payable on
acquisitions consummated during the agreement term or within one year
thereafter. The retainer is an advance of any fees earned. The fee is three
percent of the first million of the purchase price, two percent of the second
million and one

71
<PAGE>
percent of any amount over $2 million. The commission will be decreased by the
amount of any retainer previously paid to the owner. The agreement terminates
automatically upon the death or disability of Mr. Michael Macaluso. Prior to the
expiration of the three year term, AXCES may terminate the agreement with or
without cause, and MTM Holdings may terminate the agreement for any reason. If
the agreement is terminated due to Mr. Macaluso's death, the retainer through
the termination date and any unpaid commission must be paid. If AXCES terminates
the agreement without cause, it must pay MTM Holdings the retainer through the
termination date, any commission that is due and payable and not previously
paid, monthly installments on the retainer for six months following the
termination date, and commission on any acquisition consummated within one year
following the termination date that relates to a potential acquisition that was
the subject of a notice from the owner to the surviving corporation given before
the date of termination. The agreement also contains certain non-competition and
non-disclosure provisions that remain in effect for a period of three years
after termination.

During June 1999, AXCES entered into employment agreements with Michael
Avignon and Timothy Till which provide for the retention of Mr. Avignon and Mr.
Till in the capacities of Operations Manager and MIS Director, respectively, for
a three year term commencing upon the consummation of the offering. The
agreements provide each employee an annual base salary of $160,000 and a monthly
car allowance of $1,000 together with one year non-competition obligations,
among other things. Both agreements provide for an annual bonus payment to each
employee; however, Mr. Avignon's annual bonus is based upon the net income
performance of AXCES, while Mr. Till's bonus is payable in an amount at the
discretion of the Board. The agreements also contain certain non-competition and
non-disclosure provisions that remain in effect for a period of one year after
their termination.

COMPANY POLICY

In the future, any transactions with our directors, officers, employees or
affiliates are anticipated to be minimal and will, in any case, be approved in
advance by a majority of the board of directors, including a majority of
disinterested members of the board of directors.

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<PAGE>
PRINCIPAL STOCKHOLDERS

The following table shows, immediately after giving effect to the closing of
the acquisitions and this offering, the beneficial ownership of our common stock
for:

- each person beneficially owning more than 5% of our outstanding common
stock;

- each of our directors;

- each of our executive officers; and

- all of our directors and executive officers as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
(2)
-----------------------
BENEFICIAL OWNER (1) NUMBER PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Frank M. DeLape (3)
Benchmark Equity Group, Inc................................................................. 1,235,041 25.29%
700 Gemini, Suite 100
Houston, Texas 77058
MTM Holdings Corporation (4)................................................................ 1,300,000 25.06%
2500 Wilcrest, Suite 540
Houston, Texas 77042
Michael Avignon (3)(5)...................................................................... 587,500 11.96%
2500 Wilcrest, Suite 540
Houston, Texas 77042
Timothy Till (3)(6)......................................................................... 562,500 11.51%
Technology Acquisitions, Ltd. (7)........................................................... 557,895 11.42%
Clarendon House, 2 Church Street
Hamilton, HM II
Bermuda
Joseph Gregori (8).......................................................................... 480,000 9.47%
Peter Parrinello (9)........................................................................ 414,060 8.34%
Lighthouse Capital Insurance Company (10)
Trident Equity Management Group, Inc.
Trident III, L.L.C.......................................................................... 358,040 7.56%
c/o MeesPierson (Cayman) Ltd.
P.O. Box 2003 GT
Grand Pavilion Comm. Centre
Bougainvillea Way
802 West Bay Road
Grand Cayman BWI
Michael Macaluso (3)(11).................................................................... 325,000 6.86%
2500 Wilcrest, Suite 540
Houston, Texas 77042
Consolidated Technologies Group, Ltd. (12).................................................. 296,250 6.07%
700 Gemini, Suite 100
Houston, Texas 77058
</TABLE>

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<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AFTER OFFERING
(2)
-----------------------
BENEFICIAL OWNER (1) NUMBER PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Christopher Efird........................................................................... 115,429 2.52%
700 Gemini, Suite 100
Houston, Texas 77058
Tony Howlett (13)........................................................................... 114,598 2.50%
Glenn Kramer (14)........................................................................... 44,076 *
John Vanderhider (15)....................................................................... 36,185 *
Harry Bennett (16).......................................................................... 10,000 *
35 Airport Road, Suite 120
Morristown, New Jersey 07960
[Weatherly Nominee--To Be Provided by Amendment] (16)....................................... 10,000 *
[Address]
All directors and officers as a group (9 persons) (8,9,11,13-16)............................ 1,549,348 27.43%
</TABLE>

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

(1) All persons listed have sole voting and investment power with respect to
their shares unless otherwise indicated. Unless otherwise indicated, the
address of each person listed is 1770 Motor Parkway, Suite 300, Hauppauge,
New York 11788.

(2) Assumes none of these persons intends to acquire shares directly from the
underwriters in connection with this offering. Shares shown include shares
of common stock that could be acquired on exercise of currently outstanding
options which have not vested and do not vest within 60 days hereof.
However, the share amounts do not include shares of common stock which are
issuable in connection with the contingent common stock issue rights.

(3) Includes (a) 579,886 shares of common stock beneficially held by Benchmark
Equity Group, Inc., a Delaware corporation, which is wholly-owned by Mr.
DeLape; (b) 261,645 shares of common stock beneficially held by Technology
Acquisitions, Ltd., a Bermuda corporation all of the voting stock of which
is owned by Benchmark, of which Mr. DeLape is a director; (c) 296,250 shares
of common stock beneficially held by Consolidated Technology Group, a New
York corporation of which Mr. DeLape is a director; and (d) 97,260 shares of
common stock beneficially held by Emerging Ventures, L.L.C., a Delaware
limited liability company which is managed by Benchmark. Does not include
358,040 shares of common stock beneficially held by Lighthouse Capital
Insurance Company, a Cayman Island unlimited licensed insurance company,
which has issued a variable universal life insurance contract of which Mr.
DeLape and his children are remote contingent beneficiaries. Mr. DeLape
disclaims beneficial ownership of such shares held by Lighthouse and does
not have voting or dispositive power with respect to such shares.

(4) Includes (a) 700,000 shares of common stock; and (b) 600,000 shares of
common stock issuable upon conversion of the 60,000 outstanding shares of
our Series B Preferred Stock. All of these shares of common and preferred
were issued to MTM, the former sole shareholder of AXCES, as consideration
for the acquisition of AXCES. MTM is owned by Mr. Till (37.5%), Mr. Avignon
(37.5%) and Mr. Macaluso (25%).

(5) Includes (a) 262,500 shares of common stock; (b) 225,000 shares of common
stock issuable upon conversion of 22,500 shares of our Series B Preferred
Stock; (c) 36,977 shares issuable upon exercise of options at $5.00 per
share; and (d) 63,023 shares issuable upon exercise of options at $10.00 per
share. The shares of common and preferred were issued to MTM, the former
sole shareholder of AXCES, as consideration for the acquisition of AXCES.
The options at $5.00 per share all vest on the closing of this offering. The
options at $10.00 per share vest ratably each month over the three-year
period following the closing of this offering.

74
<PAGE>
(6) Includes (a) 262,500 shares of common stock; (b) 225,000 shares of common
stock issuable upon conversion of 22,500 shares of our Series B Preferred
Stock; (c) 27,733 shares issuable upon exercise of options at $5.00 per
share; and (d) 47,267 shares issuable upon exercise of options at $10.00 per
share. The shares of common and preferred were issued to MTM, the former
sole shareholder of AXCES, as consideration for the acquisition of AXCES.
The options at $5.00 per share all vest on the closing of this offering. The
options at $10.00 per share vest ratably each month over the three-year
period following the closing of this offering.

(7) Includes (a) 261,645 shares of common stock held by Technology Acquisitions,
Ltd.; and (b) 296,250 shares of common stock beneficially held by
Consolidated Technology Group, an affiliate of Technology Acquisitions.

(8) Includes (a) 300,000 shares of common stock issuable upon exercise of
options at $8.00 per share; (b) 66,557 shares issuable upon exercise of
options at $5.00 per share; and (c) 113,443 shares issuable upon exercise of
options at $10.00 per share. The options at $8.00 per share vested one-third
in June 1999, and vest an additional one-third in June 2000 and 2001. The
options at $5.00 per share all vest on the closing of this offering. The
options at $10.00 per share vest ratably each month over the three-year
period following the closing of this offering.

(9) Includes (a) 39,060 shares of common stock held by Mr. Parrinello which were
issued as consideration for the purchase of ARC (5,965 of which are held by
members of his immediate family); (b) 300,000 shares of common stock
issuable upon exercise of options at $8.00 per share; (c) 27,733 shares
issuable upon exercise of options at $5.00 per share; and (d) 47,267 shares
issuable upon exercise of options at $10.00 per share. The options at $8.00
per share vested one-third in June 1999, and vest an additional one-third in
June 2000 and 2001. The options at $5.00 per share all vest on the closing
of this offering. The options at $10.00 per share vest ratably each month
over the three-year period following the closing of this offering.

(10) Includes (a) 208,040 shares of common stock held by Trident III; and (b)
150,000 shares of common stock issuable upon exercise of warrants at $8.00
per share issued to Trident III in connection with promissory notes we
issued prior to the offering. Trident III is managed by Trident Equity
Management Group, Inc., a Cayman Islands exempted company and wholly-owned
subsidiary of Lighthouse.

(11) Includes (a) 175,000 shares of common stock; and (b) 150,000 shares of
common stock issuable upon conversion of 15,000 shares of our Series B
Preferred Stock. The shares of common and preferred were issued to MTM, the
former sole shareholder of AXCES, as consideration for the acquisition of
AXCES.

(12) Includes (a) 206,250 shares of common stock issuable upon conversion at
$8.00 per share of a $1.65 million note issued to Consolidated in exchange
for outstanding debt of ARC; and (b) 90,000 shares issuable upon exercise of
warrants at $8.00 per share which were issued to Consolidated in connection
with the restructuring of ARC's note to Consolidated.

(13) Represents 114,598 shares of common stock held by Mr. Howlett which were
issued as consideration for the purchase of InfoHighway.

(14) Represents 44,076 shares of common stock held by Mr. Kramer which were
issued as consideration for the purchase of InfoHighway.

(15) Represents shares issuable upon exercise of warrants at $5.71 issued to Mr.
Vanderhider for services rendered prior to the offering.

(16) Represents shares issuable upon exercise of options at $10.00 issued to
each of our outside directors upon appointment to the board.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

The following summary of the terms of our capital stock does not purport to
be complete and is qualified in its entirety by reference to the actual terms of
the capital stock contained in our certificate of incorporation and other
agreements referenced below which are filed as exhibits to the registration
statement of which this prospectus is a part.

Upon the closing of this offering, our authorized capital stock, after
giving effect to the amendment of our certificate of incorporation, will consist
of 25,000,000 shares of common stock and 3,000,000 shares of preferred stock.
The common stock and preferred stock each have a par value of $.0001 per share.

COMMON STOCK

The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding series of preferred stock, the holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available for
that purpose. See "Dividend Policy." In the event of a liquidation, dissolution
or winding up, the holders of our common stock are entitled to share ratably in
all assets remaining after payment of liabilities, subject to prior distribution
rights of preferred stock, if any, then outstanding. The common stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and non-assessable, and the
shares of common stock offered hereby will, upon the closing of the offering, be
fully paid and non-assessable.

CONTINGENT COMMON STOCK ISSUE RIGHTS

As of the closing of this offering, there will be approximately 727,511
contingent common stock issue rights. These rights were issued to certain of the
founders of OmniLynx and to the former shareholders of ARC and InfoHighway in
connection with the acquisition of those companies. The contingent stock issue
rights entitle the holder to receive shares of our common stock based upon its
market performance beginning 90 days after the closing of this offering.
Approximately one-half of the shares are issuable when the common stock reaches
a 10-day average of $16.00 per share. The remaining one-half are issuable when
the common stock reaches a 10-day average of $21.00 per share. The rights expire
after three years. No dividends are payable with respect to the rights and the
rights are not transferrable or assignable except by the laws of descent and
distribution, by will or by operation of law. All of the 235,878 contingent
common stock issue rights issued to the former shareholders of InfoHighway,
except for 81,425 which were issued to Trident III, L.L.C, are subject to pro
rata reduction if InfoHighway fails to maintain certain monthly revenue levels
prior to the closing of this offering.

PREFERRED STOCK

At the direction of our board, we may issue up to 3,000,000 shares of
preferred stock from time to time. Our board may, without any action by holders
of the common stock:

- adopt resolutions to issue preferred stock in one or more classes or
series;

- fix or change the number of shares constituting any class or series of
preferred stock; and

- establish or change the rights of the holders of any class or series of
preferred stock.

The rights any class or series of preferred stock may evidence may include:

- general or special voting rights;

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- preferential liquidation or preemptive rights;

- preferential cumulative or noncumulative dividend rights;

- redemption or put rights; and

- conversion or exchange rights.

We may issue shares of, or rights to purchase, preferred stock the terms of
which might:

- adversely affect voting or other rights evidenced by, or amounts otherwise
payable with respect to, the common stock;

- discourage an unsolicited proposal to acquire us; or

- facilitate a particular business combination involving us.

Any such action could discourage a transaction that some or a majority of our
stockholders might believe to be in their best interests or in which our
stockholders might receive a premium for their stock over its then market price.

SERIES A 10% CONVERTIBLE PREFERRED STOCK. Upon the closing of this
offering, 1,216,674 shares of our Series A 10% Convertible Preferred Stock will
be outstanding, of 1,217,000 shares authorized. The Series A Preferred is
convertible into common stock at any time after 90 days from the closing of this
offering at the option of the holder. The number of shares of common stock
issuable upon conversion of the Series A Preferred is determined by multiplying
the number of shares being converted by the conversion rate as defined in the
statement of designation. The conversion rate is calculated by dividing $1.00 by
the lesser of the offering price (assumed to be $10.00) or the five-day average
closing price ending on the trading day prior to any such conversion date
(subject to adjustment). Annual dividends of $.10 per share are payable each
March 1, commencing on March 1, 2000, and are cumulative. Except as otherwise
required by law, the shares of Series A Preferred Stock have no voting rights.
We may redeem any or all of the shares of Series A Preferred Stock at any time
for the redemption price of $1.00 per share, plus accrued but unpaid dividends,
upon at least 5 days notice. The shares of Series A Preferred Stock have a
liquidation right of $1.00 per share, plus accrued but unpaid dividends, and
rank on parity with the Series B Preferred Stock.

SERIES B 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK. Upon the closing of
this offering, all 60,000 authorized shares of our Series B 8% Cumulative
Convertible Preferred Stock will be outstanding. Each share of the Series B
Preferred is convertible into 10 shares of common stock (subject to adjustment)
at any time at the option of the holder. Annual dividends of $12.00 per share
are payable quarterly and are cumulative. The holders of Series B Preferred
Stock shall have the same voting rights as, and shall vote with, the holders of
the common stock on an as-converted basis. We may redeem any or all of the
shares of Series B Preferred Stock at any time beginning 36 months after the
closing of this offering for cash, or assign to the holders a designated portion
of our cash flow, for the redemption price of $150.00 per share, plus accrued
but unpaid dividends, upon at least 30 days notice. The shares of Series B
Preferred Stock have a liquidation right of $150.00 per share plus accrued but
unpaid dividends, and rank on parity with to the Series A Preferred Stock. If
our common stock trades for an average of $20.00 per share or more for a period
of 10 consecutive days, we may force a conversion of the Series B Preferred
Stock into common stock.

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REGISTRATION RIGHTS

Pursuant to certain registration rights agreements, the holders of the
securities listed below are entitled to certain registration rights for the
number of shares of common stock and as indicated below:

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
TYPE OF SECURITY WITH REGISTRATION RIGHTS REGISTRATION RIGHTS
- ------------------------------------------------------ ---------------------------- ---------------------------
<S> <C> <C>
Common Stock.......................................... 2,048,242 Piggy Back
Common Stock Contiengent Issue Rights................. 727,511 Piggy Back
Series A Preferred Stock.............................. 121,667 Demand and Piggy Back
Series B Preferred Stock.............................. 600,000 Piggy Back
Warrants.............................................. 720,031 Piggy Back
Underwriter Warrants.................................. 160,000 Demand and Piggy Back
Convertible Promissory Note........................... 206,250 Piggy Back
</TABLE>

For a detailed description of these registration rights, see "Shares
Eligible for Future Sale."

SPECIAL PROVISIONS OF OUR CHARTER, BYLAWS AND DELAWARE LAW

The following charter and bylaw provisions and provisions of Delaware law
may have the effect of delaying, deterring or preventing a change of control of
OmniLynx.

AUTHORIZATION OF PREFERRED STOCK. As noted above, our Board of Directors,
without stockholder approval, has the authority under our Certificate of
Incorporation to issue preferred stock with rights superior to the rights of the
holders of common stock. As a result, preferred stock could be issued quickly
and easily, could adversely affect the rights of holders of common stock and
could be issued with terms calculated to delay or prevent a change of control of
OmniLynx or make removal of management more difficult.

ELECTION AND REMOVAL OF DIRECTORS. Our charter and Bylaws provide for the
division of our Board of Directors into three classes, as nearly equal in number
as possible, with the directors in each class serving for a three-year term, and
one class being elected each year by our stockholders. Directors may be removed
only for cause. This system of electing and removing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of OmniLynx and may maintain the incumbency of the Board of
Directors, as it generally makes it more difficult for stockholders to replace a
majority of directors. See "Management--Classified Board."

STOCKHOLDER MEETINGS AND WRITTEN CONSENT. Under our Bylaws, a special
meeting of the stockholders may be called by the Board of Directors, by written
order of a majority of the Board, the Chairman of the Board, the Chief Executive
Officer, the President or the stockholders by the written request of not less
than two-thirds of the common stock entitled to vote at such meeting. Our
Certificate of Incorporation provides that stockholders may not act by written
consent and, accordingly, can only act at a meeting.

REQUIREMENTS FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATIONS AND
PROPOSALS. Our Bylaws establish advance notice procedures with respect to
stockholder proposals and the nomination of candidates for election as
directors, other than nominations made by or at the direction of the Board of
Directors or a committee thereof.

INDEMNIFICATION. Delaware law authorizes Delaware corporations to limit or
eliminate the personal liability of directors for monetary damages for breach of
a director's fiduciary duty of care. The duty of care requires that, when acting
on behalf of the corporation, directors must exercise an informed business
judgment based on all material information reasonably available to them. Absent
the

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limitations Delaware law authorizes, directors of Delaware corporations are
accountable to those corporations and their stockholders for monetary damages
for conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables Delaware corporations to limit available relief to
equitable remedies such as injunction or rescission. Our certificate of
incorporation limits the liability of our directors to us or our stockholders to
the fullest extent Delaware law permits, and no member of our board will be
personally liable for monetary damages for breach of the member's fiduciary duty
as a director, except for liability:

- for any breach of the member's duty of loyalty to us or our stockholders;

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
Law; or

- for any transaction from which the member derived an improper personal
benefit.

This provision could have the effect of reducing the likelihood of derivative
litigation against our directors and may discourage or deter our stockholders or
management from bringing a lawsuit against our directors for breach of their
duty of care, even though such an action, if successful, might otherwise have
benefited our stockholders and us. Our bylaws provide indemnification to our
officers and directors and other specified persons with respect to their conduct
in various capacities, and we have entered into agreements with each of our
directors and executive officers which indemnify them to the fullest extent
Delaware law and our certificate of incorporation permit.

STATUTORY BUSINESS COMBINATION PROVISION. Until June 2000, we are subject
to Section 203 of the Delaware General Corporation Law. Section 203 prevents an
"interested stockholder," which is defined generally as a person owning 15% or
more of a Delaware corporation's outstanding voting stock or any affiliate or
associate of that person, from engaging in a broad range of "business
combinations" with the corporation for three years following the date that
person became an interested stockholder unless:

- before that person became an interested stockholder, the board of
directors of the corporation approved the transaction in which that person
became an interested stockholder or approved the business combination;

- on completion of the transaction that resulted in that person's becoming
an interested stockholder, that person owned at least 85% of the voting
stock of the corporation outstanding at the time the transaction
commenced, other than stock held by (1) directors who are also officers of
the corporation or (2) any employee stock plan that does not provide
employees with the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange offer; or

- following the transaction in which that person became an interested
stockholder, both the board of directors of the corporation and the
holders of 66 2/3% of the outstanding voting stock of the corporation not
owned by that person approve the business combination.

Under Section 203, the restrictions described above also do not apply to
specific business combinations proposed by an interested stockholder following
the announcement or notification of designated extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors, if a
majority of the directors who were directors prior to any person becoming an
interested stockholder during the previous three years or were recommended for
election or elected to succeed those directors by a majority of those directors
approve or do not oppose that extraordinary transaction.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer and Trust Company is the transfer agent and
registrar for our common stock.

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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock. Future sales of substantial amounts of our common stock in the public
market could adversely affect market prices prevailing from time to time. Sales
of substantial amounts of our common stock in the public market after the
restrictions lapse could adversely affect the prevailing market price and our
ability to raise equity capital in the future.

Upon the completion of this offering, we will have 4,587,242 shares of
common stock outstanding (4,827,242 if the over-allotment option is exercised).
Of these shares, the 1,600,000 shares sold in this offering will be freely
tradable without restriction under the Securities Act, unless held by our
"affiliates," as that term is defined in Rule 144 under the Securities Act. In
addition, we have registered 165,000 shares of common stock for resale by
Benchmark Equity Group over a period of 90 days beginning 90 days after the
closing of this offering. An additional 327,917 shares of common stock issuable
upon conversion of the Series A Preferred Stock and conversion of a convertible
promissory note will be eligible for sale beginning 12 months from the closing
of this offering subject to volume limitations pursuant to Rule 144. The
remaining 2,987,242 shares of common stock held by existing stockholders were
issued and sold by us in reliance on exemptions from the registration
requirements of the Securities Act. These shares may be sold in the public
market only if registered, or pursuant to an exemption from registration such as
Rule 144, 144(k) or 701 under the Securities Act.

Except for 327,917 shares not subject to the lock up, our directors,
executive officers, all other stockholders and all other option, warrant and
contingent stock issue right holders, who in the aggregate held all of the
shares of our common stock or securities convertible into our common stock
outstanding immediately prior to the completion of this offering, are subject to
lock-up agreements under which they have agreed not to directly or indirectly,
offer, sell, contract to sell, grant any option to purchase, pledge or otherwise
dispose of, or, in any manner, transfer all or a portion of the economic
consequences associated with the ownership of any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock
beneficially owned by them for a period of 24 months after the date of this
prospectus, without the prior written consent of Weatherly Securities
Corporation. However, if the average of the closing prices for our common stock
during the last ten trading days of each measurement period following the
closing of this offering, as listed in the table below, is at least $17.00 per
share, then the designated percentage of all of the shares subject to the lockup
then outstanding shall be irrevocably released from such restrictions:

<TABLE>
<CAPTION>
MEASUREMENT PERIOD PERCENTAGE RELEASED
- ------------------- ---------------------
<S> <C>
12 months 10%
15 months 20%
18 months 30%
21 months 40%
24 months All shares not
previously released
</TABLE>

We may grant options and issue stock under our 1999 Incentive Plan in connection
with strategic relationships, and in connection with acquisitions of businesses,
technologies or products complementary to ours, provided that the recipients of
such stock agree to be bound by a lock-up agreement for the remainder of the
lock-up period.

Upon expiration of the lock-up agreements, approximately 6,268,784 shares of
common stock outstanding or issuable upon conversion or exercise of outstanding
securities will become eligible for immediate public resale, subject in some
cases to volume limitations pursuant to Rule 144. Pursuant to certain
registration rights agreements, the holders of the securities listed below are
entitled to certain registration rights for the number of shares of common stock
and as indicated below:

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<PAGE>

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
WITH REGISTRATION
TYPE OF SECURITY RIGHTS REGISTRATION RIGHTS
- ----------------------------------------------------------- ----------------------- ---------------------------
<S> <C> <C>
Common Stock............................................... 2,048,242 Piggy Back
Common Stock Contingent Issue Rights....................... 727,511 Piggy Back
Series A Preferred Stock................................... 121,667 Demand and Piggy Back
Series B Preferred Stock................................... 600,000 Piggy Back
Warrants................................................... 720,031 Piggy Back
Underwriter Warrants....................................... 160,000 Demand and Piggy Back
Convertible Promissory Note................................ 206,250 Piggy Back
</TABLE>

Pursuant to a registration rights agreement entered into with the
representative of the underwriters, the representative has certain demand and
"piggy-back" registration rights with respect to the 160,000 shares of common
stock issuable upon exercise of the warrants issued to the representative in
connection with the closing of the offering. The representative is entitled to
one demand registration right during the four year period beginning one year
after the closing of this offering unless a registration statement is filed and
is either withdrawn or does not become effective in which case, the
representative will not have been deemed to exercise the "demand" registration
right.

Trans Global, the holder of our Series A Preferred Stock, or its transferees
are entitled to "piggy back" registration rights with respect to 121,667 shares
of common stock issuable upon the conversion of Series A Preferred Stock,
subject to certain limitations and provisions. The number of securities
requested to be included in a registration involving the exercise of "piggy
back" registration rights are subject to pro rata reduction upon the request of
the managing underwriter. As a condition to including the securities in the
offering, the managing underwriter may require that the holders of the Series A
Preferred Stock agree not to sell the securities for a six month period
following the effective date of the registration statement. The holders of the
Series A Preferred Stock may exercise the "piggy back" registration rights from
the date of this offering until the holders of the Series A Preferred Stock can
sell the underlying common stock pursuant to Rule 144(k) of the Securities Act
of 1933, as amended. In addition, any holder(s) of the Series A Preferred Stock
who own(s) 25% of the Series A Preferred Stock is entitled to "demand"
registration rights with respect to the shares of common stock issuable upon the
conversion of Series A Preferred Stock. The holders of the Series A Preferred
Stock may exercise the "demand" registration rights at any time twelve months
from the date of this offering, if the underlying common stock has not been
previously registered, until holders of the Series A Preferred Stock can sell
the underlying common stock pursuant to Rule 144(k) of the Securities Act of
1933, as amended. The holders of the Series A Preferred Stock are entitled to
only one "demand" registration right unless a registration statement is filed
and is either withdrawn or does not become effective, in which case, the holders
of the Series A Preferred Stock will not have been deemed to exercise the
"demand" registration right.

Pursuant to the certain registration rights agreements, the holders of the
remaining 4,302,034 shares of common stock with registration rights are entitled
to "piggy-back" registration rights, subject to certain limitations and
conditions. Except for the 206,250 shares of common stock issuable upon
conversion of the convertible note issued to Consolidated, these shares remain
subject to the lock-up agreement even if registered pursuant to these
registration rights. The number of securities request to be included in a
registration involving the exercise of "piggy-back" rights are subject to a pro
rata reduction based on the number of shares of common stock held by each such
security holder and any other security holders exercising their respective
registration rights to the extent that we are so advised by the managing
underwriter, if any, that the total number of securities requested to be
included in the underwriting is such as to materially and adversely affect the
success of the offering. The registration rights terminate as to any such
security holder at the later (1) 3 years after the offering made hereby or (2)
such time as such security holder may sell under Rule 144 in a three month
period all registrable securities then held by such holder.

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As of the date of this offering, 1,050,000 shares were subject to
outstanding options under our 1999 Incentive Plan and 904,031 shares were
subject to outstanding warrants to purchase common stock. All of these shares
are subject to the lock-up agreements described above. Approximately 90 days
after the date of this prospectus, we intend to file a Registration Statement on
Form S-8 covering shares issuable under our 1999 Incentive Plan (including
shares subject to then outstanding options under such plan), thus permitting the
resale of such shares in the public market without restriction under the
Securities Act after expiration of the applicable lock-up agreements. In
addition, the holders of the warrants to purchase shares of common stock are
entitled to certain registration rights with respect to such shares as described
above.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned shares for at least one
year (including the holding period of any prior owner, except an affiliate) is
entitled to sell in a "broker's transaction" or to market makers, within any
three-month period commencing 90 days after the date of this prospectus, a
number of shares that does not exceed the greater of (i) one percent of the
number of shares of common stock then outstanding or (ii) the average weekly
trading volume of the common stock during the four calendar weeks preceding the
required filing of a Form 144 with respect to such sale. Sales under Rule 144
are generally subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about us.
Under Rule 144(k), a person who is not deemed to have been one of our affiliates
at any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without having to comply with the manner of sale, public information,
volume limitation or notice provisions of Rule 144. Under Rule 701 under the
Securities Act, persons who purchase shares upon exercise of options granted
prior to the effective date of this offering are entitled to sell such shares 90
days after the effective date of this offering in reliance on Rule 144, without
having to comply with the holding period requirements of Rule 144 and, in the
case of non-affiliates, without having to comply with the public information,
volume limitation or notice provisions of Rule 144.

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UNDERWRITING

Weatherly Securities Corporation is acting as representative for the
underwriters named below in connection with this offering. The underwriters have
severally agreed, subject to the terms and conditions of the underwriting
agreement, among them and our company, to purchase from us, and we have agreed
to sell to them, the number of shares of common stock set forth below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
- ----------------------------------------------------------------------- -----------------
<S> <C>
Weatherly Securities Corporation.......................................
Westport Resources Investment Services, Inc............................
-----------------
Total.................................................................. 1,600,000
-----------------
-----------------
</TABLE>

The underwriters are committed to purchase all the shares of common stock
offered hereby, if they purchase any of such common stock (excluding shares
covered by the over-allotment option discussed below). The underwriting
agreement provides that the obligations of the underwriters are subject to
certain conditions precedent.

We have been advised by the representative that the underwriters initially
propose to offer the shares of common stock to the public at the initial public
offering price set forth on the cover page of this prospectus and to certain
dealers at such price less concessions not in excess of $ per share of
common stock. Such dealers may re-allow a concession not in excess of $ per
share of common stock to certain other dealers. After the commencement of this
offering, the public offering price, concession and reallowance may be changed
by the representative.

We have agreed to pay to the representative a non-accountable expense
allowance equal to three (3%) percent of the gross proceeds derived from the
sale of the common stock underwritten, of which $ has been paid to date.

We have granted to the underwriters an over-allotment option, exercisable
during the forty-five (45) day period from the date of this prospectus, to
purchase up to 240,000 shares of common stock at the initial public offering
price per share of common stock offered hereby, less underwriting discounts and
the non-accountable expense allowance. Such option may be exercised only for the
purpose of covering over-allotments, if any, incurred in the sale of the common
stock offered hereby. To the extent such option is exercised in whole or in
part, each underwriter will have a firm commitment, subject to certain
conditions, to purchase the number of the additional Common Stock proportionate
to its initial commitment.

We have also agreed to sell to the representative, for nominal
consideration, warrants to purchase up to 160,000 shares of our common stock
(184,000 if the underwriters exercise their over-allotment option in full). The
representative's warrants are initially exercisable at a price of 120% of the
initial public offering price per share of common stock. The representative's
warrants may be exercised for a period of five years, commencing one year from
the date of this prospectus. The representative's warrants provide for
adjustment in the number of shares of common stock issuable upon the exercise
thereof and in the exercise price of the representative's warrants as a result
of certain events, including subdivisions and combinations of the common stock.
The representative's warrants grant to their holders certain demand and
"piggyback" rights to register the common stock issuable upon exercise of the
warrants.

We have agreed for a period of three years after the date hereof, if
requested by the representative, to use our best efforts to nominate one person
designated by the representative for election to our company's board of
directors. In the event the representative elects not to exercise such right, it
may designate a person to receive all notices of meetings of our board of
directors and all other correspondence and communications sent by us to our
board of directors and to attend all such meetings of our

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board of directors. We have agreed to reimburse the representative's designee
for his out-of-pocket expenses incurred in connection with his attendance of
meetings of our board of directors.

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial public offering price of our common stock has
been determined by negotiation between us and the representative and does not
necessarily bear any relationship to our asset value, net worth, or other
established criteria of value. The factors considered in such negotiations, in
addition to prevailing market conditions, included the history of and prospects
for the industry in which we compete, an assessment of our management, the
prospects of our company, our capital structure, the market for initial public
offerings, and certain other factors as were deemed relevant. The common stock
has been approved for quotation on the American Stock Exchange under the symbol
" " subject to office notice of issuance.

In connection with this offering, certain underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the common stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M of the Exchange Act of 1934, pursuant to which
such persons may bid for or purchase common stock for the purpose of stabilizing
their respective market prices. The underwriters also may create a short
position for the account of the underwriters by selling more common stock in
connection with this offering than they are committed to purchase from us, and
in such case may purchase common stock in the open market following completion
of this offering to cover all or a portion of such short position. A "syndicate
covering transaction" is the bid for or the purchase of the common stock on
behalf of the underwriters to reduce a short position created in connection with
the offering. The underwriters may also cover all or a portion of such short
position by exercising the over-allotment option referred to above. In addition,
the representative, on behalf of the underwriters, may impose "penalty bids"
under contractual arrangements with the underwriters whereby it may reclaim from
an underwriter (or dealer participating in this offering) for the account of
other underwriters, the selling concession with respect to common stock that are
distributed in this offering but subsequently purchased for the account of the
underwriters in the open market. Any of the transactions described in this
paragraph may result in the maintenance of the price of the common stock at a
level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are
undertaken, they may be discontinued at any time.

The offering of the shares is made for delivery, when, as, and if accepted
by the underwriters and subject to prior sale and to withdrawal, cancellation,
or modification of the offering without notice. The underwriters reserve the
right to reject an order for the purchase of shares in whole or in part.

The underwriters do not expect any sales of shares of common stock to be
made to discretionary accounts.

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LEGAL MATTERS

The validity of the shares of the common stock offered hereby will be passed
upon for us by Porter & Hedges, L.L.P., Houston, Texas. Certain legal matters in
connection with this offering will be passed upon for the underwriters by
Ruskin, Moscou, Evans & Faltischek, P.C., Mineola, New York.

EXPERTS

The financial statements of OmniLynx Communications Corporation included in
this prospectus and in the registration statement have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their reports appearing elsewhere herein and in the
registration statement, and are included herein in reliance upon such reports
given upon the authority of said firm as experts in auditing and accounting.

The financial statements of InfoHighway International, Inc. as of December
31, 1998 and 1997, and for each of the years in the three year period ended
December 31, 1998, have been included elsewhere in this registration statement
in reliance upon the report of KPMG LLP, independent auditors, appearing
elsewhere in the registration statement, and upon the authority of such firm as
experts in accounting and auditing.

The audited financial statements of ARC Networks, Inc. included in this
prospectus have been audited by Moore Stephens, P.C., independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of such firm as experts in giving such
report.

The audited financial statements of AXCES, Inc. included in this prospectus
have been audited by Pannell Kerr Forster of Texas, P.C., independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of such firm as experts in giving such
report.

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WHERE YOU CAN FIND MORE INFORMATION

This prospectus constitutes a part of a Registration Statement on Form S-1
that we filed with the SEC under the Securities Act. This prospectus, which
forms a part of the Registration Statement, does not contain all the information
set forth in the Registration Statement. Reference is hereby made to the
Registration Statement and related exhibits and schedules filed therewith for
further information with respect to us and the shares offered hereby. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed by us with
the SEC and each such statement is qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules thereto may be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, NW, Washington, D.C. 20594, and at the following regional
offices of the SEC: New York Regional Office, Seven World Trade Center, New
York, New York 10048, and Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such reports and other information may be
obtained from the Public Reference Section of the SEC: 450 Fifth Street, NW,
Washington, D.C. 20549, upon payment of the prescribed fees.

We are currently subject to the periodic reporting and other information
requirements of the Exchange Act, and in accordance therewith file reports and
other information with the SEC. Such reports and other information may be
inspected and copied at the public reference facilities maintained by the SEC at
450 Fifth Street, NW, Washington, D.C. 20594, and at the following regional
offices of the SEC: New York Regional Office, Seven World Trade Center, New
York, New York 10048, and Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such reports and other information may be
obtained from the Public Reference Section of the SEC: 450 Fifth Street NW,
Washington, D.C. 20549, upon payment of the prescribed fees. The SEC maintains a
Web site that contains reports and information statements and other information
regarding registrants that file electronically with the SEC. Copies of such
documents and the Registration Statement may be obtained from the SEC's Internet
address at http://www.sec.gov.

86
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
OMNILYNX COMMUNICATIONS CORPORATION AND FOUNDING COMPANIES
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Basis of Presentation.................................................................................. F-2
Unaudited Pro forma Combined Balance Sheet............................................................. F-3
Unaudited Pro forma Combined Statement of Operations................................................... F-4
Notes to Unaudited Pro Forma Combined Financial Statements............................................. F-6

OMNILYNX COMMUNICATIONS CORPORATION HISTORICAL FINANCIAL STATEMENTS
Report of Independent Certified Public Accountants..................................................... F-14
Balance Sheets......................................................................................... F-15
Statements of Loss..................................................................................... F-16
Statements of Stockholders' Equity..................................................................... F-17
Statements of Cash Flows............................................................................... F-18
Notes to Financial Statements.......................................................................... F-19

FOUNDING COMPANIES:

AXCES, INC.
Independent Auditors' Report........................................................................... F-23
Balance Sheets......................................................................................... F-24
Statements of Operations............................................................................... F-25
Statements of Stockholders' Equity..................................................................... F-26
Statements of Cash Flows............................................................................... F-27
Notes to Financial Statements.......................................................................... F-28

INFOHIGHWAY INTERNATIONAL, INC.
Independent Auditors' Report........................................................................... F-38
Balance Sheets......................................................................................... F-39
Statements of Operations............................................................................... F-40
Statements of Stockholders' Equity (Deficit)........................................................... F-41
Statements of Cash Flows............................................................................... F-42
Notes to Financial Statements.......................................................................... F-43

ARC NETWORKS, INC.
Independent Auditors' Report........................................................................... F-49
Consolidated Balance Sheets............................................................................ F-50
Consolidated Statements of Operations.................................................................. F-51
Consolidated Statements of Capital Deficit............................................................. F-52
Consolidated Statements of Cash Flows.................................................................. F-53
Notes to Consolidated Financial Statements............................................................. F-54
</TABLE>

F-1
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The following unaudited pro forma combined financial statements give effect
to the acquisitions by OmniLynx Communications Corporation ("OmniLynx") of the
outstanding capital stock of InfoHighway International, Inc. ("InfoHighway"),
ARC Networks, Inc. ("ARC"), and AXCES, Inc. ("AXCES"), (together, the "founding
companies"). OmniLynx and the founding companies are hereinafter referred to as
the Company. OmniLynx acquired ARC in June 1999, and will acquire InfoHighway
and AXCES simultaneously with and as a condition of the closing of OmniLynx's
initial public offering (the "Offering"). All of the acquisitions ("the
Acquisitions") have been accounted for using the purchase method of accounting.
With respect to the Acquisitions, AXCES has been identified as the accounting
acquiror for financial statement presentation purposes. The pro forma combined
financial statements also give effect to an asset acquisition consummated during
January 1999 by InfoHighway (the "Eden Acquisition").

The unaudited pro forma combined balance sheet gives effect to the
Acquisitions, the Eden Acquisition and the Offering as if they had occurred on
March 31, 1999. The unaudited pro forma combined statements of operations give
effect to these transactions as if they had occurred on January 1, 1998.

OmniLynx has preliminarily analyzed the benefits that it expects will be
realized from reductions in salaries, bonuses and certain benefits to the owners
and key management personnel of the founding companies. To the extent the owners
and key management personnel of the founding companies have agreed prospectively
to reductions in salaries, bonuses and benefits, these reductions have been
reflected in the unaudited pro forma combined statements of operations.
Additionally, reductions in interest expense as the result of the planned
repayment of certain debt of the founding companies, as well as through the
conversion of certain debt into preferred stock, have been reflected in the
unaudited pro forma combined statements of operations. With respect to other
potential benefits, OmniLynx has not and cannot quantify these benefits until
completion of the combination of the founding companies. It is anticipated that
these benefits will be offset by costs related to OmniLynx's new corporate
management and by the costs associated with being a public company. However,
because these costs cannot be accurately quantified at this time, they have not
been included in the unaudited pro forma financial information of OmniLynx.

The purchase price of the founding companies (except AXCES, which is the
accounting acquiror) and of OmniLynx has been allocated based on the estimated
fair value of assets acquired and liabilities assumed. The pro forma adjustments
are based on estimates, available information and certain assumptions and may be
revised as additional information becomes available. The pro forma financial
data do not purport to represent what OmniLynx's financial position or results
of operations would actually have been if such transactions in fact had occurred
on the dates stated above and are not necessarily representative of OmniLynx's
financial position or results of operations for any future period. The unaudited
pro forma combined financial statements should be read in conjunction with the
other financial statements and notes thereto included elsewhere in this
Prospectus. Also see "Risk Factors" included elsewhere herein.

F-2
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

MARCH 31, 1999
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL
BASIS PRO FORMA PRO FORMA
AXCES INFOHIGHWAY ARC OMNILYNX COMBINED ADJUSTMENTS COMBINED
----------- ------------- --------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.... $ 1,740 $ -- $ 140 $ 34 $ 1,914 $ 181 $ 2,095
Accounts receivable, net..... 3,377 118 3,464 -- 6,959 -- 6,959
Receivable from related
parties.................... 1,131 -- -- -- 1,131 -- 1,131
Costs and estimated earnings
in excess of billings on
uncompleted contracts...... -- -- 409 -- 409 -- 409
Prepaid expenses and other
current assets............. 228 2 113 66 409 -- 409
----------- ------------- --------- ----- ----------- ------------- -----------
Total current assets....... 6,476 120 4,126 100 10,822 181 11,003
PROPERTY AND EQUIPMENT, net.... 512 820 147 -- 1,479 -- 1,479
GOODWILL AND OTHER INTANGIBLE
ASSETS....................... -- 438 241 -- 679 27,633 28,312
OTHER ASSETS................... 75 34 307 -- 416 -- 416
----------- ------------- --------- ----- ----------- ------------- -----------
TOTAL ASSETS................... $ 7,063 $ 1,412 $ 4,821 $ 100 $ 13,396 $ 27,814 $ 41,210
----------- ------------- --------- ----- ----------- ------------- -----------
----------- ------------- --------- ----- ----------- ------------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
CURRENT LIABILITIES:
Notes payable................ $ -- $ 1,119 $ 250 $ 95 $ 1,464 $ 4,540 $ 6,004
Notes payable to related
parties.................... -- 918 2,460 -- 3,378 (60) 3,318
Capital lease payables....... -- 45 22 -- 67 -- 67
Accounts payable............. 406 657 4,565 -- 5,628 -- 5,628
Accrued liabilities.......... 346 82 -- 1 429 -- 429
Billings in excess of costs
and estimated earnings on
uncompleted contracts...... -- -- 551 -- 551 -- 551
Disputed amounts under
contract................... -- -- 1,394 -- 1,394 -- 1,394
Current income taxes
payable.................... -- -- -- -- -- 1,600 1,600
Other current liabilities.... 21 313 57 -- 391 -- 391
----------- ------------- --------- ----- ----------- ------------- -----------
Total current
liabilities.............. 773 3,134 9,299 96 13,302 6,080 19,382
LONG-TERM DEBT, net of current
maturities................... -- -- 559 -- 559 (550) 9
NOTES PAYABLE TO RELATED
PARTIES...................... -- -- 1,157 -- 1,157 (1,157) --
OTHER LONG-TERM LIABILITIES.... 32 -- -- -- 32 -- 32
STOCKHOLDERS' EQUITY (CAPITAL
DEFICIT):
Preferred stock.............. -- -- -- -- -- -- --
Common stock................. 1 1,836 95 -- 1,932 (1,932) --
Additional paid in capital... 13 -- 620 6 639 21,210 21,849
Retained earnings
(deficit).................. 6,244 (3,558) (6,909) (2) (4,225) 4,163 (62)
----------- ------------- --------- ----- ----------- ------------- -----------
Stockholders' equity
(capital deficit)........ 6,258 (1,722) (6,194) 4 (1,654) 23,441 21,787
----------- ------------- --------- ----- ----------- ------------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (CAPITAL
DEFICIT)..................... $ 7,063 $ 1,412 $ 4,821 $ 100 $ 13,396 $ 27,814 $ 41,210
----------- ------------- --------- ----- ----------- ------------- -----------
----------- ------------- --------- ----- ----------- ------------- -----------

<CAPTION>
POST- PRO FORMA
ACQUISITION AS
ADJUSTMENTS ADJUSTED
------------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.... $ 6,536 $ 8,631
Accounts receivable, net..... -- 6,959
Receivable from related
parties.................... -- 1,131
Costs and estimated earnings
in excess of billings on
uncompleted contracts...... -- 409
Prepaid expenses and other
current assets............. (66) 343
------------- -----------
Total current assets....... 6,470 17,473
PROPERTY AND EQUIPMENT, net.... -- 1,479
GOODWILL AND OTHER INTANGIBLE
ASSETS....................... -- 28,312
OTHER ASSETS................... -- 416
------------- -----------
TOTAL ASSETS................... $ 6,470 $ 47,680
------------- -----------
------------- -----------

CURRENT LIABILITIES:
Notes payable................ $ (5,204) $ 800
Notes payable to related
parties.................... (2,819) 499
Capital lease payables....... -- 67
Accounts payable............. -- 5,628
Accrued liabilities.......... -- 429
Billings in excess of costs
and estimated earnings on
uncompleted contracts...... -- 551
Disputed amounts under
contract................... -- 1,394
Current income taxes
payable.................... -- 1,600
Other current liabilities.... -- 391
------------- -----------
Total current
liabilities.............. (8,023) 11,359
LONG-TERM DEBT, net of current
maturities................... 1,200 1,209
NOTES PAYABLE TO RELATED
PARTIES...................... -- --
OTHER LONG-TERM LIABILITIES.... -- 32
STOCKHOLDERS' EQUITY (CAPITAL
DEFICIT):
Preferred stock.............. -- --
Common stock................. -- --
Additional paid in capital... 13,320 35,169
Retained earnings
(deficit).................. (27) (89)
------------- -----------
Stockholders' equity
(capital deficit)........ 13,293 35,080
------------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (CAPITAL
DEFICIT)..................... $ 6,470 $ 47,680
------------- -----------
------------- -----------
</TABLE>

F-3
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AXCES INFOHIGHWAY ARC OMNILYNX TOTAL ADJUSTMENTS COMBINED
--------- ------------- --------- ------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $ 5,411 $ 535 $ 4,001 $ -- $ 9,947 $ -- $ 9,947
Cost of services........................... 1,853 336 3,301 -- 5,490 -- 5,490
--------- ----- --------- ----- --------- ----------- -----------
Gross profit............................... 3,558 199 700 -- 4,457 -- 4,457
Selling, general and administrative
expenses................................. 2,507 335 968 1 3,811 767 4,578
Depreciation and amortization.............. 58 131 97 -- 286 691 977
--------- ----- --------- ----- --------- ----------- -----------
Income (loss) from operations.............. 993 (267) (365) (1) 360 (1,458) (1,098)
Interest income (expense), net............. (3) (24) (118) (2) (147) 75 (72)
--------- ----- --------- ----- --------- ----------- -----------
Income (loss) before income taxes.......... 990 (291) (483) (3) 213 (1,383) (1,170)
Provision (benefit) for income taxes....... -- -- -- -- -- (172) (172)
--------- ----- --------- ----- --------- ----------- -----------
Net income (loss).......................... $ 990 $ (291) $ (483) $ (3) $ 213 $ (1,211) $ (998)
--------- ----- --------- ----- --------- ----------- -----------
--------- ----- --------- ----- --------- ----------- -----------
Pro forma net loss before dividends on
preferred stock.......................... $ (998)
Dividends on preferred stock............... 210
-----------
Pro forma net loss applicable to common
stockholders............................. $ (1,208)
-----------
-----------

Net loss per share--basic and diluted...... $ (0.26)
Shares used in computing pro forma net loss
per share................................ 4,587
</TABLE>

F-4
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
AXCES INFOHIGHWAY ARC OMNILYNX TOTAL ADJUSTMENTS COMBINED
--------- ------------ --------- ------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................... $ 30,280 $ 1,384 $ 13,931 $ -- $ 45,595 $ 778 $ 46,373
Cost of services....................... 9,889 995 11,651 -- 22,535 184 22,719
--------- ------------ --------- ----- --------- ----------- -----------
Gross profit........................... 20,391 389 2,280 -- 23,060 594 23,654
Selling, general and administrative
expenses............................. 17,934 1,339 3,465 -- 22,738 (1,202) 21,536
Depreciation and amortization.......... 204 261 407 -- 872 2,946 3,818
--------- ------------ --------- ----- --------- ----------- -----------
Income (loss) from operations.......... 2,253 (1,211) (1,592) -- (550) (1,150) (1,700)
Interest income (expense), net......... (208) (57) (317) -- (582) 123 (459)
--------- ------------ --------- ----- --------- ----------- -----------
Income (loss) before income taxes...... 2,045 (1,268) (1,909) -- (1,132) (1,027) (2,159)
Provision (benefit) for income taxes... (917) -- -- -- (917) 1,162 245
--------- ------------ --------- ----- --------- ----------- -----------
Net income (loss)...................... $ 2,962 $ (1,268) $ (1,909) $ -- $ (215) $ (2,189) $ (2,404)
--------- ------------ --------- ----- --------- ----------- -----------
--------- ------------ --------- ----- --------- ----------- -----------
Pro forma net loss before dividends on
preferred stock...................... $ (2,404)
Dividends on preferred stock........... 842
-----------
Pro forma net loss applicable to common
stockholders......................... $ (3,246)
-----------
-----------
Net loss per share--basic and
diluted.............................. $ (0.71)
Shares used in computing pro forma net
loss per share....................... 4,587
</TABLE>

F-5
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1. GENERAL

OmniLynx Communications Corporation ("OmniLynx") was incorporated in
December 1996 in the state of Delaware. OmniLynx was formed to become a leading
provider of unified Internet, data and telecommunications solutions to niche
markets representing the high and low end of the telecommunications marketplace.
Prior to the acquisition of ARC, OmniLynx had conducted no operations. The
acquisition of ARC was consummated in June 1999. InfoHighway and AXCES will be
acquired concurrently with and as a condition of the closing of the Offering.

The historical financial statements represent the financial position and
results of operations of the founding companies and were derived from the
respective founding companies' financial statements. The periods included in
these pro forma combined financial statements for the individual founding
companies are as of and for the three months ended March 31, 1999 and for the
year ended December 31, 1998. The historical financial statements included
elsewhere herein have been included in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 80.

2. ACQUISITION OF FOUNDING COMPANIES

OmniLynx acquired ARC in June 1999, and will acquire InfoHighway and AXCES
simultaneously with and as a condition of the closing of this Offering. The
Acquisitions were accounted for using the purchase method of accounting with
AXCES treated as the accounting acquiror.

The consideration paid or to be paid in the Acquisitions includes (a) common
stock, (b) contingent common stock, and (c) Series A and Series B convertible
redeemable preferred stock. In addition, OmniLynx will be assuming certain of
the debt of all of the founding companies. For purposes of computing the
estimated purchase price for accounting purposes, the value of the common shares
issued has been determined using an estimated fair value of $9.00 per share,
which represents a discount of 10% from the assumed initial public offering
price of $10.00 per share (the midpoint of the range of estimated initial public
offering prices set forth on the cover page of this Prospectus) due to
restrictions on the sale and transferability of the shares issued. The estimated
purchase price for the Acquisitions is based upon preliminary estimates and is
subject to certain purchase price adjustments at and following closing.
Additionally, prior to the closing of the Offering, the Company intends to
obtain independent appraisals of the Acquisitions in order to determine the fair
value of net assets acquired, including values associated with intangible
assets. In the opinion of management, the final allocation of the purchase price
will not materially differ from these preliminary estimates.

ACQUISITION OF INFOHIGHWAY

The acquisition consideration to be received by the stockholders of
InfoHighway consists of 958,166 shares of common stock of OmniLynx and 235,878
shares of contingent common stock of OmniLynx (including 85,397 shares of common
stock of OmniLynx and 17,584 shares of contingent common stock of OmniLynx
earmarked for the Eden Acquisition). Issuances of contingent common stock is
conditional upon achievement of certain share price targets; 50% of the
contingent common stock shall be issued when the price of the common stock
reaches a 10-day average of $16 per share. The remaining 50% of the contingent
common stock shall be issued when the price of the common stock reaches a 10-day
average of $21 per share. For accounting purposes, no value has been allocated
to the contingent common stock. Additionally, the Company is assuming some of
InfoHighway's outstanding debt, which totaled $2.1 million at March 31, 1999.

F-6
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION OF FOUNDING COMPANIES (CONTINUED)
During January 1999, InfoHighway acquired the operations of Eden Matrix, an
Internet service provider based in Austin, Texas operated by AMICI Online
Investments, L.L.C. (the "Eden Acquisition"). The acquisition consideration
approximated $1.0 million, consisting of a $50,000 cash down payment and a
short-term note payable for $0.9 million. During the second quarter of 1999,
$0.8 million of the short-term note payable was converted into 968,750 common
shares of InfoHighway. The remaining unpaid portion of the short-term note
payable, which totaled $0.1 million after the equity conversion noted above, is
to be repaid out of Offering proceeds.

ACQUISITION OF ARC

The acquisition consideration to be received by the stockholders of ARC
consists of 390,076 shares of common stock of OmniLynx and 152,672 shares of
contingent common stock of OmniLynx. Issuances of contingent common stock are
conditional upon achievement of certain share price targets; 50% of the
contingent common stock shall be issued when the price of the common stock
reaches a 10-day average of $16 per share. The remaining 50% of the contingent
common stock shall be issued when the price of the common stock reaches a 10-day
average of $21 per share. For accounting purposes, no value has been allocated
to the contingent common stock.

The merger agreement also provides for the exchange of $1.2 million of an
existing ARC note payable to an affiliated company for Series A 10% Convertible
Preferred Stock, ("Series A Preferred Stock") of OmniLynx valued at $1.2
million. The preferred stock is convertible beginning on a date 90 days after
this Offering into common stock at the lesser of the Offering price per share or
the average of the closing prices during the five day period preceding the date
of conversion.

Additionally, the Company is assuming all debt outstanding of ARC, which
totaled $3.2 million at March 31, 1999, with the exception of the ARC note
payable which will be exchanged for preferred stock as discussed in the
aforementioned paragraph. The merger agreement also provides for: (a) the
repayment of $0.8 million of the outstanding balance on the revolving line of
credit due to the parent of ARC from proceeds of the Offering, (b) the exchange
of $0.45 million of the revolving line of credit for a note payable due on
January 31, 2000 that is convertible at the holder's option into 56,250 common
shares of OmniLynx, and (c) the balance of the revolving line of credit being
exchanged for a note payable maturing in June 2000 unless converted earlier by
the holder into 150,000 common shares of OmniLynx. The balance outstanding under
the revolving line of credit was $2.4 million at March 31, 1999.

ACQUISITION OF AXCES

The acquisition consideration to be received by the stockholders of AXCES
consists of 700,000 shares of common stock of OmniLynx and $9.0 million, 60,000
shares valued at $150 per share, of Series B 8% Cumulative Convertible Preferred
Stock ("Series B Preferred Stock") of OmniLynx. The Series B Preferred Stock is
convertible into 600,000 shares of common stock at the holder's option and is
redeemable after 36 months out of a designated portion of the Company's cash
flow. If the common stock trades for an average of $20 per share for 10
consecutive days, the Company may force the conversion of the preferred stock
into common stock.

In connection with the acquisition of AXCES, OmniLynx has agreed to assume
up to $3.0 million of indebtedness to be incurred by AXCES prior to the Offering
for distribution to its shareholder.

F-7
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITION OF FOUNDING COMPANIES (CONTINUED)
AXCES may distribute up to $6.5 million in cash to its shareholder prior to the
closing of the acquisition, including proceeds from this indebtedness, provided
that the distributions do not decrease AXCES' working capital below a minimum
level.

The following table sets forth the components for accounting purposes of the
consideration with respect to the Acquisitions, including 85,397 common shares
and 17,584 contingent common shares earmarked for the Eden Acquisition. The
table does not reflect the S Corporation Distribution and other distributions
noted above to the stockholders of AXCES.

<TABLE>
<CAPTION>
CONTINGENT PREFERRED
COMMON STOCK COMMON STOCK STOCK
------------------------- ---------------------- -------------
VALUE OF VALUE OF VALUE OF
ACQUISITION SHARES SHARES SHARES SHARES SHARES
- --------------------------------------------------------- ---------- ------------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
InfoHighway.............................................. 958,166 $ 8,623,494 235,878 $ -- $ --
ARC...................................................... 390,076 3,510,684 152,672 -- 1,216,674
AXCES.................................................... 700,000 6,300,000 -- -- 9,000,000
---------- ------------- --------- ----- -------------
2,048,242 $ 18,434,178 388,550 $ -- $ 10,216,674
---------- ------------- --------- ----- -------------
---------- ------------- --------- ----- -------------
</TABLE>

For accounting purposes, AXCES is treated as the accounting acquiror and,
accordingly, its financial statements are presented on a historical basis.

3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS

(a) Reflects the estimated distributions of $4.7 million based upon cash
balances of $1.7 million at March 31, 1999 at AXCES and $3.0 million of
projected short-term borrowings, and $1.6 million of current income taxes
related to the S corporation assuming C corporation treatment. These
short-term borrowings are expected to be repaid with proceeds from the
Offering.

(b) Records the purchase of the founding companies for a total purchase
price of $27.9 million (including $15.3 million attributed to AXCES as
accounting acquiror), consisting of (i) shares of common stock valued for
purposes of computing the estimated purchase price for accounting
purposes at $17.7 million, (ii) shares of Series A Preferred Stock valued
for purposes of computing the estimated purchase price for accounting
purposes at $1.2 million, and (iii) shares of Series B Preferred Stock
valued for purposes of computing the estimated purchase price for
accounting purposes at $9.0 million. This aggregated purchase price will
result in an excess purchase of $27.6 million over the fair value of the
identifiable net assets acquired, excluding AXCES. The excess cost has
been preliminarily allocated to an undifferentiated pool of intangible
assets to be amortized over a period of 10 years for pro forma purposes.
The Company intends to obtain independent appraisals of the Acquisitions
prior to completion of the Offering. Upon completion of the appraisals
and in accordance with the terms thereof, the intangible assets in the
pool will be allocated to the appropriate asset classifications,
including customer lists, non-compete agreements, and goodwill.

(c) Records the conversion of $0.8 million of the $0.9 million short-term
note payable incurred on the Eden Acquisition into 968,750 shares of
InfoHighway immediately prior to consummation of the Offering. Upon
consummation of the Offering, these shares will be converted into 85,397
shares of common stock of OmniLynx, valued at $0.8 million, and 17,584
shares of contingent common stock of OmniLynx.

F-8
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS (CONTINUED)
(d) Reflects financings, net of discounts, subsequent to March 31, 1999 that
are to be repaid from proceeds from the Offering.

(e) Records the cash proceeds from the issuance of 1.6 million shares of
common stock, net of estimated offering costs. Offering costs primarily
consist of underwriting discounts and commissions, accounting fees, legal
fees and printing expenses.

(f) Records the payment of certain debt of the founding companies which is
expected to be paid from the proceeds of the Offering, and the exchange
of the remaining balance under the revolving line of credit debt into
convertible notes payable.

F-9
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS (CONTINUED)
The following tables summarize unaudited pro forma combined balance sheet
adjustments (in thousands):

OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
PRO FORMA
(A) (B) (C) (D) ADJUSTMENTS (E) (F)
--------- --------- --------- --------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................... $ (1,700) $ -- $ -- $ 1,881 $ 181 $ 13,386 $ (6,850)
Accounts receivable, net....................... -- -- -- -- -- -- --
Receivable from related parties................ -- -- -- -- -- -- --
Costs and estimated earnings in excess of
billings on uncompleted contracts............ -- -- -- -- -- -- --
Prepaid expenses and other current assets...... -- -- -- -- -- (66) --
--------- --------- --------- --------- ------------- --------- ---------
Total current assets......................... (1,700) -- -- 1,881 181 13,320 (6,850)
PROPERTY AND EQUIPMENT, net...................... -- -- -- -- -- -- --
GOODWILL AND OTHER INTANGIBLE ASSETS............. -- 27,633 -- -- 27,633 -- --
OTHER ASSETS..................................... -- -- -- -- -- -- --
--------- --------- --------- --------- ------------- --------- ---------
TOTAL ASSETS..................................... $ (1,700) $ 27,633 $ -- $ 1,881 $ 27,814 $ 13,320 $ (6,850)
--------- --------- --------- --------- ------------- --------- ---------
--------- --------- --------- --------- ------------- --------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
CURRENT LIABILITIES:
Notes payable.................................. $ 3,000 $ 450 $ (769) $ 1,859 $ 4,540 $ -- $ (5,204)
Notes payable to related parties............... -- (60) -- -- (60) -- (2,819)
Capital lease payables......................... -- -- -- -- -- -- --
Accounts payable............................... -- -- -- -- -- -- --
Accrued liabilities............................ -- -- -- -- -- -- --
Billings in excess of costs and estimated
earnings on uncompleted contracts............ -- -- -- -- -- -- --
Disputed amounts under contract................ -- -- -- -- -- -- --
Payable to founding company shareholders....... -- -- -- -- -- -- --
Current income taxes payable................... 1,600 -- -- -- 1,600 -- --
Other current liabilities...................... -- -- -- -- -- -- --
--------- --------- --------- --------- ------------- --------- ---------
Total current liabilities.................... 4,600 390 (769) 1,859 6,080 -- (8,023)
LONG-TERM DEBT, net of current maturities........ -- (550) -- -- (550) -- 1,200
NOTES PAYABLE TO RELATED PARTIES................. -- (1,157) -- -- (1,157) -- --
OTHER LONG-TERM LIABILITIES...................... -- -- -- -- -- -- --
STOCKHOLDERS' EQUITY (CAPITAL DEFICIT):
Preferred stock................................ -- -- -- -- -- -- --
Common stock................................... -- (1,932) -- -- (1,932) -- --
Additional paid in capital..................... -- 20,412 769 29 21,210 13,320 --
Retained earnings (capital deficit)............ (6,300) 10,470 -- (7) 4,163 -- (27)
--------- --------- --------- --------- ------------- --------- ---------
Stockholders' equity (capital deficit)....... (6,300) 28,950 769 22 23,441 13,320 (27)
--------- --------- --------- --------- ------------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIT).............................. $ (1,700) $ 27,633 $ -- $ 1,881 $ 27,814 $ 13,320 $ (6,850)
--------- --------- --------- --------- ------------- --------- ---------
--------- --------- --------- --------- ------------- --------- ---------

<CAPTION>
TOTAL
POST-ACQUISITION
ADJUSTMENTS
-----------------
<S> <C>

CURRENT ASSETS:
Cash and cash equivalents...................... $ 6,536
Accounts receivable, net....................... --
Receivable from related parties................ --
Costs and estimated earnings in excess of
billings on uncompleted contracts............ --
Prepaid expenses and other current assets...... (66)
-------
Total current assets......................... 6,470
PROPERTY AND EQUIPMENT, net...................... --
GOODWILL AND OTHER INTANGIBLE ASSETS............. --
OTHER ASSETS..................................... --
-------
TOTAL ASSETS..................................... $ 6,470
-------
-------
LIABILITIES
CURRENT LIABILITIES:
Notes payable.................................. $ (5,204)
Notes payable to related parties............... (2,819)
Capital lease payables......................... --
Accounts payable............................... --
Accrued liabilities............................ --
Billings in excess of costs and estimated
earnings on uncompleted contracts............ --
Disputed amounts under contract................ --
Payable to founding company shareholders....... --
Current income taxes payable................... --
Other current liabilities...................... --
-------
Total current liabilities.................... (8,023)
LONG-TERM DEBT, net of current maturities........ 1,200
NOTES PAYABLE TO RELATED PARTIES................. --
OTHER LONG-TERM LIABILITIES...................... --
STOCKHOLDERS' EQUITY (CAPITAL DEFICIT):
Preferred stock................................ --
Common stock................................... --
Additional paid in capital..................... 13,320
Retained earnings (capital deficit)............ (27)
-------
Stockholders' equity (capital deficit)....... 13,293
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIT).............................. $ 6,470
-------
-------
</TABLE>

F-10
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS

THREE MONTHS ENDED MARCH 31, 1999

(a) Reflects the amortization of excess purchase price relating to the
Acquisitions which has been preliminarily allocated to an
undifferentiated pool of intangible assets to be amortized over a period
of 10 years for pro forma purposes.

(b) Reflects the reduction in interest expense due to the planned repayment
and planned conversion of certain debt in connection with the
Acquisitions, and the incremental interest expense for the amortization
of original issue discounts.

(c) Adjusts salaries, bonuses and benefit amounts to reflect those
established in contractual agreements between the Company and the owner
and key management personnel of the founding companies.

(d) Reflects the compensation charge pursuant to Accounting Principles Board
No. 25 for 159,000 stock options that vest upon consummation of the
Offering. The charge is calculated based upon an assumed Offering price
of $10.00 per share and the exercise price per share of $5.00.

(e) Reflects the incremental provision for federal and state income taxes
relating to the statement of operations pro forma adjustments and to
reflect income taxes on S corporation operations as if AXCES had been
taxable as a C corporation during the period presented. Assumes all
income is subject to a federal corporate tax rate of 34% and the
non-deductibility of goodwill and intangible asset amortizations.

The following table summarizes the unaudited pro forma combined statement of
operations adjustments (in thousands):
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
--------- --- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenues.......................................................... $ -- $ -- $ -- $ -- $ --
Cost of services.................................................. -- -- -- -- --
--------- --- --- --------- ---------
Gross profit...................................................... -- -- -- -- --
Selling, general and administrative expenses...................... -- -- (28) 795 --
Depreciation and amortization..................................... 691 -- -- -- --
--------- --- --- --------- ---------
Income (loss) from operations..................................... (691) -- 28 (795) --
Interest income (expense), net.................................... -- 75 -- -- --
--------- --- --- --------- ---------
Income (loss) before income taxes................................. (691) 75 28 (795) --
Provision (benefit) for income taxes.............................. -- -- -- -- (172)
--------- --- --- --------- ---------
Net income (loss)................................................. $ (691) $ 75 $ 28 $ (795) $ 172
--------- --- --- --------- ---------
--------- --- --- --------- ---------

<CAPTION>
PRO FORMA
ADJUSTMENTS
-----------
<S> <C>
Revenues.......................................................... $ --
Cost of services.................................................. --
-----------
Gross profit...................................................... --
Selling, general and administrative expenses...................... 767
Depreciation and amortization..................................... 691
-----------
Income (loss) from operations..................................... (1,458)
Interest income (expense), net.................................... 75
-----------
Income (loss) before income taxes................................. (1,383)
Provision (benefit) for income taxes.............................. (172)
-----------
Net income (loss)................................................. $ (1,211)
-----------
-----------
</TABLE>

F-11
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

5. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS

YEAR ENDED DECEMBER 31, 1998

(c) Reflects the operating results for the Eden Acquisition for the year
ended December 31, 1998. Also reflects the amortization of the customer
list from the Eden Acquisition which is being amortized over a period of
three years and depreciation of property and equipment acquired which is
being recognized over the average useful life of the property and
equipment of five years.

(d) Adjusts salaries, bonuses and benefit amounts to reflect those
established in contractual agreements between the Company and the owners
and key management personnel of the founding companies.

(e) Reflects the compensation charge pursuant to Accounting Principles Board
No. 25 for 159,000 stock options that vest upon consummation of the
Offering. The charge is calculated based upon an assumed Offering price
of $10.00 per share and the exercise price per share of $5.00.

(f) Reflects the incremental provision for federal and state income taxes
relating to the statement of operations pro forma adjustments and to
reflect income taxes on S corporation operations as if AXCES had been
taxable as a C corporation during the period presented. Assumes all
income is subject to a federal corporate tax rate of 34% and the
non-deductibility of goodwill and intangible asset amortizations.

The following table summarizes the unaudited pro forma combined statement of
operations adjustments (in thousands):

<TABLE>
<CAPTION>
PRO FORMA
(A) (B) (C) (D) (E) (F) ADJUSTMENTS
--------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues............................................. $ -- $ -- $ 778 $ -- $ -- $ -- $ 778
Cost of services..................................... -- -- 184 -- -- -- 184
--------- --------- --------- --------- --------- --------- -----------
Gross profit......................................... -- -- 594 -- -- -- 594
Selling, general and administrative expenses......... -- -- 610 (2,607) 795 -- (1,202)
Depreciation and amortization........................ 2,696 -- 250 -- -- -- 2,946
--------- --------- --------- --------- --------- --------- -----------
Income (loss) from operations........................ (2,696) -- (266) 2,607 (795) -- (1,150)
Interest income (expense), net....................... -- 123 -- -- -- -- 123
--------- --------- --------- --------- --------- --------- -----------
Income (loss) before income taxes.................... (2,696) 123 (266) 2,607 (795) -- (1,027)
Provision (benefit) for income taxes................. -- -- -- -- -- 1,162 1,162
--------- --------- --------- --------- --------- --------- -----------
Net income (loss).................................... $ (2,696) $ 123 $ (266) $ 2,607 $ (795) $ (1,162) $ (2,189)
--------- --------- --------- --------- --------- --------- -----------
--------- --------- --------- --------- --------- --------- -----------
</TABLE>

F-12
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. PRO FORMA LOSS PER SHARE

The following table summarizes shares used in computing pro forma loss per
share:

<TABLE>
<S> <C>
OmniLynx Founders................................................ 939,000

Founding Companies:
InfoHighway.................................................... 872,769
ARC............................................................ 390,076
AXCES.......................................................... 700,000
Eden Acquisition................................................. 85,397
Offering......................................................... 1,600,000
Effect of assumed exercise of common stock warrants and options
(see Note 7)................................................... --
---------
Shares used in computing pro forma loss per share................ 4,587,242
---------
---------
</TABLE>

7. COMMON STOCK WARRANTS AND OPTIONS

During the first quarter of 1999, OmniLynx entered into an agreement with an
independent consultant for services to be rendered in conjunction with the
Offering. The agreement, as amended, provided for, among other things, the
granting of five-year exercisable warrants to purchase 86,844 common shares of
the Company at $5.71 per share in exchange for services rendered. The warrants
vest ratably over a period of twelve months from February 17, 1999.

During the first quarter of 1999, OmniLynx borrowed $100,000 from Trident
III, L.L.C. under a 13% promissory note. In conjunction with this financing,
Trident III, L.L.C. also received warrants to acquire 100,000 shares of common
stock at an initial exercise price per share of $8.00. Such warrants expire
during March 2004. This loan was repaid from the proceeds of the $1.5 million
financing entered into by OmniLynx in the second quarter of 1999.

During the second quarter of 1999, OmniLynx borrowed $100,000 from Trident
III, L.L.C. under a 13% promissory note. In conjunction with this financing,
Trident III, L.L.C. also received warrants to acquire 50,000 shares of common
stock at an initial exercise price per share of $8.00. Such warrants expire
during April 2004. This loan was repaid from the proceeds of the $1.5 million
financing entered into by OmniLynx in the second quarter of 1999.

During the second quarter of 1999, OmniLynx borrowed $250,000 from a group
of accredited investors under a 13% promissory note. In conjunction with this
financing, the accredited investors also received warrants to acquire 83,333
shares of common stock at an initial exercise price of $8.00. Such warrants
expire during April 2004.

During the second quarter of 1999, OmniLynx borrowed $1.5 million from a
group of accredited investors under a 13% promissory note. In conjunction with
this financing, the accredited investors also received warrants to acquire
300,000 shares of common stock at an initial exercise price of $8.00. Such
warrants expire during June 2004.

During the second quarter of 1999, OmniLynx borrowed $200,000 from Halcyon
Investment Company, a British Virgin Islands corporation, under a 13% promissory
note. In conjunction with this financing, Halcyon also received warrants to
acquire 40,000 shares of common stock at an initial exercise price of $8.00.
Such warrants expire during June 2004.

F-13
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION
AND FOUNDING COMPANIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)

7. COMMON STOCK WARRANTS AND OPTIONS (CONTINUED)
During the second quarter of 1999, OmniLynx issued warrants to the parent of
ARC to acquire 90,000 shares of common stock at an initial exercise price of
$8.00. Such warrants expire during June 2004. Additionally, in assuming certain
warrant obligations of ARC, OmniLynx issued warrants to acquire 20,513 shares of
common stock at an initial exercise price of $121.85.

During the second quarter of 1999, OmniLynx stockholders approved the 1999
Incentive Stock Option Plan (the "Plan"), which provides for the granting of
stock options to directors, executive officers, certain other employees and
certain non-employee consultants of the Company. The Plan permits the granting
of options for up to 1,500,000 shares of common stock. The Company has granted
stock options to purchase 1,050,000 shares of common stock to certain members of
the executive management team and outside directors of the Company. The exercise
prices of the options range from $5.00 to $10.00 per share and certain options
vest at the IPO and certain options vest over a three year period.

No common stock warrants or stock options were considered exercised for
purposes of computing earnings per share because to do so would be antidilutive.

F-14
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

OmniLynx Communications Corporation
Houston, Texas

We have audited the accompanying balance sheets of OmniLynx Communications
Corporation as of December 31, 1997 and 1998, and the related statements of
loss, stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of OmniLynx Communications
Corporation at December 31, 1997 and 1998, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

BDO SEIDMAN, LLP

May 3, 1999
Houston, Texas

F-15
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS:
Cash............................................................................... $ 940 $ 853 $ 33,589
Deferred offering costs............................................................ -- -- 66,572
--------- --------- -----------
Total assets..................................................................... $ 940 $ 853 $ 100,161
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accrued expenses................................................................... $ -- $ -- $ 1,083
Note payable (Note 4).............................................................. -- -- 95,233

COMMITMENTS (NOTES 6 AND 7)

STOCKHOLDERS' EQUITY (NOTE 5):
Preferred stock, $.0001 par value, 3,000,000 shares authorized; none issued and
outstanding...................................................................... -- -- --
Common stock, $.0001 par value, 25,000,000 shares authorized; 909,074, 939,000 and
939,000 issued and outstanding................................................... 91 94 94
Additional paid-in capital......................................................... 909 906 6,106
Deficit............................................................................ (60) (147) (2,355)
--------- --------- -----------
Total stockholders' equity....................................................... 940 853 3,845
--------- --------- -----------
Total liabilities and stockholders' equity....................................... $ 940 $ 853 $ 100,161
--------- --------- -----------
--------- --------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-16
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

STATEMENTS OF LOSS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
---------------------- ----------------------
1997 1998 1998 1999
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Selling, general and administrative expenses.................. $ 60 $ 87 $ 22 $ 692
Interest expense.............................................. -- -- -- 1,516
---------- ---------- ---------- ----------
Net loss.................................................... $ (60) $ (87) (22) $ (2,208)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LOSS PER SHARE:
Basic....................................................... $ 0 $ 0 $ 0 $ 0
Diluted(1).................................................. N/A N/A N/A N/A
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic....................................................... 909,074 933,999 909,074 939,000
Diluted(1).................................................. N/A N/A N/A N/A
</TABLE>

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

(1) There are no securities that would have a dilutive effect at December 31,
1997 and 1998, and March 31, 1998 and 1999.

The accompanying notes are an integral part of these financial statements.

F-17
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
----------------------- PAID-IN STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
---------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
Initial capitalization of the Company at December 31,
1996................................................ 909,074 $ 91 $ 909 $ -- $ 1,000
Net loss.............................................. -- -- -- (60) (60)
---------- ----- ----------- --------- ------------
Balance, December 31, 1997............................ 909,074 91 909 (60) 940
Compensation related to common stock granted.......... 29,926 3 (3) -- --
Net loss.............................................. -- -- -- (87) 87
---------- ----- ----------- --------- ------------
Balance, December 31, 1998............................ 939,000 94 906 (147) 853
Issuance of common stock warrants (unaudited) (Note
4).................................................. -- -- 5,200 -- 5,200
Net loss (unaudited).................................. -- -- -- (2,208) (2,208)
---------- ----- ----------- --------- ------------
Balance, March 31, 1999 (unaudited)................... 939,000 $ 94 $ 6,106 $ (2,355) $ 3,845
---------- ----- ----------- --------- ------------
---------- ----- ----------- --------- ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-18
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
-------------------- ---------------------
1997 1998 1998 1999
--------- --------- --------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss......................................................... $ (60) $ (87) $ (22) $ (2,208)
Amortization of notes payable discount........................... -- -- -- 433
Adjustments to reconcile net loss to net cash used in operating
activities:
Deferred offering costs........................................ -- -- -- (66,572)
Accrued expenses............................................... -- -- -- 1,083
--------- --------- --------- ----------
Net cash used in operating activities (60) (87) (22) (67,264)
--------- --------- --------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable...................................... -- -- -- 100,000
Issuance of common stock......................................... 1,000 -- -- --
--------- --------- --------- ----------
Net cash provided by financing activities.......................... 1,000 -- -- 100,000
--------- --------- --------- ----------
Net increase (decrease) in cash.................................... 940 (87) (22) 32,736
Cash at beginning of period........................................ -- 940 940 853
--------- --------- --------- ----------
Cash at end of period.............................................. $ 940 $ 853 $ 918 $ 33,589
--------- --------- --------- ----------
--------- --------- --------- ----------
</TABLE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

There were no payments of interest or taxes made during the years ended December
31, 1997 and 1998. Payments of interest totaled $1,083 for the three months
ended March 31, 1999. Noncash transactions included the recording of a $5,200
original issue discount on notes payable during the three months ended March 31,
1999. (unaudited)

The accompanying notes are an integral part of these financial statements.

F-19
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

NOTES TO FINANCIAL STATEMENTS

NOTE 1--THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

BUSINESS AND ORGANIZATION

OmniLynx Communications Corporation ("OmniLynx") was incorporated in
December 1996 in the State of Delaware. OmniLynx was formed, through Strategic
Acquisitions, to become a leading provider of unified internet, data and
telecommunications solutions to businesses and consumers.

The Company has conducted no operations to date, except in connection with
its efforts to raise equity capital through an initial public offering ("IPO")
and in completing targeted acquisitions. The companies identified for
acquisition to date and which will form the "founding companies" in the
contemplated IPO are described below:

AXCES, INC. (AXCES)

AXCES is a switchless long-distance carrier that resells long-distance
service to the low-volume urban residential user, primarily in Texas. It also
offers paging service, 800 service, voice-mail and calling cards.

InfoHighway and AXCES are expected to be acquired simultaneously with and as
a condition to the consummation of the IPO.

ARC ACQUISITION (ARC) ARC Networks, Inc. is a local exchange carrier based
in New York which offers local phone service, long distance, cabling and other
network services to customers primarily in the New York metropolitan area. ARC
was acquired by the Company in June 1999.

INFOHIGHWAY INTERNATIONAL, INC. (INFOHIGHWAY) InfoHighway is an internet
service provider based in Houston, Texas which specializes in offering a
high-speed internet access product to high-rise office buildings, including
providing value-added internet services to the tenants.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenue and expense during the reporting period. Actual
results could differ from those estimates.

INCOME TAXES

The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been recognized differently in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement carrying amounts and tax basis of assets and liabilities using enacted
tax rates and laws in effect in the years in which the differences are expected
to reverse. Deferred tax assets are evaluated for realization based on a
more-likely-than-not criteria in determining if a valuation allowance should be
provided. Income tax expense is the tax payable for the year and the change
during the year in deferred tax assets and liabilities.

F-20
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES", which
established accounting and reporting standards for derivative instruments and
hedging activities. It requires that entities recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The provisions of this statement are effective
for all fiscal quarters of all fiscal years beginning after December 15, 1999.
In December 1998, the FASB issued SFAS 134, ACCOUNTING FOR MORTGAGE-BACKED
SECURITIES RETAINED AFTER THE SECURITIZATION OF MORTGAGE LOANS HELD FOR SALE BY
A MORTGAGE BANKING ENTERPRISE, which amended SFAS 65. This statement is
effective for the first fiscal quarter beginning after December 15, 1998. SFAS
134 will not apply to the Company. The FASB recently issued SFAS 135, RESCISSION
OF FASB STATEMENT NO. 75 AND TECHNICAL CORRECTIONS. SFAS 135 includes a long
list of technical corrections that, among other things, rescinds SFAS 75,
DEFERRAL OF THE EFFECTIVE DATE OF CERTAIN ACCOUNTING REQUIREMENTS FOR PENSION
PLANS OF STATE AND LOCAL GOVERNMENTAL UNITS. The Statement is effective for
financial statements issued for fiscal years ending after February 15, 1999. The
Company believes that these standards will not have a material impact on their
financial statements or disclosures thereto.

SOP 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES, requires all
start-up and organizational costs to be expensed as incurred. It also requires
all remaining historically capitalized amounts of these costs existing at the
date of adoption to be expensed and reported as the cumulative effect of a
change in accounting principles. SOP 98-5 is effective for all fiscal years
beginning after December 31, 1998. The Company believes that the adoption of SOP
98-5 will not have a material effect on its financial statements.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

The unaudited combined interim financial statements for the three month
periods ended March 31, 1998 and 1999 and as of March 31, 1999 have been
prepared on the same basis as the Company's audited financial statements as of
and for the year ended December 31, 1998. In the opinion of management, all
adjustments, consisting of normal, recurring accruals, necessary to present
fairly the financial position of the Company at March 31, 1999, and the results
of operations and cash flows for the three month periods ended March 31, 1998
and 1999 have been included. The results of operations for such interim periods
are not necessarily indicative of the results expected for the full year ending
December 31, 1999.

NOTE 3--DEFERRED OFFERING COSTS (UNAUDITED)

Subsequent to December 31, 1998 and as of March 31, 1999, the Company has
incurred expenses totaling approximately $67,000 in connection with a potential
IPO of the Company's common stock. These expenses have been deferred and will be
recognized as costs of the offering upon the completion of the initial public
offering. If no offering takes place, the expenses incurred will be charged to
operations.

NOTE 4--NOTE PAYABLE

On March 1, 1999, the Company borrowed $100,000 from Trident III, L.L.C.
under a 13% promissory note. In connection with this financing, Trident III,
L.L.C. received warrants to acquire

F-21
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--NOTE PAYABLE (CONTINUED)
100,000 shares of common stock at an exercise price of $8.00. Such warrants
expire during March 2004. The Company estimated the fair value of the warrants
using the Black-Scholes option pricing model with the following assumptions:
dividend yield of 0%, expected volatility of 46.1%, and a risk free interest
rate of 5.2%. The fair value of the warrants of approximately $5,200 was
accounted for as an original issue discount to be amortized over the term of the
note. All unpaid principal and accrued interest is due March 1, 2000, or upon
obtaining other equity or debt financing with minimum gross proceeds of
$500,000, if earlier. This note is to be repaid from the proceeds of the $1.5
million financing expected to be entered into by the Company in June 1999.
(Unaudited)

NOTE 5--CAPITAL

PREFERRED STOCK

The Company is authorized to issue up to 3,000,000 shares of $.0001 par
value preferred stock. The Board of Directors is authorized to designate the
voting power, preferences, dividends, liquidation rights, redemption and other
features related to the Company's preferred stock. As of December 31, 1997 and
1998 and March 31, 1999, no preferred stock had been issued.

COMMON STOCK

The Company effected a 2,055-for-one stock split in March 1999 of the
outstanding shares of common stock. In addition, the Company increased the
number of authorized shares of common stock to 25,000,000. In April 1999, the
Company effected a .52-for-one reverse stock split of the outstanding shares of
common stock. The effects of the stock split and reverse stock split and the
increase in the shares of authorized common stock have been retroactively
reflected in the accompanying balance sheets and in the notes to the financial
statements.

EMPLOYEE STOCK OPTION PLAN

In April 1999, the Company's stockholders approved the 1999 Incentive Stock
Option Plan (the "Plan"), which provides for the granting of stock options to
directors, executive officers, certain other employees and certain non-employee
consultants of the Company. The Plan permits the granting of options for up to
1,500,000 shares of common stock. The Company has granted stock options to
purchase 1,050,000 shares of common stock to certain members of the executive
management team and outside directors of the Company. The exercise prices of the
options range from $5.00 to $10.00 per share and certain options vest at the IPO
and certain options vest over a three year period.

Pursuant to FASB Statement No. 123, "Accounting for Stock-Based
Compensation," the Company has elected to adopt only the disclosure provision of
SFAS 123 for stock issued to employees and will account for its employee stock
option plan under APB Opinion No. 25 "Accounting for Stock Issued to Employees."

NOTE 6--COMMITMENTS

F-22
<PAGE>
OMNILYNX COMMUNICATIONS CORPORATION

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--COMMITMENTS (CONTINUED)
common shares of the Company at $5.71 per share in exchange for services
rendered. The warrants vest ratably over a period of twelve months from February
17, 1999. (Unaudited)

NOTE 7--SUBSEQUENT EVENTS

During the second quarter of 1999, OmniLynx borrowed $100,000 from Trident
III, L.L.C. under a 13% promissory note. In conjunction with this financing,
Trident III, L.L.C. also received warrants to acquire 50,000 shares of common
stock at an initial exercise price per share of $8.00. Such warrants expire
during April 2004. This note was repaid from the proceeds of the $1.5 million
financing entered into by the Company in June 1999. (Unaudited)

During the second quarter of 1999, OmniLynx borrowed $250,000 from a group
of accredited investors under a 13% promissory note. In conjunction with this
financing, the accredited investors received warrants to acquire 83,333 shares
of common stock at an initial exercise price of $8.00. Such warrants expire
during April 2004. (Unaudited)

During the second quarter of 1999, OmniLynx borrowed $1.5 million from a
group of accredited investors under a 13% promissory note. In conjunction with
this financing, the accredited investors received warrants to acquire 300,000
shares of common stock at an initial exercise price of $8.00. Such warrants
expire during June 2004. (Unaudited)

During the second quarter of 1999, OmniLynx borrowed $200,000 from Halcyon
under a 13% promissory note. In conjunction with this financing, Halcyon also
received warrants to acquire 40,000 shares of common stock at an initial
exercise price of $8.00. Such warrants expire during June 2004. (Unaudited)

During the second quarter of 1999, Omnilynx issued warrants to the parent of
ARC to acquire 90,000 shares of common stock at an exercise price of $8.00 in
connection with the extension of a debt maturity. Such warrants expire during
June 2004. Additionally, Omnilynx assumed certain warrant obligations of ARC and
issued warrants to acquire 20,513 shares of common stock at an exercise price of
$121.85.

The Company estimated the fair value of the warrants issued during the
second quarter of 1999 using the Black-Scholes option pricing model with the
following assumptions: dividend yield of 0%, expected volatility of 46.1%, and a
risk free interest rate of 5.2%. The fair value of the warrants of approximately
$29,000 will be recorded as a discount to notes payable and amortized over the
expected lives of the warrants.

No common stock warrants were considered exercised for purposes of computing
earnings per share because to do so would be antidilutive.

The Company has entered into letters of intent to acquire two of the
founding companies on the date the offering closes and one of the founding
companies prior to the offering. The founding companies are InfoHighway
International, Inc. ("InfoHighway"), ARC Networks, Inc. ("ARC"), and AXCES, Inc.
("AXCES"). The Company acquired ARC in June 1999. The aggregate consideration
expected to be paid by the Company to acquire the founding companies is
approximately 2,048,242 shares of common stock, 1,216,674 shares of Series A 10%
Convertible Redeemable Preferred stock and 60,000 shares of Series B 8%
Convertible Redeemable Preferred stock valued at $9,000,000. The Company also
issued 388,550 shares of common stock which vests based on certain stock
performance criteria.

F-23
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Stockholders

AXCES, Inc.

We have audited the accompanying balance sheets of AXCES, Inc. as of
December 31, 1997 and 1998, and the related statements of operations,
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AXCES, Inc. as of December
31, 1997 and 1998 and the results of its operations and its cash flows for each
of the years in the three-year period ended December 31, 1998, in conformity
with generally accepted accounting principles.

April 13, 1999 Pannell Kerr Forster of Texas,
P.C.

Houston, Texas

F-24
<PAGE>
AXCES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, DECEMBER 31, PRO FORMA
---------------------- 1998 MARCH 31, MARCH 31,
1997 1998 ------------- 1999 1999
---------- ---------- ----------- -----------
(NOTES 1 AND
5) (UNAUDITED) (UNAUDITED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............. $ 220,109 $ 293,376 $ 293,376 $1,740,385 $1,740,385
Accounts receivable, net of allowance
for doubtful accounts of $457,780 in
1997, $1,248,964 in 1998, and
$549,742 in 1999..................... 3,246,686 6,227,738 6,227,738 3,377,303 3,377,303
Receivables from related parties....... -- 220,475 220,475 1,131,230 1,131,230
Federal income tax receivable.......... -- 684,000 684,000 -- --
Prepaid expenses and other current
assets............................... 381,655 230,802 230,802 227,548 227,548
---------- ---------- ------------- ----------- -----------
Total current assets................. 3,848,450 7,656,391 7,656,391 6,476,466 6,476,466
---------- ---------- ------------- ----------- -----------
Net property and equipment............... 586,629 538,165 538,165 511,747 511,747
Other assets............................. 88,783 74,220 74,220 74,812 74,812
Notes receivable from related parties.... 210,658 -- -- -- --
---------- ---------- ------------- ----------- -----------
Total assets............................. $4,734,520 $8,268,776 $ 8,268,776 $7,063,025 $7,063,025
---------- ---------- ------------- ----------- -----------
---------- ---------- ------------- ----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Note payable........................... $ -- $1,694,969 $ 1,694,969 $ -- $ --
Current portion of long-term debt...... 19,080 20,921 20,921 -- --
Current portion of prizes and awards... 16,389 29,167 29,167 21,250 21,250
Accounts payable....................... 556,931 578,612 578,612 331,281 331,281
Sales tax payable...................... 469,478 421,646 421,646 74,433 74,433
Other accrued expenses................. 341,308 205,570 205,570 346,291 346,291
Current income taxes payable........... 2,249 -- 993,936 -- 1,397,502
Deferred income taxes.................. 904,840 -- 223,440 -- 223,440
---------- ---------- ------------- ----------- -----------
Total current liabilities............ 2,310,275 2,950,885 4,168,261 773,255 2,394,197
---------- ---------- ------------- ----------- -----------
Long-term debt, less current portion..... 43,706 17,772 17,772 -- --
Deferred income taxes.................... 12,502 -- 437,035 -- 378,245
Prizes and awards, less current
portion................................ 62,361 31,945 31,945 31,945 31,945
---------- ---------- ------------- ----------- -----------
Total liabilities.................... 2,428,844 3,000,602 4,655,013 805,200 2,804,387
---------- ---------- ------------- ----------- -----------
Commitments and contingencies

Stockholder's equity
Common stock, $1.00 par value; 1,000
shares authorized, issued and
outstanding.......................... 1,000 1,000 1,000 1,000 1,000
Additional paid-in capital............. 12,492 12,492 12,492 12,492 12,492
Retained earnings...................... 2,292,184 5,254,682 3,600,271 6,244,333 4,245,146
---------- ---------- ------------- ----------- -----------
Total stockholders' equity........... 2,305,676 5,268,174 3,613,763 6,257,825 4,258,638
---------- ---------- ------------- ----------- -----------
Total liabilities and stockholders'
equity................................. $4,734,520 $8,268,776 $ 8,268,776 $7,063,025 $7,063,025
---------- ---------- ------------- ----------- -----------
---------- ---------- ------------- ----------- -----------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-25
<PAGE>
AXCES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------- (UNAUDITED)
1996 1997 1998 1998 1999
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales............................. $8,467,506 $ 19,473,981 $ 30,279,621 $ 10,386,909 $5,410,906
Cost of sales..................... 3,959,087 8,002,688 9,889,028 2,864,376 1,852,809
-------------- -------------- -------------- -------------- --------------
Gross profit.................... 4,508,419 11,471,293 20,390,593 7,522,533 3,558,097
Selling, general and
administrative expenses......... 3,673,546 8,910,007 17,934,268 3,562,900 2,507,241
Depreciation and amortization..... 61,379 135,461 203,576 43,900 58,118
-------------- -------------- -------------- -------------- --------------
Operating income................ 773,494 2,425,825 2,252,749 3,915,733 992,738
Other income (expense)
Interest income................. 56,694 9,575 63,911 17,474 53,098
Interest expense................ (20,424) (28,529) (271,504) (73,544) (56,185)
-------------- -------------- -------------- -------------- --------------
Income before income tax
provision....................... 809,764 2,406,871 2,045,156 3,859,663 989,651
Income tax provision
Current expense................. 261,554 2,936 -- -- --
Deferred expense (benefit)...... 16,730 834,157 (917,342) (917,342) --
-------------- -------------- -------------- -------------- --------------
278,284 837,093 (917,342) (917,342) --
-------------- -------------- -------------- -------------- --------------
Net income...................... $ 531,480 $ 1,569,778 $ 2,962,498 $ 4,777,005 $ 989,651
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Basic net income per common
share........................... $ 531 $ 1,570 $ 2,962 $ 4,777 $ 990
Diluted net income per common
share........................... $ 531 $ 1,570 $ 2,962 $ 4,777 $ 990
Average common shares
outstanding..................... 1,000 1,000 1,000 1,000 1,000
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
(UNAUDITED) (UNAUDITED) (UNAUDITED)
(NOTES 1 AND (NOTES 1 AND (NOTES 1 AND
5) 5) 5)
-------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net income as reported............ $ 2,962,498 $ 4,777,005 $ 989,651
Pro forma incremental income tax
provision....................... 1,654,412 2,227,009 344,776
-------------- -------------- --------------
Pro forma net income.............. $ 1,308,086 $ 2,549,996 $ 644,875
Pro forma net income per common
share........................... $ 1,308 $ 2,550 $ 645
Pro forma average common shares
outstanding..................... 1,000 1,000 1,000
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-26
<PAGE>
AXCES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN RETAINED
COMMON STOCK CAPITAL EARNINGS TOTAL
--------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995................................ $ 1,000 $ 12,492 $ 190,926 $ 204,418
Net income................................................ -- -- 531,480 531,480
------ ----------- ------------ ------------
Balance, December 31, 1996................................ 1,000 12,492 722,406 735,898
Net income................................................ -- -- 1,569,778 1,569,778
------ ----------- ------------ ------------
Balance, December 31, 1997................................ 1,000 12,492 2,292,184 2,305,676
Net income................................................ -- -- 2,962,498 2,962,498
------ ----------- ------------ ------------
Balance, December 31, 1998................................ 1,000 12,492 5,254,682 5,268,174
------ ----------- ------------ ------------
Net income (unaudited).................................... -- -- 989,651 989,651
------ ----------- ------------ ------------
Balance, March 31, 1999 (unaudited)....................... $ 1,000 $ 12,492 $ 6,244,333 $ 6,257,825
------ ----------- ------------ ------------
------ ----------- ------------ ------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-27
<PAGE>
AXCES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
---------------------------------- --------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income........................................ $ 531,480 $1,569,778 $2,962,498 $4,777,005 $ 989,651
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Compensation expense recognized from cancellation
of notes receivable from related parties........ -- -- 210,658 -- --
Loss (gain) on sale of property and equipment... -- 13,146 -- -- (3,362)
Depreciation and amortization................... 61,379 135,461 203,576 43,900 58,118
Provision for doubtful accounts................. 416,540 1,803,763 4,264,752 751,197 728,792
Increase (decrease) in deferred income taxes.... 16,730 834,157 (917,342) (917,342) --
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable........ (1,108,607) (3,761,591) (7,245,803) (3,928,100) 2,121,643
Decrease in advances to officers.................. 14,926 -- -- -- --
(Increase) decrease in receivables from related
parties......................................... -- -- (20,475) (1,821,717) (910,755)
(Increase) decrease in federal income tax
receivable.................................... -- -- (684,000) -- 684,000
Decrease (increase) in prepaid expenses........... -- (381,655) 150,853 193,850 3,254
Decrease (increase) in other assets............... (48,601) 4,307 7,623 9,553 (2,327)
Increase (decrease) in accounts payable........... 447,448 (303,468) 21,681 194,059 (247,332)
Increase (decrease) in current income taxes
payable......................................... 249,209 (259,170) (2,249) (2,249) --
Increase (decrease) in other accrued expenses..... 124,692 202,836 (135,738) 762,562 140,722
Increase (decrease) in sales tax payable.......... 39,334 375,475 (47,832) (35,870) (347,213)
Increase (decrease) in awards and prizes
payable......................................... 17,500 36,250 (17,639) (3,750) (7,917)
---------- ---------- ---------- --------- ---------
Net cash provided by (used in) operating
activities.................................... 762,030 269,289 (1,249,437) 23,098 3,207,274
---------- ---------- ---------- --------- ---------
Cash flows from investing activities
Purchases of property and equipment............... (259,621) (433,694) (148,172) -- (83,603)
Proceeds from sale of property and equipment...... -- 2,000 -- -- 57,000
Issuance of notes to related parties.............. -- (210,658) (200,000) -- --
---------- ---------- ---------- --------- ---------
Net cash used in investing activities........... (259,621) (642,352) (348,172) -- (26,603)
---------- ---------- ---------- --------- ---------
Cash flows from financing activities
Payment on note payable to vendor................. (100,000) -- -- -- --
Proceeds from long-term notes payable............. -- 62,786 -- -- 67,776
Principal payments on long-term debt.............. (10,690) (19,285) (24,093) (6,023) (106,469)
Proceeds from short-term notes payable............ -- -- 1,694,969 -- --
Principal payments of short-term notes payable.... -- -- -- -- (1,694,969)
---------- ---------- ---------- --------- ---------
Net cash provided by (used in) financing
activities.................................... (110,690) 43,501 1,670,876 (6,023) (1,733,662)
---------- ---------- ---------- --------- ---------
Net increase (decrease) in cash and cash
equivalents....................................... 391,719 (329,562) 73,267 17,075 1,447,009
Cash and cash equivalents, beginning of period...... 157,952 549,671 220,109 220,109 293,376
---------- ---------- ---------- --------- ---------
Cash and cash equivalents, end of period............ $ 549,671 $ 220,109 $ 293,376 $ 237,184 $1,740,385
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

F-28
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1--BASIS OF PRESENTATION, BUSINESS AND ORGANIZATION

AXCES, Inc. (the "Company") was incorporated in Delaware on January 3, 1994.
Effective January 1, 1997, the two original stockholders of the Company entered
into a Share Exchange Agreement with MTM Holdings Corporation ("MTM"). Each
stockholder transferred and conveyed 500 shares of Company common stock to MTM
in exchange for 37,500 newly issued shares of MTM stock.

The Company is a long distance telephone company which has contracted with
Coastal Telephone Services Limited Company ("Coastal") to provide long-haul
transmissions of its traffic. Coastal bills the Company at contractual rates for
the usage of Coastal's long distance system by the Company's residential
customers.

In September 1996, the Company entered into an agreement with Frontier
Communications of the West, Inc. ("Frontier") whereby Frontier provides network
transport and other telecommunication services for the Company's resale to
residential customers on a common carrier basis. This agreement supplements the
agreement with Coastal and allows the Company to expand its service to a wider
geographic area.

The Company has a billing and service contract with Southwestern Bell
Telephone Company ("SWBT") whereby the latter, generally, performs the billing
and collection procedures for a fee and acquires the Company's accounts
receivable. SWBT remits revenues to the Company, net of fees, bad debts, and
other deductions.

In January 1997, the Company entered into an agreement with Ameritech of
Illinois, Indiana, Michigan, Ohio and Wisconsin ("AOCs") and Ameritech Services,
Inc. ("ASI") whereby AOCs will provide billing and collection services to the
Company for its end users. This agreement supplements the agreement with SWBT
and allows the Company to expand its service to a wider geographic area. The
agreement has an initial term of one year with written renewal options, unless
terminated earlier by either party. The agreement has been renewed through March
2000. No guaranteed minimum purchases of services are stipulated in the
contract.

The Company markets its products and services primarily to residential
customers in Texas, Oklahoma, Missouri, Kansas, Illinois, Indiana, Michigan,
Arkansas and Wisconsin. In addition, the Company has received approval of tariff
applications to operate in other mid-western and eastern seaboard states.

UNAUDITED PRO FORMA ADJUSTMENTS

During April 1999, the Company and the stockholders of MTM signed a
definitive agreement with OmniLynx Communications Corporation ("OmniLynx"),
pursuant to which all of the Company's outstanding shares will be exchanged for
consideration as described in Note 10 to be issued prior to the consummation of
an initial public offering of the common stock of OmniLynx (the "Offering").
Just prior to the effective date of the Offering, the Company will terminate its
status as an S Corporation. At that time, the Company will be required to
provided deferred income taxes for cumulative temporary differences between
financial statement and income tax bases of the Company's assets and
liabilities. At December 31, 1998 and March 31, 1999, a deferred tax liability
of $660,475 and $601,685 has been reflected in the pro forma balance sheet
presented.

F-29
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--BASIS OF PRESENTATION, BUSINESS AND ORGANIZATION (CONTINUED)
There are no income tax liabilities attributable to the S corporation
stockholders' share of the Company's taxable income for the year ended December
31, 1998 and therefore, there are no distributions to the S corporation
stockholders reflected in the pro forma presentation for 1998.

The 1998 unaudited pro forma net income data reflect adjustments for income
taxes as if the Company had been subject to federal and state income taxes based
upon a pro forma effective tax rate of 38% applied to income before income taxes
(see Note 5).

PRO FORMA EARNINGS PER SHARE

Pro forma earnings per share is calculated in accordance with Statement of
Financial Accounting Standards No. 128 and, as such, is based on the weighted
average number of shares of Common Stock outstanding. Dilutive earnings per
share is equivalent to basic earnings per share for all periods presented as the
Company had no potentially dilutive securities in 1996, 1997 and 1998.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PROPERTY AND EQUIPMENT

Property and equipment, consisting primarily of computer equipment, office
furniture and fixtures, leasehold improvements, and automobiles, is carried at
cost less accumulated depreciation. Depreciation for financial reporting
purposes is provided by the straight-line method over the estimated useful lives
of three to seven years. The cost of repairs and maintenance is charged against
income as incurred.

Property and equipment is comprised of:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Automobiles................................ $ 142,904 $ 142,904 $ 137,538
Furniture, fixtures and equipment.......... 435,232 505,356 521,182
Leasehold improvements..................... 156,175 234,223 234,223
--------- --------- -----------
734,311 882,483 892,943
Accumulated depreciation and
amortization............................. (147,682) (344,318) 381,196
--------- --------- -----------
Net property and equipment............. $ 586,629 $ 538,165 $ 511,747
--------- --------- -----------
--------- --------- -----------
</TABLE>

REVENUE RECOGNITION

Revenue is recognized in the month the Company's customers complete their
telephone call.

PRIZE AND AWARD COSTS

The Company records as expense the amounts of awards and prizes for sales
promotions and customer contests in the year when publicly declared.

F-30
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

Effective January 1, 1998, the Company and its stockholders elected to be
taxed as a qualified subchapter S subsidiary ("QSSS") of MTM under the
provisions of Subchapter S of the United States Internal Revenue Code of 1986.
Under those provisions, the Company is treated as a division of its S
corporation parent, MTM, and the stockholders of MTM are liable for individual
Federal income taxes on the Company's taxable income. As a result, no provision
for United States income taxes has been included in the accompanying statements
of operations for 1998 other than the reversal of the deferred tax liability at
the date of election of QSSS status.

For the years ending December 31, 1997 and 1996, Federal income taxes are
provided in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 109, "ACCOUNTING FOR INCOME TAXES", which requires the use of an asset and
liability approach for financial accounting and reporting for income taxes.
Deferred tax assets relate to the deferral of certain expenses for tax reporting
purposes. Deferred tax liabilities relate primarily to the excess of tax
depreciation over depreciation recorded for financial statement reporting
purposes, and the net effect of deferring revenues and expenses for filing the
Federal income tax return on a cash basis. Deferred tax balances are adjusted to
reflect the tax rates in effect when those amounts are expected to be payable or
refundable.

TERMINATION OF S CORPORATION ELECTION

Certain events, including the transaction with OmniLynx as described in Note
10, will automatically terminate the Company's QSSS status, thereby subjecting
future income to Federal and state income taxes at the corporate level. Due to
temporary differences in recognition of revenue and expenses, income for
financial reporting purposes has exceeded income for income tax purposes.
Accordingly, the application of the provisions of SFAS No. 109, "ACCOUNTING FOR
INCOME TAXES", will result in the recognition of deferred tax liabilities and a
corresponding charge to expense in the period in which the OmniLynx transaction
occurs. (see Note 5).

ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

STATEMENT OF CASH FLOWS

For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.

CONCENTRATION OF CREDIT RISK

The Company maintains its cash with a major domestic bank. The amounts held
in this bank exceed the insured limit of $100,000 from time to time. The terms
of these deposits are on demand to minimize risk. The Company has not incurred
losses related to these deposits.

F-31
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments that potentially subject the Company to concentrations
of credit risk are the Company's accounts receivable acquired by SWBT and AOCs
with recourse against the Company for uncollectible accounts. The Company's
acquired accounts generally consist of a large number of individually small
amounts which reduces the risk of significant losses from any individual account
write-off. The Company continuously monitors its bad debt experience in its
areas of operations and adjusts its marketing and credit policies as necessary.

The Company's allowance for doubtful accounts is provided based upon
industry standards and its actual bad debt experience. The allowance is withheld
and retained from customer remittances by SWBT and AOCs at December 31, 1998 and
1997. Write-offs of accounts receivable were $3,473,567, $1,382,888 and $401,114
for 1998, 1997 and 1996, respectively. Write-offs for the three month periods
ending March 31, 1998 and 1999 were $652,238 and $1,428,014, respectively.
(unaudited)

RECLASSIFICATION OF PRIOR YEAR AMOUNTS

Certain reclassifications of 1997 and 1996 amounts have been made to conform
to the 1998 financial statement presentation.

FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS",
requires that the Company disclose estimated fair values of its financial
instruments. Fair value estimates, methods and assumptions are set forth below.

The carrying amounts of cash, accounts receivable, receivables from related
parties and others, accounts payable and accrued expenses approximate fair value
at December 31, 1998 and 1997 due to the short-term nature of such accounts.

Management believes that the stated interest rates of notes payable
approximate market rates for instruments with similar credit risk. Accordingly,
the carrying value of notes payable is believed to approximate fair value.

NEW ACCOUNTING STANDARDS

In November 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES", which
established accounting and reporting standards for derivative instruments and
hedging activities. It requires that entities recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The provisions of this statement are effective
for all fiscal quarters of all fiscal years beginning after June 15, 1999. In
December 1998, the FASB issued SFAS 134, "ACCOUNTING FOR MORTGAGE-BACKED
SECURITIES RETAINED AFTER THE SECURITIZATION OF MORTGAGE LOANS HELD FOR SALE BY
A MORTGAGE BANKING ENTERPRISE", which amended SFAS 65. This statement is
effective for the first fiscal quarter beginning after December 15, 1998. SFAS
134 will not apply to the Company. The FASB recently issued SFAS 135,
"RESCISSION OF FASB STATEMENT NO. 75 AND TECHNICAL CORRECTIONS". SFAS 135
includes a long list of technical corrections that, among other things, rescinds
SFAS 75, "DEFERRAL OF THE EFFECTIVE DATE OF CERTAIN ACCOUNTING REQUIREMENTS FOR
PENSION PLANS OF STATE AND LOCAL GOVERNMENTAL UNITS". The Statement is effective
for financial statements issued for fiscal years ending after

F-32
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
February 15, 1999. The Company believes that these standards will not have a
material impact on their financial statements or disclosures thereto.

Statement of position ("SOP") 98-5 "REPORTING ON THE COSTS OF START-UP
ACTIVITIES" requires all start-up and organizational costs to be expensed as
incurred. It also requires all remaining historically capitalized amounts of
these costs existing at the date of adoption to be expensed and reported as the
cumulative effect of a change in accounting principles. SOP 98-5 is effective
for all fiscal years beginning after December 31, 1998. The Company believes
that the adoption of SOP 98-5 will not have a material effect on its financial
statements.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

The unaudited interim financial statements for the three month periods ended
March 31, 1998 and 1999 and as of March 31, 1999 have been prepared on the same
basis as the Company's audited financial statements as of and for the year ended
December 31, 1998. In the opinion of management, all adjustments, consisting of
normal, recurring accruals, necessary to present fairly the financial position
of the Company at March 31, 1999, and the results of operations and cash flows
for the three month periods ended March 31, 1998 and 1999 have been included.
The results of operations for such interim periods are not necessarily
indicative of the results expected for the full year ending December 31, 1999.

NOTE 3--ACCOUNTS RECEIVABLE

In August 1997, the Company entered into a renewable financing agreement
with a third party lender. The agreement provides for advances on selected
accounts receivable of SWBT and AOCs not to exceed an aggregate outstanding
balance of $2,000,000. This agreement was amended in April 1998 to increase the
maximum aggregate outstanding balance to $5,500,000. There were no outstanding
advances at December 31, 1998. Total outstanding advances at December 31, 1997
were $749,931. Advances are limited to 90% of the selected account balances and
are recorded as a reduction of accounts receivable. The related fees are
expensed. The monthly fees charged equal 1.17% of the aggregate outstanding
balance. This agreement is secured by accounts receivable.

F-33
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--NOTES PAYABLE AND LONG-TERM DEBT

NOTES PAYABLE

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1997 1998 1999
---- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Note payable to a third party lender, dated December 23, 1998, bearing interest
of $10,000, entire balance of principal and interest due January 8, 1999,
secured by accounts receivable................................................ $ -- $1,000,000 $ --
$700,000 bank line of credit, dated December 11, 1998, bearing interest at prime
plus 1% (8.75% as of December 31, 1998), entire balance of principal and
accrued interest due January 5, 1999, secured by brokerage accounts held by
the stockholders of MTM....................................................... $ -- 694,969 --
---- ---------- -----
$ -- $1,694,969 $ --
---- ---------- -----
---- ---------- -----
</TABLE>

These notes were paid in full in January 1999.

LONG-TERM DEBT

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1997 1998 1999
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Term loan to a bank, dated December 8, 1997, due in 36
installments of $2,008 each including interest at
9.25%, commencing January 8, 1998 secured by
automotive equipment................................. $ 62,786 $ 38,693 $ --
Less current portion................................... 19,080 20,921 --
--------- --------- -----
$ 43,706 $ 17,772 $ --
--------- --------- -----
--------- --------- -----
</TABLE>

Maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- -------------------------------------------------------------------------
<S> <C>
1999..................................................................... $ 20,921
2000..................................................................... 17,772
---------
$ 38,693
---------
---------
</TABLE>

In February 1999, the Company entered into another term note agreement with
a bank due in 36 installments of $2,127 each including interest at 8% and
secured by automotive equipment.

Both term notes were paid in full in March 1999.

F-34
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 4--NOTES PAYABLE AND LONG-TERM DEBT (CONTINUED)
Interest paid during 1996, 1997 and 1998 on long-term debt and short-term
borrowings amounted to $20,424, $28,529 and $271,504, respectively. Interest
paid during the three month periods ending March 31, 1998 and 1999 were $73,544
and $56,185, respectively. (unaudited)

NOTE 5--INCOME TAXES

The reconciliation between the effective income tax rate and the U.S.
federal statutory rate is as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------- -------------------------
1998 1998 1999
1996 1997 (PRO FORMA) (PRO FORMA) (PRO FORMA)
---------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
U.S. federal taxes at statutory rate............ $ 275,320 $ 818,336 $ 695,354 $ 1,312,285 $ 336,481
Increase (decrease):
Book/tax basis differences on disposed
equipment................................... -- (8,547)
Nondeductible terms........................... 9,709 20,919 48,122 3,687 3,189
Other......................................... (6,745) 6,385 (6,406) (6,305) 5,106
---------- ---------- ----------- ------------ -----------
Income tax provision............................ $ 278,284 $ 837,093 $ 737,070 $ 1,309,667 $ 344,776
---------- ---------- ----------- ------------ -----------
---------- ---------- ----------- ------------ -----------
</TABLE>

Deferred income tax assets (liabilities) consist of the following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------ MARCH 31,
1998 1999
1997 1998 (PRO FORMA) (PRO FORMA)
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT
Net receivables--cash basis................................. $ (72,715) $ (904,840) $(223,440) $(223,440)
---------- ----------- ----------- -----------

NONCURRENT
Depreciation and amortization............................... $ (20,670) $ (17,177) $ 15,210 $ 12,775
Net receivables--cash basis................................. 10,200 4,675 (452,245) (391,020)
---------- ----------- ----------- -----------
Net deferred tax liability.................................. $ 10,470 $ (12,502) $(437,035) $(378,245)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>

Federal income taxes of $12,345, $267,590 and $684,000 were paid during the
years ended December 31, 1996, 1997 and 1998, respectively. The $684,000 paid
during 1998 is reflected as a receivable at December 31, 1998 since no federal
income taxes were due.

During 1998, the Company's 1996 federal income tax return was audited by the
Internal Revenue Service. The Company did not receive additional tax assessments
as a result of the audit.

Upon termination of its S Corporation status (SEE NOTE 1), the Company will
be required to recognize deferred income taxes for cumulative temporary
differences between income for financial and tax reporting purposes. Had the
termination occurred at December 31, 1998, the deferred income tax liability,
calculated in accordance with Statement of Financial Accounting Standards No.
109, "ACCOUNTING FOR INCOME TAXES", would have approximated $660,475.

F-35
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--REGULATORY APPROVAL

The Company is required to obtain statutory approval to sell long distance
traffic in the states in which the Company conducts business. The Company has
filed for and received approval of all necessary tariff applications in all
states in which it operated at December 31, 1996, 1997 and 1998.

NOTE 7--COMMITMENTS AND CONTINGENCIES

CONTRACTS WITH PROVIDERS

The Company's agreement with Coastal whereby Coastal provides long-haul
transmissions for the Company's traffic has an initial term of five years ending
in the year 2000 at which time the contract is cancelable upon 30 days notice
(SEE NOTE 1).

The Company's September 1996 agreement with Frontier has an initial term of
four years with automatic renewal options, unless terminated earlier by either
party. Commencing in June 1997 the agreement requires the Company to purchase
minimum services starting at $50,000 and escalating to $250,000 minimum monthly
usage in September 1998 and beyond, for a total minimum requirement of
$7,650,000 during the initial contract period. In the event the Company is in
breach of the agreement as defined, and Frontier elects to terminate the
agreement, the total minimum requirement is reduced to $6,000,000 for the
initial four-year term. Minimum purchase requirements were met for the years
ended December 31, 1997 and 1998. The Company was assessed the minimum charge
called for under the agreement for the period ended March 31, 1999 as purchased
services did not meet the minimum purchase requirements.

Should the Company be unable to renew these agreements on favorable terms or
should either Coastal or Frontier be unable to provide services to the Company
at any time, the Company would be required to contract with similar providers
for these services in order to continue operations. The Company's management
believes that there are sufficient alternative providers from which similar
services could be timely acquired at competitive rates in order to avoid
interruptions of operations.

The Company also has a contract with SWBT to provide billing and account
collection services. The initial term of the contract is five years ending in
the year 2000 at which time the contract is cancelable upon ninety days notice,
or it is renewable for one year periods under amended terms. The contract calls
for guaranteed minimum purchases of services of $52,500 per year totaling
$262,500 over the five year term. The Company's management believes that there
are sufficient alternative sources, including the Company, to provide these
services without an interruption of operations should SWBT discontinue providing
them. Minimum purchase requirements were met for years ending December 31, 1997
and 1998.

LITIGATION

The Public Utility Commission of Texas ("PUC") and the Office of the
Attorney General for the state of Texas brought claims under the Texas Deceptive
Trade Practices Act alleging that the Company engaged in the practice known as
"slamming" which involves the unauthorized change of a customer's long distance
service. The Texas Attorney General sought to restrain certain marketing
practices and to assess damages. The case was settled in June 1998 for $150,000
and while the settlement did not constitute an admission of liability on the
Company's part, the Company did agree to comply with the rules promulgated by
the PUC. The settlement agreement required a payment of $50,000 on the date

F-36
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--COMMITMENTS AND CONTINGENCIES (CONTINUED)
of the agreement and 12 payments of $8,333 beginning June 1, 1998. Unpaid
settlement amounts are included in accrued liabilities at December 31, 1997 and
1998.

Similar claims have been brought against the Company in early 1998 by the
Attorneys General for the states of Illinois, Oklahoma and Missouri. The Company
settled with the Illinois Attorney General in March 1999 for $50,000. The
settlement amount is included in accrued liabilities at December 31, 1998.

The remaining suits request, amongst other things, fines, restitution and
loss of ability to conduct business in these states. The Company believes these
claims are without merit, that it has meritorious defenses to them and intends
to vigorously defend itself against these claims.

In addition, the Company has been named a defendant in two suits seeking
class action certification. Both suits were filed in 1998 and are in the
discovery phase. Management of the Company believes that the claims asserted are
without merit and intends to vigorously contest them.

The Company is subject to other legal proceedings which have arisen in the
ordinary course of business and have not been fully adjudicated. Although there
can be no assurance as to the ultimate disposition of these matters and the
proceedings disclosed above, in the opinion of management, based upon
information available at this time, the cost of defense or settlement of these
actions, individually or in the aggregate, will not have a material adverse
effect on the financial position, results of operations or cash flows of the
Company.

OPERATING LEASES

The Company leases office space, office furniture and fixtures and equipment
under noncancellable operating lease arrangements for various periods ranging up
to five years. Future minimum lease payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
-------------
<S> <C>
1999.............................................................................. $ 413,175
2000.............................................................................. 174,462
2001.............................................................................. 32,759
----------
Total future minimum lease payments........................................... $ 620,396
----------
----------
</TABLE>

Lease rental expenses were approximately $73,550, $151,341 and $361,646 for
the years ended December 31, 1996, 1997 and 1998, respectively. Lease rental
expenses approximated $119,373 and $156,817 for the three month periods ended
March 31, 1998 and 1999, respectively.

NOTE 8--RELATED PARTY TRANSACTIONS

The notes receivable from certain stockholders of MTM at December 31, 1997
bear interest at 7% and are payable in annual installments of principal and
interest of $14,746 and $225,450 for years ending December 31, 1999 and 2000,
respectively. These notes were included in the stockholders compensation for
1998. (unaudited)

F-37
<PAGE>
AXCES, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--RELATED PARTY TRANSACTIONS (CONTINUED)
During the three month period ending March 31, 1999, the Company advanced
the stockholders of MTM and a company under common control of MTM $858,197 and
$40,577, respectively. These amounts are included in receivables from related
parties at March 31, 1999.

The Company had the following transaction with a printing company under
common control of MTM:

In January 1998, the Company entered into a one-year agreement totaling
$500,000 with the printing company to provide management and consulting
service for the Company's advertising campaigns, public relations,
marketing, and strategic planning needs.

In November 1998, the Company loaned the printing company $200,000. The
note receivable bears interest at 7%, principal and accrued interest are
payable on March 31, 1999. Outstanding balance at December 31, 1998 is
included in receivables from related parties.

During 1998 and 1997, the Company purchased printing services totaling
$281,660 and $284,660, respectively, from the printing company. Amounts due
the printing company at December 31, 1997 and 1998 were $16,583 and $66,265,
respectively, and are included in accounts payable.

During 1998, the Company paid $20,475 of officers life insurance premiums on
behalf of MTM. This amount is included in receivables from related parties at
December 31, 1998. The Company paid $11,981 of officers' life insurance premiums
on behalf of MTM which are included in receivables from related parties at March
31, 1999. (unaudited)

NOTE 9--401(K) PLAN

The Company established a 401(k) Profit Sharing Plan (the "Plan") effective
January 1, 1998, covering all eligible Company employees. Contributions may be
made to the Plan by an employee at a percentage of salary, but not to exceed the
maximum allowed by the Internal Revenue Code and may be matched by a
discretionary Company contribution of 50% of the employer's contribution up to
3% of total employee compensation.

The Company's contributions to the Plan for the year ended December 31, 1998
totaled $29,886. The Company's contributions to the Plan for the three month
periods ended March 31, 1998 and 1999 were $11,843 and $14,820, respectively.
(unaudited)

NOTE 10--SUBSEQUENT EVENT

In April 1999, the Company and the stockholders of MTM signed a definitive
agreement with OmniLynx pursuant to which all shares of the Company will be
exchanged for the following consideration: (i) 700,000 shares of common stock,
and (ii) $9.0 million of Series B 8% Cumulative Convertible Preferred Stock. The
preferred stock is convertible into 600,000 shares of common stock at the
holder's option and is redeemable after 36 months out of a designated portion of
OmniLynx's cash flow. Additionally, the merger agreement provides for
distributions to MTM totaling $6.5 million representing (i) substantially all of
the undistributed earnings of AXCES, a QSSS under the Federal Income Tax Code of
1986, and (ii) up to $3.0 million in borrowings prior to the Offering. The
acquisition of AXCES is expected to occur during June 1999 and will precede the
consummation of an initial public offering of the common stock of OmniLynx.

F-38
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
InfoHighway International, Inc.:

We have audited the accompanying balance sheets of InfoHighway
International, Inc. as of December 31, 1997 and 1998 and the related statements
of operations, stockholders' equity (deficit) and cash flows for each of the
years in the three-year period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of InfoHighway International,
Inc. as of December 31, 1997 and 1998, and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1998, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has suffered recurring losses and negative
cash flows from operations and has a working capital deficit and stockholders'
deficit that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

KPMG LLP

April 9, 1999
Houston, Texas

F-39
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1997 1998 1999
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS

Current assets
Cash................................................. $ 355 $ 250 $ 363
Accounts receivable, net of allowance for doubtful
accounts of $50,638, $82,904 and $116,194 at
December 31, 1997 and 1998 and March 31, 1999,
respectively....................................... 86,992 39,260 117,349
Other current assets................................. -- 1,250 1,970
---------- ---------- ----------
Total current assets............................... 87,347 40,760 119,682
Property and equipment, net............................ 407,779 323,050 819,644
Intangible assets, net................................. 92,393 71,382 437,428
Other assets........................................... 21,399 14,469 34,652
---------- ---------- ----------
$ 608,918 $ 449,661 $1,411,406
---------- ---------- ----------
---------- ---------- ----------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Notes payable........................................ $ -- $ -- $1,118,573
Note payable to related party........................ -- 475,650 499,250
Notes payable to shareholders........................ 199,900 418,942 418,942
Capital lease obligations............................ 142,477 48,896 45,153
Accounts payable..................................... 376,897 629,259 657,209
Deferred revenues.................................... 196,399 262,458 312,709
Accrued expenses..................................... -- 45,694 82,030
---------- ---------- ----------
Total current liabilities.......................... 915,673 1,880,899 3,133,866

Commitments and contingencies
Stockholders' deficit:
Common stock, no par value, authorized 20,000,000
shares; 6,236,620, 16,605,958 and 16,605,958 shares
issued and outstanding, respectively............... 1,692,778 1,836,015 1,836,015
Accumulated deficit.................................. (1,999,533) (3,267,253) (3,558,475)
---------- ---------- ----------
Total stockholders' deficit........................ (306,755) (1,431,238) (1,722,460)
---------- ---------- ----------
Total liabilities and stockholders' deficit........ $ 608,918 $ 449,661 $1,411,406
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

See accompanying notes to financial statements.

F-40
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED ENDED DECEMBER 31, MARCH 31,
--------------------------------- --------------------
1996 1997 1998 1998 1999
--------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Access service revenues $ 425,561 $ 914,661 $1,384,563 $ 301,640 $ 534,891
Cost of services................... 217,086 647,172 995,524 225,651 335,433
--------- ---------- ---------- --------- ---------
Gross profit..................... 208,475 267,489 389,039 75,989 199,458
Selling, general and
administrative................... 639,204 1,481,366 1,338,859 333,021 335,666
Depreciation and amortization 52,336 175,217 260,816 69,156 131,179
--------- ---------- ---------- --------- ---------
Loss from operations............. (483,065) (1,389,094) (1,210,636) (326,188) (267,387)
Interest expense................... 4,034 28,135 57,084 10,786 23,835
--------- ---------- ---------- --------- ---------
Loss before income taxes......... (487,099) (1,417,229) (1,267,720) (336,974) (291,222)
Income taxes....................... -- -- -- -- --
--------- ---------- ---------- --------- ---------
Net loss $(487,099) $(1,417,229) $(1,267,720) $(336,974) $(291,222)
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
Basic and diluted loss per share:
Net loss $ (0.12) $ (0.27) $ (0.14) $ (0.05) $ (0.02)
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
Weighted-average common shares
outstanding 3,995,502 5,222,454 8,884,820 6,238,176 16,605,958
--------- ---------- ---------- --------- ---------
--------- ---------- ---------- --------- ---------
</TABLE>

See accompanying notes to financial statements.

F-41
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK STOCKHOLDERS'
-------------------------- ACCUMULATED EQUITY
SHARES AMOUNT DEFICIT (DEFICIT)
------------ ------------ ------------- --------------
<S> <C> <C> <C> <C>
Balances, December 31, 1995............................ 3,350,000 $ 113,670 $ (95,205) $ 18,465
Issuances of common stock for cash..................... 966,000 371,310 -- 371,310
Issuances of common stock for services performed....... 100,000 80,000 -- 80,000
Net loss............................................... -- -- (487,099) (487,099)
------------ ------------ ------------- --------------
Balances, December 31, 1996............................ 4,416,000 564,980 (582,304) (17,324)
Issuances of common stock for cash..................... 1,570,610 647,782 -- 647,782
Issuances of common stock for services performed....... 123,038 276,861 -- 276,861
Issuances of common stock for acquisition of intangible
assets............................................... 126,972 203,155 -- 203,155
Net loss............................................... -- -- (1,417,229) (1,417,229)
------------ ------------ ------------- --------------
Balances, December 31, 1997............................ 6,236,620 1,692,778 (1,999,533) (306,755)
Issuances of common stock for cash..................... 70,547 10,085 -- 10,085
Issuances of common stock for services performed....... 505,221 2,088 -- 2,088
Issuances of common stock for acquisition of intangible
assets............................................... 4,883 7,814 -- 7,814
Issuances of common stock in connection with unit
offering............................................. 308,125 123,250 -- 123,250
Issuances of common stock for consulting services
performed............................................ 7,182,244 -- -- --
Issuances of common stock in connection with note
payable to related party............................. 2,298,318 -- -- --
Net loss............................................... -- -- (1,267,720) (1,267,720)
------------ ------------ ------------- --------------
Balances, December 31, 1998............................ 16,605,958 1,836,015 (3,267,253) (1,431,238)
Net loss (unaudited)................................... -- -- (291,222) (291,222)
------------ ------------ ------------- --------------
Balances, March 31, 1999 (unaudited)................... 16,605,958 $ 1,836,015 $ (3,558,475) $ (1,722,460)
------------ ------------ ------------- --------------
------------ ------------ ------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-42
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------- ------------------------
1996 1997 1998 1998 1999
----------- ------------ ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss................................... $ (487,099) $ (1,417,229) $ (1,267,720) $ (336,974) $ (291,222)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............ 52,336 175,217 260,816 69,156 131,179
Issuances of common stock for services
performed.............................. 80,000 276,861 2,088 -- --
Changes in assets and liabilities:
Accounts receivable.................... (71,965) (15,027) 47,732 41,577 (78,089)
Other current assets................... -- -- (1,250) (500) (720)
Other assets........................... (4,782) (15,415) 6,930 (16,159) (11,501)
Accounts payable....................... 77,485 299,412 252,362 151,472 27,950
Deferred revenues...................... 103,827 92,572 66,059 114,820 50,251
Accrued expenses....................... -- -- 45,694 6,032 36,336
----------- ------------ ------------ ----------- -----------
Net cash provided by (used in)
operating activities............... (250,198) (603,609) (587,289) 29,424 (135,816)
----------- ------------ ------------ ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment........ (121,184) (216,251) (130,825) (27,916) (33,928)
Acquisition of intangible assets........... -- -- (16,437) (3,648) (50,000)
----------- ------------ ------------ ----------- -----------
Net cash used in investing
activities......................... (121,184) (216,251) (147,262) (31,564) (83,928)
----------- ------------ ------------ ----------- -----------
Cash flows from financing activities:
Proceeds from unit offering................ -- -- 493,000 12,000 --
Proceeds from note payable to related
party.................................... -- -- 475,650 -- 223,600
Proceeds from notes payable to
shareholders............................. -- 269,500 117,463 421 --
Payments of notes payable to
shareholders............................. (17,533) (97,067) (268,171) -- --
Payments of capital lease obligations...... -- -- (93,581) (14,281) (3,743)
Issuances of common stock for cash......... 371,310 647,782 10,085 4,000 --
----------- ------------ ------------ ----------- -----------
Net cash provided by financing
activities............................. 353,777 820,215 734,446 2,140 219,857
----------- ------------ ------------ ----------- -----------
Net increase (decrease) in cash.......... (17,605) 355 (105) -- 113
Cash at beginning of period.................. 17,605 -- 355 355 250
----------- ------------ ------------ ----------- -----------
Cash at end of period........................ $ -- $ 355 $ 250 $ 355 $ 363
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
Supplemental disclosure of cash flow
information--cash paid for interest........ $ 4,034 $ 28,228 $ 34,273 $ 4,754 $ --
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
Supplemental disclosure of noncash
activities:
Issuance of common stock for acquisition of
customer lists........................... $ -- $ 203,155 $ 7,814 $ -- $ --
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
Equipment acquired under capital leases.... $ 100,369 $ 42,108 $ -- $ -- $ --
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
Issuance of notes payable for
acquisition.............................. $ -- $ -- $ -- $ -- $ 918,573
----------- ------------ ------------ ----------- -----------
----------- ------------ ------------ ----------- -----------
</TABLE>

See accompanying notes to financial statements.

F-43
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

(1) BUSINESS AND ORGANIZATION

InfoHighway International, Inc. (the Company) is an Internet service
provider whose customers consist primarily of small to medium-sized businesses.
The Company was founded in 1994 and is based in Houston, Texas.

(2) LIQUIDITY

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. Since its inception, the Company has
suffered losses and negative cash flows from operations and has a working
capital deficit and stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern. In addition, the Company's operations
are subject to certain risks and uncertainties including the following: (i)
risks associated with technology and regulatory trends; (ii) evolving industry
standards; (iii) dependence on its network infrastructure and suppliers; (iv)
growth and acquisitions; (v) actual and prospective competition by entities with
greater financial and other resources; and (vi) the development of the Internet
market. Inability to obtain additional financing or refinancing on acceptable
terms could necessitate changes in the Company's operating plans.

As discussed further in note 10, management has entered into a stock
purchase agreement with OmniLynx Communications Corporation (OmniLynx) whereby
the Company will be acquired by OmniLynx and included in the proposed initial
public offering of OmniLynx. Ultimately, the Company's ability to generate
positive cash flows depends on factors which may be beyond the Company's
control. There can be no assurance that the proposed initial public offering of
OmniLynx will be successful.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) INTERIM FINANCIAL INFORMATION (UNAUDITED)

The unaudited financial statements as of March 31, 1999 and for the
three-month periods ended March 31, 1998 and 1999 have been prepared on the same
basis as the audited financial statements, and, in the opinion of management,
include all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of the financial position and results of
operations of such interim periods in accordance with generally accepted
accounting principles. Results for the three months ended March 31, 1999 are not
necessarily indicative of results to be expected for the full year.

(B) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated using the
straight-line method over the estimated useful lives of the assets of three to
five years. Leasehold improvements are amortized over the shorter of their
estimated useful lives or the remaining lease term.

The Company leases certain of its data communication and other equipment
under agreements accounted for as capital leases. The assets and liabilities
under capital leases are recorded at the lesser of the present value of
aggregate future minimum lease payments, including estimated bargain purchase
options, or the fair value of the assets under lease. Assets under capital lease
are depreciated over the shorter of their estimated useful lives or the related
lease term.

F-44
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) INTANGIBLE ASSETS

Intangible assets consist primarily of capitalized costs incurred for the
purchase of subscriber bases from other Internet service providers, and are
being amortized on a straight-line basis over the expected periods to be
benefitted of 3 to 4 years. Accumulated amortization on intangible assets
amounted to $39,946, $85,016 and $131,374 at December 31, 1997 and 1998, and
March 31, 1999 (unaudited), respectively. The Company assesses the
recoverability of intangible assets by determining whether the amortization of
the intangible asset balance over its remaining life can be recovered through
undiscounted future operating cash flows of the purchased subscriber bases. The
assessment of intangible assets will be impacted if estimated future operating
cash flows are not achieved.

(D) REVENUE RECOGNITION

Revenues derived from the providing of access services are recognized as the
services are provided. In some instances, the Company bills its subscribers in
advance for direct access to the Internet, but defers recognition of these
revenues until the services have been provided.

(E) SOURCE OF SUPPLIES

The Company relies on certain telecommunication companies to provide data
communications capacity. Although management believes alternative
telecommunications facilities could be found in a timely manner, any disruption
of these services could have an adverse effect on operating results.

The Company attempts to maintain multiple vendors for its modems, terminal
servers and high-performance routers, which are important components of its
network. If the suppliers are unable to meet the Company's needs as it expands
its network infrastructure, the Company may experience delays and increased
costs, which would adversely affect operating results.

(F) INCOME TAXES

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(G) LOSS PER SHARE

Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding for the
period, and excludes the effect of potentially dilutive securities (such as
options, warrants and convertible securities) which are convertible into common
stock. Dilutive loss per share is equivalent to basic loss per share for all
periods presented as the Company had no potentially dilutive securities
outstanding in 1996, 1997, 1998 or during the three months ended March 31, 1999.

(H) FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, DISCLOSURES ABOUT FAIR
VALUE OF FINANCIAL INSTRUMENTS, requires the disclosure of estimated fair values
for financial statement instruments. Fair

F-45
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
value estimates are made at discrete points in time based on relevant market
information. These estimates may be subjective in nature and involve
uncertainties and matters of significant judgment and therefore, cannot be
determined with precision. The Company believes that the carrying amounts of its
financial instrument current assets and current liabilities approximate the fair
value of such items due to their short-term nature. The carrying amounts of
notes payable and capital lease obligations approximate their fair value because
the interest rates approximate market.

(I) USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

(4) PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
(UNAUDITED)
Data communications equipment $ 556,499 $ 654,027 $ 1,086,072
Office equipment...................................... 42,608 69,113 213,225
Other................................................. 12,314 19,106 24,364
----------- ----------- ------------
611,421 742,246 1,323,661
Less accumulated depreciation and amortization........ (203,642) (419,196) (504,017)
----------- ----------- ------------
$ 407,779 $ 323,050 $ 819,644
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

(5) NOTE PAYABLE TO RELATED PARTY

In September 1998, the Company entered into a $500,000 loan agreement with
Trident III, L.L.C. (Trident III). Under the terms of the loan agreement, the
Company has borrowed $475,650 from Trident III. These borrowings incur interest
at 12% annually and are payable at the earlier of September 30, 1999, the
Company's receipt of $1,000,000 or more from one or more debt or equity
financings or the merger of the Company into a publicly-traded company. The
borrowings are secured by substantially all of the assets of the Company.

In connection with the borrowings, the Company issued a total of 2,298,318
shares of common stock to Trident III. These shares were issued with a
repurchase right that gave the Company the right to repurchase all of the shares
for total cash of $1 if the Company was not merged into or had become a
publicly-traded company by March 31, 1999. In connection with additional
borrowings granted to the Company and OmniLynx by Trident III subsequent to
March 31, 1999, the Company forfeited its right to repurchase these shares. Due
to the nominal repurchase right, no value was given to the issuance of these
shares.

F-46
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(6) UNIT OFFERING

In 1998 the Company sold units in a private placement offering for cash
proceeds of $493,000. Each unit was sold for $16,000 and consisted of a $12,000
note payable and 10,000 shares of the Company's common stock. The notes payable
bear interest at 10% and mature at the sooner of March 31, 2003 or within 90
days of the sale of the Company. In connection with the unit offering, the
Company issued 308,125 shares of common stock.

(7) ISSUANCES OF COMMON STOCK

During 1998 the Company sold 70,547 shares of common stock to various
investors for cash proceeds of $10,085. In addition, the Company issued 4,883
shares of common stock in connection with the purchases of subscriber bases from
other Internet service providers. The Company also issued 505,221 shares of
common stock to certain employees and consultants of the Company in exchange for
services performed. For the year ended December 31, 1998, the Company recorded
$2,088 in compensation expense related to the issuances of common stock to
certain employees and consultants based on management's estimate of the fair
value of the stock on the date of issuance.

Additionally during 1998, the Company issued 7,182,244 shares of common
stock to Benchmark Equity Group (Benchmark) in exchange for consulting and
advisory services provided in connection with the anticipated merger with
OmniLynx. These shares were issued with a repurchase right that gave the Company
the right to repurchase the shares for total cash of $1 if the Company was not
merged into or had become a publicly-traded company by March 31, 1999. This
repurchase right was exercised by the Company and the shares owned by Benchmark
were forfeited in 1999. Due to the nominal repurchase right, no value was given
to the issuance of these shares.

During 1997 the Company sold 1,570,610 shares of common stock to various
investors for cash proceeds of $647,782. In addition, the Company issued 126,972
shares of common stock in connection with the purchases of subscriber bases from
other Internet service providers. The Company also issued 123,038 shares of
common stock to certain employees and consultants of the Company in exchange for
services performed. For the year ended December 31, 1997, the Company recorded
$276,861 in compensation expense related to the issuances of common stock to
certain employees and consultants based on management's estimate of the fair
value of the stock on the date of issuance.

During 1996 the Company sold 966,000 shares of common stock to various
investors for cash proceeds of $371,310. The Company also issued 100,000 shares
of common stock to certain employees and consultants of the Company in exchange
for services performed. For the year ended December 31, 1996, the Company
recorded $80,000 in compensation expense related to the issuances of common
stock to certain employees and consultants based on management's estimate of the
fair value of the stock on the date of issuance.

F-47
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(8) INCOME TAXES

No income tax expense or benefit was recognized for the years ended December
31, 1996, 1997 or 1998. Income tax benefit attributable to losses from
operations differed from the amounts computed by applying the U.S. federal
income tax rate to pretax loss from operations as a result of the following:

<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
Computed "expected" tax benefit........................ $ (165,614) $ (481,858) $ (431,025)
Increase in valuation allowance........................ 137,390 385,287 430,315
Nondeductible expenses................................. 28,224 96,571 710
----------- ----------- -----------
$ -- $ -- $ --
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of deferred tax assets at December 31, 1997 and 1998 are as follows:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.................................. $ 550,074 $ 886,002
Accounts receivable............................................... -- 28,187
----------- -----------
Total deferred tax assets....................................... 550,074 914,189
Less valuation allowance.......................................... (550,074) (914,189)
----------- -----------
Net deferred tax asset.......................................... $ -- $ --
----------- -----------
----------- -----------
</TABLE>

At December 31, 1998, the Company has net operating loss carryforwards for
federal income tax purposes of approximately $2,606,000 which are available to
offset future federal taxable income, if any, through 2018. These net operating
loss carryforwards are subject to limitations in the event of a change of
ownership of the Company.

(9) LEASES

The Company is obligated under various noncancellable operating and capital
leases, primarily for the lease of office space and data communications
equipment. Future minimum lease payments under noncancellable operating leases
(with initial or remaining lease terms in excess of one year) as of December 31,
1998 are:

<TABLE>
<CAPTION>
YEAR ENDING OPERATING
DECEMBER 31, LEASES
- -------------------------------------------------------------------------------- ------------
<S> <C>
1999............................................................................ 100,365
2000............................................................................ 100,365
2001............................................................................ 105,027
2002............................................................................ 107,291
2003............................................................................ 42,485
------------
$ 455,533
------------
------------
</TABLE>

F-48
<PAGE>
INFOHIGHWAY INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

(9) LEASES (CONTINUED)
Rent expense for the years ended December 31, 1996, 1997 and 1998 was
$51,000, $70,000 and $80,000, respectively.

(10) SUBSEQUENT EVENTS (UNAUDITED)

The Company has entered into a stock purchase agreement with OmniLynx. In
exchange for all of the issued and outstanding shares of the company,
shareholders of the Company will receive shares of OmniLynx on a pro rata basis.
Additional shares of OmniLynx will be issued to the shareholders of the Company
upon achievement of certain share price targets of OmniLynx common stock.

During January 1999, the Company acquired certain assets, including customer
lists and property and equipment from an Internet service provider (the "Eden
Acquisition"). The purchase price consisted of $50,000 in cash; a $150,000 note,
accruing interest at 9% per annum, due March 15, 1999; and a $768,573 note
redeemable in 968,750 shares of the Company's common stock on March 15, 1999.
The Company and Eden have agreed to extend the due date of the notes pending
completion of the Company's stock purchase agreement with OmniLynx. The purchase
price was allocated $547,486 to property and equipment and $421,087 to customer
lists. The customer lists are being amortized on a straight-line basis over 3
years.

(11) YEAR 2000 COMPLIANCE (UNAUDITED)

Many software applications, computer hardware and related equipment and
systems that use embedded technology, such as microprocessors, rely on two
digits rather than four digits to represent years in performing computations and
decision-making functions. These programs, hardware items and systems may fail
on January 1, 2000 or earlier because they misinterpret "00" as the year 1900
rather than 2000. These failures could have an adverse effect on the Company
because of its direct dependence on its own applications, equipment and systems
and its indirect dependence on those of third parties.

F-49
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
ARC Networks, Inc.
Hauppauge, New York

We have audited the accompanying consolidated balance sheets of Arc
Networks, Inc. and Subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of operations, capital deficit, and cash flows for each
of the three years in the period ended December 31, 1998. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Arc Networks, Inc. and Subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As shown in the
consolidated financial statements and as discussed in Note 3 to the consolidated
financial statements, the Company has suffered recurring losses since its
inception in 1993, and has a deficit at December 31, 1998 of $6,425,265. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 3. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

MOORE STEPHENS, P.C.
Certified Public Accountants.

Cranford, New Jersey
February 16, 1999

F-50
<PAGE>
ARC NETWORKS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current Assets:
Cash and Equivalents................................................. $ 68,712 $ 192,992 $ 139,430
Accounts Receivable, net of Allowance for Doubtful Accounts of
$85,200, $443,000, and $418,556.................................... 2,386,072 2,991,554 3,464,301
Costs and Estimated Profits in Excess of Interim Billings............ 100,149 158,355 408,724
Prepaid Expenses and Other Current Assets............................ 32,737 97,805 113,406
----------- ----------- -----------
Total Current Assets..................................................... 2,587,670 3,440,706 4,125,861
Equipment - net.......................................................... 84,970 125,675 147,583
----------- ----------- -----------
Other Assets:
Deferred Financing Costs............................................. 70,742 248,730 220,396
Customer list, net................................................... -- 53,125 43,750
Goodwill, net........................................................ -- 239,566 197,266
Deposits............................................................. 50,100 86,241 86,241
----------- ----------- -----------
Total Other Assets....................................................... 120,842 627,662 547,653
----------- ----------- -----------
Total Assets............................................................. $ 2,793,482 $ 4,194,043 $ 4,821,097
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current Maturities of Long Term Debt................................. $ 106,000 $ -- $ --
Current Maturities of Capitalized Leases............................. 15,507 20,350 21,335
Current Maturities of Notes Payable.................................. 650,000 250,000 250,000
Notes Payable--Related Parties....................................... 100,000 2,044,724 2,459,724
Loan Payable--Asset Based Lender..................................... 231,064 -- --
Accounts Payable..................................................... 3,098,480 3,817,657 4,565,097
Disputed Amounts Under Contract...................................... -- 1,518,971 1,394,093
Deferred Salary--Officer............................................. -- 52,336 57,077
Deferred Revenue..................................................... 110,326 -- --
Interim Billings in Excess of Costs and Estimated Profits............ 1,166,283 462,605 551,182
----------- ----------- -----------
Total Current Liabilities................................................ 5,477,660 8,166,643 9,298,508
----------- ----------- -----------
Long Term Liabilities:
Long Term Debt....................................................... 123,740 -- --
Capitalized Leases................................................... 33,777 15,319 9,361
Notes Payable........................................................ -- 550,000 550,000
Notes Payable--Related Parties....................................... 1,155,095 1,171,674 1,156,674
----------- ----------- -----------
Total Long Term Liabilities.............................................. 1,312,612 1,736,993 1,716,035
----------- ----------- -----------
Commitments and Contingencies............................................ -- -- --
----------- ----------- -----------
Capital Deficit:
Common Stock - par value $.01, Authorized: 15,000,000 Shares;
3,000,000, 9,530,760 and 9,530,760 issued and outstanding.......... 30,000 95,307 95,307
Additional Paid in Capital........................................... 489,750 620,365 620,365
Deficit.............................................................. (4,516,540) (6,425,265) (6,909,118)
----------- ----------- -----------
Total Capital Deficit.................................................... (3,996,790) (5,709,593) (6,193,446)
----------- ----------- -----------
Total Liabilities and Capital Deficit.................................... $ 2,793,482 $ 4,194,043 $ 4,821,097
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

See Notes to Consolidated Financial Statements

F-51
<PAGE>
ARC NETWORKS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------- --------------------------
1996 1997 1998 1998 1999
------------- ------------- -------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales.................................. $ 5,256,498 $ 9,110,364 $ 13,624,320 $ 3,166,581 $ 4,000,811
Sales - Related Parties................ 326,237 537,837 306,367 295,774 --
------------- ------------- -------------- ------------ ------------
Total Sales............................ 5,582,735 9,648,201 13,930,687 3,462,355 4,000,811
------------- ------------- -------------- ------------ ------------
Cost of Sales.......................... 4,773,279 8,410,293 11,374,867 2,762,753 3,301,052
Cost of Sales - Related Parties........ 300,138 484,810 276,159 266,610 --
------------- ------------- -------------- ------------ ------------
Total Cost of Sales.................... 5,073,417 8,895,103 11,651,026 3,029,363 3,301,052
------------- ------------- -------------- ------------ ------------
Gross Profit........................... 509,318 753,098 2,279,661 432,992 699,759
------------- ------------- -------------- ------------ ------------
Expenses:
Selling, General and Administrative
Expenses......................... 1,248,496 2,277,290 3,104,603 517,682 857,924
Provision for Bad Debts............ 109,989 36,179 345,500 -- 110,600
Administrative Expenses - Related
Parties.......................... 80,119 28,579 14,066 5,382 --
Depreciation and Amortization...... 17,222 436,538 407,390 155,320 96,508
Loss on Impaired Asset............. -- 352,847 -- -- --
------------- ------------- -------------- ------------ ------------
Total Expenses......................... 1,455,826 3,131,433 3,871,559 678,384 1,065,032
------------- ------------- -------------- ------------ ------------
Loss from Operations................... (946,508) (2,378,335) (1,591,898) (245,392) (365,273)
------------- ------------- -------------- ------------ ------------
Other Expenses:
Interest Expense................... (59,903) (205,164) (134,732) (88,225) (61,143)
Interest Expense - Related
Parties.......................... (106,910) (120,912) (182,095) (37,836) (57,437)
------------- ------------- -------------- ------------ ------------
Total Other Expenses................... (166,813) (326,076) (316,827) (126,061) (118,580)
------------- ------------- -------------- ------------ ------------
Net Loss............................... $ (1,113,321) $ (2,704,411) $ (1,908,725) $ (371,453) $ (483,853)
------------- ------------- -------------- ------------ ------------
------------- ------------- -------------- ------------ ------------
BASIC EARNINGS PER SHARE:
Net Loss per Share................. $ (0.37) $ (0.90) $ (0.39) $ (0.12) $ (0.05)
------------- ------------- -------------- ------------ ------------
------------- ------------- -------------- ------------ ------------
Weighted Average Number of
Shares........................... 3,000,000 3,000,000 4,860,819 3,000,000 9,530,760
------------- ------------- -------------- ------------ ------------
------------- ------------- -------------- ------------ ------------
</TABLE>

See Notes to Consolidated Financial Statements

F-52
<PAGE>
ARC NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------------- PAID IN CAPITAL
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
---------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995...................... 3,000,000 $ 30,000 $ (17,750) $ (698,808) $ (686,558)
Allocated related party administrative
expenses...................................... -- -- 18,000 -- 18,000
Net loss........................................ -- -- -- (1,113,321) (1,113,321)
---------- --------- ---------- ------------- -------------
Balance, December 31, 1996...................... 3,000,000 30,000 250 (1,812,129) (1,781,879)
Allocated related party administrative
expenses...................................... -- -- 4,500 -- 4,500
Issuance of warrants related to debt............ -- -- 485,000 -- 485,000
Net loss........................................ -- -- -- (2,704,411) (2,704,411)
---------- --------- ---------- ------------- -------------
Balance, December 31, 1997...................... 3,000,000 30,000 489,750 (4,516,540) (3,996,790)
Issuance of shares related to refinancing....... 6,530,760 65,307 130,615 -- 195,922
Net loss........................................ -- -- -- (1,908,725) (1,908,725)
---------- --------- ---------- ------------- -------------
Balance, December 31, 1998...................... 9,530,760 95,307 620,365 (6,425,265) (5,709,593)
Net loss........................................ -- -- -- (483,853) (483,853)
---------- --------- ---------- ------------- -------------
Balance, March 31, 1999 (unaudited)............. 9,530,760 $ 95,307 $ 620,365 $ (6,909,118) $ (6,193,446)
---------- --------- ---------- ------------- -------------
---------- --------- ---------- ------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-53
<PAGE>
ARC NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
---------------------------------- --------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................ $(1,113,321) $(2,704,411) $(1,908,725) $(371,453) $(483,853)
Adjustments to reconcile net loss to net Cash used
in operating activities
Provision for doubtful accounts..................... 109,989 36,179 345,500 -- 110,600
Depreciation........................................ 17,222 46,488 30,539 5,320 9,300
Amortization........................................ -- 390,050 376,850 150,000 87,208
Loss on impaired asset.............................. -- 352,847 -- -- --
Cost of shares issued in refinancing................ -- -- 195,923 -- --
(Increase) Decrease in assets:
Accounts receivable--trade.......................... (549,490) (1,329,865) (800,565) (641,682) (463,107)
Amounts charged to allowance for doubtful
accounts.......................................... -- (5,979) (150,417) (31,455) (120,240)
Costs and estimated profits in excess of interim
billings.......................................... 129,760 (94,411) (58,207) (62,324) (250,368)
Notes receivable--officer........................... -- 22,500 -- -- 4,741
Prepaid expenses and other assets................... (11,264) (6,835) (65,068) (27,529) (15,601)
Deposits............................................ (225) (49,875) (36,141) -- --
Increase (Decrease) in Liabilities:
Accounts payable and accrued expenses............... 765,591 1,841,481 719,176 202,369 747,441
Deferred salary--officer............................ -- -- 52,336 -- --
Deferred revenue.................................... 6,115 104,211 (110,326) (44,187) --
Disputed amounts under contract..................... -- -- 1,518,971 -- (124,878)
Interim billings in excess of costs and earnings.... 221,520 918,588 (703,677) 1,219,301 88,577
---------- ---------- ---------- --------- ---------
Cash flows used in operating activities............. (424,103) (479,032) (593,831) 398,360 (410,180)
---------- ---------- ---------- --------- ---------
INVESTING ACTIVITIES:
Acquisition of long distance customer base.......... -- -- (413,266) -- --
Capital expenditures................................ (416,466) (82,579) (71,243) (18,072) (31,208)
---------- ---------- ---------- --------- ---------
Cash flows used in investing activities............. (416,466) (82,579) (484,509) (18,072) (31,208)
---------- ---------- ---------- --------- ---------
FINANCING ACTIVITIES:
Net proceeds (repayment) asset based lender......... 79,742 151,322 (231,064) 159,928 --
Proceeds from notes payable, due April 1, 1998...... -- 495,000 -- -- --
Proceeds from demand notes.......................... -- 250,000 -- -- --
Note payable--parent................................ (67,496) (429,389) (106,277) -- --
Proceeds of notes payable--affiliate................ 427,126 223,692 67,855 26,877 400,000
Proceeds of Line of Credit.......................... -- -- 1,999,724 -- --
Proceeds of capitalized leases...................... 114,085 52,950 -- (3,643) (4,974)
(Repayments) of capitalized leases.................. -- (3,666) (13,615) -- --
Proceeds of note payable--equipment loan............ 350,000 -- -- -- --
(Repayment) of note payable--equipment loan......... -- (102,000) (229,740) (18,001) --
Deferred financing costs............................ -- (70,742) (284,263) (1,052) (7,199)
---------- ---------- ---------- --------- ---------
Cash flows provided by financing activities......... 903,457 567,167 1,202,620 164,109 387,827
---------- ---------- ---------- --------- ---------
Net increase in cash and equivalents................ 62,888 5,556 124,280 544,397 (53,561)
Cash and equivalents--beginning balance............. 268 63,156 68,712 68,712 192,992
---------- ---------- ---------- --------- ---------
Cash and equivalents--ending balance.................. $ 63,156 $ 68,712 $ 192,992 $ 613,109 $ 139,431
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
Supplemental disclosures:
Cash paid during the period for:
Interest.............................................. $ 27,536 $ 40,941 $ 233,748 $ 23,860 $ 33,230
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
Income taxes.......................................... $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- --------- ---------
---------- ---------- ---------- --------- ---------
</TABLE>

F-54
<PAGE>
ARC NETWORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the twelve months ended December 31, 1998, 1997 and 1996 the following
non-cash items occurred:

In February 1997, in connection with the issuance of $550,000 of notes, the
Company issued Series B Warrants to purchase 1,000,000 shares of common stock at
$1.00 per share and Series C Warrants to purchase 500,000 shares of common stock
at $5.00 per share. The Company has valued the Series B Warrants, using the
Black-Scholes method, at $485,000 and the Series C Warrants at $0. Such amount
is being amortized over the life of the notes which matured April 1, 1998.
Amortization recorded for the twelve month period ended December 31, 1998 and
1997 was $150,000 and $335,000.

In connection with the issuance of $550,000 interim notes payable, the
Company paid to the placement agent a fee of $55,000 which was amortized in
1997. In 1998, the Company arranged for the sale of these notes to a friendly
party. (See below)

In September 1998, the Company paid certain debts and refinanced others by
obtaining a $2,000,000 line of credit, secured by all assets of the Company,
with Consolidated Technology Group, Ltd. in exchange for the issuance of
4,500,760 shares of Common Stock valued at $135,000. In conjunction with the
refinancing, the Company renegotiated the employment contract of its President
and CEO and issued 1,280,000 shares valued at $38,400. In conjunction with the
refinancing of the $550,000 in notes referred to above, 750,000 shares of Common
Stock were issued to the new note holder valued at $22,500. The total cost of
the refinancing was deferred at September 1998 and is being amortized over 2
years. A summary of the deferral is presented below:

<TABLE>
<S> <C>
Cost of issuing shares............................................ $ 195,922
Origination fee................................................... 15,000
Legal costs....................................................... 73,341
---------
Total deferral.................................................... 284,263
Amortization...................................................... (35,533)
---------
Net deferral...................................................... $ 248,730
---------
---------
</TABLE>

The Note Receivable-Officer in the amount of $22,500 was forgiven and
recorded as additional compensation in 1997.

See Notes to Consolidated Financial Statements.

F-55
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

[1] PRINCIPLES OF ORGANIZATION AND BUSINESS

ARC Networks, Inc., a Delaware corporation (the "Company") was incorporated
in January 1997. The Company was formed for the purpose of acquiring all of the
outstanding stock of A.R.C. Networks, Inc., a New York corporation ("ARC-New
York"). On January 17, 1997, all of the stockholders of ARC-New York transferred
their stock to ARC Networks, Inc. for 100% ownership in the Company (the
"Recapitalization"). The accompanying consolidated financial statements reflect
the financial position and the results of operations and cash flows of the
Company and its subsidiary as if the Recapitalization occurred January 1, 1994.
The Company is a majority owned subsidiary of SIS Capital Corp. ("SISC"). SISC
is a wholly-owned subsidiary of Consolidated Technology Group Ltd. ("CTG" and
"Parent"), a public company.

The Company offers local and long-distance telephone services to commercial
telephone users, and also provides data cable installation services primarily in
the New York metropolitan area.

[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include
the accounts of the Company and its subsidiary after elimination of intercompany
balances and transactions.

UNAUDITED INTERIM FINANCIAL STATEMENTS--The financial statements as of March
31, 1998 and 1999 and for the three months ended March 31, 1998 and 1999 are
unaudited; however, in the opinion of management, all adjustments (consisting
solely of normal recurring adjustments) necessary to a fair presentation of the
financial statements for the interim periods have been made. The results of the
interim periods are not necessarily indicative of the results to be obtained for
a full fiscal year.

USE OF ESTIMATES--The preparation of financial statements, in conformity
with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

CONCENTRATION OF CREDIT RISK--The Company extends credit to customers which
results in accounts receivable arising from its normal business activities. The
financial strength of the customers is routinely assessed and, based upon
factors surrounding the credit risk of the customers, the Company believes that
its receivable credit risk exposure is limited. Such estimate of the financial
strength of customers may be subject to change in the near term. At December 31,
1998, cash balances of $308,000 were held at a financial institution in excess
of the federally insured limits. The Company believes no significant
concentration of credit risk exists with respect to cash.

CASH AND EQUIVALENTS--The Company considers certain highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. At December 31, 1998, the Company had no cash equivalents.

EQUIPMENT AND DEPRECIATION--Equipment is recorded at cost. Expenditures for
normal repairs and maintenance are charged to expense as incurred. When assets
are retired or otherwise disposed of, their costs and related accumulated
depreciation are removed from the accounts and the resulting gains and losses
are included in operations. Depreciation and amortization are recorded using the

F-56
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
straight-line method over the estimated useful lives of the assets. The
following sets forth the Company's depreciation policy:

<TABLE>
<S> <C>
5-10
Telecommunications equipment..................................... years
Office equipment and computers................................... 5 years
</TABLE>

INTANGIBLES--Intangible assets consist primarily of capitalized costs
incurred for the purchase of a customer base and are amortized on a straight
line basis over the expected periods to be benefitted, twenty four months.
Management assesses the recoverability of the intangible assets by determining
whether the amortization of the intangible asset balance over the remaining life
can be recovered through undiscounted future operating cash flows of the
acquired customer base. The assessment of intangible assets will be impacted if
estimated future operating cash flows are not achieved.

REVENUE RECOGNITION--For local and long distance telephone service, the
Company recognizes revenue as service is provided to customers. For telephone
service provided through the sale of prepaid debit cards the Company invoices
the customer, principally distributors, at a discount from the face amount of
the debit card, when the debit cards are distributed. The Company records the
invoiced amount as deferred revenue and recognizes revenue as telephone usage is
provided.

The Company recognizes revenue from its data cable installation services
using the percentage of completion method, measured by the percentage of cost
incurred to date to the total estimated cost for each contract. Revisions in
cost estimates and recognition of losses, if any, on these contracts are
reflected in the accounting period in which the facts become known. Contract
terms provide for billing schedules that differ from revenue recognition and
give rise to costs and estimated profits in excess of interim billings, and
billings in excess of costs and estimated profits. It is reasonably possible
that the amount of costs and estimated profits in excess of billing and billings
in excess of costs and estimated profits may be subject to change in the near
term.

INCOME TAXES--The Company utilizes the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in the period that includes the enactment date.

STOCK OPTIONS AND SIMILAR EQUITY INSTRUMENTS--On January 1, 1996, the
Company adopted the disclosure requirements, but not the fair value based method
of valuation, of Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation", for stock options and similar equity
instruments (collectively, "Options") issued to employees. The Company will
continue to apply the intrinsic value based method of accounting for Options
issued to employees prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." However, SFAS No. 123
applies to transactions in which an entity issues its equity instruments to
acquire goods or services from non-employees. Those transactions are accounted
for based on the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably measurable.

F-57
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[2] SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS (LOSS) PER SHARE--Loss per share for the 1998 and 1999 periods is
based upon the weighted average shares outstanding for the period. Loss per
share for 1997 and 1996 are based on 3,000,000 shares issued in the
Recapitalization as if they were outstanding for both 1997 and 1996. Potential
common share equivalents are included in the calculation if they are dilutive.
Loss per share for all periods have been recalculated pursuant to SFAS No 128,
"Earnings per Share."

DEFERRED FINANCING COSTS--The Company accounts for the value of warrants
associated with the issuance of debt as a reduction of the principal balance and
amortizes such amounts over the life of the debt utilizing the straight line
method. Costs associated with the issuance of debt are deferred and amortized
over the term of the debt. Amounts paid or accrued for costs associated with an
anticipated public offering are deferred until the completion of the offering at
which time they are charged to paid in capital or are charged to expense if the
offering is not consummated.

[3] GOING CONCERN

The accompanying financial statements have been prepared on a going concern
basis which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company has sustained losses
since inception, and its accumulated deficit at December 31, 1998 and March 31,
1999 was $6,425,265 and $6,909,118, respectively. Its ability to continue as a
going concern is dependent upon the success of its marketing efforts, its
ability to produce sufficient margins to cover operating and overhead expenses
and its access to sufficient funding to enable it to continue operations. The
Company has been funded through December 31, 1998 by loans from its principal
stockholder and affiliated entities. The Company's plans for its transition to
profitability include obtaining financing, possibly through additional private
equity or through the merger of its operations with another entity in order to
provide the necessary working capital to expand its operations profitably and by
instituting stringent cost controls. While there can be no assurance that
additional equity capital can be raised or that its cost control efforts will be
successful, the Company recognizes that it must generate revenues at a level in
excess of its ongoing expenses or consider the prospect of reducing or ceasing
operations. Management also plans to increase revenues by marketing its services
and products to geographic markets throughout the United States and to increase
the products available to its customers.

[4] RECEIVABLES AND LOAN PAYABLE--ASSET-BASED LENDER

In 1994, the Company entered into an agreement with an asset-based lender to
finance its accounts receivable. The maximum availability of funds was
$3,000,000. The base interest rate was equal to 8.25% throughout 1998, 1997 and
1996, plus 2% and a commission of 0.3% of the receivables financed. The weighted
average interest rate for 1998 was 20.4%. The balance of the loan, $178,476, was
repaid in September 1998 from the proceeds of the Line of Credit received from
CTG (See Note 8). As of December 31, 1997 the balance of the loan was $231,064.

F-58
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[5] CONTRACTS IN PROGRESS

Costs, estimated profits, and billings on uncompleted contracts are
summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1998
------------- ------------- MARCH 31,
-------------
1999
-------------
(UNAUDITED)
<S> <C> <C> <C>
Costs Incurred....................................................... $ 1,368,827 $ 991,835 $ 874,869
Estimated Profits.................................................... 405,586 368,807 137,024
------------- ------------- -------------
Totals............................................................... 1,774,413 1,360,642 1,011,893
Billings to Date..................................................... (2,840,547) (1,664,891) (1,154,351)
------------- ------------- -------------
Net.............................................................. $ (1,066,134) $ (304,249) $ (142,458)
------------- ------------- -------------
------------- ------------- -------------
Included in the accompanying balance sheet under the following
captions:
Costs and Estimated Profits in Excess of Interim Billings............ $ 100,149 $ 158,356 $ 408,724
Interim Billings in Excess of Costs and Estimated Profits............ (1,166,283) (462,605) (551,182)
------------- ------------- -------------
Net.................................................................. $ (1,066,134) $ (304,249) $ (142,458)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

At December 31, 1998 and March 31, 1999, the Company reclassified certain
contracts which are the subject of litigation in "Disputed Amounts Under
Contract" in the amounts of $1,518,971 and $1,394,093, respectively. See Notes
21 and 23.

At December 31, 1998, the Company had a backlog of firm orders for data
cabling and wiring services of approximately $2,000,000, of which substantially
all is expected to be completed during 1999.

[6] EQUIPMENT

Equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------- -----------
1997 1998 1999
--------- ---------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Telephone switching equipment............................ $ 33,558 $ 34,735 $ 35,935
Furniture and fixtures................................... 13,351 17,450 18,109
Computer equipment....................................... 43,136 109,104 138,453
--------- ---------- -----------
90,045 161,289 192,497
Less: Accumulated Depreciation........................... (5,075) (35,614) (44,914)
--------- ---------- -----------
Equipment--net........................................... $ 84,970 $ 125,675 $ 147,583
--------- ---------- -----------
--------- ---------- -----------
</TABLE>

Depreciation expense was $17,222, $46,488 and $30,539 for the years ended
December 31, 1996, 1997 and 1998, respectively, and $5,320 and $9,300 for the
three months ended March 31, 1998 and 1999, respectively.

F-59
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[7] INTANGIBLES

In June 1998, the Company purchased for cash a long distance customer base
for $413,266 of which $338,266 was allocated to goodwill and $75,000 was
allocated to customer lists. The total purchase price is being amortized over 24
months. Amortization amounted to $120,575 for the twelve months December 31,
1998 and $51,675 for the three months ended March 31, 1999.

[8] DEBT

[A] LONG TERM DEBT--EQUIPMENT LOAN

In September 1996, the Company entered into a term loan agreement with an
asset-based lender to borrow up to $350,000 for the purpose of purchasing
equipment. The loan agreement provided for weekly principal payments of $2,000.
Interest was charged monthly at a rate equal to the highest prime interest
charged in New York City plus 12%. The loan was collateralized by the Company's
accounts receivable and equipment.

The security interest granted to this lender was junior to the security
interest granted to the Company's other asset-based lender as to all assets,
except for the equipment being financed under this loan. SISC, CTG, and Lewis
Schiller, the Company's former Chairman and Chief Executive Officer, guaranteed
the Company's obligations under this agreement. The outstanding balance of this
loan, $189,156, was repaid in September 1998, plus a $12,500 prepayment penalty
from the proceeds of the Company's new $2,000,000 Line of Credit with CTG. As of
December 31, 1997 $106,000 was classified as Current Maturities of Long Term
Debt and the balance, $123,740 was shown as Long Term Debt. The weighted average
interest rate was 32.7% for 1998, including the prepayment penalty.

[B] NOTES PAYABLE--LISTED BELOW IS A SUMMARY OF NOTES PAYABLE

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------ ------------
1997 1998 1999
----------- ----------- ------------
<S> <C> <C> <C>
(UNAUDITED)
12% Demand Notes...................................... $ 250,000 $ 250,000 $ 250,000
8% Notes.............................................. 550,000 550,000 550,000
Less: Debt discount on 8% Notes....................... (150,000) -- --
----------- ----------- ------------
Sub-total........................................... 650,000 800,000 800,000
Less: Current Portion................................. (650,000) (250,000) (250,000)
----------- ----------- ------------
Total Long Term Notes................................. $ -- 550,000 $ 550,000
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

[I] 12% DEMAND NOTES

In September 1997, the Company borrowed $250,000 from two accredited
investors and issued its 12% Demand Notes. No fee was incurred in connection
with the issuance of such Demand Notes. The first interest payment is due
January 1, 1999 and the weighted average interest rate was 12% for 1998 and
1997. See Notes 21 and 23.

F-60
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[8] DEBT (CONTINUED)
[II] 8% NOTES PAYABLE

In February 1997, the Company issued 8% promissory notes in the principal
amount of $550,000, from which it received net proceeds of approximately
$495,000 after deducting a $55,000 commission paid to the placement agent, and,
in connection therewith, issued Series B Common Stock Purchase Warrants ("Series
B") to purchase an aggregate of 1,000,000 shares of Common Stock at $1.00 per
share and Series C Common Stock Purchase Warrants ("Series C") to purchase an
aggregate of 500,000 shares of Common Stock at $5.00 per share. The Company has
valued the Series B Warrants, using the Black-Scholes method, at $485,000. The
Series C Warrants were valued at $0. Amortization of $335,000 was recorded in
1997 and $150,000 in 1998. Such notes were originally due April 1, 1998.

In conjunction with the Line of Credit obtained from CTG in September 1998
(see below), the Company arranged for the sale of the $550,000 notes and
renegotiated the terms as follows. The Series B Warrants were cancelled and
400,000 of the 500,000 Series C Warrants were transferred to the new note
holder. The maturity date of the notes was extended to January 1, 2001, subject
to certain prepayment conditions should the Company raise in excess of $3
million or more in financings. All interest due under the note was forgiven and
the note became non-interest bearing. CTG guaranteed the note and the Company
issued 750,000 shares of its Common Stock to the new note holder, which was
valued at $22,500.

[C] NOTES TO RELATED PARTIES

A summary of notes to related parties is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------- -------------
1997 1998 1999
------------ ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Accounts payable--CTG............................. $ 106,277 $ -- $ --
Revolving Line of Credit--CTG..................... -- 1,999,724 2,399,724
Trans Global Services, Inc........................ 1,148,818 1,216,674 1,216,674
------------ ------------- -------------
Sub-total....................................... 1,255,095 3,216,398 3,616,398
Less: Current Maturities.......................... (100,000) (2,044,724) (2,459,724)
------------ ------------- -------------
Notes Payable--long term.......................... $ 1,155,095 $ 1,171,674 $ 1,156,674
------------ ------------- -------------
------------ ------------- -------------
</TABLE>

[I] REVOLVING LINE OF CREDIT WITH CTG

In September 1998, the Company obtained a $2,000,000 line of credit from CTG
in exchange for the issuance of 4,500,760 shares of its Common Stock, valued at
$135,000. The terms of this line of credit allow the Company to borrow up to 85%
of eligible receivables as defined in the agreement and is collateralized by all
assets of the Company. Interest on the outstanding balance is prime plus 2% and
a monthly maintenance fee of $1,500. The weighted average interest rate was
15.9% for 1998. (See Notes 14 and 22)

The proceeds of the CTG Line of Credit were used, in part, to repay the Loan
Payable--Asset Based Lender, in the amount of $178,476, and the Equipment Loan
in the amount of $189,156. The balance was used for working capital. At December
31, 1998 and March 31, 1999, the outstanding balances under the line were
$1,999,724 and $2,399,724, respectively.

F-61
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[8] DEBT (CONTINUED)
[II] DEFERRED FINANCING COSTS

As a condition to receiving the Line of Credit in September 1998, the
Company paid at closing to CTG a $15,000 origination fee and the attorney's fees
for both the Company and CTG in the amount of $73,341. In addition, the Company
renegotiated the employment contract with its President and CEO and issued to
him 1,280,000 shares of Common Stock valued at $38,400 (See Note 16). All such
amounts have been deferred and are being amortized over 24 months. A summary of
the 1998 activity regarding this deferral is presented below:

<TABLE>
<CAPTION>
SHARES AMOUNT
---------- ----------
<S> <C> <C>
Cost of share issuance:
CTG Line of Credit................................................... 4,500,760 $ 135,022
Employment Contract.................................................. 1,280,000 38,400
Shares in lieu of interest--$550,000 Notes........................... 750,000 22,500
---------- ----------
Sub-total........................................................ 6,530,760 195,922
Origination Fee to CTG............................................... 15,000
Legal Costs.......................................................... 73,341
----------
Gross Deferral....................................................... 284,263
Amortization......................................................... (35,533)
----------
Deferred Financing Costs............................................. $ 248,730
----------
----------
</TABLE>

For the three months ended March 31, 1999 amortization totaled $35,533.

[III] NOTES PAYABLE AND TRANSACTIONS--AFFILIATED COMPANY

During 1996, 1997 and 1998, Trans Global Services, Inc. ("Trans Global"), an
affiliate through common ownership by CTG, made loans and advances to the
Company. Interest is charged at 10% annually on amounts owed to Trans Global.
Such amounts were $78,167, $104,968, and $119,935 for the years ended December
31, 1996, 1997 and 1998, respectively. In addition, Trans Global allocated
certain amounts for shared expenses such as certain payroll, payroll taxes,
employee benefits, professional fees and rents. Such amounts allocated totaled
$38,966, $21,245 and $0 for the years ended December 31, 1996, 1997 and 1998,
respectively, and bear interest at 10% per annum. Offsetting these items, the
Company provided to Trans Global phone services during 1997 totaling $24,918. As
of December 31, 1996 and 1997, respectively, such loans amounted to $973,411 and
$1,148,818, including interest. On September 30, 1997, the Company issued its
10% promissory note to Trans Global in the principal amount of $1,139,000,
representing the amount due to Trans Global on such date, including accrued
interest. In September 1998, the Company renegotiated this note in the amount of
$1,216,674, including all previously deferred interest. Interest on the new note
is payable monthly and, beginning in April 1999, monthly principal payments of
$5,000 are due until August 31, 2003, when a balloon payment for the balance is
due. The note is subject to certain prepayment conditions in the event the
Company raises additional financings of at least $5,000,000, or, in the event of
a sale of the Company or a change of control occurs, as defined in the
agreement.

F-62
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[8] DEBT (CONTINUED)
Scheduled payments related to this note for the next five years are as
follows:

<TABLE>
<S> <C>
1999............................................................ $ 45,000
2000............................................................ 60,000
2001............................................................ 60,000
2002............................................................ 60,000
2003............................................................ 991,674
---------
Total........................................................... $1,216,674
---------
---------
</TABLE>

[9] CAPITAL LEASES

During 1997, the Company purchased certain equipment with a value of $52,950
through the issuance of four capitalized leases. Accumulated depreciation
through December 31, 1997, 1998 and March 31, 1999 was $3,005, $10,445 and
$12,305, respectively. Depreciation expense on equipment under capitalized
leases is included in depreciation expense. Interest rates on the leases range
from approximately 16% to 18%. Future minimum lease payments for the remaining
years of the leases as of December 31, 1998 and March 31, 1999 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ -----------
<S> <C> <C>
(UNAUDITED)
1999.............................................................. $ 25,243 $ 23,079
2000.............................................................. 16,478 11,374
------------ -----------
Total minimum payments............................................ 41,721 34,453
Less: amounts representing interest............................... (6,052) (3,757)
------------ -----------
Net present value of lease payments............................... $ 35,669 $ 30,696
------------ -----------
------------ -----------
</TABLE>

[10] INCOME TAXES

The tax effects of significant items comprising the Company's net deferred
tax asset as of December 31, 1997 and 1998 and March 31, 1999 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31
---------------------------- -------------
1997 1998 1999
------------- ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
Deferred Tax Asset:
Loss Carryforwards............................. $ 1,800,000 $ 2,500,000 $ 2,700,000
Less: Valuation Allowance...................... (1,800,000) (2,500,000) (2,700,000)
------------- ------------- -------------
Net Deferred Tax Asset......................... $ -- $ -- $ --
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

F-63
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[10] INCOME TAXES (CONTINUED)
The Valuation Allowance increased by approximately $1,120,000 in 1997,
$700,000 in 1998, and $150,000 and $200,000 for the three months ended March 31,
1998 and 1999, respectively. The provision for income taxes varies from the
amount computed by applying statutory rates for the reasons summarized below for
all periods presented:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------ -----------
1996 1997 1998 1998 1999
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Provision based on statutory rates.......................... (34)% (34)% (34)% (34)% (34)%
State taxes, net of federal tax benefit..................... (6) (6) (6) (6) (6)
Losses for which there is no current tax benefit............ 40 40 40 40 40
---- ---- ---- ---- ----
Total....................................................... --% --% --% --% --%
---- ---- ---- ---- ----
---- ---- ---- ---- ----
</TABLE>

For financial reporting purposes, at December 31, 1998 and March 31, 1999,
the Company had net operating loss carryforwards of approximately $6,400,000 and
$6,600,000, respectively, expiring in 2013 and 2014. Pursuant to Section 382 of
the Internal Revenue Code of 1986, as amended, utilization of these losses may
be limited in the event of a substantial change in the Company's ownership.
Based on this and the operating losses generated through December 31, 1998 and
March 31, 1999, the deferred tax asset of approximately $2,500,000 and
$2,700,000 is offset by an allowance of $2,500,000 and $2,700,000, respectively.

The expiration dates of net operating loss carryforwards are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ------------
<S> <C> <C>
(UNAUDITED)
2009............................................................. $ 125,000 $ 125,000
2010............................................................. 525,000 525,000
2011............................................................. 1,050,000 1,050,000
2012............................................................. 2,800,000 2,800,000
2018............................................................. 1,900,000 1,900,000
2019............................................................. -- 200,000
------------ ------------
$6,400,000 $ 6,600,000
------------ ------------
------------ ------------
</TABLE>

F-64
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[11] STOCK OPTIONS

In January 1997, the Company, by action of the Board of Directors and
shareholders, adopted the 1997 Stock Option Plan (the "1997 Plan"). The 1997
Plan provides for the awards of stock options, non-qualified options, stock
appreciation rights, restricted stock, deferred stock, stock purchase rights and
other stock based awards to purchase up to 500,000 shares of Common Stock of the
Company. If shares subject to an option under the 1997 Plan cease to be subject
to such option, or if shares awarded are later forfeited or otherwise terminated
without a payment being made to the participant in the form of stock, such
shares will again be available for future issuance under the 1997 Plan. Awards
under the 1997 Plan may be made to key employees, including officers of and
consultants to the Company, its subsidiaries and affiliates, but may not be
granted to any director unless the director is also an employee of or consultant
to the Company or any subsidiaries or affiliates. The 1997 Plan imposes no limit
on the number of officers and other key employees to whom awards may be made.
The exercise price of each option is equal to the market price of the Company's
stock on the date of grant.

In January 1997, the Company granted options to purchase 200,000 shares of
Common Stock at $5.00 per share, which was in excess of the fair market value of
the Common Stock on the date of grant, to the Company's President. Such options
are immediately exercisable as to 20,000 shares and become exercisable
cumulatively as to an additional 20,000 shares on January 1st of each year from
1998 through 2006. All other options, when granted, become cumulatively
exercisable as to 50% of shares granted, one year from the date of grant and an
additional 25% on the second and third anniversaries of the date of grant. All
options have a term of ten years from the date of grant. Based on current
vesting requirements, the Company estimates that 100% of the options granted to
date will eventually vest. A summary of activity in the 1997 option plan is as
follows:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- -----------------
<S> <C> <C>
Outstanding, December 31, 1996................................... -- --
Granted.......................................................... 200,000 $ 5.00
Exercised........................................................ -- --
Expired/Forfeited................................................ -- --
--------- -----
Outstanding at December 31, 1997................................. 200,000 $ 5.00
Granted.......................................................... -- --
Exercised........................................................ -- --
Expired/Forfeited................................................ -- --
--------- -----
Outstanding, December 31, 1998................................... 200,000 $ 5.00
Exercisable at December 31, 1998................................. 40,000 $ 5.00
--------- -----
--------- -----
Granted.......................................................... -- --
Exercised........................................................ -- --
Expired/Forfeited................................................ -- --
--------- -----
Outstanding, March 31, 1999 (unaudited).......................... 200,000 $ 5.00
Exercisable at March 31, 1999 (unaudited)........................ 60,000 $ 5.00
--------- -----
--------- -----
</TABLE>

F-65
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[11] STOCK OPTIONS (CONTINUED)
The following table summarizes option information as of December 31, 1998
and 1997, and March 31, 1999:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
---------------------------------------------------------- EXERCISABLE OPTIONS
RANGE OF WEIGHTED AVG --------------------------
EXERCISE REMAINING WEIGHTED AVG WEIGHTED AVG
DATE PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE SHARES EXERCISE PRICE
- ------------------------------------ ----------- --------- ----------------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997................... $ 5.00 200,000 9 yrs. $ 5.00 20,000 $ 5.00
December 31, 1998................... $ 5.00 200,000 8 yrs. $ 5.00 40,000 $ 5.00
March 31, 1999 (unaudited).......... $ 5.00 200,000 7 yrs. $ 5.00 60,000 $ 5.00
</TABLE>

The Company applies APB Opinion 25 in accounting for its stock option plan.
No compensation has been recognized for the plan in 1997, 1998 or 1999. If the
Company had accounted for the issuance of options pursuant to the fair value
method of SFAS No. 123, the Company would have recorded additional compensation
expense in 1997 of $596,400 and the Company's net loss and net loss per share
would have been:

<TABLE>
<CAPTION>
DECEMBER 31,
1997
-------------
<S> <C>
Net loss, as reported.......................................................... $ (2,704,411)
-------------
-------------
Net loss, as adjusted.......................................................... $ (3,300,811)
-------------
-------------
Net loss per share, as reported................................................ $ (.90)
-------------
-------------
Net loss per share, as adjusted................................................ $ (1.10)
-------------
-------------
</TABLE>

The per share weighted average fair value of options granted during 1997 was
$2.98, which was estimated on the grant date using the Black-Scholes method. The
following assumptions were made in estimating the fair value:

<TABLE>
<CAPTION>
1997
---------
<S> <C>
Dividend yield....................................................................... --%
Risk free interest rate.............................................................. 5.50%
Expected life........................................................................ 10 yrs
Expected volatility.................................................................. 37.85%
</TABLE>

[12] WARRANTS

In February 1997, the Company issued 8% promissory notes in the principal
amount of $550,000, from which it received net proceeds of approximately
$495,000 after deducting a $55,000 commission paid to the placement agent, and,
in connection therewith, issued Series B Common Stock Purchase Warrants to
purchase an aggregate of 1,000,000 shares of Common Stock at $1.00 per share and
Series C Common Stock Purchase Warrants to purchase an aggregate of 500,000
shares of Common Stock at $5.00 per share. The Company valued the Series B
Warrants, using the Black-Scholes method, at $485,000 and valued the Series C
Warrants at $0. Amortization of $335,000 was recorded in 1997 and $150,000 in
1998. Such notes were originally due April 1, 1998.

F-66
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[12] WARRANTS (CONTINUED)
In conjunction with the Line of Credit obtained from CTG in September 1998,
the Company arranged for the sale of the $550,000 notes and renegotiated the
terms as follows. The Series B Warrants were cancelled and 400,000 of the
500,000 Series C Warrants were sold to a new note holder. The maturity date of
the notes was extended to January 1, 2001, subject to certain prepayment
conditions should the Company raise in excess of $3 million or more in
financings. All interest due under the note was forgiven and the note is now
non-interest bearing. CTG guaranteed the note and the Company issued 750,000
shares of its Common Stock to the new note holder, which was valued at $22,500
(See Note 8). A summary of activity for all warrants is as follows:

<TABLE>
<CAPTION>
WEIGHTED AVG
WARRANTS EXERCISE PRICE
----------- ---------------
<S> <C> <C>
Outstanding, December 31, 1996................................... -- --
Granted.......................................................... 1,500,000 $ 2.33
Exercised........................................................ -- --
Expired/Cancelled................................................ -- --
----------- -----
Outstanding, December 31, 1997................................... 1,500,000 $ 2.33
Granted.......................................................... -- --
Exercised........................................................ -- --
Expired/Cancelled................................................ (1,000,000) $ 1.00
----------- -----
Outstanding, December 31, 1998................................... 500,000 $ 5.00
----------- -----
----------- -----

Granted.......................................................... -- --
Exercised........................................................ -- --
Expired/Cancelled................................................ -- --
----------- -----
Outstanding, March 31, 1999 (unaudited).......................... 500,000 $ 5.00
----------- -----
----------- -----
</TABLE>

The following table summarizes warrant information as of December 31, 1998
and 1997 and March 31, 1999:

<TABLE>
<CAPTION>
OUTSTANDING WARRANTS
---------------------------------------------------------
WEIGHTED AVG EXERCISABLE WARRANTS
RANGE OF REMAINING ---------------------------
EXERCISE CONTRACTUAL WEIGHTED AVG WEIGHTED AVG
DATE PRICES SHARES LIFE EXERCISE PRICE SHARES EXERCISE PRICE
- ----------------------------------- ----------- ---------- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997.................. $ 5.00 500,000 10 yrs $ 5.00 500,000 $ 5.00
$ 1.00 1,000,000 10 yrs $ 1.00 1,000,000 $ 1.00
December 31, 1998.................. $ 5.00 500,000 9 yrs $ 5.00 500,000 $ 5.00
March 31, 1999 (unaudited)......... $ 5.00 500,000 8 yrs $ 5.00 500,000 $ 1.00
</TABLE>

The Company accounted for the issuance of warrants and recorded compensation
pursuant to the fair value method of SFAS No. 123, which produced additional
compensation expense of $485,000, of which $150,000 and $335,000 was amortized
in 1998 and 1997, respectively. See Note 11 for the assumptions made in
estimating the fair value of warrants.

F-67
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[13] ECONOMIC DEPENDENCY

For the three months ended March 31, 1999, three customers accounted for
more than 10% of total revenues. Revenues for these three customers were
$346,500, $490,900 and $572,100, respectively. For the three months ended March
31, 1998, no customer accounted for more than 10% of total revenues. In 1998, no
customer accounted for more than 10% of total revenues, however, one customer
accounted for 12% of accounts receivable. Revenues from two customers in 1996
and 1997, respectively, amounted to $1,046,238 and $1,835,382, or 11% and 19%,
and $710,097 and $869,195, or 13% and 16% of total revenues, respectively. At
March 31, 1999, accounts receivable for three customers was $312,800, $576,400
and $224,200, respectively. Accounts receivable for these two customers was
$224,904 and $241,393 at December 31, 1996 and 1997, respectively. At December
31, 1998, the Company had a backlog of firm orders for data cabling and wiring
services of approximately $2,000,000, of which substantially all is expected to
be completed during 1999. There is no backlog for telephone services.

[14] TRANSACTIONS WITH RELATED PARTIES

[A] NOTES PAYABLE--PARENT (CTG) AND TELEVEND

During the years ended December 31, 1995 and 1996, the Company received
loans from SISC. Interest expense on the outstanding notes amounted to $28,743,
$34,033 and $62,160 for the years ended December 31, 1996, 1997 and 1998,
respectively. Such loans accrued interest at 10% per annum. As of December 31,
1996, 1997 and 1998, such loans, exclusive of the Line of Credit received in
September 1998 from CTG, were $466,117, $534,902 and $0, respectively. See Note
8 regarding the Company's Accounts Receivable Line of Credit.

During the years ended December 31, 1996 and 1997, the Company sold prepaid
debit calling cards to Televend, a wholly owned subsidiary of CTG, in the
amounts of $326,237 and $537,837, respectively. Sales to Televend were at a rate
no lower than that provided to the Company's best customers. At December 31,
1996 and 1997, Televend owed to the Company $49,236 and $428,625, respectively.
Such amounts were offset against the Company's payable to CTG at the respective
dates according to a directive issued by CTG. During 1998, Televend purchased an
additional $306,367 of prepaid debit cards from the Company and paid to the
Company $116,085, which resulted in Televend owing to the Company $618,906.

On March 31, 1998, Lewis Schiller ("Schiller"), the Company's former CEO and
CTG's and Televend's former President, CEO and Chairman, and certain other
officers and directors of the Company and CTG, agreed to terminate their
employment agreements and resign as officers and directors of the Company and
CTG, subject to certain terms and conditions, in return for a lump sum payment
by CTG of $4,000,000. As part of this agreement, CTG agreed to transfer certain
subsidiaries of CTG with a zero or negative net worth to Schiller for a nominal
consideration. Televend was one of the subsidiaries transferred to Schiller. At
this point, the Company had a receivable from a company who no longer was an
affiliate. In May 1998, with the consent of CTG, the Company reclassified the
$618,906 Televend owed to the Company against its payable to CTG, leaving a
balance of $84,004 owed to CTG by the Company.

[B] RELATED PARTY TRANSACTIONS--PARENT

The Company occupies space leased by CTG in New York City. There is no
formal lease agreement between CTG and the Company. Rent is charged by SISC to
the Company which amounted to

F-68
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[14] TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
$23,153, $27,752 and $14,066 for the years ended December 31, 1996, 1997 and
1998, respectively. For the three months ended March 31, 1998 and 1999, rent
charged was $7,238 and $5,832, respectively.

During 1996 and 1997, certain administrative services were performed for the
Company by CTG and its subsidiaries. The fair value of such services,
approximately $18,000 and $4,500, respectively, was charged to general and
administrative expenses and credited to additional paid-in capital since CTG
will not be reimbursed for such charges.

[15] FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table summarizes the financial instruments by individual
balance sheet account as of December 31, 1998 and 1997 and March 31, 1999. The
fair value of the financial instruments disclosed therein is not necessarily
representative of the amount that could be realized or settled, nor does the
fair value amount consider the tax consequences of realization or settlement.

<TABLE>
<CAPTION>
CARRYING AMOUNT FAIR VALUE
---------------------------------------- ----------------------------------------
DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31,
-------------------------- ------------ -------------------------- ------------
1997 1998 1999 1997 1998 1999
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Debt Maturing Within One
Year....................... $ 987,064 $ 250,000 $ 250,000 $ 1,137,064 $ 250,000 $ 250,000
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Notes payable--Parent &
Affiliates................. $ 1,255,095 $ 3,216,398 $ 3,676,398 $ 1,683,720 $ 3,216,398 $ 3,676,398
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Long-Term Debt............... $ 123,740 $ 550,000 $ 550,000 $ 123,740 $ 550,000 $ 550,000
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>

For certain financial instruments, including cash, trade receivables and
payables, and short-term debt, the carrying amount approximated fair value
because of the near term maturities of such obligations. The fair value of the
notes payable to the parent company, and affiliates, is based on current rates
at which the Company could borrow funds with similar remaining maturities and
approximates fair value. The fair value of long-term debt to non-affiliates is
based on current rates at which the Company could borrow funds with similar
terms and maturities.

[16] COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company occupies space at two locations for use in its data cable
installation services business and to support its telephone customer service
center and corporate offices. Both leases contain renewal options and escalation
clauses. Rent expense for the twelve months ended December 31, 1996, 1997 and
1998 was $29,122, $47,345 and $82,712, respectively. Rent expense for the three
months ended March 31, 1998 and 1999 was $15,156 and $18,545, respectively.

F-69
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[16] COMMITMENTS AND CONTINGENCIES (CONTINUED)
Future minimum rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of December 31, 1998 for each of the
next five years and in the aggregate are:

<TABLE>
<S> <C>
1999.............................................................. $ 103,861
2000.............................................................. 106,978
2001.............................................................. 102,823
2002.............................................................. 95,617
2003.............................................................. 56,767
---------
Total............................................................. $ 466,046
---------
---------
</TABLE>

EMPLOYMENT CONTRACT--OFFICER

In September 1998, the Company revised and entered into a new five-year
employment agreement with its President and Chief Operating Officer (the
"Officer"). The agreement provides for annual compensation, as of September 30,
1998, of $204,000, subject to cost of living increases and bonuses beginning in
1999, provided the Company meets certain earnings goals. From October 1996
through 1998, the Officer deferred $52,336 of salary. During the twelve months
ended December 31, 1998 such amount was charged to expense. The Officer has
voluntarily continued to defer salary beyond 1998. As of March 31, 1999, such
amount was $57,077.

MINIMUM PURCHASE COMMITMENTS

The Company has entered into agreements with local and long-distance
carriers (the "Carriers") from which it purchases telephone service. Such
agreements include minimum purchase obligations which require monthly payments
based on minimum service usage to the Carriers even if the minimum service is
not used. The minimums are stated in both dollar amounts and usage based on
minutes. Actual purchases made under unconditional purchase obligations for the
years ended December 31, 1996, 1997 and 1998 were $2,525,000, $5,583,000 and
$5,140,000, and for the three months ended March 31, 1998 and 1999 were
$1,427,00 and $1,463,000, respectively. For the twelve months ended December 31,
1998, the minimum purchase commitment with one of the Company's telephone
carriers, Frontier Communications, was not met and as a result, the Company was
obligated to record as additional expense $155,700. Estimated minimum future
payments due under the agreements in the aggregate are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------
<S> <C>
1999........................................................................... $ 4,531,000
2000........................................................................... 6,171,000
2001........................................................................... 6,171,000
2002........................................................................... 1,671,000
2003........................................................................... 43,000
-------------
$ 18,587,000
-------------
-------------
</TABLE>

F-70
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[17] LOSS ON IMPAIRED ASSET

In December 1997, the Company provided for the impairment of its debit card
platform due to the continuing losses and outlook for future profitability. The
platform was purchased in 1996 for $411,560. As of December 31, 1996 and 1997,
the Company had recorded depreciation of $17,301 and $41,412. The Company
accounted for debit card operations as part of Telephone Services. In October
1998, the Company began outsourcing the call processing for its debit card
operation as a means of improving its margins in this business.

[18] INITIAL PUBLIC OFFERING

In 1997, the Company incurred $70,742 of costs in connection with the
anticipated initial public offering with an underwriter, which it deferred until
July 1998 when the offering was terminated. Such costs were charged to income.

In 1996, the Company had incurred $162,282 of costs associated with an
offering, which were expensed in 1997 as a result of the Company's decision to
proceed with an offering through another underwriter.

[19] SEGMENT INFORMATION

The Company's reportable segments are strategic businesses that, although
complimentary, offer different products and services. They are managed
separately because each business requires different technology and marketing
strategies. See Note 1 for descriptive information about the Company's business
segments and Note 13 for information on certain significant customers. The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies. The Company evaluates performance
based on results of operations before income taxes, interest and unusual items.
The Company derives 100% of its revenue from customers within the domestic
United States.

F-71
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[19] SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
------------------------------------------ --------------------------
1996 1997 1998 1998 1999
------------ ------------- ------------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Assets:
Telephone Services..................... $ 1,430,260 $ 2,303,476 $ 2,921,795 $ 2,785,762 $ 2,911,431
Data Cable Installation Services....... 136,040 343,649 804,471 1,039,435 1,516,839
Corporate.............................. 88,640 146,357 467,777 718,100 392,827
------------ ------------- ------------- ------------ ------------
Totals............................... $ 1,654,940 $ 2,793,482 $ 4,194,043 $ 4,543,297 $ 4,821,097
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
Depreciation:
Telephone Services..................... $ 17,222 $ 46,488 $ 30,539 $ 5,320 $ 9,300
Data Cable Installation Services....... -- -- -- -- --
------------ ------------- ------------- ------------ ------------
Totals............................... $ 17,222 $ 46,488 $ 30,539 $ 5,320 $ 9,300
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
Additions to Equipment:
Telephone Services..................... $ 416,466 $ 82,579 $ 71,243 $ 18,072 $ 31,208
Data Cable Installation Services....... -- -- -- -- --
------------ ------------- ------------- ------------ ------------
Totals............................... $ 416,466 $ 82,579 $ 71,243 $ 18,072 $ 31,208
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
Amortization of Intangibles:
Telephone Services..................... $ -- $ 390,050 $ 376,850 $ 150,000 $ 87,208
Data Cable Installation Services....... -- -- -- -- --
------------ ------------- ------------- ------------ ------------
Totals............................... $ -- $ 390,050 $ 376,850 $ 150,000 $ 87,208
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
Acquisition of Customer Base
Telephone Services..................... $ -- $ -- $ 413,266 $ -- $ --
Data Cable Installation Services....... -- -- -- -- --
------------ ------------- ------------- ------------ ------------
Totals............................... $ -- $ -- $ 413,266 $ -- $ --
------------ ------------- ------------- ------------ ------------
------------ ------------- ------------- ------------ ------------
</TABLE>

[20] NEW AUTHORITATIVE PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) has issued SFAS No 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. SFAS No 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The accounting for changes
in the fair value of a derivative depends on the intended use of the derivative
and how it is designated. For example, gains or loses related to changes in the
fair value of a derivative not designated as a hedging instrument are recognized
in earnings in the period of the change, while certain types of hedges may be
initially reported as a component of other comprehensive income (outside
earnings) until the consummation of the underlying transaction.

SFAS No 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of SFAS No 133 should be as of the
beginning of a fiscal quarter; on that date, hedging relationships must be
designated anew and documented pursuant to the provisions of SFAS No 133.

F-72
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[20] NEW AUTHORITATIVE PRONOUNCEMENTS (CONTINUED)
Earlier application of all of the provisions of SFAS No 133 is encouraged, but
it is not permitted only as of the beginning of any fiscal quarter. SFAS No 133
is not to be applied retroactively to financial statements of prior periods. The
Company will evaluate the new standard to determine any required new disclosures
or accounting.

The FASB has also issued SFAS No 134 "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans held for Sale by
a Mortgage Banking Enterprise, an Amendment of FASB Statement No 65" and SFAS No
135 "Rescission of FASB Statement No 75 and Technical Corrections." SFAS No 134
will not apply to the Company. The Company will evaluate SFAS No 135, which is
effective for financial statements issued for the fiscal years ending after
February 15, 1999, to determine any required new disclosures or accounting.

[21] SUBSEQUENT EVENTS

LITIGATION

On January 8, 1999, the Company was served with a summons from the State
Supreme Court of New York, County of New York, by Mitel Telecommunications
Systems, Inc., ("Mitel") for a breach of contract claim in the amount of
$1,715,000 relating to cabling and installation services for which the Company
has been paid in full. The Company believes the action is without merit and
filed a motion to dismiss the action based on numerous defenses available to it
and that it continues to perform all requested services under the contract from
Mitel. As of December 31, 1998, the Company believes the maximum exposure
resulting from this claim will be $1,518,971 and has recorded a liability for
such amount, however, it is at least reasonably possible that a change in the
estimate may occur in the near term.

[22] DEFAULTS

LINE OF CREDIT--CTG

In January 1999, the Company received an additional $250,000 advance from
CTG pursuant to Amendment #1 of the agreement. As of March 12, 1999, the Company
was in default of certain provisions of the agreement relating to $249,724 of
ineligible accounts receivable and $18,327 of interest which remained unpaid to
CTG.

DEMAND NOTES

In January 1999, the Company was obligated to make interest payments for the
period September 1997 through December 31, 1998 amounting to $38,750. Through
February 15, 1999, the Company paid $10,000.

[23] SUBSEQUENT EVENTS AFTER FEBRUARY 16, 1999--UNAUDITED

[A] CHANGE OF CONTROL

In June 1999, OmniLynx acquired all of the outstanding capital stock of the
Company. The acquisition consideration received by the stockholders of the
Company consists of 390,076 shares of common stock and 152,672 shares of
contingent common stock of OmniLynx. Issuance of the contingent common stock is
conditional upon achievement of certain share price targets of OmniLynx after an
initial

F-73
<PAGE>
ARC NETWORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

[23] SUBSEQUENT EVENTS AFTER FEBRUARY 16, 1999--UNAUDITED (CONTINUED)
public offering expected to be completed in mid 1999. Additionally, OmniLynx
assumed all outstanding debt of the Company, with the exception of the note
payable to Trans Global in the amount of $1.2 million, which will be exchanged
for Series A 10% Convertible Redeemable Preferred Stock of OmniLynx valued at
$1.2 million.

From the proceeds of the initial public offering by OmniLynx, CTG will be
repaid 50% of the then outstanding balance of the line of credit, with the
balance of the line being exchanged for a convertible note payable maturing in
18 months if not converted previously.

In April and June 1999, the Company received $150,000 and $250,000,
respectively, from OmniLynx pursuant to a 12% note payable. The note and accrued
interest are both due on or before October 31, 1999.

[B] LITIGATION

[I] MITEL--As of March 31, 1999, the Company estimates that its maximum
exposure resulting from this claim will be $1,394,093. This represents a
decrease of $124,878 from the estimated December 31, 1998 liability and results
from the Company completing work on other jobs granted to the Company by Mitel
used to offset the contracts under dispute.

[II] On March 26, 1999, the Company was served with a summons from the State
Supreme Court of New York, County of Orange, by an employee of a customer of the
Company located in Thiells, N.Y., for $1,000,000 resulting from a December 1996
fall over wiring claimed to be negligently installed by the Company. The Company
has a liability insurance policy which provides sufficient coverage in the event
the plaintiff's claim is successful. The Company believes the action is without
merit and filed a motion to dismiss the action based on numerous defenses
available to it.

[C] DEFAULTS

[I] LINE OF CREDIT--CTG--In March 1999, the Company received an additional
$150,000 advance from CTG pursuant to Amendment #2 to the agreement. As of May
6, 1999, the Company was in default of certain provisions of the agreement
relating to approximately $607,000 of ineligible accounts receivable and the
amount outstanding on the line was $2,399,724. Also, as of May 6, 1999, $62,160
of interest on the line and rent payments was owed to CTG.

[II] DEMAND NOTES--The Company was obligated to make another interest
payment in the amount of $7,500 for the period January 1, 1999 through March 31,
1999 on April 1, 1999 which was not paid. As of May 6, 1999, the total unpaid
interest on these notes amounted to $38,750. On June 4, 1999, the Company
received demand for repayment of $125,000 of principal and all accrued and
unpaid interest from one of the note holders.

[D] INITIAL PUBLIC OFFERING

In the first quarter of 1999, the Company deferred $7,200 of legal costs in
anticipation of an initial public offering in mid 1999.

F-74
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE
YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE
FRONT COVER OF THIS PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND PROSPECTUS MAY HAVE CHANGED SINCE THAT DATE.
------------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
The Company............................................................... 20
Use of Proceeds........................................................... 21
Dividend Policy........................................................... 21
Capitalization............................................................ 22
Dilution.................................................................. 24
Selected Financial Data................................................... 25
Management's Discussion and Analysis of Pro Forma Financial Condition and
Results of Operations................................................... 28
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Combined and Founding Companies............................. 34
Business.................................................................. 44
Management................................................................ 61
Certain Relationships and Related Transactions............................ 68
Principal Stockholders.................................................... 73
Description of Capital Stock.............................................. 76
Shares Eligible for Future Sale........................................... 80
Underwriting.............................................................. 83
Legal Matters............................................................. 85
Experts................................................................... 85
Where You Can Find More Information....................................... 86
Index to Financial Statements............................................. F-1
</TABLE>

UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1,600,000 SHARES

OMNILYNX
COMMUNICATIONS
CORPORATION

COMMON STOCK

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

PROSPECTUS

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

WESTPORT
RESOURCES
INVESTMENT
SERVICES, INC.

WEATHERLY

SECURITIES

CORPORATION

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 3. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses (other than underwriting
discounts and commissions) in connection with the offering described in this
Registration Statement, all of which shall be paid by us. All of such amounts
(except the SEC Registration Fee, the NASD Filing Fee and the New York Stock
Exchange Listing Fee) are estimated.

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 5,627
NASD Filing Fee................................................... 6,000
American Stock Exchange Listing Fee............................... 35,000
Printing and Mailing Costs........................................ 100,000
Legal Fees and Expenses........................................... 290,000
Accounting Fees and Expenses...................................... 100,000
Transfer Agent and Registrar Fees and Expenses.................... 10,000
Miscellaneous..................................................... 53,373
---------
Total......................................................... 600,000
---------
---------
</TABLE>

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

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law permits a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action. In an
action brought to obtain a judgment in the corporation's favor, whether by the
corporation itself or derivatively by a stockholder, the corporation may only
indemnify for expenses, including attorney's fees, actually and reasonably
incurred in connection with the defense or settlement of such action, and the
corporation may not indemnify for amounts paid in satisfaction of a judgment or
in settlement of the claim. In any such action, no indemnification may be paid
in respect of any claim, issue or matter as to which such person shall have been
adjudged liable to the corporation except as otherwise approved by the Delaware
Court of Chancery or the court in which the claim was brought. In any other type
of proceeding, the indemnification may extend to judgments, fines and amounts
paid in settlement, actually and reasonably incurred in connection with such
other proceeding, as well as to expenses.

The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner be reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. The statute contains additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation. The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (1) by a majority vote of
a quorum of disinterested members of the board of directors, (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.

II-1
<PAGE>
Our Certificate of Incorporation and Bylaws require us to indemnify our
directors to the fullest extent permitted under Delaware law. Pursuant to
employment agreements entered into by us with our executive officers and certain
other key employees, we must indemnify such officers and employees in the same
manner and to the same extent that we are required to indemnify our directors
under our Bylaws. The Certificate of Incorporation limits the personal liability
of a director to us or our stockholders to damages for breach of the director's
fiduciary duty.

We maintain officers' and directors' indemnity insurance against expenses of
defending claims or payment of amounts arising out of good-faith conduct
believed by the officer or director to be in or not opposed to our best
interest.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since our inception, we have issued and sold the following unregistered
securities:

(1) In June 1999, we underwent a recapitalization which included a reverse stock
split. As adjusted for the recapitalization, we have issued and sold an
aggregate of 939,000 shares of common stock to our founders, directors and
consultants at a purchase price of $.0001 per share. In addition, we issued
certain contingent common stock issue rights to certain of these
shareholders. Sales of our common stock and related issue rights were as
follows:

<TABLE>
<CAPTION>
NUMBER CONTINGENT
OF COMMON STOCK
SHAREHOLDER SHARES ISSUE RIGHTS
- ---------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Benchmark Equity Group.......................................... 579,886 158,363
Emerging Ventures, L.L.C........................................ 97,260 38,067
Pound Capital................................................... 52,371 20,497
Christopher H. Efird............................................ 115,429 67,243
Constantin J. Trezos............................................ 40,614 23,660
Jeffrey W. Tomz................................................. 23,514 13,699
Gary Panno...................................................... 14,963 8,716
Don Moorehead................................................... 14,963 8,716
------------ -------
Total Common Shares......................................... 939,000 338,961
------------ -------
------------ -------
</TABLE>

(2) From April through June 1999, we issued a total of 573,333 warrants to
purchase common stock in connection with certain bridge loans to accredited
investors which will be repaid out of the proceeds of the offering. The
warrants are exercisable at $8.00 per share for a period of five years after
their issuance.

(3) We acquired ARC in June 1999. We will acquire ARC and InfoHighway
simultaneously, with and as a condition of this offering. In connection with
the acquisition, we issued the shares of common stock, contingent common
stock issue rights and preferred stock to accredited investors and a limited
number of unaccredited investors:

<TABLE>
<CAPTION>
CONTINGENT COMMON
COMMON STOCK STOCK ISSUE RIGHTS PREFERRED STOCK
--------------------- ---------------------- ---------------------
VALUE OF VALUE OF VALUE OF
ACQUISITION SHARES SHARES SHARES SHARES SHARES SHARES
- --------------- --------- ---------- --------- ----------- --------- ----------
AXCES.......... 700,000 $6,300,000 -- $ -- 60,000 $9,000,000
<S> <C> <C> <C> <C> <C> <C>
InfoHighway.... 958,166 8,623,494 235,878 -- -- --
ARC............ 390,076 3,510,684 152,672 -- 121,667 1,216,674
--------- ---------- --------- ----- --------- ----------
Total.......... 2,048,242 $18,434,178 388,550 $ -- 181,667 $10,216,674
--------- ---------- --------- ----- --------- ----------
--------- ---------- --------- ----- --------- ----------
</TABLE>

We also issued convertible promissory notes for a total of $1.65 million to
a former debt holder of ARC. The notes are convertible at $8.00 per share for a
total of 206,250.

II-2
<PAGE>
(4) From February until June 1999, we issued warrants to purchase a total of
36,185 shares of common stock at $5.71 per share to John Vanderhider, our
Chief Financial Officer, for consulting work performed prior to his election
as an officer. In April 1999, we also issued 300,000 options to purchase
common stock to each of Joseph A. Gregori and Peter Parrinello, our Chief
Executive Officer and President, respectively, at an exercise price of $8.00
per share. In addition we intend to issue options to purchase an additional
450,000 shares of common stock to these and other officers upon the closing
of this offering at exercise prices of $5.00 and $10.00 per share.

The sales of the securities described in paragraphs (1) through (4) were
deemed to be exempt from registration under the Securities Act in reliance upon
Section 4(2) of the Securities Act, or Regulation D promulgated thereunder, as
transactions by an issuer not involving a public offering. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either receive adequate information about OmniLynx or had access, through
employment or other relationships, to such information.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------
<C> <C> <S>
*1.1 -- Form of Underwriting Agreement dated , 1999 by and between OmniLynx and Weatherly
Securities Corporation.
2.1 -- Agreement and Plan of Reorganization dated as of June 30, 1999 by and among OmniLynx, ARC
Acquisition, Inc., ARC Networks, Inc. and its Stockholders Named Therein.
2.2 -- Agreement and Plan of Reorganization dated as of June 24, 1999 by and among OmniLynx, AXCES
Acquisition, Inc, AXCES, Inc., MTM Holdings Corporation and its Shareholders Named Therein.
2.3 -- Agreement and Plan of Reorganization dated as of June 30, 1999 by and among OmniLynx, Info
Acquisition,Inc., InfoHighway International, Inc. and its Stockholders Named Therein.
3.1 -- Amended and Restated Certificate of Incorporation of OmniLynx (f/k/a Gemini II, Inc.), including
the Designation, Preferences, Rights and Limitations of Series A 10% Convertible Preferred Stock
as filed on June 24, 1999.
3.2 -- Form of Certificate of Designation, Preferences, Rights and Limitations of Series B 8%
Cumulative Convertible Preferred Stock.
3.3 -- Amended and Restated Bylaws of OmniLynx.
*4.1 -- Form of Certificate representing common stock.
*4.2 -- Form of Certificate representing Series A 10% Convertible Preferred Stock.
*4.3 -- Form of Certificate representing Series B 8% Cumulative Convertible Preferred Stock.
*4.4 -- Form of Underwriter Representative Warrant.
4.5 -- Warrant issued to John Vanderhider.
4.6 -- Form of 13% Promissory Note issued by OmniLynx during March through June 1999 in connection with
the Bridge Loans.
4.7 -- Form of Agreement of Purchase and Sale entered into during March through June 1999 in connection
with the Bridge Loans.
4.8 -- Form of Warrants to Purchase Common Stock of OmniLynx entered into during March through June
1999 in connection with the Bridge Loans.
</TABLE>

II-3
<PAGE>
<TABLE>
<C> <C> <S>
4.9 -- Form of Registration Rights Agreement entered into during March through June 1999 in connection
with the Bridge Loans.
4.10 -- Form of Registration Rights Agreements entered into between OmniLynx and each of the
shareholders of AXCES, ARC and InfoHighway in connection with the acquisitions.
*4.11 -- Registration Rights Agreement to be entered into between OmniLynx and the Representative of the
Underwriter concerning the shares underlying the Underwriter Representative Warrants.
4.12 -- Registration Rights Agreement by and among Trans Global Services, Inc., ARC Networks, Inc.,
Consolidated Technology Group Ltd., Technology Acquisitions Ltd. and OmniLynx dated March 23,
1999.
4.13 -- Registration Rights Agreement between OmniLynx and Consolidated Technology Group, Ltd. dated May
19, 1999.
4.14 -- Form of Certificate of Contingent Interest in Common Stock.
*5.1 -- Opinion of Porter & Hedges, L.L.P.
10.1 -- 1999 Stock Incentive Plan
*10.2 -- Form of Indemnification Agreement between OmniLynx and each of its directors and officers.
10.3 -- Employment Agreement by and between OmniLynx and Joseph A. Gregori dated June 30, 1999.
10.4 -- Employment Agreement by and between OmniLynx and Peter Parrinello dated June 30, 1999.
10.5 -- Employment Agreement by and between OmniLynx and Tony Howlett dated June 30, 1999.
10.6 -- Employment Agreement by and between OmniLynx and Glenn Kramer dated June 30, 1999.
10.7 -- Employment Agreement by and between AXCES and Michael Avignon dated as of June 24, 1999.
10.8 -- Employment Agreement by and between AXCES and Timothy Till dated as of June 24, 1999.
10.9 -- Consulting Agreement by and between AXCES and MTM Holdings dated as of June 24, 1999.
10.10 -- Consulting Agreement by and between OmniLynx and Benchmark dated as of September 1, 1998, as
amended on June 1, 1999, and June 24, 1999.
10.11 -- M&A Letter Agreement by and between OmniLynx and Benchmark dated September 1, 1998, as amended
on June 1, 1999, and June 24, 1999.
*21.1 -- Subsidiaries of OmniLynx.
23.1 -- Consent of BDO Seidman, LLP.
23.2 -- Consent of Pannell Kerr Forster of Texas, P.C.
23.3 -- Consent of KPMG LLP.
23.4 -- Consent of Moore Stephens, P.C.
*23.5 -- Consent of Porter & Hedges, L.L.P. (contained in Exhibit 5.1)
23.6 -- Consent of Harry Bennett as nominee for director
23.7 -- Consent of Glenn Kramer as nominee for director.
23.8 -- Consent of Michael Macaluso as nominee for director.
23.9 -- Consent of Peter Parrinello as nominee for director.
*23.10 -- Consent of [Weatherly Nominee] as nominee for director.
</TABLE>

II-4
<PAGE>
<TABLE>
<C> <C> <S>
24.1 -- Power of Attorney (included on the signature page of this Registration Statement).
*27.1 -- Financial Data Schedule.
</TABLE>

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

* To be filed by amendment.

(b) Financial Statement Schedules. All schedules are omitted because they
are not applicable or because the required information is contained in the
Financial Statements or Notes thereto.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the underwriters,
at the closing specified in the underwriting agreement, certificates
representing the shares of common stock offered hereby in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) For the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as a
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE>
SIGNATURES

Pursuant to the Requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on June 30, 1999.

OMNILYNX COMMUNICATIONS CORPORATION

By: /s/ JOSEPH A. GREGORI
-----------------------------------------
Joseph A. Gregori,
CHIEF EXECUTIVE OFFICER AND DIRECTOR

POWER OF ATTORNEY

Each person whose signature appears below hereby appoints Joseph A. Gregori
and Christopher H. Efird, and both of them, either of whom may act without the
joinder of the other, as his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any registration
statement for the same offering filed pursuant to Rule 462 under the Securities
Act of 1933, and to file the same, with all exhibits thereto and all other
documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing appropriate or necessary to be done, as fully and for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------------------------------------------- ------------------------------------------ ----------------------

<C> <S> <C>
/s/ JOSEPH A. GREGORI
------------------------------------ Chief Executive Officer (Principal June 30, 1999
Joseph A. Gregori Executive Officer), and Director

/s/ JOHN C. VANDERHIDER
------------------------------------ Chief Financial Officer (Principal June 30, 1999
John C. Vanderhider Financial and Accounting Officer)

/s/ CHRISTOPHER H. EFIRD
------------------------------------ Director June 30, 1999
Christopher H. Efird
</TABLE>

II-6

<PAGE>

Exhibit 2.1

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF JUNE 30, 1999

BY AND AMONG

OMNILYNX COMMUNICATIONS CORPORATION,

ARC ACQUISITION, INC.,

ARC NETWORKS, INC.

AND ITS

STOCKHOLDERS NAMED HEREIN

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I

THE MERGER

Section 1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.3 Effects of Merger . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.4 Certificate of Incorporation. . . . . . . . . . . . . . . . . . . . .2
Section 1.5 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.7 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

ARTICLE II

CONVERSION OF SHARES; OBJECTING SHARES; PAYMENT

Section 2.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.2 Objecting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 2.3 Delivery, Exchange and Payment. . . . . . . . . . . . . . . . . . . .4
Section 2.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2.5 Options and Warrants. . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.6 Available Surplus . . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 2.7 Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

Section 3.1 By each Stockholder . . . . . . . . . . . . . . . . . . . . . . . . .5
Section 3.2 Ownership and Status of Company Common Stock. . . . . . . . . . . . .6
Section 3.3 Power of the Stockholder; Approval of the Merger. . . . . . . . . . .6
Section 3.4 No Conflicts or Litigation. . . . . . . . . . . . . . . . . . . . . .7
Section 3.5 Preemptive and Other Rights; Waiver . . . . . . . . . . . . . . . . .7
Section 3.6 Control of Related Businesses . . . . . . . . . . . . . . . . . . . .7
Section 3.7 Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

<PAGE>

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 4.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 4.2 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Section 4.3 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .8
Section 4.4 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4.5 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 4.6 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.7 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.8 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . . . 10
Section 4.9 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . 10
Section 4.10 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.11 Non-Contravention; Consents . . . . . . . . . . . . . . . . . . . . 13
Section 4.12 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.15 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . 15
Section 4.16 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.17 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.18 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.19 Restrictive Covenants . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.20 Unlawful Payments . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.21 Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.22 Transactions with Related Parties . . . . . . . . . . . . . . . . . 17
Section 4.23 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.24 Certain Environmental Matters . . . . . . . . . . . . . . . . . . . 18
Section 4.25 Accuracy of Information Furnished . . . . . . . . . . . . . . . . . 18
Section 4.26 Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO

Section 5.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.3 Capitalization of the Purchaser . . . . . . . . . . . . . . . . . . 19
Section 5.4 Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.6 Undisclosed Liabilities, Etc. . . . . . . . . . . . . . . . . . . . 20
Section 5.7 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.8 Non-Contravention; Consents . . . . . . . . . . . . . . . . . . . . 21
Section 5.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

<PAGE>

Section 5.10 Accuracy of Information Furnished; Subsequent Events. . . . . . . . 21
Section 5.11 Compliance with Applicable Law. . . . . . . . . . . . . . . . . . . 22
Section 5.12 Unlawful Payments . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.13 Solvency of the Purchaser and Newco . . . . . . . . . . . . . . . . 22
Section 5.14 Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE VI

COVENANTS

Section 6.1 Covenants of the Company. . . . . . . . . . . . . . . . . . . . . . 23
Section 6.2 Covenants of the Company and the Stockholders . . . . . . . . . . . 26
Section 6.3 Covenants of Purchaser and Newco. . . . . . . . . . . . . . . . . . 26
Section 6.4 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.5 Purchaser and Newco's Right to Investigate. . . . . . . . . . . . . 28
Section 6.6 No Shop; Release of Directors . . . . . . . . . . . . . . . . . . . 28

ARTICLE VII

CLOSING AND CONDITIONS TO CLOSING

Section 7.1 Date and Time of Closing. . . . . . . . . . . . . . . . . . . . . . 29
Section 7.2 Delivery of Instruments . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.3 Notices of Change of Control. . . . . . . . . . . . . . . . . . . . 30
Section 7.4 Conditions to the Obligations of Purchaser and Newco. . . . . . . . 30
Section 7.5 Conditions to Obligations of the Company and the Stockholders . . . 31

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Survival of Representations and Warranties. . . . . . . . . . . . . 32
Section 8.2 Indemnification of Purchaser Indemnified Parties. . . . . . . . . . 33
Section 8.3 Indemnification of Stockholder Indemnified Parties. . . . . . . . . 34
Section 8.4 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . 34
Section 8.5 Remedies Exclusive. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.6 Limitations on Indemnification. . . . . . . . . . . . . . . . . . . 36

ARTICLE IX

LIMITATIONS ON COMPETITION

Section 9.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . 37
Section 9.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.3 Reasonable Restraint. . . . . . . . . . . . . . . . . . . . . . . . 38

<PAGE>

Section 9.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . 38
Section 9.5 Independent Covenant. . . . . . . . . . . . . . . . . . . . . . . . 38
Section 9.6 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE X

POST-CLOSING RESTRICTIONS

Section 10.1 Treatment of Confidential Information . . . . . . . . . . . . . . 39
Section 10.2 Restrictions on Transfer of Purchaser Common Stock. . . . . . . . 39

ARTICLE XI

TERMINATION AND REMEDIES FOR BREACH OF AGREEMENT

Section 11.1 Termination by Mutual Agreement . . . . . . . . . . . . . . . . . . 41
Section 11.2 Termination for Failure to Close. . . . . . . . . . . . . . . . . . 42
Section 11.3 Termination by Operation of Law . . . . . . . . . . . . . . . . . . 42
Section 11.4 Termination for Failure to Perform Covenants or Conditions. . . . . 42
Section 11.5 Effect of Termination or Default; Remedies. . . . . . . . . . . . . 42
Section 11.6 Remedies; Specific Performance. . . . . . . . . . . . . . . . . . . 42

ARTICLE XII

MISCELLANEOUS

Section 12.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 12.2 Modification; Amendments and Waiver . . . . . . . . . . . . . . . . 43
Section 12.3 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 12.4 Burden and Benefit. . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 12.5 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 12.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 12.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 12.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 12.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.10 Rights Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.11 Severability of Provisions. . . . . . . . . . . . . . . . . . . . . 45
Section 12.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>

<PAGE>

LIST OF EXHIBITS AND SCHEDULES

<TABLE>
<CAPTION>
EXHIBITS:
<S> <C>
Exhibit 1.2 Form of Certificate of Merger
Exhibit 2.1 Form of Certificate of Contingent Stock Issue Rights
Exhibit 7.2(a) Form of Employment Agreements
Exhibit 7.2(c) Form of Registration Rights Agreement
Exhibit 7.2(d) Form of General Release
Exhibit 7.4(a) Form of Opinion of Counsel to Company and Stockholders

SCHEDULES:

Schedule 2.1 Merger Consideration
Schedule 3.1 Exceptions to Accredited Investor Status
Schedule 3.2 Liens - Stockholders
Schedule 3.6 Related Businesses
Schedule 4.2 Jurisdictions in which Seller is Qualified to do
Business; Subsidiaries
Schedule 4.3 Financial Statements
Schedule 4.7 Inventory
Schedule 4.9 Certain Changes or Events
Schedule 4.10 Agreements
Schedule 4.11 Non-Contravention; Consents
Schedule 4.13 Insurance
Schedule 4.14 Tax Matters
Schedule 4.16 Litigation
Schedule 4.17 Employee Benefit Plans
Schedule 4.22 Transactions with Related Parties
Schedule 4.24 Environmental Matters
Schedule 5.3 Purchaser's Options
Schedule 5.6 Purchaser's Undisclosed Liabilities
Schedule 5.7 Purchaser's Absence of Changes
Schedule 6.3(c) Purchaser's Benefit Plans
Schedule 9.1 Restricted Stockholders
</TABLE>

<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
June __, 1999, among OmniLynx Communications Corporation, a Delaware corporation
("Purchaser"), Arc Acquisition, Inc., a Delaware corporation and a wholly-owned
subsidiary of Purchaser ("Newco"), and Arc Networks, Inc., a Delaware
corporation (the "Company"), and the persons listed on the signature pages of
this Agreement under the caption "Stockholders" (collectively, the
"Stockholders," and each of them, individually, a "Stockholder").

WHEREAS, the respective Boards of Directors of Newco and the Company have
each determined that it is in the best interests of their respective
stockholders for the Company to become a wholly-owned subsidiary of Purchaser,
upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the Board of Directors of Purchaser has approved this Agreement
and the merger of Newco with the Company (the "Merger"); and

WHEREAS, the Board of Directors of the Company has, in light of and upon
the terms and subject to the conditions set forth herein, (i) determined that
the Merger is fair to and in the best interests of the Company and its
stockholders and (ii) resolved to approve and adopt this Agreement and the
transactions contemplated hereby and to recommend approval and adoption by the
stockholders of the Company of this Agreement and the Merger.

WHEREAS, the respective Boards of Directors of Purchaser, Newco and
the Company have approved and adopted this Agreement to effect a transaction
involving a reorganization described in Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").

NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser, Newco and the Company hereby agree as follows:

ARTICLE I

THE MERGER

Section 1.1 THE MERGER. At the Effective Time (as hereinafter
defined) and upon the terms and subject to the conditions of this Agreement and
the Delaware General Corporation Law (the "DGCL."), Newco shall be merged with
and into the Company in the Merger. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and the
separate corporate existence of Newco shall cease. The Merger shall be
consummated as promptly as practicable after satisfaction or waiver of all
conditions to the Merger set forth herein.

<PAGE>

Section 1.2 EFFECTIVE TIME. The Merger shall become effective
upon the filing with the Secretary of State of Delaware a Certificate of Merger
in substantially the form attached hereto as Exhibit 1.2 (the "Certificate of
Merger") and such other documents as are required by the DGCL to be filed with
the Secretary of State of Delaware. The time of such filing shall be referred
to herein as the "Effective Time".

Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 259 of the DGCL. Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the rights,
privileges, immunities, powers and franchises of the Company and Newco and all
property, real, personal and mixed, and every other interest of, or belonging to
or due to each of the Company and Newco shall vest in the Surviving Corporation,
and all debts, liabilities, obligations and duties of the Company and Newco
shall become the debts, liabilities, obligations and duties of the Surviving
Corporation without further act or deed, all in the manner and to the full
extent provided by the DGCL. Whenever a conveyance, assignment, transfer, deed
or other instrument or act is necessary to vest any property or right in the
Surviving Corporation, the directors and officers of the respective constituent
corporations shall execute, acknowledge and deliver such instruments and perform
such acts, for which purpose the separate existence of the constituent
corporations and the authority of their respective directors and officers shall
continue, notwithstanding the Merger.

Section 1.4 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Newco, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation and
thereafter may be amended or repealed in accordance with its terms and
applicable law, subject to the provisions of Section 6.3(f).

Section 1.5 BY-LAWS. At the Effective Time and without any
further action on the part of the Company and Newco, the By-laws of Newco shall
be the By-laws of the Surviving Corporation and thereafter may be amended or
repealed in accordance with their terms or the Certificate of Incorporation of
the Surviving Corporation and as provided by law, subject to the provisions of
Section 6.3(f).

Section 1.6 DIRECTORS. The directors of Newco at the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.

Section 1.7 OFFICERS. The officers of the Company at the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly appointed and qualified, as the case may be.

ARTICLE II

CONVERSION OF SHARES; OBJECTING SHARES; PAYMENT

Section 2.1 CONVERSION OF SHARES. (a) Each share of common
stock, par value $.01 per share, of the Company (the "Company Common Stock")
outstanding immediately prior to

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<PAGE>

the Effective Time (other than the Company Common Stock held by the Company
or any subsidiary of the Company, which shall be cancelled, and Objecting
Company Common Stock (as hereinafter defined)) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be automatically
converted into the right to receive without interest, on surrender of the
certificate evidencing those shares of Company Common Stock, the number of
whole and fractional shares of common stock, par value $.0001 per share of
Purchaser ("Purchaser Common Stock") and the rights to acquire shares of
Purchaser Common Stock which Rights have the terms and conditions set forth
in the form of Certificate of Contingent Stock Issue rights attached as
Exhibit 2.1 hereto ("Contingent Stock Issue Rights") set forth or determined
as provided in Schedule 2.1 (the "Merger Consideration"), payable to the
holder thereof, upon the surrender of the certificate formerly representing
such shares of Company Common Stock in the manner provided by Section 2.3.

(b) Each share of common stock, par value $.0001 per share, of
Newco outstanding immediately prior to the Effective Time shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
automatically converted into one share of Common Stock, par value $.01 per
share, of the Surviving Corporation, and the shares of common stock of the
Surviving Corporation issued on such conversion will constitute all the issued
and outstanding shares of capital stock of the Surviving Corporation.

Section 2.2 OBJECTING SHARES. Notwithstanding anything in this
Agreement to the contrary, each share of Company Common Stock which is issued
and outstanding immediately prior to the Effective Time and which is held by a
holder who has filed written objections with the Company in the time required by
Section 262 of the DGCL and who has not voted such share of Company Common Stock
in favor of the Merger or consented thereto in writing and who shall deliver to
the Company a written demand for appraisal of such share of Company Common Stock
in accordance with Section 262 of the DGCL (collectively, the "Objecting Company
Common Stock") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, but holders of such shares of Company Common
Stock shall be entitled to receive payment of the appraised value of such
Company Common Stock in accordance with the provisions of Section 262 of the
DGCL; provided, however, that (i) if any holder of Objecting Company Common
Stock shall subsequently deliver a written withdrawal of his demand for
appraisal of such Company Common Stock (with the consent of the Company), (ii)
if any holder shall fail to establish his entitlement to or to perfect appraisal
rights or loses his appraisal rights as provided in such Section 262, or (iii)
if neither any holder of Objecting Company Common Stock nor the Surviving
Corporation shall have filed a petition demanding a determination of the value
of all Objecting Company Common Stock within the time provided in such Section
262, then such holder or holders (as the case may be) shall forfeit the right to
appraisal of such Company Common Stock and such Company Common Stock shall
thereupon be deemed to have been converted as of the Effective Time into the
right to receive the Merger Consideration, without interest thereon. The
Company agrees to give Purchaser prompt notice of any written demands for
appraisal or notice of objection with respect to any Company Common Stock, any
request to withdraw any such demand, and any other instruments served pursuant
to the DGCL and received by the Company. Purchaser shall have the right to
participate in all negotiations and proceedings with respect to any demands for
appraisal made by any holders of Objecting Company Common Stock. The Company
shall not, except with the prior written consent of Purchaser, make any payment
with respect to, or settle or offer to settle,

3
<PAGE>

any such demands.

Section 2.3 DELIVERY, EXCHANGE AND PAYMENT.

(a) At or after the Effective Time: (i) each Stockholder, as
the holder of certificates representing Company Common Stock, will, on surrender
of his certificates to Purchaser (or any agent which may be appointed by
Purchaser for purposes of this Section 2.3), receive, and Purchaser will pay and
issue to each Stockholder, in each case subject to the provisions of Section
2.4, the Merger Consideration; and (ii) until any certificate representing the
Company Common Stock has been surrendered and replaced pursuant to this Section
2.3, that certificate will, for all purposes, be deemed to evidence ownership of
the number of whole Company Common Stock of Purchaser Common Stock and
Contingent Stock Issue Rights included in the Merger Consideration payable in
respect of that certificate pursuant to Section 2.1. All Company Common Stock
of Purchaser Common Stock and Contingent Stock Issue Rights issuable in the
Merger will be deemed for all purposes to have been issued by Purchaser at the
Effective Time.

(b) Each Stockholder will deliver to Purchaser (or any agent
that may be appointed by Purchaser for purposes of this Section 2.3), as
promptly as practicable after the Effective Time the certificates representing
Company Common Stock owned by the Stockholder, duly endorsed in blank by him, or
accompanied by stock powers duly executed by him in blank, and with all
necessary transfer tax and other revenue stamps, acquired at his expense,
affixed and canceled. Each Stockholder shall cure any deficiencies in the
endorsement of the certificates or other documents of conveyance respecting, or
in the stock powers accompanying, the certificates representing Company Common
Stock delivered by him.

(c) No dividends (or interest) or other distributions declared
or earned after the Effective Time with respect to Purchaser Common Stock and
payable to the holders of record thereof after the Effective Time will be paid
to the holder of any unsurrendered certificates representing Company Common
Stock for which Company Common Stock of Purchaser Common Stock have been issued
in the Merger until the unsurrendered certificates are surrendered as provided
herein, but (i) on such surrender, Purchaser will cause to be paid, to the
person in whose name the certificates representing such Company Common Stock of
Purchaser Common Stock shall then be issued, the amount of dividends or other
distributions previously paid with respect to such whole Company Common Stock of
Purchaser Common Stock with a record date, or which have accrued, subsequent to
the Effective Time, but prior to surrender, and the amount of any cash payable
to such person for and in lieu of fractional Company Common Stock pursuant to
Section 2.4 and (ii) at the appropriate payment date or as soon as practicable
thereafter, Purchaser will cause to be paid to that person the amount of
dividends or other distributions with a record date, or which have been accrued,
subsequent to the Effective Time, but which are not payable until a date
subsequent to surrender, which are payable with respect to such number of whole
Company Common Stock of Purchaser Common Stock, subject in all cases to any
applicable escheat laws. No interest will be payable with respect to the
payment of such dividends or other distributions (or cash for and in lieu of
fractional Company Common Stock) on surrender of outstanding certificates.

4
<PAGE>

Section 2.4 FRACTIONAL SHARES. Notwithstanding any other
provision of this Article II, no fractional shares of Purchaser Common Stock and
Contingent Stock Issue Rights will be issued, and any Stockholder otherwise
entitled to receive a fractional share of Purchaser Common Stock and Contingent
Stock Issue Rights but for this Section 2.4 will instead be entitled to receive
a cash payment for and in lieu thereof in the amount (rounded to the nearest
whole cent) equal to such Stockholder's fractional interest in a share of
Purchaser Common Stock and Contingent Stock Issue Rights multiplied by $10.00.

Section 2.5 OPTIONS AND WARRANTS. The Company shall
(a) terminate the Company's Stock Option Plan immediately prior to the Effective
Time without prejudice to the rights of the holders of options (the "Options")
awarded pursuant thereto and (b) following such termination grant no additional
Options. By virtue of the Merger and without any action on the part of any of
the parties hereto, each Option and each warrant to acquire Company Common Stock
shall be converted into a stock option or a warrant, as the case may be, to
acquire one share of Purchaser Common Stock for each 24.4331 shares of Company
Common Stock which the holder thereof would have been entitled to receive had he
or it exercised such Option or warrant prior to the Effective Time.

Section 2.6 AVAILABLE SURPLUS. Any surplus of the constituent
corporations which was available for the payment of dividends and other
distributions to stockholders immediately prior to the Merger shall continue to
be so available to the Surviving Corporation for such payments to the same
extent as before such Merger, except as otherwise required by law.

Section 2.7 LEGEND. Each certificate representing shares of
Purchaser Common Stock issued as Merger Consideration will contain a legend
indicating such shares have been acquired for investment and not with the view
to the distribution thereof and that they may not be sold, transferred or
otherwise disposed of or encumbered unless registered under the Securities Act
of 1933, as amended, or unless Purchaser receives an opinion of its counsel to
the effect that no registration is required with respect to the proposed sale,
transfer or other disposition or encumbrance.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

Section 3.1 BY EACH STOCKHOLDER. Each Stockholder, severally
as to himself or herself only, represents and warrants to Purchaser that all the
following representations and warranties in this Article III are true and
correct: (i) the Stockholder will be acquiring the shares of Purchaser Common
Stock and Contingent Stock Issue Rights issued as part of the Merger
Consideration, and the Purchaser Common Stock issued, if any, pursuant to the
Contingent Stock Issue Rights (collectively, the "Purchaser Merger Securities")
to be issued to him pursuant to Section 2.1 solely for the Stockholder's
account, for investment purposes only and with no current intention or plan to
distribute, sell or otherwise dispose of any of those Purchaser Merger
Securities in connection with any distribution; (ii) the Stockholder is not a
party to any agreement or other arrangement for the disposition of any shares of
Purchaser Merger Securities other than this

5
<PAGE>

Agreement; (iii) unless otherwise specified on Schedule 3.1, the Stockholder
is an "accredited investor" as defined in Rule 501(a) of the General Rules
and Regulations under the Securities Act of 1933, as amended (the "1933
Act"); (iv) the Stockholder (A) is able to bear the economic risk of an
investment in the Purchaser Merger Securities to be acquired by him pursuant
to this Agreement, (B) can afford to sustain a total loss of that investment,
(C) has such knowledge and experience in financial and business matters that
he is capable of evaluating the merits and risks of the proposed investment
in the Purchaser Merger Securities, (D) has had an adequate opportunity to
ask questions and receive answers from the officers of Purchaser concerning
any and all matters relating to the transactions contemplated by this
Agreement, including the background and experience of the current and
proposed officers and directors of Purchaser, and the plans for the
operations of the business of Purchaser, and (E) has asked all questions of
the nature described in preceding clause (D), and all those questions have
been answered to his satisfaction.

Section 3.2 OWNERSHIP AND STATUS OF COMPANY COMMON STOCK. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Common Stock set forth, by class, and by each series in
each class, opposite the Stockholder's name in Schedule 3.2, free and clear of
all adverse claims, liens, mortgages, charges, security interests, encumbrances
and other restrictions or limitations of any kind whatsoever (collectively,
"Liens") except for the Liens accurately set forth in Schedule 3.2, all of which
will be released at or before the Effective Time.

Section 3.3 POWER OF THE STOCKHOLDER; APPROVAL OF THE MERGER.

(a) The Stockholder has the full power, legal capacity and
authority to execute and deliver this Agreement and each other agreement,
document, instrument and certificate executed pursuant to or in connection with
this Agreement (collectively, the "Transaction Documents") to which the
Stockholder is a party and to perform the Stockholder's obligations under this
Agreement and under all other Transaction Documents to which the Stockholder is
a party. This Agreement constitutes, and each such other Transaction Document,
when executed in the Stockholder's individual capacity and delivered by the
Stockholder, will constitute, the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms,
except as their enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law). If the Stockholder is an entity, the Stockholder has, in accordance
with all applicable Governmental Requirements (as hereinafter defined) and its
Certificate of Incorporation and By-Laws or other documents of formation or
management, obtained all approvals and taken all actions necessary for the
authorization, execution, delivery and performance by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is a
party. If the Stockholder is acting otherwise than in his individual capacity
(whether as an executor or a guardian or in any other fiduciary or
representative capacity), all actions on the part of the Stockholder and all
other persons (including any court) necessary for the authorization, execution,
delivery and performance by the Stockholder of this Agreement and the other
Transaction Documents to which the Stockholder is a party have been duly taken.
As used in this Agreement, the term "Governmental Requirement" means at any time
(a) any law, statute, code, ordinance, order,

6
<PAGE>

rule, regulation, judgment, decree, injunction, order, writ, edict, award,
authorization or other requirement of any Governmental Authority in effect at
that time or (b) any obligation included in any certificate, certification,
franchise, permit or license issued by any Governmental Authority or
resulting from binding arbitration, including any requirement under common
law, at that time and, unless otherwise limited, the term "Governmental
Authority" means any national, state, county, municipal or other government,
domestic or foreign, or any agency, board, bureau, commission, court,
department or other instrumentality of any such government.

(b) The Stockholder, acting in each capacity in which he is
entitled, by reason of the Company's Certificate of Incorporation and By-Laws or
other documents of formation or management or the Governmental Requirements of
the State of Delaware or for any other reason, to vote to approve or disapprove
the consummation of the Merger, hereby votes all shares of Company Common Stock
owned by him and entitled to a vote or votes on that matter, in any one or more
of the manners prescribed or permitted by the Company's Certificate of
Incorporation and By-Laws or other documents of formation or management or the
Governmental Requirements of the State of Delaware, whichever are controlling,
to approve this Agreement and the consummation of the Merger and the other
transactions contemplated by this Agreement.

Section 3.4 NO CONFLICTS OR LITIGATION. The execution,
delivery and performance in accordance with their respective terms by the
Stockholder of this Agreement and the other Transaction Documents to which the
Stockholder is or will be a party do not and will not (a) violate any
Governmental Requirement, (b) breach or constitute a default under any agreement
or instrument to which the Stockholder is a party or by which the Stockholder or
any of the Company Common Stock owned by the Stockholder is bound, (c) result in
the creation or imposition of, or afford any person the right to obtain, any
Lien upon any of the Company Common Stock of owned by the Stockholder (or upon
any revenues, income or profits of the Stockholder therefrom) or (d) if the
Stockholder is an entity, violate the Stockholder's Certificate of
Incorporation, By-Laws or other documents of formation or management. There is
no action, suit, proceeding or investigation pending or, to the knowledge of the
Stockholder, threatened to which the Stockholder is or may become a party which
(a) questions or involves the validity or enforceability of any of the
Stockholder's obligations under any Transaction Document or (b) seeks (or
reasonably may be expected to seek) (i) to prevent or delay the consummation by
the Stockholder of the transactions contemplated by this Agreement to be
consummated by the Stockholder or (ii) damages in connection with any
consummation by the Stockholder of the transactions contemplated by this
Agreement.

Section 3.5 PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for
the right of the Stockholder to receive shares of Purchaser Common Stock and
Contingent Stock Issue Rights as a result of the Merger or to acquire Purchaser
Common Stock pursuant to any written option or warrant granted by Purchaser or
the Company to the Stockholder, the Stockholder either (a) does not have any
statutory or contractual preemptive or other right of any kind (including any
right of first offer or refusal) to acquire any shares of Company Common Stock
or Purchaser Common Stock or (b) hereby irrevocably waives each such right of
that type the Stockholder has or may have.

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<PAGE>

Section 3.6 CONTROL OF RELATED BUSINESSES. Except as accurately
set forth in Schedule 3.6, the Stockholder is not, alone or with one or more
other persons, an affiliate (an "Affiliate") (within the meaning of Rule
12b-2 of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "1934 Act")) of any entity, business or trade (other
than the Company and subsidiaries of the Company) that (a) is engaged in any
line of business which is the same as or similar to any line of business in
which the Company or any subsidiary of the Company is engaged (the
"Business") or (b) is, or has within the three-year period ending on the date
of this Agreement, engaged in any transaction or been a party to any
agreement with the Company or any subsidiary of the Company.

Section 3.7 COUNSEL. The Stockholder has been represented by
attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of Porter & Hedges, L.L.P. with respect to this Agreement, the transactions
contemplated hereby and any actual or potential consequences, including any
actual or potential tax consequences, hereof and thereof on Purchaser, Newco,
the Company Group or the Stockholder.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 4.1 AUTHORIZATION. The execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby have been duly authorized by the Company. The Company has taken all
necessary corporate action and has all the necessary corporate power to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the officers
of the Company on its behalf, and assuming that this Agreement is the valid and
binding obligation of Purchaser and Newco, is the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect, or
by legal or equitable principles, relating to or limiting creditors' rights
generally and except that the remedy of specific performance and injunctive and
other forms of equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.

Section 4.2 ORGANIZATION. The Company is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware. The Company has the requisite power and authority to own and lease
its assets and to carry on its Business as it is now being conducted and is duly
qualified to do business as a foreign entity in each jurisdiction where it
conducts business, except where the failure to be so qualified would not have a
material adverse effect on the Business, operations, earnings, prospects, assets
or condition (financial or otherwise) of the Company. Set forth on Schedule 4.2
hereto is a true and correct list of each jurisdiction in which the Company is
qualified to do business. Except as set forth on Schedule 4.2 hereto, the

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Company does not own any shares of capital stock or other interest in any other
corporation, partnership, association or other entity.

Section 4.3 FINANCIAL STATEMENTS. Schedule 4.3 hereto includes
the unaudited balance sheet at March 31, 1999 and the audited balance sheets as
at December 31, 1998, December 31, 1997 and December 31, 1996 (the "Balance
Sheets") and the unaudited statement of income (loss) and cash flow for the
quarter ended March 31, 1999 and the audited statements of income (loss) and
cash flow for the fiscal years ended December 31, 1998, December 31, 1997 and
December 31, 1996 for the Company and its subsidiary (all of the foregoing,
including the notes thereto, are collectively referred to hereinafter as the
"Financial Statements"). The Financial Statements present fairly, in all
material respects, the consolidated financial position of the Company as of the
respective dates indicated and the consolidated revenues and expenses of the
Company for the respective periods indicated, in conformity with generally
accepted accounting principles applied on a consistent basis, subject, in the
case of the unaudited Financial Statements, to notes and normal year end audit
adjustments.

Section 4.4 TITLE. The Company together with its subsidiary
(collectively, the "Company Group") owns good and marketable title to all of its
assets (the "Assets"), including without limitation the Assets reflected on the
Balance Sheets or purchased by the Company Group after the date thereof, except
supplies consumed or Assets sold in the ordinary course of business subsequent
to the date thereof. The Assets, including without limitation certain of the
Assets reflected on the Balance Sheets or purchased by the Company Group after
the date thereof, are owned free and clear of all Liens, except: (i) as
specifically stated in the Financial Statements (including the notes thereto);
(ii) for Liens for taxes or assessments not yet due and payable or which are
being contested by the Company in good faith; (iii) for minor Liens imposed by
law for sums not yet due or which are being contested by the Company in good
faith; and (iv) for Liens that are minor and which do not detract in any
material respect from the value of any of the Assets or which do not impair the
Business in any material respect or affect the present use or utility of the
Assets in any material respect. The Company has not made any commitments or
received any notice, oral or written, from any public authority or other entity
with respect to the taking or use of any of the Assets, whether temporarily or
permanently, for any purpose whatsoever, nor is there any proceeding pending or,
to the best knowledge of Company, threatened, which could adversely affect the
Assets, including without limitation, any Asset owned or used by the Company
Group as of the date hereof.

Section 4.5 CONDITION OF ASSETS. All documents and agreements
pursuant to which the Company Group has obtained the right to use any Assets are
valid and enforceable in all respects against the parties thereto in accordance
with their respective terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect, or by legal or equitable principles, relating
to or limiting creditors' rights generally and except that the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought; provided, however, that no
representation or warranty is being made by Company as to the validity or
enforcement of any of same on behalf of Purchaser or Newco. All licenses,
permits and authorizations related to the location or operation of the Business
are in good standing and are valid and enforceable in all respects against the
Company

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Group in accordance with their respective terms. There is not, under any of
the foregoing instruments, documents or agreements, any existing default, nor
is there any event which, with notice or lapse of time or both, would
constitute a default arising through the Company Group or, to the best
knowledge of Company, arising through any third party which could: (i) have
a material adverse effect on the Business, the Assets or the consolidated
operations, earnings or condition (financial or otherwise) of the Company; or
(ii) materially adversely affect its title to the Assets. The Company Group
is not in violation of and has complied with all applicable zoning, building
or other codes, statutes, regulations, ordinances, notices and orders of any
governmental authority with respect to the occupancy, use, maintenance,
condition, operation and improvement of the Assets, except where the failure
to comply would not have a material adverse effect on the Business, the
Assets or the consolidated operations, earnings or condition (financial or
otherwise) of the Company. The Company Group's use of any improvements for
the purposes for which any of the Assets are being used as of the date hereof
does not violate in any material respect any such code, statute, regulation,
ordinance, notice or order. The Company Group possesses all licenses,
certificates of occupancy, permits and authorizations required to be obtained
by the Company Group with respect to the Company Group's operation and
maintenance of the Assets for all uses for which such Assets are operated or
used by the Company Group as of the date hereof, except where the failure to
do so would not have a material adverse effect on the Business, the Assets or
the consolidated operations, earnings or condition (financial or otherwise)
of the Company Group. All of the Assets (whether owned or leased by the
Company Group) are in good operating condition and repair, subject to normal
wear and use, and each such item is usable in a manner consistent with
current use by the Company Group.

Section 4.6 INTELLECTUAL PROPERTY. The Company Group has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any intellectual property rights of third parties, and the Company
Group has not received any charge, complaint, claim, demand, or notice alleging
any such interference, infringement, misappropriation or violation. To the best
knowledge of the Company, no third party is currently interfering with,
infringing upon, misappropriating or otherwise coming into conflict with any
intellectual property rights of the Company Group.

Section 4.7 INVENTORY. Schedule 4.7 hereto sets forth a true,
correct and complete list of the Company Group's inventory (the "Inventory") as
of December 31, 1998. There have been no changes in the Inventory since such
date other than ordinary business reductions due to sales and increases due to
receipt of items of Inventory received in the ordinary course of the conduct of
the Company Group's business consistent with its past practices. The Company
has delivered the Balance Sheets which accurately, correctly and completely set
forth the value of such inventory at the respective dates thereof. The
Inventory consists only of items in current product lines or items which are
used in the production or distribution thereof. All items in the Inventory are
of a quality and quantity usable or saleable in the ordinary course of business
and are not obsolete, defective or damaged in any way. The Inventory is valued
on the books of the Company Group and is reflected on such Balance Sheets in
accordance with generally accepted accounting principles consistently applied.

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Section 4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Other than as
set forth on the Balance Sheets, the notes thereto or Schedule 4.8, the Company
Group has not had nor does it have any indebtedness, loss or liability of any
nature whatsoever (other than those incurred in the ordinary course of
business), whether accrued, absolute, contingent or otherwise and whether due or
become due, which is material to the Assets, the Business or the consolidated
operations, prospects, earnings or condition (financial or otherwise) of the
Company Group.

Section 4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth on Schedule 4.9 and except as expressly set forth in this Agreement, since
September 30, 1998:

A. the Company Group have not amended their respective
certificates of incorporation (the "Certificates of Incorporation") or By-laws;

B. the Company Group has not

(i) made any capital expenditures or commitments for the
acquisition or construction of any property, plant or equipment relating to the
Business other than in the ordinary course of business of the Company;

(ii) entered into any material transaction relating to
the Business inconsistent with the past practices of the Business or conducted
the Business inconsistent with its past practices;

(iii) incurred any damage, destruction or any other loss
to any of the Assets in an aggregate amount exceeding Five Thousand Dollars
($5,000) whether or not covered by insurance;

(iv) suffered any loss relating to the Business or the
Assets and the Company has not become aware of any intention on the part of any
customer, dealer, vendor or supplier to discontinue its current relationship
with the Company Group, the loss or discontinuance of which, alone or in the
aggregate, could have a material adverse effect on the Business, the Assets or
the consolidated operations, earnings or condition (financial or otherwise) of
the Company;

(v) modified, amended or altered any contractual
arrangement with any customer, dealer or supplier, the modification, amendment
or alteration of which, alone or in the aggregate, could have a material adverse
effect on the Business, the Assets or the consolidated operations, earnings or
condition (financial or otherwise) of the Company;

(vi) incurred any material liability or obligation
(absolute or contingent) or made any material expenditure other than in the
ordinary course of business of the Company Group;

(vii) experienced any material adverse change in the
Business, the Assets or the consolidated operations, earnings or condition
(financial or otherwise) of the Company or experienced or received knowledge of
any event which could have a material adverse effect on the

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Business, the Assets or the consolidated operations, earnings or condition
(financial or otherwise) of the Company;

(viii) granted, conveyed, transferred, assigned, pledged,
hypothecated or made any sale of accounts receivable or any accrual of
liabilities outside of the ordinary course of the business of the Company Group;

(ix) except in the ordinary course of business of the
Company Group, purchased, disposed of or contracted to purchase or dispose of,
or granted or received an option or any other right to purchase or sell, any of
the Assets or any equity security of the Company;

(x) increased the rate of compensation payable or to
become payable to the employees of the Business, or increased the amounts paid
or payable to such employees under any bonus, insurance or other compensation
plan, or made any arrangements therefor with or for any of said employees except
for increases consistent with the ordinary course of business or increases
resulting from the application of existing formulas under existing agreements or
policies relating to employee compensation;

(xi) changed any accounting principle, procedure or
practice followed by the Company or changed the method of applying such
principle, procedure or practice; or

(xii) settled any pending litigation for an aggregate
amount exceeding $5,000.

Section 4.10 AGREEMENTS. Set forth on Schedule 4.10 hereto is a
true, correct and complete list of all material contracts, agreements and other
instruments relating to the Business, including without limitation, those by
which any of the Assets are bound. Copies of all such agreements have
heretofore been delivered or made available by the Company to Purchaser and
Newco. Other than as set forth on Schedule 4.10, there is no material contract
or agreement to which the Company Group is a party or which affects the Assets
or the liabilities of the Company Group or otherwise relates to the Business.
Except as otherwise previously disclosed to Purchaser and Newco or set forth on
the schedules hereto, the Company Group is not a party to or bound by, nor are
any of the Assets subject to, any material written or oral agreement relating to
the Business, including without limitation the following:

(i) any agreement which has not been entered into or
received by the Company Group in the ordinary course of business or which is not
consistent with the prior practice of the Company Group;

(ii) any agreement which involves the purchase or sale of
goods or payment by or to the Company Group for services rendered with a value
in excess of Five Thousand Dollars ($5,000) which is not cancelable within
thirty (30) days of the Closing Date (as defined in Section 7.1) by the Company
Group upon notice given on or prior to the Closing Date;

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<PAGE>

(iii) any agreement for the employment of any officer,
director or employee or former officer, director or employee (other than, with
respect to any employee, agreements which are terminable without liability upon
notice of thirty (30) days or less and do not provide for any further payments
following such termination) pursuant to which payments may be required to be
made at any time following the Closing Date in an aggregate amount exceeding
Five Thousand Dollars ($5,000);

(iv) any mortgage, deed of trust or security agreement or
other documentation relating to or establishing a security interest to secure
indebtedness for borrowed money;

(v) any debentures, indentures, notes or installment
obligations, the unpaid balance of which exceeds Five Thousand Dollars ($5,000)
in the aggregate, or other instruments for or relating to any unsecured
borrowing of money by the Company Group, the unpaid balance of which exceeds
Five Thousand Dollars ($5,000) in the aggregate;

(vi) any guaranty of any obligation of any person or
party for borrowings or otherwise, excluding endorsements made for collection in
the ordinary course of business;

(vii) any agreement or arrangement for the sale or lease
of any of the Assets (other than that which is included in the inventory) having
a book value in excess of Five Thousand Dollars ($5,000) in the aggregate;

(viii) any agreement or agreements pursuant to which the
Company Group is or may be obligated to make any payments, contingent or
otherwise, in excess of Five Thousand Dollars ($5,000) in the aggregate,
resulting from or arising out of the prior acquisition of any business, or of
all or substantially all of the assets of any company or any division thereof;

(ix) any agreement with any labor union;

(x) any agreement with any officer, director or employee
of the Company, the immediate family of any officer, director or employee of the
Company, or any affiliate of any of the foregoing;

(xi) any unexpired and enforceable agreements for the
disposition of the Assets; or

(xii) any other agreement, contract, document or
instrument not entered into in the ordinary course of business which is material
to the Business and not excluded by reason of operation of this or any other
provision of this Agreement.

Except as set forth on Schedule 4.10, with respect to the
Business, the Company Group is not, nor to the best knowledge of the Company, is
any third party, in default and no event has occurred which, with notice or
lapse of time or both, could cause or become a default by the Company Group or,
to the best knowledge of the Company, by any third party, under any contract,

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<PAGE>

agreement, document or instrument to which the Company Group is a party which is
material to the Business. Each contract, agreement, document or instrument to
which the Company Group is a party which is material to the Business is
enforceable, in accordance with its terms, against all other parties thereto,
except as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect, or
by legal or equitable principles, relating to or limiting creditors' rights
generally and except that the remedy of specific performance and injunctive and
other forms of equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.

Section 4.11 NON-CONTRAVENTION; CONSENTS. Neither the execution
and delivery of this Agreement by the Company, nor consummation of the
transactions contemplated hereby, does or will: (i) violate or conflict with
any provision of the Certificates of Incorporation or By-Laws of the Company
Group; (ii) violate or, with the passage of time, result in the violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate any obligation under, or result in the creation or imposition of any
Lien upon any of the Assets, pursuant to any provision of any mortgage, lien,
lease, agreement, permit, indenture, license, instrument, law, order,
arbitration award, judgment or decree to which the Company Group is a party or
by which it or any of the Assets are bound, the effect of which violation,
acceleration, creation or imposition could result, in the aggregate, in
liability of the Company Group in excess of Five Thousand Dollars ($5,000) in
connection with its Business; (iii) violate or conflict with any other
restriction of any kind whatsoever to which the Company Group is subject, or by
which any of the Assets may be bound, the effect of any of which violation or
conflict could result, in the aggregate, in liability of the Company Group in
excess of Five Thousand Dollars ($5,000) in connection with its Business; or
(iv) constitute an event permitting termination by a third party of any
agreement to which the Company Group is a party or the Assets are subject.
Except as set forth on Schedule 4.11 hereto, no consent, authorization, order or
approval of, or filing or registration with, any Governmental Authority is
required by the Company Group in connection with the execution, delivery and
performance of the terms of this Agreement and consummation of the transactions
contemplated hereby by the Company.

Section 4.12 LABOR RELATIONS. There are no agreements with or
pending petitions for recognition of any labor union or association as the
exclusive bargaining agent for any or all of the employees of the Company Group
and no such petition has been pending at any time during the two years prior to
the date hereof. There has not been any organizing effort by any union or other
group seeking to represent any employees of the Company Group as their exclusive
bargaining agent at any time since inception of the Company Group. There are no
labor strikes, work stoppages or other labor disputes now pending or threatened
against the Company Group, nor has there been any such labor strike, work
stoppage or other labor dispute or grievance at any time since inception of the
Company Group.

Section 4.13 INSURANCE. Set forth on Schedule 4.13 hereto is a
true, correct and complete list of all insurance policies or binders of
insurance or programs of self-insurance which relate to the Business, copies of
which have been previously provided or made available to Purchaser and Newco.
The coverage under each such policy and binder is in full force and effect. The
Company has no knowledge of nor has it received any notice of cancellation,
termination,

<PAGE>

nonrenewal or disallowance of any claim made by the Company Group
thereunder or with respect thereto. Except as specifically recited on Schedule
4.13, each such policy, binder or program providing coverage for the Assets or
the Business shall be terminated effective as of the close of business on the
Closing Date, unless agreed otherwise by the parties hereto.

Section 4.14 TAX MATTERS. The Company Group is a member of an
affiliated group (an "Affiliated Group") within the meaning of Section 1504 of
the Code. Neither the Company Group nor Purchaser or Newco will incur any tax
liability in connection with the transactions contemplated hereby as a result of
the Company Group being a member of an Affiliated Group and consummation by the
Company of such transactions does not give rise to the imposition upon any party
hereto of any taxes, payments or penalties of any nature whatsoever. The
Company Group has filed when due and will file if and when due prior to the
Closing Date (after giving effect to any extensions granted by the requisite
legal or regulatory authority) all returns, reports, elections, estimates,
declarations, schedules, forms and other documents ("Tax Returns") relating to
taxes required to be filed by the Code or by any applicable federal, state,
county, municipal, local, foreign or other laws, including, without limitation,
consolidated, combined or unitary returns, for any taxable period ending prior
to or on the Closing Date (the "Pre-Closing Tax Period"). The taxable year of
the Company Group for federal and state income and business tax purposes ends on
December 31 of each year. All taxes shown on any Tax Return required to be
filed with respect to the Company Group for any Pre-Closing Tax Period have
been, or will have been, paid or accrued prior to the Closing (as defined in
Section 7.1). The Company Group has fully accrued on its books all taxes not
yet due. No tax Liens have been filed, and no material claims have been or are
being asserted or proposed, against the Company Group with respect to any taxes.
Except as set forth on Schedule 4.14 hereto, no deficiencies or claims have been
proposed, assessed or claimed (including interest and penalties) against the
Company Group which have not been paid or accrued, and the Company Group has not
waived or extended any statute of limitations with respect to the assessment of
any taxes, which waiver or extension has not yet expired by its terms. There
are no suits, actions, proceedings, claims or investigations now pending against
the Company Group with respect to any taxes. The Company Group has withheld or
collected from each payment made to each of its employees, consultants,
contractors and other payees the amount of all taxes (including, but not limited
to, federal income taxes, state and local income and wage taxes, payroll taxes,
workers' compensation and unemployment taxes) required to be withheld or
collected therefrom for all Pre-Closing Tax Periods and the Company Group has
timely paid or accrued and reported the same in respect of its employees,
consultants, contractors and other payees to the proper tax receiving offices.
The Company Group does not have any liability for any taxes of any nature
whatsoever other than as shown on the Balance Sheets (except for liabilities for
taxes accruing after the date of the Balance Sheets in the ordinary course of
business) and there is no basis for any additional liabilities for taxes for any
Pre-Closing Tax Period. The reserve for accrued but unpaid taxes for the period
ending September 30, 1998 includes adequate provision for all taxes which have
been assessed or which will be due and payable by the Company Group for all
Pre-Closing Tax Periods. The Company Group is not, and will not on the Closing
Date be, liable for any taxes for which it has not made adequate provision.

The term "taxes" or "tax" as used in this section or referred to
elsewhere in this Agreement shall mean all taxes, charges, fees, levies,
penalties, or other assessments, including

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<PAGE>

without limitation, income, capital gain, profit, gross receipts, ad valorem,
excise, property, payroll, withholding, employment, severance, social
security, workers' compensation, occupation, premium, customs duties,
windfall profits, sales, use and franchise taxes, imposed by the United
States, or any state, county, local or foreign government or any subdivision
or agency thereof, and including any interest, penalties, or additions
attributable thereto.

Section 4.15 COMPLIANCE WITH APPLICABLE LAW. The Company
Group has been and is substantially in compliance with all Governmental
Requirements except where the failure to comply with the same would not
adversely affect the Business, the Assets or the consolidated operations,
earnings or condition (financial or otherwise) of the Company or would subject
any owner of the Company to civil or criminal penalties or imprisonment. The
Company Group has complied with the rules and regulations of all Governmental
Authorities having authority over the Business, except where the failure to
comply would not have an adverse effect on the Business, the Assets or the
consolidated operations, earnings, prospects or condition (financial or
otherwise) of the Company. The Company has no knowledge of nor has received any
notice of violation of any such rule or regulation which could result in any
material liability of the Company Group for penalties or damages or which could
subject the Company Group to any injunction or government writ, order or decree.
There are no facts, events or conditions known to the Company that could
interfere with, prevent continued compliance with or give rise to any liability
under any Governmental Requirements applicable to the Business, the Assets or
the consolidated operations, earnings or condition (financial or otherwise) of
the Company, except where the failure to do so would not have a material adverse
effect on the Business, the Assets or the consolidated operations, earnings,
prospects or condition (financial or otherwise) of the Company.

Section 4.16 LITIGATION. Except as set forth on Schedule 4.16,
there is no action, suit, proceeding or investigation pending against or related
to the Company Group, nor to the best knowledge of the Company, threatened,
which would restrict the Company's ability to perform its obligations hereunder
or would have a material adverse effect on the Business, the Assets or the
consolidated operations, earnings, or condition (financial or otherwise) of the
Company Group. To the best knowledge of the Company, there are no grounds for
or facts, events or circumstances which could form the basis of any such action
that could cause or result in any such action, suit, proceeding or investigation
or which is probable of assertion. The Company Group is not in default in
respect of any judgment, order, writ, injunction or decree of any court or any
federal, state, local or other governmental agency, authority, body, board,
bureau, commission, department or instrumentality which could have a material
adverse effect on the Business, the Assets or the consolidated operations,
earnings or condition (financial or otherwise) of the Company.

Section 4.17 EMPLOYEE BENEFIT PLANS. Schedule 4.17 sets forth a
true, correct and complete list of all "employee benefit plans" as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (the "Benefit Plans") covering the employees of the Company
Group (the "Employees"). Each Benefit Plan is in compliance in all material
respects with all applicable provisions of law, including ERISA and the Code.
There are no pending or, to the knowledge of the Company, threatened claims
against any Benefit Plan (except for claims for benefits payable in the normal
operation of the Benefit Plans) that could give rise to any material liability
to the Company Group. All material reports, notices and returns required to

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<PAGE>

be filed with any governmental agency or provided to any person or entity with
respect to the Benefit Plans have been timely filed. Each Benefit Plan that is
an employee pension plan (as defined in Section 3(2) of ERISA) (a "Retirement
Plan") and the related trusts have received a determination from the Internal
Revenue Service that it is qualified and exempt from federal income tax under
Sections 401(a) and 501(a), respectively, of the Code. No person has engaged in
a "prohibited transaction" with respect to any Retirement Plan (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA), which could
subject the Company Group to a penalty tax imposed by Section 4975 of the Code.
All contributions required to be made to each Retirement Plan have been timely
made and no plan has an "accumulated funding deficiency" within the meaning of
Section 412 of the Code. No Retirement Plan subject to Title IV of ERISA has
incurred any material liability to the Pension Benefit Guaranty Corporation
("PBGC") other than for the payment of premiums, all of which have been paid
when due. Other than as contemplated herein, no Retirement Plan subject to
Title IV of ERISA has been terminated nor has there been any "reportable event"
(as that term is defined in Section 4043 of ERISA and the regulations
thereunder) that could present a material risk of termination of a Retirement
Plan which termination could have a material adverse effect on the Company
Group. The Company Group does not contribute to any multi-employer pension or
multi-employer welfare benefit plan (within the meaning of Section 3(37) of
ERISA).

Section 4.18 PERMITS. The Company Group holds all permits,
licenses, orders and approvals of all Governmental Authorities required for the
conduct and operation of the Business as currently conducted, except where the
failure to do so would not have a material adverse effect on the Business, the
Assets or the consolidated operations, earnings or condition (financial or
otherwise) of the Company. All such permits, licenses, orders, and approvals
are in full force and effect and no suspension, termination or revocation of any
of the foregoing is threatened. None of such permits, licenses, orders or
approvals will be adversely affected by consummation of the transactions
contemplated by this Agreement. To the best knowledge of the Company, the
Company Group has complied with the rules and regulations of all Governmental
Authorities which regulate, supervise or are in any manner concerned with import
and export licenses, occupational safety, environmental protection and
employment practices relating to the Business, except where the failure to do so
would not have a material adverse effect on the Business, the Assets or the
consolidated operations, earnings or condition (financial or otherwise) of the
Company. The Company has no knowledge of nor has it received any notice of
violation of any of such rules or regulations which would result in any
liability of the Company Group for penalties or damages or which would subject
the Company Group to any injunction or governmental writ, order or decree.

Section 4.19 RESTRICTIVE COVENANTS. The Company Group is not
party to any agreement, contract or covenant limiting the freedom of the Company
Group to compete in any line of business or with any person or other entity in
any geographic region within or outside of the United States of America.

Section 4.20 UNLAWFUL PAYMENTS. The Company Group has not, to the
best knowledge of Company, nor has any officer, director, employee, agent, owner
or representative of the Company Group made, directly or indirectly, any bribe
or kickback, illegal political contribution, payment from corporate funds which
was incorrectly recorded on the books and records of the Company Group, unlawful
payment from corporate funds to governmental or municipal officials in

17
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their individual capacities for the purpose of affecting their action or the
actions of the jurisdiction which they represent to obtain favorable
treatment in securing business or licenses or to obtain special concessions
of any kind whatsoever, or illegal payment from corporate funds to obtain or
retain any business.

Section 4.21 WARRANTIES. Except as required by federal or state
law, the Company Group has not made, extended or otherwise represented that it
would provide any express warranty with respect to the products or services
sold, distributed or leased to its clients or customers nor is the

Section 4.22 TRANSACTIONS WITH RELATED PARTIES. Except as set
forth on Schedule 4.22 hereto, there are no loans outstanding pursuant to which
the Company Group is owed or owes money which involve any stockholder, officer,
director, employee or consultant of the Company nor is the Company a party to
any instrument, license, lease or other agreement, written or oral, with any
stockholder, officer, director, employee or consultant of the Company.

Section 4.23 BOOKS AND RECORDS.

(i) The books of account and other financial records of
the Business and of the Company Group are complete and correct and have been
maintained in accordance with good business practices.

(ii) The Company Group will provide Purchaser and Newco
prior to the Closing Date access to all books and records referred to above, and
all books and records relating to the Business shall be delivered to Purchaser
and Newco at the Closing.

Section 4.24 CERTAIN ENVIRONMENTAL MATTERS. Except as set forth
on Schedule 4.24 hereto, (a) to the knowledge of the Company, the Company Group
has complied, and remains in compliance, with the provisions of all
Environmental Laws (as defined below) applicable to it or any of its presently
owned or operated facilities, sites or other properties, businesses and
operations and which relate to the reporting by the Company Group of all sites
presently owned or operated by any of it where Solid Wastes, Hazardous Wastes or
Hazardous Substances (as defined below) have been treated, stored, disposed of
or otherwise handled; (b) no release (as defined in the applicable Environmental
Laws) at, from, in or on any site owned or operated by the Company Group has
occurred which, if all relevant facts were known to the relevant Governmental
Authorities, reasonably could be expected to require remediation to avoid deed
record notices, restrictions, liabilities or other consequences that would not
be applicable if the release had not occurred; (c) the Company has not
transported or arranged for the transportation of any Solid Wastes, Hazardous
Wastes or Hazardous Substances to, or disposed or arranged for the disposition
of any Solid Wastes, Hazardous Wastes or Hazardous Substances at, any off-site
location that could lead to any valid claim against the Company, Purchaser or
Newco, as a potentially responsible party or otherwise, for any clean-up costs,
remedial work, damage to natural resources, personal injury or property damage,
including any claim under the Comprehensive Environmental Response, Conservation
and Liability Act of 1980 ("CERCLA"); and (d) no storage tanks exist, or, to the
knowledge of the Company, have existed, on or under any of the properties owned
or operated by the Company Group from which any

18
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Solid Wastes, Hazardous Wastes or Hazardous Substances have been released
into the surrounding environment. The Company has provided Purchaser with
copies (or if not available, accurate written summaries) of all environmental
investigations, studies, audits, reviews and other analyses conducted by or
on behalf, or which otherwise are in the possession, of the Company
respecting any facility, site or other property now or previously owned or
operated by the Company Group. As used in this Agreement, the term
"Environmental Law" means any and all Governmental Requirements relating to
the environment or worker health, including ambient air, surface water, land
surface or subsurface strata, or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes (including Solid Wastes, Hazardous
Wastes or Hazardous Substances) or noxious noise or odor into the environment
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, recycling, removal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including petroleum, petroleum distillates, asbestos or
asbestos-containing material, polychlorinated biphenyls, chlorofluorocarbons
or hydrochlorofluorocarbons) and the terms "Solid Wastes, Hazardous Wastes or
Hazardous Substances" have the meanings ascribed to those terms in CERCLA,
the Resource Conservation and Recovery Act of 1976 ("RCRA") or any other
Environmental Law applicable to the business or operations of the Company
Group which imparts a broader meaning to any of those terms than does CERCLA
or RCRA.

Section 4.25 ACCURACY OF INFORMATION FURNISHED. No statement,
representation, warranty or covenant set forth in this Agreement, in the
exhibits or the schedules hereto, or in any certificate or other instrument or
document required to be delivered by or on behalf of the Company pursuant hereto
or in connection with the consummation of the transactions contemplated hereby,
contained, contains or will contain any untrue statement of a material fact, or
omits, omitted or will omit to state any material fact which is necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.

Section 4.26 COUNSEL. The Company Group has been represented by
attorneys, accountants and other counsel of their choosing, and have not relied
in any way on any statements, advice or opinion, whether written or oral, of
Porter & Hodges, L.L.P. with respect to this Agreement, the transactions
contemplated hereby and any actual or potential consequences, including any
actual or potential tax consequences, hereof and thereof on the Purchaser,
Newco, the Company Group or the Stockholder.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO

Section 5.1 AUTHORIZATION. The execution, delivery and
performance of this Agreement and consummation of the transactions contemplated
hereby have been duly authorized, adopted and approved by the Board of Directors
of each of Purchaser and Newco. Each of Purchaser and Newco has taken all
necessary corporate action and has all the necessary corporate power to enter
into this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the officers
of each of Purchaser and Newco

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on its behalf, and, assuming that this Agreement is the valid and binding
obligation of the Company is the valid and binding obligation of Purchaser
and Newco, enforceable against each of Purchaser and Newco in accordance with
its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect, or by legal or equitable principles, relating to or
limiting creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.

Section 5.2 ORGANIZATION. Purchaser and Newco each is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Purchaser has the corporate power and
authority to own and lease its properties and assets and to carry on its
businesses as they are now being conducted and is duly qualified to do
business as a foreign corporation in each jurisdiction where it owns or
leases real property or conducts business, except where the failure to be so
qualified would not have a material adverse effect on the business,
operations, earnings, assets or condition (financial or otherwise) of
Purchaser. Newco has been organized solely for the purpose of the
transaction contemplated by this Agreement and has not taken any action,
incurred any expense or entered into any agreements or arrangements of any
kind except in connection herewith.

Section 5.3 CAPITALIZATION OF THE PURCHASER. The authorized
capital stock of Purchaser consists of 25,000,000 shares of Purchaser Common
Stock and 3,000,000 shares of preferred stock, par value $.0001 per share, of
which 2,112,506 shares of Purchaser Common Stock were issued and outstanding at
March 31, 1999, no shares of preferred stock are issued and outstanding and no
shares are held in the treasury. Except as set forth on Schedule 5.3, there
are no options, calls, subscriptions, warrants, rights, agreements or
commitments of any character obligating Purchaser, contingently or otherwise, to
issue any shares of its capital stock or any shares convertible into its capital
stock.

Section 5.4 MERGER CONSIDERATION. Upon consummation of the
Merger in accordance with the provisions of this Agreement, each share of
Purchaser Common Stock constituting a part of the Merger Consideration shall be
validly issued, fully paid and non-assessable, with no personal liability
attaching to the ownership thereof.

Section 5.5 FINANCIAL STATEMENTS. Purchaser has delivered to
the Company an audited consolidated balance sheet of Purchaser as at December
31, 1998 (the "Balance Sheet Date"), the related audited consolidated statements
of income and cash flows for the year then ended, an unaudited consolidated
balance sheet of Purchaser as at March 31, 1999 and the related unaudited
consolidated statements of income and cash flows for the quarter then ended
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the period covered thereby and fairly present, in
the case of the balance sheets, the consolidated financial condition of
Purchaser as of the dates indicated, and in the case of the statements of income
and cash flows, the consolidated results of operations and cash flows of
Purchaser for the periods indicated.

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Section 5.6 UNDISCLOSED LIABILITIES, ETC. Except as set forth
on Schedule 5.6, neither Purchaser nor any subsidiary of Purchaser
(collectively, the "Purchaser Group") has any indebtedness, obligations or
liabilities of any nature, whether accrued, absolute, contingent or other issue,
whether due or to become due, including, without limitation, liabilities or
obligations on account of taxes, other governmental charges, duties, penalties,
interest or fines other than those set forth on the consolidated balance sheet
of Purchaser at the Balance Sheet Date or incurred by the Purchaser Group since
the Balance Sheet Date in the ordinary course of business and consistent with
past practice, all of which are reflected on its books and records and none of
which is materially adverse to Purchaser.

Section 5.7 ABSENCE OF CHANGES. Except as specifically set
forth on Schedule 5.7, since the Balance Sheet Date, the Purchaser Group has
conducted its business only in the ordinary course and consistent with past
practice and there has not been any:

(i) change in the consolidated condition (financial or
otherwise), properties, assets, liabilities, earnings, business or prospects of
the Purchaser, other than changes in the ordinary course of business which in
the aggregate have not been materially adverse;

(ii) additional obligation or liability (absolute or
contingent) incurred by the Purchaser Group or to which the Purchaser Group has
become subject, other than current liabilities incurred in the ordinary course
of business and obligations under contracts entered into in the ordinary course
of business; or

(iii) other event or condition of any character which in
any one case or in the aggregate has materially adversely affected, or any event
or condition known to Purchaser on the date hereof which might reasonably be
expected in any one case or in the aggregate to materially adversely affect in
the future, the consolidated condition (financial or otherwise), assets,
properties, liabilities, earnings, business or prospects of Purchaser.

Section 5.8 NON-CONTRAVENTION; CONSENTS. Neither the execution
and delivery of this Agreement by Purchaser and Newco, nor consummation of the
transactions contemplated hereby, does or will: (i) violate or conflict with
any provision of the certificate of incorporation or bylaws of the Purchaser and
Newco; (ii) violate or with the passage of time, result in the violation of any
provision of, or result in the acceleration of or entitle any party to
accelerate any obligation under, or result in the creation or imposition of any
Lien upon any assets of the Purchaser Group, pursuant to any lease, agreement,
permit, indenture, license, instrument, law, order, arbitration award, judgment
or decree to which the Purchaser Group is a party or by which it or any of the
property or assets which are material to its business or operation are bound,
the effect of any of which violation would result, in the aggregate, in
liability of the Purchaser Group in excess of Five Thousand Dollars ($5,000);
(iii) violate or conflict with any other restriction to which the Purchaser
Group is subject or by which any of the property or assets which are material to
its business or operation may be bound, the effect of any of which violation or
conflict would result, in the aggregate, in liability of the Purchaser Group in
excess of Five Thousand Dollars ($5,000); or (iv) constitute an event permitting
termination of any agreement to which the Purchaser Group is subject by any
other party thereto, if in any such circumstance such termination could have a

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<PAGE>

materially adverse effect on Purchaser's and Newco's ability to fulfill its
respective obligations hereunder. No consent, authorization, order or approval
of, or filing or registration with, any Governmental Authority is required in
connection with the execution, delivery and performance of the terms of this
Agreement by Purchaser or Newco and consummation by Purchaser or Newco of any of
the transactions contemplated hereby.

Section 5.9 LITIGATION. There is no action, suit, proceeding or
investigation pending against or related to Purchaser or Newco (including
stockholder's suits), nor, to the best of Purchaser's and Newco's knowledge, has
Purchaser or Newco been threatened with any such action, suit, proceeding or
investigation, which would restrict Purchaser's or Newco's ability to perform
its respective obligations hereunder or which would have a material adverse
effect on the business, assets, operations, earnings or condition (financial or
otherwise) of the Purchaser Group. To the best knowledge of Purchaser and Newco,
there are no grounds for or facts, events or circumstances which would form the
basis of any such action that would cause or result in any such action, suit,
proceeding or investigation or which is probable of assertion. The Purchaser
Group is not in default in respect of any judgment, order, writ, injunction or
decree of any court or any federal, state, local or other governmental agency,
authority, body, board, bureau, commission, department or instrumentality which
could have a material adverse effect on the business, assets, operations,
earnings or condition (financial or otherwise) of the Purchaser Group.

Section 5.10 ACCURACY OF INFORMATION FURNISHED; SUBSEQUENT
EVENTS. No statement by Purchaser or Newco set forth herein or in the exhibits
or the schedules hereto, and no statement set forth in any certificate or other
instrument or document required to be delivered by or on behalf of Purchaser or
Newco pursuant hereto or in connection with consummation of the transactions
contemplated hereby contained, contains or will contain any untrue statement of
a material fact, or omitted, omits or will omit to state any material fact which
is necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.

Section 5.11 COMPLIANCE WITH APPLICABLE LAW. The Purchaser
Group has been and is in compliance with all Governmental Requirements
(including without limitation the 1933 Act and the 1934 Act) as of the date
hereof, the failure to comply with which could materially adversely affect the
business, assets, operations, earnings or condition (financial or otherwise) of
the Purchaser Group or which would subject any officer or director of the
Company to civil or criminal penalties or imprisonment. The Purchaser Group has
complied with the rules and regulations of all Governmental Authorities having
authority over its business or its operations, including without limitation,
agencies concerned with intra-state and interstate commerce, occupational
safety, environmental protection and employment practices, except where the
failure to comply would not have a material adverse effect on the business,
operations, earnings, prospects, assets or condition (financial or otherwise) of
the Purchaser Group. Purchaser and Newco have no knowledge of and have not
received any notice of violation of any such rule or regulation which could
result in any liability of the Purchaser Group for penalties or damages or which
could subject the Purchaser Group to any injunction or government writ, order or
decree. To the best knowledge of Purchaser and Newco, there are no facts,
events or conditions that could interfere with, prevent continued compliance
with, or give rise to any liability under, any Governmental Requirements
applicable to the business, assets, operations, earnings or condition (financial
or otherwise) of the Purchaser

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Group, except where the failure to do so would not have a material adverse
effect on the business, operations, earnings, prospects, assets or condition
(financial or otherwise) of the Purchaser Group.

Section 5.12 UNLAWFUL PAYMENTS. Neither the Purchaser Group nor
any officer, director, employee, agent, owner or representative of the Purchaser
Group has made, directly or indirectly, any bribe or kickback, illegal political
contribution, payment from corporate funds which was incorrectly recorded on the
books and records of the Purchaser Group, unlawful payment from corporate funds
to governmental or municipal officials in their individual capacities for the
purpose of affecting their action or the actions of the jurisdiction which they
represent to obtain favorable treatment in securing business or licenses or to
obtain special concessions of any kind whatsoever, or illegal payment from
corporate funds to obtain or retain any business.

Section 5.13 SOLVENCY OF THE PURCHASER AND NEWCO. Since its
formation and through the Closing Date, Purchaser and Newco each has been and
will be solvent. "Solvent" shall mean, for purposes of application of this
provision, that (i) the fair saleable value of the Purchaser Group's property is
in excess of the total amount of its debts; and (ii) Purchaser and Newco are
each able to pay their respective debts as they mature.

Section 5.14 COUNSEL. Purchaser and Newco have been represented
by attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of counsel for the Company Group and the Stockholders with respect to this
Agreement, the transactions contemplated hereby and any actual or potential
consequences, including any actual or potential tax consequences, hereof and
thereof on Purchaser and Newco, except the opinion of counsel for the Company
Group and the Stockholders to be delivered pursuant to Section 7.4(a).

ARTICLE VI

COVENANTS

Section 6.1 COVENANTS OF THE COMPANY.

(a) NOTIFICATION. The Company shall give prompt notice to
Purchaser and Newco of: (i) any notice or other communication received by
the Company prior to the Closing Date, relating to a default or an event
which, with notice or lapse of time or both would become a default under this
Agreement or become a material default under any other material contract,
agreement or instrument to which the Company is a party, by which it or any
of the Assets are bound or to which it or any of the Assets are subject;
(ii) any event which, with notice or lapse of time or both, would cause any
warranty, representation or covenant of the Company under this Agreement to
be inaccurate, untrue, incomplete, misleading or violated in any respect;
(iii) any notice or other communication from any third party alleging that
the consent of such third party was, is or may be required in connection with
the transactions contemplated by this Agreement; and (iv) any material
adverse change in the Business, the Assets or the consolidated operations,
earnings or condition (financial or otherwise) of the Company.

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<PAGE>

(b) CONDUCT OF BUSINESS; CERTAIN COVENANTS. Prior to and through
the Closing Date, the Company shall conduct and operate the Business and will
not, without prior written consent of Purchaser and Newco, which consent
shall not be unreasonably withheld or delayed, take any action other than in
accordance with the ordinary and usual course of business. The Company will
use commercially reasonable efforts to preserve intact the Business, the
Assets and the operation, organization and relationships with its employees,
independent contractors, agents, suppliers, customers and others having
business dealings with it. Prior to and through the Closing Date, without
the prior written consent of Purchaser and Newco, which consent shall not be
unreasonably withheld or delayed,

(A) the Company shall not

(i) amend its Certificate of Incorporation or By-Laws; or

(ii) issue, transfer, sell or deliver any interest in the
Company;

(B) the Company Group shall not in any matter affecting the Business:

(i) issue or otherwise grant or enter into any agreement
relating to the issuance or grant of any interests or rights calling for or
permitting the issuance, transfer, sale or delivery of any rights to the Assets
or the Business;

(ii) incur any indebtedness for borrowed money, except in
the ordinary course of business or pursuant to existing agreements which the
Company Group has previously disclosed or made available to the Purchaser and
Newco;

(iii) permit the occurrence or continuance of any material
default under any agreement to which the Company Group is a party;

(iv) make any acquisition of the capital stock or all or
substantially all of the assets of any entity;

(v) enter into any business combination with any other
entity or enter into any joint venture arrangement with any third party;

(vi) enter into any employment or similar contract with
or increase the compensation payable to any employee of the Company Group,
except in the ordinary course of business of the Company Group and in a manner
consistent with the Company Group's past practices;

(vii) alter, amend or otherwise modify any material term
or provision of any contract or agreement with any of its clients, customers,
subscribers, suppliers or vendors;

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<PAGE>

(viii) adopt, amend or modify in any respect or
terminate any severance plan or collective bargaining agreement or make
distributions under any severance plan, except in a manner consistent with the
Company Group's past practices or as otherwise contemplated herein;

(ix) sell, enter into any contract to sell or grant any
option to purchase, any of the Assets, other than in the ordinary course of
business;

(x) create, assume or permit to exist any Lien of any
kind whatsoever on any of the Assets other than:

(A) Liens existing on the date hereof which are otherwise
permitted hereby and described in a schedule hereto;

(B) any Lien in or upon any property or asset hereafter
acquired by the Company Group in the ordinary course of business, which Lien is
entered into contemporaneously with such acquisition to secure or provide for
the payment of any part of the purchase price therefor, or the assumption by the
Company Group of any Lien in or upon any property or asset hereafter acquired by
the Company Group which Lien existed at the time of such acquisition; provided
that, no such Lien shall extend to or cover any property or asset of the Company
Group other than such property or asset hereafter acquired;

(C) any Lien created for the sole purpose of
renewing or refunding any Lien allowed under clause (B) above; provided that,
the principal amount of indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time of such renewal or
refunding and that such renewed or refunded Lien shall not extend the Lien
renewed or refunded to any additional property or asset;

(D) the pledge by the Company Group of any of the
Assets as security required by law or governmental regulation as a condition to
the transaction of any business or the exercise of any privilege, license or
right;

(E) a banker's lien or right of offset on funds
of the Company Group deposited with a lender or holder in its ordinary course of
business in favor of any lender of funds or holder of the Company's commercial
paper in the ordinary course of business;

(F) Liens for taxes, assessments and governmental
charges or levies imposed upon the Company Group or upon its income or profit,
or upon any of its property or assets if the same shall not at the time be due
or are being contested in good faith in appropriate proceedings; and

(G) Liens imposed by law, such as those of
carriers, warehousemen and mechanics, for sums not yet due or are being
contested in good faith in appropriate proceedings.

(xi) except in the ordinary course of business, enter into any
contract, including but not limited to assignments, licenses, transfers of
exclusive rights, "work for hire"

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<PAGE>

agreements, special commissions, employment contracts, purchase orders, sales
orders, mortgages and security agreements;

(xii) except in the ordinary course of business or arising
out of or relating to this Agreement, initiate any legal proceedings involving
the Company Group, the Business or the Assets, including suits and
administrative proceedings in the United States or any foreign country; or

(xiii) take any action that would cause any representation,
warranty or covenant contained herein to be inaccurate, untrue, incomplete,
misleading or violated.

(c) BEST EFFORTS AND COOPERATION; FURTHER ASSURANCES. Prior to the
Closing Date, with the cooperation of Purchaser and Newco where appropriate, the
Company shall:

(i) promptly comply with all filing requirements which
federal, state or local law may impose on the Company with respect to the
transactions contemplated by this Agreement; and

(ii) use all reasonable efforts to take all actions necessary
to be taken, make any filing and obtain any consent, authorization or approval
of or exemption by any Governmental Authority or any other third party
(including, without limitation, any landlord or lessor of the Company and any
party to whom notification is required to be delivered or from whom any form of
consent is required) which is required to be filed or obtained by the Company in
connection with the transactions contemplated by this Agreement.

(d) ACCESS TO ADDITIONAL AGREEMENTS AND INFORMATION. Prior to the
Closing Date, the Company shall make available to representatives of the
Purchaser and Newco access to any and all agreements, contracts, documents and
other instruments material to the Business, including without limitation, those
to which the Company is a party and those by which the Business or any of the
Assets are bound and including without limitation, any and all materials
relating to the intellectual property referred to in Section 4.6, the agreements
set forth in Section 4.10, the consents and waivers referred to in Section 4.11,
the insurance materials referred to in Section 4.13, the Tax Returns referred to
in Section 4.14 and the licenses and permits referred to in Section 4.18, to the
extent permitted by law.

Section 6.2 COVENANTS OF THE COMPANY AND THE STOCKHOLDERS.

(a) COOPERATION IN CONNECTION WITH THE IPO. The Company and the
Stockholders will (a) provide Purchaser and the investment banking firm or firms
(the "Underwriter") selected by it to underwrite the initial public offering of
Purchaser Common Stock (the "IPO") with all the information concerning the
Company or any of the Stockholders which is reasonably requested by Purchaser
and the Underwriter from time to time in connection with effecting the IPO and
(b) cooperate with Purchaser and the Underwriter and their respective
representatives in the preparation and amendment of the registration statement
relating thereto (including the financial statements) and in responding to the
comments, if any, of the staff of the Securities and Exchange

26
<PAGE>

Commission (the "SEC"), with respect thereto. The Company and each
Stockholder agree promptly to (a) advise Purchaser if, at any time during the
period in which a prospectus relating to the IPO is required to be delivered
under the 1933 Act, any information contained in the then current
registration statement prospectus concerning the Company, any subsidiaries of
the Company or the Stockholders becomes incorrect or incomplete in any
material respect and (b) provide Purchaser with the information needed to
correct or complete that information.

Section 6.3 COVENANTS OF PURCHASER AND NEWCO.

(a) NOTICE OF DEFAULTS. Purchaser and Newco shall give prompt
notice to the Company of: (i) any notice or other communication relating to a
default hereunder or event which, with notice or lapse of time or both, would
become a default hereunder, received by Purchaser or Newco prior to the Closing
Date, or under any material contract, agreement or instrument to which the
Purchaser or Newco is a party, by which it or any of its properties or assets
are bound or to which it or any of its properties or assets are subject which
would prevent the consummation of the transactions contemplated hereby; (ii) any
event which, with notice or lapse of time or both, would cause any
representation or warranty of Purchaser or Newco under this Agreement to be
inaccurate or misleading in any respect; (iii) any notice or other communication
by any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement; and
(iv) any material adverse change in the business, assets, operations, earnings
or condition (financial or otherwise) of the Purchaser Group.

(b) BEST EFFORTS AND COOPERATION; FURTHER ASSURANCES. Prior to
the Closing Date, with the cooperation of the Company where appropriate,
Purchaser and Newco shall:

(i) promptly comply with all filing requirements which
federal, state or local law may impose on Purchaser or Newco with respect to the
transactions contemplated by this Agreement; and

(ii) use its diligent efforts to take all actions
necessary to be taken, make any filing and obtain any consent, authorization or
approval of or exemption by any Governmental Authority or any other third party
which is required to be filed or obtained by Purchaser or Newco in connection
with the transactions contemplated by this Agreement.

(c) PURCHASER BENEFIT PLANS. Purchaser shall use its best
efforts to provide that employees of the Company receive credit for time of
their service as employees of Company, unless expressly prohibited by law, in
all existing benefits plans or future benefits plans adopted by Purchaser. A
listing of all bonus and benefits plans currently offered by Purchaser for its
employees is appended hereto as Schedule 6.3(c).

(d) ACTIONS BY NEWCO. Newco shall take no action or enter into
any agreements or arrangements except as may be required by this Agreement.

(e) NO CHANGE IN CAPITAL STOCK. Prior to the Effective Time,
no change will be made in the authorized, issued or outstanding capital stock of
Purchaser, and no subscriptions,

27
<PAGE>

options, rights, warrants, calls, commitments or agreements relating to the
authorized, issued or outstanding capital stock of Purchaser will be entered
into, issued, granted or created.

(f) INSURANCE AND INDEMNIFICATION. (i) After the Effective
Time and for six years thereafter (or such later time as to which the statute of
limitations shall have been extended by action of the Surviving Corporation),
Purchaser shall, and shall cause the Surviving Corporation to, indemnify, defend
and hold harmless the present and former officers, directors, employees and
agents of the Company and its subsidiaries (each an "Indemnified Party") against
all losses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time (including, without limitation the
transactions contemplated by this Agreement) to the full extent permitted or
required under Delaware law and by Articles Seventh and Eighth of the Company's
Certificate of Incorporation as in effect at the date hereof (which Articles
Seventh and Eighth shall be included in the Certificate of Incorporation of the
Surviving Corporation and shall not be amended to adversely affect such
indemnity for the six year period), including provisions relating to advances of
expenses incurred in the defense of any action or suit, provided that any
determination required to be made with respect to whether an Indemnified Party's
conduct complies with the standards set forth under Delaware law and the
Company's Certificate of Incorporation shall be made by independent counsel
mutually selected by the Indemnified Party and the Surviving Corporation. At
the Effective Time Purchaser shall cause the Surviving Corporation to purchase a
non-cancelable extension of the Company's existing directors' and officers'
liability insurance covering parties who are currently covered by such policy
for a period of five years after the Effective Time in respect of acts or
omissions occurring prior to the Effective Time on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date hereof.

(ii) If the Surviving Corporation or any of its successors or
assigns (x) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (y) transfers all or substantially all of its properties and assets to
any person, then and in each such case, proper provisions shall be made so that
the successors and assigns of the Surviving Corporation assume the obligations
set forth in this Section 6.3(f).

(g) ACCESS. Prior to the Closing Date, Purchaser and Newco will
(i) afford to the representatives of the Company and the Stockholders access to
all sites, properties, books and records of Purchaser and Newco, (ii) provide
the Company with such additional financial and operating data and other
information relating to the business and properties of Purchaser and Newco as
the Company or any Stockholder may from time to time reasonably request, and
(iii) cooperate with the Company and the Stockholders and their respective
representatives in the preparation of any documents or other material which may
be required in connection with any Transaction Documents.

Section 6.4 PUBLICITY. Any public announcement or press release
relating to this transaction must be approved by both Company and Purchaser, in
writing before being made or released. Purchaser shall have the right to issue
a press release without Company's written approval if in the opinion of
Purchaser's counsel such a release is necessary to comply with the rules and
regulations of the SEC provided that the Company receives a copy of such
prepared press release for purposes of review at least 48 hours before it is
issued. This 48 hour period may be shortened

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<PAGE>

if in the opinion of Purchaser's counsel it is required by law, provided that
the Company receives a copy of such release as long as reasonably practical
before it is issued.

Section 6.5 PURCHASER AND NEWCO'S RIGHT TO INVESTIGATE. The
Company shall afford to the officers and authorized representatives and agents
of Purchaser and Newco, during regular business hours and upon reasonable prior
notice, free and full access to any office, warehouse, plant, property,
inventory, accounts, books and records of the Company such as to afford
Purchaser and Newco the full opportunity to make such investigations as it shall
desire or deem appropriate with respect to the affairs of the Business of the
Company, except as prohibited by law. The Company shall furnish Purchaser and
Newco with such additional financial and operating data and other information
relating to the Business, the Assets and the consolidated operations, earnings
or condition (financial or otherwise) of the Company as Purchaser and Newco
shall from time to time request. Nothing contained in this subsection shall be
construed as imposing an obligation on the part of the Company to compile or
produce records in a form other than currently in existence. Prior to the
Closing Date, or at all times hereafter in the event that the transactions
contemplated hereby are not consummated or this Agreement is otherwise
terminated, Purchaser and Newco shall, except as may be otherwise required by
applicable law, hold confidential all information obtained pursuant to this
subsection or otherwise in connection with consummation of the transactions
contemplated by this Agreement with respect to the Company. In the event that
this Agreement is terminated, Purchaser and Newco shall return to the Company
all of such information as shall be in documentary form.

Section 6.6 NO SHOP: RELEASE OF DIRECTORS.

(a) Each of the Company and the Stockholders agrees that, from
the date of this Agreement until the Effective Time, neither the Company nor any
Stockholder, nor any of their respective officers and directors shall, and the
Company and each Stockholder will direct and use their best efforts to cause
each of their respective representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including any proposal or offer to the Stockholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, the Company (any such proposal or offer being herein
called an "Acquisition Proposal") or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information (as hereinafter
defined) respecting, the Company or Purchaser to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. The Company and
each Stockholder will: (i) immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any persons previously
conducted with respect to any of the foregoing, and each will take the steps
necessary to inform the persons referred to in the first sentence of this
Section 6.6 of the obligations undertaken in this Section 6.6); and (ii) notify
Purchaser immediately if any such inquiries or proposals are received by, any
such information is requested from or any such discussions or negotiations are
sought to be initiated or continued with the Company or any Stockholder. For
purposes of this Agreement, the term "Confidential Information" means, with
respect to any person, all trade secrets and other confidential, nonpublic
and/or proprietary information of that person, including information derived
from designs, reports,

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investigations, research, testing, development, work-in-progress, codes,
marketing and sales programs, capital expenditure projects, cost summaries,
pricing formulae, contract analyses, financial information, projections,
confidential filings with any Governmental Authority and any other
confidential, nonpublic concepts, methods of doing business, ideas, materials
or information prepared or performed for, by or on behalf of that person.

(b) Each of the Company and the Stockholders hereby (i) waives
every right, if any, the Governmental Requirements of the State of Delaware
afford the Company or Stockholders to require the Company's directors, in the
exercise of their fiduciary duties in their capacity as such, to engage in any
of the activities prohibited by this Section 6.6 and (ii) releases each such
person from any and all liability he might otherwise have to the Company or any
Stockholders but for this release.

ARTICLE VII

CLOSING AND CONDITIONS TO CLOSING

Section 7.1 DATE AND TIME OF CLOSING. Subject to satisfaction
of the conditions to closing set forth in this Agreement, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place on
June __, 1999 at 10:00 a.m. at the offices of Porter & Hedges, L.L.P., or at
such other date, place and time as shall be mutually agreeable to the parties
hereto (the "Closing Date").

Section 7.2 DELIVERY OF INSTRUMENTS. The following documents,
instruments and other materials shall be executed and delivered or filed at or
prior to the Closing on the Closing Date:

(a) EMPLOYMENT AGREEMENTS. Each of Peter F. Parrinello and
Joseph Gregori shall enter into an employment agreement with the Purchaser in
substantially the form attached hereto as Exhibits 7.2(a)(i) and 7.2(a)(ii),
respectively.

(b) CERTIFICATE OF MERGER. The Certificate of Merger and any
other documents required to effectuate the Merger shall be filed with the
Secretary of State of Delaware.

(c) REGISTRATION RIGHTS AGREEMENT. Each of the Stockholders
and the Purchaser shall have entered into the Registration Rights Agreement in
the form of Exhibit 7.2(c) hereto.

(d) GENERAL RELEASE. Peter F. Parrinello shall deliver a
General Release to the Company in the form of Exhibit 7.2(d) hereto.

(e) RELATED AGREEMENTS. Purchaser, Newco and the Company shall
execute and deliver any other agreements reasonably necessary to effectuate
consummation of the transactions contemplated herein.

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Section 7.3 NOTICES OF CHANGE OF CONTROL. The Company shall
prepare and mail, with copies to Purchaser and Newco, at or prior to the
Closing, such notices to and requests for the consent (where required for the
assignment of leases or contracts) of the other party under such of the
agreements as are necessary or may be reasonably required by the Purchaser and
Newco, advising such other party of the change in control of the Company. The
Company shall execute and deliver, or shall cause to be executed and delivered,
on a timely basis to all appropriate Governmental Authorities, with a copy to
the Purchaser and Newco, all notices, assignments or transfers of rights,
reports and other authorizations or documentation as may be necessary to assure
the continued effectiveness, and transfer to the Purchaser and Newco, of all
existing permits, approvals, licenses, and authorizations in effect with respect
to operation of the Business of the Company in compliance with applicable law
and regulations, to the extent such are assignable or transferable.

Section 7.4 CONDITIONS TO OBLIGATIONS OF PURCHASER AND NEWCO.
The obligation of Purchaser and Newco to consummate the transactions
contemplated by this Agreement is subject to the fulfillment of each of the
following conditions, which may be waived in whole or in part by Purchaser and
Newco to the extent permitted by applicable law:

(a) OPINION OF COMPANY'S AND STOCKHOLDERS' COUNSEL. The
Company shall have furnished to Purchaser and Newco, at the Closing, with an
opinion of counsel to the Company and the Stockholders dated as of the Closing
Date, substantially in the forms attached hereto as Exhibit 7.4(a).

(b) ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
COVENANTS. Each of the representations and warranties of the Company and the
Stockholders set forth in this Agreement was true, correct and complete in all
material respects when made and shall also be true, correct and complete in all
material respects at and as of the Closing Date, with the same force and effect
as if made at and as of the Closing Date. The Company shall have performed and
complied in all material respects with all agreements and covenants required by
this Agreement to be performed by the Company at or prior to the Closing Date.

(c) DELIVERY OF CERTIFICATES. The Company shall have delivered
to Purchaser and Newco certificates, dated the Closing Date, and signed by an
executive officer of the Company representing and affirming that the
representations and warranties made by the Company in Article IV hereof were and
are true, correct and complete as required by Section 7.4(b) above and the
conditions set forth in this Section 7.4 have been satisfied. The Company shall
also have delivered a certificate signed by the Secretary of the Company with
respect to the authority and incumbency of the officers of the Company in
executing this Agreement and any documents required to be executed in connection
herewith on behalf of the Company.

(d) CONSENTS AND WAIVERS. At the Closing, any and all necessary
consents, authorizations, orders or approvals described in Section 4.11 above
shall have been obtained, except as the same shall have been waived by Purchaser
and Newco.

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(e) LITIGATION. On the Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to the Company issued by a Governmental Authority
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated hereby or making consummation thereof unduly
burdensome to Purchaser. On the Closing Date and immediately prior to
consummation of the transactions contemplated by this Agreement, no proceeding
or lawsuit shall have been commenced, be pending or have been threatened by any
Governmental Authority or any other person with respect to the transactions
contemplated by this Agreement.

(f) DELIVERY OF DOCUMENTS AND OTHER INFORMATION. Prior to the
Closing Date, the Company shall have made available or delivered to Purchaser
and Newco all of the agreements, contracts, documents and other instruments
required to be delivered pursuant to the provisions of this Agreement.

(g) GOVERNMENTAL APPROVALS. All authorizations, consents,
approvals, permits, franchises, certificates, licenses, implementing orders or
exemptions of, or registrations or filings with, any Governmental Authority
(collectively, "Governmental Approvals") (other than the acceptance for filing
of the Certificate of Merger) required to be obtained by any of the Company,
Purchaser and Newco in connection with the consummation of the Merger shall have
been obtained.

(h) TERMINATION OF THE 1997 LONG TERM INCENTIVE PLAN OF THE
COMPANY. The Company hereby covenants and agrees to terminate the ARC Networks,
Inc. 1997 Long Term Incentive Plan (the "Designated Plan") in accordance with
the terms thereof prior to the Closing Date, and at or prior to the Closing, the
Company will provide evidence reasonably satisfactory to the Purchaser that the
Designated Plan has been terminated.

Section 7.5 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDERS. The obligations of the Company and the Stockholders to consummate
the transactions contemplated by this Agreement are subject to the fulfillment
of each of the following conditions, which may be waived in whole or in part by
the Company to the extent permitted by law:

(a) COPIES OF RESOLUTIONS. At the Closing, Purchaser and Newco
shall have furnished the Company with certified copies of resolutions duly
adopted by the board of directors of the Purchaser and Newco authorizing the
execution, delivery and performance of the terms of this Agreement and all other
necessary or proper corporate action to enable Purchaser and Newco to comply
with the terms of this Agreement.

(b) ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF
COVENANTS. Each of the representations and warranties of Purchaser and Newco
was true, correct and complete in all material respects when made and shall also
be true, correct and complete in all material respects at and as of the Closing
Date, with the same force and effect as if made at and as of the Closing Date.
Purchaser and Newco shall have performed and complied in all material respects
with all agreements and covenants required by this Agreement to be performed by
the Purchaser and Newco at or prior to the Closing Date.

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(c) DELIVERY OF OFFICERS' CERTIFICATES. Purchaser and Newco
each shall have delivered to the Company certificates, dated the Closing Date
and signed by an executive officer of Purchaser and Newco, affirming that:
(i) the representations and warranties of Purchaser and Newco as set forth in
Article V of this Agreement were and are true, correct and complete as required
by Section 7.5(b) above; and (ii) the conditions set forth in this Section 7.5
have been satisfied. Purchaser and Newco shall also have delivered a
certificate signed by the Secretary of Purchaser and Newco with respect to the
authority and incumbency of the officers of Purchaser and Newco executing this
Agreement and any documents required to be executed or delivered in connection
therewith.

(d) CONSENTS AND WAIVERS. On or prior to the Closing Date, any
and all necessary consents, authorizations, orders or approvals described in
Section 5.8 shall have been obtained, except as the same shall have been waived
by the Company.

(e) LITIGATION. On the Closing Date, there shall be no
effective injunction, writ or preliminary restraining order or any order of any
kind whatsoever with respect to Company issued by a Governmental Authority of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated herein or making the consummation thereof unduly
burdensome to the Company. On the Closing Date, no proceeding or lawsuit shall
have been commenced, threatened or be pending or by any Governmental Authority
or any other person with respect to the transactions contemplated by this
Agreement.

(f) DELIVERY OF DOCUMENTS AND OTHER INFORMATION. Prior to the
Closing Date, Purchaser and Newco shall have made available or delivered to the
Company all of the agreements, contracts, documents and other instruments
required to be delivered pursuant to the provisions of this Agreement.

(g) GOVERNMENTAL APPROVALS. All Governmental Approvals (other
than the acceptance for filing of the Certificate of Merger) required to be
obtained by any of the Company, Purchaser and Newco in connection with the
consummation of the Merger and the IPO shall have been obtained.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the Effective Time
notwithstanding any investigation at any time made by or on behalf of any party
hereto; provided that representations and warranties contained in Articles III,
IV and V and in any certificate delivered in connection herewith with respect to
any of those representations and warranties will terminate and expire two years
after the Effective Time. After a representation and warranty has terminated
and expired, no indemnification will or may be sought on the basis of that
representation and warranty by any Person who would have been entitled pursuant
to this Article VIII to indemnification on the basis of that representation and
warranty prior to its termination and expiration, provided that, in the case of
each representation

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and warranty that will terminate and expire as provided in this Section 8.1,
no claim presented in writing for indemnification pursuant to this Article VIII
on the basis of that representation and warranty prior to its termination and
expiration will be affected in any way by the termination and expiration.

Section 8.2 INDEMNIFICATION OF PURCHASER INDEMNIFIED PARTIES.

(a) Subject to the applicable provisions of Sections 8.1 and
8.6, the Stockholders covenant and agree that they, jointly and severally, will
indemnify each Purchaser Indemnified Party (as hereinafter defined) against, and
hold each Purchaser Indemnified Party harmless from and in respect of, any cost,
damage (including any consequential, exemplary, punitive or treble damage) or
expense (including reasonable and necessary or appropriate fees and actual
expenses of and disbursements by attorneys, consultants, experts or other
representatives and litigation costs) to, any fine of or penalty on, or any
liability (including loss of earnings or profits) of, any other nature
(collectively, "Damages") of such person that arise from, are based on or relate
or otherwise are attributable to (i) any breach of the representations and
warranties of the Stockholders or the Company set forth herein (other than in
Article III) or in certificates delivered in connection herewith, (ii) any
nonfulfillment of any covenant or agreement on the part of the Stockholders or
the Company under this Agreement, (iii) any liability under the 1933 Act, the
1934 Act or other applicable Governmental Requirement which arises out of or is
based on (A) any untrue statement of a material fact relating to the Company or
any subsidiary of the Company which is (1) provided to Purchaser or its counsel
by the Stockholders and (2) contained in any preliminary prospectus relating to
the IPO, the registration statement or any prospectus forming a part thereof, or
any amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating to the Company or any
subsidiary of the Company, or any of them, required to be stated therein or
necessary to make the statements therein not misleading, and not provided to
Purchaser or its counsel by the Company or the Stockholders (each such claim for
Damages and each claim for Damages described in Section 8.2(b) being an
"Purchaser Indemnified Loss"). As used in this Agreement, the term "Purchaser
Indemnified Party" shall mean Purchaser and its Affiliates and each of their
respective officers, directors, employees, agents and counsel; provided,
however, that no person who indemnifies any Purchaser Indemnified Party under
this Agreement in his capacity as a Stockholder will be an Purchaser Indemnified
Party for purposes of this Agreement.

(b) Each Stockholder, severally and not jointly with any other
person, covenants and agrees that he will indemnify each Purchaser Indemnified
Party against, and hold each Purchaser Indemnified Party harmless from and in
respect of, all claims for Damages that arise from, are based on or relate or
otherwise are attributable to (i) any breach of the representations and
warranties of that Stockholder solely as to that Stockholder set forth in
Article III, (ii) any nonfulfillment of any several, and not joint and several,
agreement on the part of that Stockholder under this Agreement or (iii) any
liability under the 1933 Act, the 1934 Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement or
alleged untrue statement of a material fact relating solely to that Stockholder
which is (1) provided to Purchaser or its counsel by that Stockholder and (2)
contained in any preliminary prospectus relating to the IPO, the registration
statement or any prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or (B) any omission or alleged omission to state therein a
material fact relating solely to that

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Stockholder required to be stated therein or necessary to make the statements
therein not misleading, and not provided to Purchaser or its counsel by that
Stockholder.

Section 8.3 INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
Purchaser covenants and agrees that it will indemnify each Stockholder
Indemnified Party (as hereinafter defined) against, and hold each Stockholder
Indemnified Party harmless from and in respect of, all damage claims (that
arise from, are based on or relate or otherwise are attributable to (i) any
breach by Purchaser or Newco of their representations and warranties set
forth herein or in their certificates delivered to the Company or the
Stockholders in connection herewith, (ii) any nonfulfillment of any covenant
or agreement on the part of Purchaser or Newco under this Agreement (each
such damage claim being a "Stockholder Indemnified Loss"); or (iii)any
liability under the 1933 Act, the 1934 Act or other applicable Governmental
Requirement which arises out of or is based on (A)any untrue statement or
alleged untrue statement of a material fact relating to Purchaser or Newco
contained in any preliminary prospectus relating to the IPO, the registration
statement or any prospectus forming a part thereof, or any amendment thereof
or supplement thereto, or (B) any omission or alleged omission to state
therein a material fact relating to Purchaser or Newco, or any of them,
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made. As
used in this Agreement, the term Stockholder Indemnified Party" shall mean
(a) each Stockholder and each of that Stockholder's Affiliates (other than
the Company or, following the Effective Time, the Surviving Corporation or
Purchaser or any of its Subsidiaries, if the Stockholder is an Affiliate of
Purchaser), agents and counsel and (b) prior to the Effective Time, the
Company and each of its officers, directors, employees, agents and counsel
who are not Stockholder Indemnified Parties within the meaning of clause (a)
of this definition.

Section 8.4 CONDITIONS OF INDEMNIFICATION.

(a) All claims for indemnification under this Agreement shall
be asserted and resolved as provided in this Section 8.4.

(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii)transmit to
the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to the claim (if any), an estimate of the amount of Damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of the claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in Section 8.2, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of the claim. Within
15 days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article VIII with respect to the Third Party Claim and (ii) if the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party with respect to the Third Party Claim, whether the

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<PAGE>

Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against the Third Party Claim.

(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, the Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 8.4(c) and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to the Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of the Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party if found liable hereunder, to file, during the Election Period, any
motion, answer or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party. The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 8.4(c) and will bear its own costs and expenses with
respect to its participation; provided, however, that if the named parties to
any such action (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party, and the Indemnified Party has been advised in
writing by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to the Indemnifying
Party, then the Indemnified Party may employ separate counsel at the expense of
the Indemnifying Party, and, on its written notification of that employment, the
Indemnifying Party shall not have the right to assume or continue the defense of
the action on behalf of the Indemnified Party.

(d) If the Indemnifying Party (i) within the Election Period
(A) disputes its potential liability to the Indemnified Party under this Article
VIII, (B) elects not to defend the Indemnified Party pursuant to Section 8.4(c)
or (C) fails to notify the Indemnified Party that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 8.4(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 8.4(c) but fails diligently and
promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VIII and if such dispute is resolved in
favor of the Indemnifying Party, the Indemnifying Party shall not be required to
bear the costs and expenses of the Indemnified Party's defense pursuant to this
Section 8.4 or of the Indemnifying Party's participation therein at

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the Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable and appropriate costs and expenses
of such litigation. The Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party pursuant to this
Section 8.4(d), and the Indemnifying Party shall bear its own costs and expenses
with respect to such participation.

(e) If any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of Damages attributable to that claim to the extent
feasible (which estimate shall not be conclusive of the final amount of the
claim) and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes the claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed the claim, as
provided above, the dispute shall be resolved by proceedings in an appropriate
court of competent jurisdiction if the parties do not reach a settlement of such
dispute within 30 days after notice of the dispute is given.

(f) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article VIII relating to a Third Party Claim shall be made
within 30 days after the latest of (i) the settlement of that Third Party Claim,
(ii) the expiration of the period for appeal of a final adjudication of that
Third Party Claim or (iii) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the Indemnified Party
under this Agreement. Payments of all amounts owing by an Indemnifying Party
pursuant to Section 8.4(e) shall be made within 30 days after the later of
(i) the expiration of the 30-day Indemnity Notice period or (ii) the expiration
of the period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement.

Section 8.5 REMEDIES EXCLUSIVE. Except as otherwise expressly
provided in this Agreement, the remedies provided in this Article VIII are the
exclusive remedies available to one party against the other, either at law or in
equity, in respect of any matter indemnified against in this Article VIII.

Section 8.6 LIMITATIONS ON INDEMNIFICATION.

(a) Notwithstanding the provisions of Section 8.2(a), the
Stockholders shall not be required to indemnify or hold harmless any of the
Purchaser Indemnified Parties on account of any Purchaser Indemnified Loss under
Section 8.2(a) unless the liability of the Stockholders in respect of that
Purchaser Indemnified Loss, when aggregated with the liability of the
Stockholders in respect of all Purchaser Indemnified Losses under Section 8.2
(a), exceeds, and only to the extent the aggregate amount of all those Purchaser
Indemnified Losses does exceed, 1% of the aggregate amount of the Merger
Consideration. In no event shall (i) the aggregate joint and several liability
of the Stockholders under this Agreement, including Section 8.2(a), exceed the
aggregate amount of the Merger Consideration or (ii) the aggregate liability of
each Stockholder under this Agreement,

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including Sections 8.2(a) and 8.2(b), exceed that Stockholder's
pro rata share of the the aggregate amount of the Merger Consideration.

(b) Notwithstanding the provisions of Section 8.3, Purchaser
shall not be required to indemnify or hold harmless any of the Stockholder
Indemnified Parties on account of any Stockholder Indemnified Loss unless the
liability of Purchaser in respect of that Stockholder Indemnified Loss, when
aggregated with the liability of Purchaser in respect of all Stockholder
Indemnified Losses, exceeds, and only to the extent the aggregate amount of all
those Stockholder Indemnified Losses does exceed, 1% of the the aggregate amount
of the Merger Consideration. In no event shall Purchaser be liable under this
Agreement, including Section 8.3, for any amount in excess of the the aggregate
amount of the Merger Consideration.

ARTICLE IX

LIMITATIONS ON COMPETITION

Section 9.1 PROHIBITED ACTIVITIES. Each Stockholder identified on
Schedule 9.1 (each a "Restricted Stockholder") and, in the case of paragraphs
(b) and (d) below of this Section 9.1, each Stockholder, severally agrees that
he will not during the period beginning on the date hereof and ending on the
third anniversary of the date hereof, directly or indirectly, for any reason,
for his own account or on behalf of or together with any other Person:

(a) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether as an
employee, independent contractor, consultant or advisor, in any business in
competition with the Company, any subsidiary of the Company, Purchaser or any
subsidiary of Purchaser (Purchaser and its Subsidiaries collectively being
called "Purchaser" for purposes of this Article IX) within any territory
surrounding any office or facility (each a "facility") in which any of the
Company or any subsidiary of the Company was engaged in business on the date
hereof or immediately prior to the Effective Time (for purposes of this Article
IX, the territory surrounding a facility shall be: (i)the city, town or village
in which the facility is located, (ii)the county or parish in which the facility
is located, (iii)the counties or parishes contiguous to the county or parish in
which the facility is located, and (iv)the area located within 100 miles of the
facility, all of such locations being herein collectively called the
"Territory");

(b) call on any natural person who is at that time employed by
the Company, any subsidiary of the Company or Purchaser with the purpose or
intent of attracting that person from the employ of the Company, any subsidiary
of the Company or Purchaser, provided that a Stockholder may call on and hire
any member of his immediate family;

(c) call on any person that at that time is, or at any time
within one year prior to that time was, a customer of the Company, any
subsidiary of the Company or Purchaser within the Territory, (i) for the purpose
of soliciting or selling any product or service in competition with the Company,
any subsidiary of the Company or Purchaser within the Territory and (ii) with
the knowledge of the customer relationship; or

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(d) call on any Purchaser Acquisition Candidate (as hereinafter
defined), with the knowledge of that person's status as an Purchaser Acquisition
Candidate, for the purpose of acquiring that person or arranging the acquisition
of that person by any person other than Purchaser. For purposes of this
Agreement, a "Purchaser Acquisition Candidate" means any entity which shall have
been called on by any of the Company, Purchaser or a subsidiary of the Company
or Purchaser in connection with the possible acquisition by any of them of that
entity or with respect to which any of them has made an acquisition analysis.

Notwithstanding the foregoing, any Restricted Stockholder may own and hold as a
passive investment up to 1% of a class of the outstanding capital stock of a
competing entity if that class of capital stock is publicly traded.

Section 9.2 DAMAGES. Because of the difficulty of measuring
economic losses to Purchaser as a result of any breach by a Restricted
Stockholder or any other Stockholder of his covenants in Section 9.1, and
because of the immediate and irreparable damage that could be caused to
Purchaser for which it would have no other adequate remedy, each Restricted
Stockholder (and, in the case of paragraphs (b) and (d) of Section 9.1, each
Stockholder) agrees that Purchaser may enforce the provisions of Section 9.1 by
injunctions and restraining orders against the Restricted Stockholder or
Stockholder, as the case may be, if he breaches any of those provisions.

Section 9.3 REASONABLE RESTRAINT. The Parties each agree that
Sections 9.1 and 9.2 impose a reasonable restraint on the Restricted Stockholder
or Stockholders, as the case may be, in light of the activities and business of
Purchaser on the date hereof, the current business plans of Purchaser and the
investment by each Stockholder in Purchaser as a result of the Merger.

Section 9.4 SEVERABILITY; REFORMATION. The covenants in this
Article IX are severable and separate. The unenforceability of any specific
covenant in this Article IX is not intended by any party to, and shall not,
affect the provisions of any other covenant in this Article IX. If any court of
competent jurisdiction determines that the scope, time or territorial
restrictions set forth in Section 9.1 are unreasonable as applied to any
Restricted Stockholder or Stockholder, as the case may be, the parties,
including the Restricted Stockholder or Stockholder in question, acknowledge
their mutual intention and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby shall be reformed to that
extent as applied to that Restricted Stockholder or Stockholder, as the case may
be, and any other Restricted Stockholder or Stockholder, as the case may be,
similarly situated.

Section 9.5 INDEPENDENT COVENANT. All the covenants in this
Article IX are intended by each Party to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Restricted Stockholder or
Stockholder against Purchaser, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by Purchaser of any
covenant in this Article IX. It is specifically agreed that the period specified
in Section 9.1 shall be computed in the case of each Restricted Stockholder and
Stockholder by excluding from that computation any time during which the
Restricted Stockholder or Stockholder is in violation of any provision of
Section 9.1. The

39
<PAGE>

covenants contained in this Article IX shall not be affected by any breach of
any other provision of this Agreement by any party.

Section 9.6 MATERIALITY. The Company and each Stockholder,
severally and not jointly with any other person, hereby agree that this Article
IX is a material and substantial part of the transactions contemplated by this
Agreement.

ARTICLE X

POST-CLOSING RESTRICTIONS

Section 10.1 TREATMENT OF CONFIDENTIAL INFORMATION.

(a) Each of the Company and the Stockholders, severally and not
jointly with any other person, acknowledges that it has or may have had in the
past, currently has and in the future may have access to Confidential
Information of the Company and subsidiaries of the Company and Purchaser and its
subsidiaries. Each of the Company and the Stockholders, severally and not
jointly with any other person, agrees that it will keep confidential all such
Confidential Information furnished to it and, except with the specific prior
written consent of Purchaser will not disclose such Confidential Information to
any person except (a) representatives of Purchaser, (b) its own representatives,
provided that these representatives (other than counsel) agree to the
confidentiality provisions of this Section 10.1; and provided, further, that
Confidential Information shall not include (i) such information which becomes
known to the public generally through no fault of any Stockholder,
(ii) information required to be disclosed by law or the order of any
Governmental Authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), each Stockholder shall, if
possible, give prior written notice thereof to Purchaser and provide Purchaser
with the opportunity to contest such disclosure, or (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any Stockholder of the provisions of this Section 10.1 with
respect to any Confidential Information, Purchaser shall be entitled to an
injunction restraining such Stockholder from disclosing, in whole or in part,
that Confidential Information. Nothing herein shall be construed as prohibiting
Purchaser from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.

(b) Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 10.1(a), and because
of the immediate and irreparable damage that would be caused to Purchaser for
which it would have no other adequate remedy, each of the Company and the
Stockholders agrees that Purchaser may enforce the provisions of Section 10.1(a)
by injunctions and restraining orders against each of them who breaches any of
those provisions.

(c) If this Agreement is terminated, Purchaser promptly will
return all written Confidential Information of the Company it then possesses to
the Company.

40
<PAGE>

(d) The obligations of the parties under this Section 10.1
shall survive for a period of three years after the termination of this
Agreement.

Section 10.2 RESTRICTIONS ON TRANSFERS OF PURCHASER COMMON STOCK.

(a) During the two year period (the "Restricted Period") after
the date on which Purchaser first receives payment for the shares of Purchaser
Common Stock it sells in the IPO (the "IPO Closing Date"), no Stockholder
voluntarily will: (i) sell, assign, exchange, transfer, encumber, pledge,
distribute, appoint or otherwise dispose of (A) any shares of Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common Stock
issued thereunder, if any) received by any Stockholder in the Merger or (B) any
interest in (including any option to buy or sell) any such shares of Purchaser
Common Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any), in whole or in part, and Purchaser will have
no obligation to, and shall not, treat any such attempted transfer as effective
for any purpose; or (ii) engage in any transaction, whether or not with respect
to any shares of Purchaser Common Stock and Contingent Stock Issue Rights (and
shares of Purchaser Common Stock issued thereunder, if any) or any interest
therein, the intent or effect of which is to reduce the risk of owning the
shares of Purchaser Common Stock and Contingent Stock Issue Rights (and shares
of Purchaser Common Stock issued thereunder, if any) acquired pursuant to
Section 2.1 (including, for example engaging in put, call, short-sale, straddle
or similar market transactions); PROVIDED, HOWEVER, that if the average closing
price of the Purchaser Common Stock (as reported by the principal exchange or
market upon which the Purchaser Common Stock is then listed) for the ten trading
day period prior to (i) the end of the twelfth month following the IPO Closing
Date, (ii) the end of the fifteenth month following the IPO Closing Date, (iii)
the end of the eighteenth month following the IPO Closing Date, or (iv) the end
of the twenty-first month following the IPOClosing Date, each such ten trading
day period a "Measurement Period," is greater than or equal to $17 per share,
then (i) ten percent, (ii) twenty percent, (iii) thirty percent or (iv) forty
percent, respectively, of Purchaser Common Stock and shares of Purchaser Common
Stock actually issued pursuant to the Contingent Stock Issue Rights, if any,
received by each Stockholder in the Merger shall irrevocably be released from
the restrictions of this Section 10.2 following the applicable Measurement
Period; and, PROVIDED, FURTHER, that this Section 10.2 shall not restrict any
transfer of Purchaser Common Stock and Contingent Stock Issue Rights acquired
by a Stockholder pursuant to Section 2.1 to any of that Stockholder's Related
Persons (as defined in Section 10.2(c)) who agree in writing to be bound by the
provisions of Section 10.1 and this Section 10.2. The certificates evidencing
the Purchaser Common Stock and Contingent Stock Issue Rights (and shares of
Purchaser Common Stock issued thereunder, if any) delivered to each Stockholder
pursuant to Section 2.3 will bear a legend substantially in the form set forth
below and containing such other information as Purchaser may deem necessary or
appropriate:

41
<PAGE>

APPOINTMENT OR OTHER DISPOSITION OF ANY OF THOSE SHARES,
DURING THE TWO-YEAR PERIOD ENDING ON THE SECOND ANNIVERSARY
OF THE CLOSING OF THE INITIAL PUBLIC OFFERING (THE "RESTRICTED
PERIOD"). ON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE
LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT)
AFTER THE EXPIRATION OF THE RESTRICTED PERIOD.

(b) Each Stockholder, severally and not jointly with any other
person, (i) acknowledges that the shares of Purchaser Common Stock and
Contingent Stock Issue Rights (and shares of Purchaser Common Stock issued
thereunder, if any) to be delivered to him pursuant to Section 2.1 (A) have not
been and will not be registered under the 1933 Act and therefore may not be
resold by him without compliance with the 1933 Act and (B) will, as a result of
their restrictions on transferability which are imposed by this Agreement during
the Restricted Period, have a value materially less at the Effective Time than
the value of then freely tradeable shares of Purchaser Common Stock, and
(ii) covenants that none of the shares of Purchaser Common Stock and Contingent
Stock Issue Rights (and shares of Purchaser Common Stock issued thereunder, if
any) issued to him pursuant to Section 2.1 will be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of except after full
compliance with all the applicable provisions of the 1933 Act and the rules and
regulations of the SEC and applicable state securities laws and regulations.
All certificates evidencing shares of Purchaser Common Stock and Contingent
Stock Issue Rights (and shares of Purchaser Common Stock issued thereunder, if
any) issued pursuant to Section 2.1 will bear the following legend in addition
to the legend prescribed by Section 10.2(a):

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY ONLY
BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER HEREOF
COMPLIES WITH THAT ACT AND OTHER APPLICABLE SECURITIES
LAWS.

In addition, certificates evidencing shares of Purchaser Common Stock and
Contingent Stock Issue Rights issued to each Stockholder pursuant to Section 2.1
will bear any legend required by (i) the securities or blue sky laws of the
state in which that Stockholder resides or (ii) the Underwriter in connection
with any agreement of that Stockholder with the Underwriter to the effect set
forth in Section 10.2(a).

(c) A "Related Person" of a Stockholder means: (a) if the
Stockholder is a natural person, (i) any immediate family member of the
Stockholder, (ii) any estate of the Stockholder or any immediate family member
of the Stockholder, (iii) the trustee of any inter vivos or testamentary trust
of which all the beneficiaries are immediate family members of the Stockholder,
and (iv) any entity the entire equity interest in which is owned by any one or
more of the Stockholder and immediate family members of the Stockholder; and
(b) if the Stockholder is an entity, estate or trust, (i) any person who owns an
equity interest in the Stockholder on the date hereof, (ii) any person who would
be a Related Person under clause (a) of this definition of a natural person who
is an ultimate beneficial owner of the Stockholder, or (iii) any other entity
the entire equity interest in which is owned by any one or more of the
Stockholder and immediate family members of the Stockholder. As used in this
definition, "estate" means, as to any natural person who has died or been
adjudicated

42
<PAGE>

mentally incompetent by a court of competent jurisdiction, (i) that person's
estate or (ii) the administrator, conservator, executor, guardian or
representative of that person's estate.

ARTICLE XI

TERMINATION AND REMEDIES FOR BREACH OF AGREEMENT

Section 11.1 TERMINATION BY MUTUAL AGREEMENT. This Agreement may
be terminated at any time by mutual consent of the parties hereto, provided that
such consent to terminate is manifested in writing and is signed by each of the
parties hereto.

Section 11.2 TERMINATION FOR FAILURE TO CLOSE. This
Agreement may be terminated by any party hereto if the Closing shall not have
occurred by October 31, 1999, provided that, the right to terminate this
Agreement pursuant to this Section 11.2 shall not be available to any party
whose failure to fulfill any of its obligations hereunder has been the cause of
or resulted in the failure to consummate the transactions contemplated hereby by
the foregoing date.

Section 11.3 TERMINATION BY OPERATION OF LAW. This
Agreement may be terminated by any party hereto if there shall be any statute,
rule or regulation that renders consummation of the transactions contemplated
hereby illegal or otherwise prohibited, or a court of competent jurisdiction or
any government (or governmental authority) shall have issued an order, decree or
ruling, or has taken any other action restraining, enjoining or otherwise
prohibiting the consummation of such transactions and such order, decree, ruling
or other action shall have become final and nonappealable.

Section 11.4 TERMINATION FOR FAILURE TO PERFORM COVENANTS
OR CONDITIONS. This Agreement may be terminated prior to the Closing Date:

(a) by Newco or Purchaser if: (i) any of the representations
and warranties made in this Agreement by the Company or the Stockholders shall
not be materially true and correct, when made or at any time prior to
consummation of the transactions contemplated hereby as if made at and as of
such time; (ii) any of the conditions set forth in Section 7.4 hereof have not
been fulfilled by the Closing Date; (iii) the Company or the Stockholders shall
have failed to observe or perform any of their material obligations under this
Agreement; or (iv) as otherwise set forth herein; or

(b) by the Company if: (i) any of the representations and
warranties of Newco or Purchaser shall not be materially true and correct when
made or at any time prior to consummation of the transactions contemplated
hereby as if made at and as of such time; (ii) any of the conditions set forth
in Section 7.5 hereof have not been fulfilled by the Closing Date;
(iii) Purchaser and Newco shall have failed to observe or perform any of their
material respective obligations under this Agreement; or (iv) as otherwise set
forth herein.

Section 11.5 EFFECT OF TERMINATION OR DEFAULT; REMEDIES. In the
event of termination of this Agreement as set forth above, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, provided that such party is a

43
<PAGE>

Non-Defaulting Party (as defined below). The foregoing shall not relieve any
party from liability for damages actually incurred as a result of such party's
breach of any term or provision of this Agreement.

Section 11.6 REMEDIES; SPECIFIC PERFORMANCE. In the event that
any party shall fail or refuse to consummate the transactions contemplated by
this Agreement or if any default under or breach of any representation,
warranty, covenant or condition of this Agreement on the part of any party (the
"Defaulting Party") shall have occurred that results in the failure to
consummate the transactions contemplated hereby, then in addition to the other
remedies provided herein, the non-defaulting party (the "Non-Defaulting Party")
shall be entitled to seek and obtain money damages from the Defaulting Party, or
may seek to obtain an order of specific performance thereof against the
Defaulting Party from a court of competent jurisdiction, provided that the
Non-Defaulting Party seeking such protection must file its request with such
court within forty-five (45) days after it becomes aware of the Defaulting
Party's failure, refusal, default or breach. In addition, the Non-Defaulting
Party shall be entitled to obtain from the Defaulting Party court costs and
reasonable attorneys' fees incurred in connection with or in pursuit of
enforcing the rights and remedies provided hereunder.

ARTICLE XII

MISCELLANEOUS

Section 12.1 FEES AND EXPENSES. Except as otherwise provided in
this Agreement, each party hereto will bear its own legal, accounting and other
fees and expenses incident to the transactions contemplated herein.

Section 12.2 MODIFICATION, AMENDMENTS AND WAIVER. The parties
hereto may amend, modify or otherwise waive any provision of this Agreement by
mutual consent, provided that such consent and any amendment, modification or
waiver is in writing and is signed by each of the parties hereto.

Section 12.3 ASSIGNMENT. Neither the Company nor Purchaser or
Newco shall have the authority to assign its respective rights or obligations
under this Agreement without the prior written consent of the other parties
hereto, except that Purchaser and Newco may assign all or any portion of its
respective rights hereunder as security, without the prior written consent of
the Company, to any lender, bank, financial institution or other entity
providing financing to Purchaser and Newco in connection with consummation of
the transactions contemplated hereby and the Company shall execute such
documents as are necessary in order to effectuate such assignments.

Section 12.4 BURDEN AND BENEFIT. This Agreement shall be
binding upon and, to the extent permitted in this Agreement, shall inure to the
benefit of the parties and their respective successors and permitted assigns.
In the event of a default by the Company of any of its obligations hereunder,
the sole and exclusive recourse and remedy of the Purchaser and Newco shall be
against the Company and its Assets; under no circumstances shall any officer,
director, stockholder or affiliate of the Company be liable in law or equity for
any obligations of the Company. In the event

44
<PAGE>

of a default by Purchaser or Newco of any of their obligations hereunder, the
sole and exclusive recourse and remedy of the Company shall be against the
Purchaser and Newco and its assets; under no circumstances shall any officer,
director, stockholder or affiliate of Purchaser or Newco be liable in law or
equity for any obligations of Purchaser or Newco hereunder.

Section 12.5 BROKERS. The Company represents and warrants to
Purchaser and Newco that there are no brokers or finders entitled to any
brokerage or finder's fee or other commission or fee based upon arrangements
made by or on behalf of the Company in connection with this Agreement or any of
the transactions contemplated hereby. Each Stockholder represents and warrants
to Purchaser and Newco that there are no brokers or finders entitled to any
brokerage or finder's fee or other commission or fee based upon arrangements
made by or on behalf of the Stockholder in connection with this Agreement or any
of the transactions contemplated hereby. Purchaser and Newco represent and
warrant to the Company and the Stockholders that, other than fees payable to
Benchmark Equity Group, Inc. for which Purchaser and Newco are solely
responsible, no other broker or finder is entitled to any brokerage or finder's
fee or other commission or fee based upon arrangements made by or on behalf of
Purchaser or Newco in connection with this Agreement or any of the transactions
contemplated hereby, other than fees set forth above for which the Purchaser and
Newco shall be solely responsible.

Section 12.6 ENTIRE AGREEMENT. This Agreement and the exhibits,
lists and other documents referred to herein contain the entire agreement among
the parties hereto with respect to the transactions contemplated hereby and
supersede all prior agreements with respect thereto, whether written or oral.

Section 12.7 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard, however, to such jurisdiction's principles of conflicts of laws.

Section 12.8 NOTICES. Any notice, request, instruction or other
document to be given hereunder by any party hereto shall be in writing and
delivered personally or sent by registered or certified mail (return receipt
requested), postage prepaid, with a copy simultaneously sent via facsimile,
addressed as follows:

If to the Company: Arc Networks, Inc.
1770 Motor Parkway
Hauppauge, New York 11788
Attn.: Peter F. Parrinello, President and
Joseph F. Gregori, Executive Vice President
Telecopy No.: (516) 582-1240

with a copy (which Parker Chapin Flattau & Klimpl, LLP
shall not constitute 1211 Avenue of the Americas
notice for purposes of New York, New York 10036
this Agreement) to: Attn.: Michael J. Shef, Esq.
Telecopy No.: (212) 704-6288

45
<PAGE>

If to the Stockholders, addressed to them at their respective
addresses set forth on the signature page hereto; and

If to Purchaser or Newco: OmniLynx Communications Corporation
700 Gemini, Suite 100
Houston, Texas 77058
Attn.: Christopher H. Efird, President
Telecopy No.: (281) 488-5353

with a copy (which shall not Porter & Hedges, L.L.P.
constitute notice for purposes of 700 Louisiana, 35th Floor
this Agreement) to: Houston, Texas 77002-2764
Attn.: Robert G. Reedy, Esq.
Telecopy No.: (713) 228-4935

or to such other persons or addresses as may be designated in writing by the
party to receive such notice. If mailed as aforesaid, the day of mailing or
transmission shall be the date any such notice shall be deemed to have been
delivered.

Section 12.9 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be an original, but all of which shall
constitute but one agreement.

Section 12.10 RIGHTS CUMULATIVE. All rights, powers and
privileges conferred hereunder upon the parties, unless otherwise provided,
shall be cumulative and shall not be restricted to those given by law. Failure
to exercise any power given any party hereunder or to insist upon strict
compliance by any other party shall not constitute a waiver of any party's right
to demand exact compliance with any of the terms or provisions hereof.

Section 12.11 SEVERABILITY OF PROVISIONS. The provisions of this
Agreement shall be considered severable in the event that any of such provisions
are held by a court of competent jurisdiction to be invalid, void or otherwise
unenforceable. Such invalid, void or otherwise unenforceable provisions shall
be automatically replaced by other provisions which are valid and enforceable
and which are as similar as possible in term and intent to those provisions
deemed to be invalid, void or otherwise unenforceable. Notwithstanding the
foregoing, the remaining provisions hereof shall remain enforceable to the
fullest extent permitted by law.

Section 12.12 HEADINGS. The headings set forth in the articles
and sections of this Agreement and in the exhibits and the schedules to this
Agreement are inserted for convenience of reference only and shall not be deemed
to constitute a part hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed and delivered on the date and year first above written.

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<PAGE>

ATTEST: OMNILYNX COMMUNICATIONS
CORPORATION

By: /s/ Christopher H. Efird
- ------------------------------ -------------------------------
Name: Christopher H. Efird
----------------------
Title: President
----------------------

ATTEST: ARC ACQUISITION, INC.

By: /s/ Christopher H. Efird
- ------------------------------ -------------------------------
Name: Christopher H. Efird
----------------------
Title: President
----------------------

ATTEST: ARC NETWORKS, INC.

By: /s/ Peter F. Parrinello
- ------------------------------ -------------------------------
Name: Peter F. Parrinello
----------------------
Title: President
----------------------

ATTEST: TECHNOLOGY ACQUISITIONS, LTD.

/s/ Jeffrey W. Tomz By: /s/ Vance R. Tillman
- ------------------------------ -------------------------------
Name: Vance R. Tillman
----------------------
Address: c/o Benchmark Equity Group, Inc.
700 Gemini Street, Suite 100
Houston, Texas 77058
Telecopy No.:(281) 488-5353

ATTEST:

- ------------------------------ ------------------------------------
LEWIS S. SCHILLER
Address: c/o Sequential Electronics
249 North Saw Mill River Road
Elmsford, New York 10523
Telecopy No.:
------------------

ATTEST: DLB, INC.

By:
- ------------------------------ -------------------------------
Name:
----------------------
Address:
----------------------

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

Telecopy No.:
-----------------

47
<PAGE>

ATTEST:

- ------------------------------ ------------------------------------
BLAKE SCHILLER
Address: 95 High Street
Armonk, New York 10504
Telecopy No.:
------------------
and
Address: c/o DLB, Inc.
One Butler Road
Scarsdale, New York 10583
ATTEST:

- ------------------------------ ------------------------------------
LINDA SCHILLER
Address: 153 Greenridge Avenue
White Plains, New York 10605
and
Address: c/o DLB, Inc.
One Butler Road
Scarsdale, New York 10583
Telecopy No.:
------------------
ATTEST:

- ------------------------------ ------------------------------------
DOUGLAS SCHILLER
Address: 9206 Morte Mov Drive
Los Angeles, California 90035
Telecopy No.:
------------------
and
Address: c/o Interactive Light
1202 Olympic Boulevard
Santa Monica, California 90404

48
<PAGE>

ATTEST:

- ------------------------------ ------------------------------------
GRAZYNA WNUK
Address: c/o Sequential Electronics
249 North Saw Mill River Road
Elmsford, New York 10523
Telecopy No.:
------------------
ATTEST:
/s/ Joseph A. Gregori /s/ Peter F. Parrinello
- ------------------------------ ------------------------------------
PETER F. PARRINELLO
Address: 9 Paul Court
Tappan, New York 10983
Telecopy No.:(914) 365-0459
ATTEST:
/s/ Joseph A. Gregori /s/ Peter J. Parrinello
- ------------------------------ ------------------------------------
PETER J. PARRINELLO
Address: 9 Paul Court
Tappan, New York 10983
Telecopy No.:(914) 365-0459
ATTEST:
/s/ Joseph A. Gregori /s/ Catherine A. Parrinello
- ------------------------------ ------------------------------------
CATHERINE A. PARRINELLO
Address: 9 Paul Court
Tappan, New York 10983
Telecopy No.:(914) 365-0459
ATTEST:
/s/ Joseph A. Gregori /s/ Kristine M. Parrinello
- ------------------------------ ------------------------------------
KRISTINE M. PARRINELLO
Address: 9 Paul Court
Tappan, New York 10983
Telecopy No.:(914) 365-0459

49
<PAGE>

ATTEST:
/s/ Joseph A. Gregori /s/ Angela M. Parrinello
- ------------------------------ ------------------------------------
ANGELA M. PARRINELLO
Address: 9 Paul Court
Tappan, New York 10983
Telecopy No.:(914) 365-0459
ATTEST:

- ------------------------------ ------------------------------------
GERALD KAY
Address: 225 Long Avenue
Hillside, New Jersey 07205
Telecopy No.:
------------------
ATTEST:
/s/ /s/ Norman Hoskins
- ------------------------------ ------------------------------------
NORMAN HOSKINS
Address:200 East Palmetto Park Road, #200
Boca Raton, Florida 33432
Telecopy No.:
------------------
ATTEST:

- ------------------------------ ------------------------------------
GEORGE W. MAHONEY
Address: 21082 Sweetwater Lane North
Boca Raton, Florida 33428
Telecopy No.: (561) 347-5352

ATTEST:
/s/ Anton Lee Wingeier /s/ Brian K. Wade
- ------------------------------ ------------------------------------
BRIAN K. WADE
Address: 9447 Sun Pointe Drive
Boynton Beach, Florida 33437
Telecopy No.: (561) 347-5352

50
<PAGE>

ATTEST:
/s/ Brian K. Wade /s/ Anton Lee Wingeier
- ------------------------------ ------------------------------------
ANTON LEE WINGEIER
Address: 7771 Villa Nova Drive
Boca Raton, Florida 33433
Telecopy No.: (561) 347-5352
ATTEST:
/s/ Joseph Sicinski
- ------------------------------ ------------------------------------
JOSEPH SICINSKI
Address: 38 Woodhollow Road
Great River, NY 11739
Telecopy No.:
------------------
ATTEST:
/s/ Anita Y. Sicinski
- ------------------------------ ------------------------------------
ANITA Y. SICINSKI
Address: 38 Woodhollow Road
Great River, NY 11739
Telecopy No.:
------------------
ATTEST:
/s/ Deborah Rocklein
- ------------------------------ ------------------------------------
DEBORAH ROCKLEIN
Address: 29 Sandy Court
Lake Grove, New York 11755
Telecopy No.:
------------------
ATTEST:
/s/ Daniel J. Sicinski
- ------------------------------ ------------------------------------
DANIEL J. SICINSKI
Address: 162 Country Village Lane
East Islip, New York 11730
Telecopy No.:
------------------

51
<PAGE>

ATTEST: BATEI SEFER LIMLACHA

By: /s/ Menachem M. Deren
- ------------------------------ -------------------------------
Address: 35 Balfour Place
Brooklyn, New York 11225
Telecopy No.:
------------------
with a copy to
Address: Widowski Cassidy &
Steinhart LLP
425 Madison Avenue, Suite 700
New York, New York 10017
Attention: Jerold K. Levien, Esq.
Telecopy No.:
------------------

<PAGE>

================================================================================

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF JUNE 24, 1999

BY AND AMONG

OMNILYNX COMMUNICATIONS CORPORATION

AND

AXCES ACQUISITION, INC.

AND

AXCES, INC.

AND

MTM HOLDINGS CORPORATION

AND ITS

STOCKHOLDERS NAMED HEREIN

================================================================================
<PAGE>

TABLE OF CONTENTS

<S> <C>
ARTICLE I

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE II

THE MERGER AND RELATED MATTERS. . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.1. Certificate of Merger. . . . . . . . . . . . . . . . . . . . . 18
Section 2.2. The Effective Time . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.3. Certain Effects of the Merger. . . . . . . . . . . . . . . . . 18
Section 2.4. Effect of the Merger on Capital Stock. . . . . . . . . . . . . 19
Section 2.5. Delivery, Exchange and Payment . . . . . . . . . . . . . . . . 19
Section 2.6. Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERAND EACH MTM
STOCKHOLDER JOINTLY AND SEVERALLY . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.1. Investment Representations . . . . . . . . . . . . . . . . . . 21
Section 3.2. Ownership and Status of Company Capital Stock. . . . . . . . . 21
Section 3.3. Power of the Stockholder; Approval of the Merger . . . . . . . 21
Section 3.4. No Conflicts or Litigation . . . . . . . . . . . . . . . . . . 22
Section 3.5. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.6. Preemptive and Other Rights; Waiver. . . . . . . . . . . . . . 23
Section 3.7. Control of Related Businesses. . . . . . . . . . . . . . . . . 23

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE STOCKHOLDER AND
THE MTM STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.2. Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.3. Authorization; Enforceability; Absence of Conflicts;
Required Consents. . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.4. Charter Documents and Records; No Violation. . . . . . . . . . 25
Section 4.5. No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.6. Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . 25
Section 4.7. Capital Stock of the Company . . . . . . . . . . . . . . . . . 25

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<PAGE>

Section 4.8. Transactions in Capital Stock. . . . . . . . . . . . . . . . . 26
Section 4.9. No Bonus Shares. . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.10. Predecessor Status; etc. . . . . . . . . . . . . . . . . . . . 26
Section 4.11. Related Party Agreements . . . . . . . . . . . . . . . . . . . 26
Section 4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.13. Financial Statements; Disclosure . . . . . . . . . . . . . . . 26
Section 4.14. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . 27
Section 4.15. Certain Environmental Matters. . . . . . . . . . . . . . . . . 28
Section 4.16. Liabilities and Obligations. . . . . . . . . . . . . . . . . . 28
Section 4.17. Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.18. Owned and Leased Real Properties . . . . . . . . . . . . . . . 29
Section 4.19. Owned and Leased Personal Property . . . . . . . . . . . . . . 30
Section 4.20. Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.21. Title to Other Properties. . . . . . . . . . . . . . . . . . . 33
Section 4.22. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.23. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 34
Section 4.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.25. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.26. Compliance With ERISA, etc.. . . . . . . . . . . . . . . . . . 37
Section 4.27. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.28. Government Contracts . . . . . . . . . . . . . . . . . . . . . 40
Section 4.29. Absence of Change. . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.30. Bank Relations; Powers of Attorney . . . . . . . . . . . . . . 42
Section 4.31. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB . . . . . . . . . 43
Section 5.1. Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.2. Organization; Power. . . . . . . . . . . . . . . . . . . . . . 43
Section 5.3. Authorization; Enforceability; Absence of Conflicts;
Required Consents. . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.4. Charter Documents. . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.5. Capital Stock of Purchaser and Merger Sub. . . . . . . . . . . 45
Section 5.6. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.7. Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 5.8. Compliance With Laws; No Litigation. . . . . . . . . . . . . . 46
Section 5.9. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 5.10. Private Placement Memorandum . . . . . . . . . . . . . . . . . 46
Section 5.11. Registration and Other Rights. . . . . . . . . . . . . . . . . 46

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ARTICLE VI

COVENANTS EXTENDING TO THE EFFECTIVE TIME . . . . . . . . . . . . . . . . . . 47
Section 6.1. Access and Cooperation; Due Diligence. . . . . . . . . . . . . 47
Section 6.2. Conduct of Business Pending Closing. . . . . . . . . . . . . . 48
Section 6.3. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . 49
Section 6.4. No Shop: Release of Directors. . . . . . . . . . . . . . . . . 50
Section 6.5. Notification of Certain Matters. . . . . . . . . . . . . . . . 51
Section 6.6. Supplemental Information . . . . . . . . . . . . . . . . . . . 51
Section 6.7. Cooperation in Connection With the IPO . . . . . . . . . . . . 52
Section 6.8. HSR Act Matters. . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE VII

THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION. . . . . . . . . . . . 53
Section 7.1. The Closing and Certain Conditions . . . . . . . . . . . . . . 53
Section 7.2. Conditions to the Obligations of Each Party. . . . . . . . . . 54
Section 7.3. Conditions to the Obligations of the Company, the
Stockholder and the MTM Stockholders . . . . . . . . . . . . . 55
Section 7.4. Conditions to the Obligations of Purchaser and Merger Sub. . . 56

ARTICLE VIII

COVENANTS FOLLOWING THE EFFECTIVE TIME. . . . . . . . . . . . . . . . . . . . 57
Section 8.1. Of Each Party Other Than the Company . . . . . . . . . . . . . 57
Section 8.2. Tax Liability. . . . . . . . . . . . . . . . . . . . . . . . . 58

ARTICLE IX

INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.1. Survival of Representations and Warranties . . . . . . . . . . 59
Section 9.2. Indemnification of Purchaser Indemnified Parties . . . . . . . 59
Section 9.3. Indemnification of Stockholder Indemnified Parties . . . . . . 60
Section 9.4. Conditions of Indemnification. . . . . . . . . . . . . . . . . 61
Section 9.5. Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.6. Limitations on Indemnification . . . . . . . . . . . . . . . . 63

ARTICLE X

LIMITATIONS ON COMPETITION. . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 10.1. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . 64
Section 10.2. Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 10.3. Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . 65

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<PAGE>

Section 10.4. Severability; Reformation. . . . . . . . . . . . . . . . . . . 65
Section 10.5. Independent Covenant . . . . . . . . . . . . . . . . . . . . . 66
Section 10.6. Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . 66

ARTICLE XI

TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.1. Termination of This Agreement. . . . . . . . . . . . . . . . . 66
Section 11.2. Liabilities in Event of Termination. . . . . . . . . . . . . . 67

ARTICLE XII

GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.1. Treatment of Confidential Information. . . . . . . . . . . . . 67
Section 12.2. Restrictions on Transfers of Purchaser Common Stock. . . . . . 69
Section 12.3. Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . 71
Section 12.4. Assignment; No Third Party Beneficiaries . . . . . . . . . . . 71
Section 12.5. Entire Agreement; Amendment; Waivers . . . . . . . . . . . . . 71
Section 12.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 12.7. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 12.9. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 12.10. Exercise of Rights and Remedies. . . . . . . . . . . . . . . . 73
Section 12.11. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.12. Reformation and Severability . . . . . . . . . . . . . . . . . 74
Section 12.13. Respecting the IPO . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.14. Termination of the AXCES, Inc. 401(k) Plan . . . . . . . . . . 74
</TABLE>

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AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made as
of June 24, 1999, among OmniLynx Communications Corporation, a Delaware
corporation ("PURCHASER"), AXCES Acquisition, Inc., a Delaware corporation and a
wholly owned subsidiary of Purchaser ("MERGER SUB"), AXCES, Inc., a Delaware
corporation (the "COMPANY"), MTM Holdings Corporation, a Texas corporation
("STOCKHOLDER"), and the persons listed on the signature pages of this Agreement
under the caption "MTM STOCKHOLDERS".

PRELIMINARY STATEMENTS

The parties to this Agreement wish to effect a business combination
pursuant to which:

(1) The Company will merge with and into Merger Sub (the
"MERGER") on the terms and subject to the conditions of this Agreement;

(2) Purchaser will acquire the stock of the entities other
than the Company identified in the accompanying Addendum I (each an
"OTHER FOUNDING COMPANY" and, collectively with the Company, the
"FOUNDING COMPANIES") under agreements entered into among the Other
Founding Companies, their stockholders, Purchaser and other subsidiaries
of Purchaser (collectively, the "OTHER AGREEMENTS"); and

(3) Following the Merger, Purchaser will effect a public
offering of shares of its common stock.

The respective boards of directors of Purchaser, Merger Sub, the Company
and the Stockholder have approved and adopted this Agreement to effect a
transaction involving a reorganization described in Section 368 of the Code.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained in this Agreement, the
parties to this Agreement agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.1:

"ACQUISITION PROPOSAL" has the meaning specified in Section 6.4.

<PAGE>

"AFFILIATE" means, as to any specified Person, any other Person
who, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of Capital Stock of the Person, by contract, or otherwise).

"AGREED SETTLEMENT COSTS" means the actual out-of-pocket amounts
paid by the Company to settle any Litigation shown on SCHEDULE 4.12 in
order to cause an order dismissing such Litigation with prejudice to
be entered, or if such Litigation is not subject to such an order
being entered, an equivalent, final settlement thereof, and as to
which the Purchaser has given its prior written consent to the
settlement terms thereof and the amount of the settlement payment,
which consent shall not be unreasonably withheld.

"AGREEMENT" means this Agreement, including all attached
Schedules, Addenda, Annexes and Exhibits, as each of them may be amended,
modified or supplemented from time to time under their provisions or the
provisions of this Agreement.

"ALLOWABLE NEW INDEBTEDNESS" shall mean Indebtedness incurred by
the Company (i) not exceeding the principal amount of $3,000,000 in the
aggregate, (ii) bearing interest at not greater than the prime rate of
interest, as quoted by THE WALL STREET JOURNAL, plus 3%, (iii) incurred
not more than 30 days prior to the Closing, (iv) which is solely used to
fund distributions to the Stockholder allowed under Section 6.3(c), (v)
which may be repaid following the IPO Closing Date without penalty, and
(vi) the principal and all accrued interest of which is due and payable
not more than one year from the date of incurrence thereof.

"BUSINESS DAY" means a day other than Saturday, Sunday or any day
on which banks located in New York, New York or Houston, Texas are
authorized or obligated to close.

"CAPITAL LEASE" means a lease of (or other agreement conveying the
right to use) real or personal property that is required to be classified
and accounted for as a capital lease under GAAP as in effect on the date
of this Agreement.

"CAPITAL STOCK" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in the corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity
interest in the Entity.

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<PAGE>

fees and other cash compensation paid or payable by the Company to
that employee or other natural person.

"CEILING AMOUNT" means an amount equal to (i) the sum of (a) the
aggregate number of shares of Purchaser Common Stock issued to the
Stockholder as part of the Merger Consideration, plus (b) the aggregate
number of shares of Purchaser Common Stock that would be issuable if all
Purchaser Preferred Stock issued to the Stockholder as part of the Merger
Consideration was converted on the IPO Closing Date into Purchaser Common
Stock in accordance with the provisions thereof, times (ii) the IPO
Price.

"CERCLA" means the Comprehensive Environmental Response,
Conservation, and Liability Act of 1980, as amended.

"CERTIFICATE OF MERGER" means: the certificate of merger
respecting the Merger which contains the information required by the DGCL
to effect the Merger.

"CHARTER DOCUMENTS" means, with respect to any Entity at any time,
in each case as amended, modified and supplemented at that time, the
articles or certificate of formation, incorporation or organization (or
the equivalent organizational documents) of the Entity, (b) the bylaws or
limited liability company agreement or regulations (or the equivalent
governing documents) of the Entity, and (c) each document setting forth
the designation, amount and relative rights, limitations and preferences
of any class or series of the Entity's Capital Stock or of any rights in
respect of the Entity's Capital Stock.

"CLAIM NOTICE" has the meaning specified in Section 9.4.

"CLOSING" has the meaning specified in Section 7.1(a).

"CLOSING DATE" means the date of the Closing.

"CLOSING MEMORANDUM" means the form of closing memorandum to be
prepared by Purchaser for the Closing, in which there shall be included
the forms of certificates of officers, the opinions of counsel and
certain other documents to be delivered at the Closing as provided in
Article VII.

"CLOSING PRICE" shall mean the last reported sales price regular
way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in
either case on the principal national securities exchange on which the
Purchaser Common Stock is listed or admitted to trading or, if not listed
or admitted to trading on any national securities exchange, on the
National Association of Securities Dealers Automated Quotations National
Market System, or, if the Purchaser Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices
in the

3
<PAGE>

over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by Purchaser for that purpose.

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

"COMPANY COMMITMENT" has the meaning specified in Section 4.22.

"COMPANY COMMON STOCK" means the common stock, par value $1.00 per
share, of the Company.

"COMPANY DEFERRED TAX LIABILITY" shall mean the deferred tax
liability of the Company as shown on the Current Balance Sheet.

"COMPANY ERISA BENEFIT PLAN" has the meaning specified in Section
4.25(d).

"COMPANY ERISA PENSION PLAN" has the meaning specified in Section
4.25(d).

"COMPANY ERISA GROUP" means any "group of organizations" within
the meaning of Section 414(b), (c), (m) or (o) of the Code, or any
"controlled group" as defined in Section 4001(a)(14) of ERISA, of which
the Company is a member.

"COMPANY WORKING CAPITAL" shall mean the working capital of the
Company as determined in accordance with GAAP.

"CONFIDENTIAL INFORMATION" means, with respect to any Person, all
trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from designs,
reports, investigations, research, testing, development,
work-in-progress, codes, marketing and sales programs, capital
expenditure projects, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings
with any Governmental Authority and any other confidential, nonpublic
concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of that Person.

"COUNSEL FOR PURCHASER AND MERGER SUB" means Porter & Hedges,
L.L.P.

"COUNSEL FOR THE COMPANY, THE STOCKHOLDER AND THE MTM
STOCKHOLDERS" means Verner, Liipfert, Bernhard, McPherson and Hand
Chartered.

"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company at March 31, 1999, which is included in the Initial Financial
Statements.

"CURRENT BALANCE SHEET DATE" means March 31, 1999.

4
<PAGE>

"CURRENT DATE" means any day during the 20-day period ending on
the date of the Closing.

"CURRENT MARKET PRICE" means (i) the average of the daily Closing
Prices of the Purchaser Common Stock for the 20 consecutive Trading Days
immediately preceding the date of determination thereof, or (ii) if the
Purchaser Common Stock is not listed on any national securities exchange
or quoted on the National Association of Securities Dealers Automated
Quotations National Market System or in the over-the-counter market, the
Fair Market Value.

"DAMAGE" to any specified Person means any cost, damage (including
any consequential, exemplary, punitive or treble damage) or expense
(including reasonable and necessary or appropriate fees and actual
expenses of and disbursements by attorneys, consultants, experts or other
Representatives and Litigation costs) to, any fine of or penalty on, or
any liability (including loss of earnings or profits) of any other nature
of, that Person.

"DAMAGE CLAIM" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against that
Person for Damages to any other Person, or (b) by the specified Person,
any claim or demand of the specified Person against any other Person for
Damages to the specified Person.

"DERIVATIVE SECURITIES" of a specified Entity means any Capital
Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (a) any unissued Capital Stock
of the specified Entity or (b) any Capital Stock of the specified Entity
which has been issued and is being held by the Entity directly or
indirectly as treasury Capital Stock.

"DGCL" means the General Corporation Law of the State of Delaware.

"EFFECTIVE TIME" has the meaning specified in Section 2.2.

"ELECTION PERIOD" has the meaning specified in Section 9.4(b).

"EMPLOYEE POLICIES AND PROCEDURES" means at any time all employee
manuals and all material policies, procedures and work-related rules that
apply at that time to any employee, nonemployee director or officer of,
or any other natural person performing consulting or other independent
contractor services for, the Company.

"EMPLOYMENT AGREEMENT" means at any time (a) any agreement to
which the Company is a party which then relates to the direct or indirect
employment or engagement, or arises from the past employment or
engagement, of any natural person by the Company, whether as an employee,
a nonemployee officer or director, a consultant or other independent

5
<PAGE>

contractor, a sales representative or a distributor of any kind,
including any employee leasing or service agreement and any
noncompetition agreement, and (b) any agreement between the Company and
any Person which arises from the sale of a business by that Person to the
Company or and limits that Person's competition with the Company.

"ENTITY" means any sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual
company, joint stock company or joint venture.

"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating to the environment or worker health or safety, including ambient
air, surface water, land surface or subsurface strata, or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes
(including Solid Wastes, Hazardous Wastes or Hazardous Substances) or
noxious noise or odor into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
recycling, removal, transport or handling of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes
(including petroleum, petroleum distillates, asbestos or
asbestos-containing material, polychlorinated biphenyls,
chlorofluorocarbons or hydrochlorofluorocarbons).

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

"ERISA AFFILIATE" means, with respect to any specified Person at
any time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years prior to that time was,
a member of any ERISA Group of which the specified Person is or was a
member at the same time.

"ERISA AFFILIATE PENSION PLAN" has the meaning specified in
Section 4.25(d).

"ERISA EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA and includes any ERISA Pension Benefit
Plan.

"ERISA PENSION BENEFIT PLAN" means any "employee pension benefit
plan," as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code (excluding any Multiemployer Plan).

"EXCESS TAX OBLIGATIONS" has the meaning specified in Section 8.2.

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

"FAIR MARKET VALUE" shall mean the fair value of the Purchaser
Common Stock as determined by an independent investment banking or
appraisal firm experienced in the

6
<PAGE>

valuation of such securities or property selected in good faith by the
Board of Directors of Purchaser or a committee thereof, or, if no such
investment banking or appraisal firm is, in the good faith judgment of
the Board of Directors or such committee, available to make such
determination, as determined in good faith by the Board of Directors
of Purchaser or such committee. Any determination of Fair Market Value
by an investment banking or appraisal firm, the Board of Directors or
a committee thereof shall be conclusive and described in a board
resolution.

"FINAL PROSPECTUS" means the prospectus included in the
Registration Statement at the time it becomes effective, except that if
the prospectus first furnished to the Underwriter after the Registration
Statement becomes effective for use in connection with the IPO differs
from the prospectus included in the Registration Statement at the time it
becomes effective (whether or not the prospectus so furnished to the
Underwriter is required to be filed with the SEC pursuant to Securities
Act Rule 424(b)), the prospectus so furnished to the Underwriter will be
the "FINAL PROSPECTUS."

"FINANCIAL STATEMENTS" means the Initial Financial Statements and
any subsequent financial statements of the Company delivered to Purchaser
prior to the Effective Time pursuant to Section 6.6.

"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which have
been or are applied on a basis consistent with the most recent audited
Financial Statements delivered to Purchaser prior to the Effective Time.

"GENERAL RELEASE" means the general release of the Company to be
executed at or before, and delivered to Purchaser and the Company at, the
Closing, effective as of the Effective Time, by the Stockholder and each
MTM Stockholder, which general release shall be in the form of the
attached EXHIBIT 1.1-A, with its blanks appropriately completed.

"GOVERNMENTAL APPROVAL" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing
order or exemption of, or registration or filing with, any Governmental
Authority.

"GOVERNMENTAL AUTHORITY" means any national, state, county,
municipal or other government, domestic or foreign, or any agency, board,
bureau, commission, court, department or other instrumentality of any
such government.

"GOVERNMENTAL REQUIREMENT" means at any time (a) any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction,
order, writ, edict, award, authorization or other requirement of any
Governmental Authority in effect at that time or (b) any obligation
included in any certificate, certification, franchise, permit or license
issued by any

7
<PAGE>

Governmental Authority or resulting from binding arbitration,
including any requirement under common law, at that time.

"GUARANTY" means, for any specified Person, without duplication,
any liability, contingent or otherwise, of that Person guaranteeing or
otherwise representing liability for any obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
and including any liability of the specified Person, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) the other Person's obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of that
obligation, (b) to purchase property, securities or services for the
purpose of assuring the owner of that obligation of its payment, or
(c) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable
the primary obligor to pay that obligation; PROVIDED, HOWEVER, that the
term "GUARANTY" excludes endorsements for collection or deposit in the
ordinary course of the endorser's business.

"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.

"IMMEDIATE FAMILY MEMBER" means at any time: (a) with respect to a
natural person, any child or grandchild or spouse of such natural person
at that time, or any child of such natural person's spouse; and (b) with
respect to an Entity which has as an ultimate beneficial owner one or
more natural persons, or a natural person and his spouse, any child or
grandchild or spouse at that time (if not then an ultimate beneficial
owner of the Entity), or any child of the spouse, of the ultimate
beneficial owner or owners of the Entity (for purposes hereof, child or
grandchild includes those by blood or legal adoption).

"INDEBTEDNESS" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds,
letters of credit, banker's acceptances and similar instruments), for the
deferred purchase price of property or services or arising under
conditional sale or other title retention agreements, other than trade
payables arising in the ordinary course of business, (ii) evidenced by
notes, bonds, debentures or similar instruments, (iii) in respect of
Capital Leases, or (iv) in respect of Interest Rate Protection
Agreements, (b) any liability secured by any Lien upon any property or
assets of that Person (or upon any revenues, income or profits of that
Person therefrom), whether or not that Person has assumed the liability
or otherwise become liable for its payment, or (c) any liability of
others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a
liability by means of a Guaranty.

"INDEMNITY NOTICE" has the meaning specified in Section 9.4(e).

"INDEMNIFIED PARTY" has the meaning specified in Section 9.4(b).

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<PAGE>

"INDEMNIFYING PARTY" has the meaning specified in Section 9.4(b).

"INFORMATION" means written information, including (a) data,
certificates, reports and statements (excluding Financial Statements) and
(b) summaries of unwritten agreements, arrangements, contracts, plans,
policies, programs or practices or of unwritten amendments or
modifications of, supplements to or waivers under any of the foregoing
documents.

"INITIAL FINANCIAL STATEMENTS" means (a) the audited balance
sheets of the Company at December 31, 1998, 1997 and 1996 and the related
audited statements of income, stockholders' equity and cash flows for
each of the Company's three fiscal years in the three-year period ended
December 31, 1998, together with the related audit report of Pannell Kerr
Forster of Texas, P.C. and (b) the Current Balance Sheet and the related
unaudited statements of income stockholders' equity and cash flows for
the three month period ended on the Current Balance Sheet.

"INTEREST RATE PROTECTION AGREEMENT" means, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks of that
Person, either generally or under specific contingencies, between that
Person and any other Person.

"IPO" means the first time after May 1, 1999 a registration
statement filed under the Securities Act and respecting a primary
offering by Purchaser of shares of Purchaser Common Stock is declared
effective under the Securities Act and the shares registered by that
registration statement are issued and sold by Purchaser.

"IPO CLOSING DATE" means the date on which Purchaser first
receives payment for the shares of Purchaser Common Stock it sells to the
Underwriter in the IPO.

"IPO PRICE" means the price per share of Purchaser Common Stock
which is set forth as the "price to public" on the cover page of the
Final Prospectus.

"IPO PRICING DATE" means the date, if any, on which Purchaser and
the Underwriter agree in the Underwriting Agreement to the price per
share of Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of Purchaser Common Stock from Purchaser on the IPO Closing Date.

"IRS" means the Internal Revenue Service.

"LIEN" means, with respect to any property or asset of any Person
(or any revenues, income or profits of that Person therefrom), in each
case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise, (a) any mortgage,
lien, security interest, pledge, attachment, levy or other charge or
encumbrance

9
<PAGE>

of any kind thereupon or in respect thereof or (b) any other
arrangement under which the same is transferred, sequestered or
otherwise identified with the intention of subjecting the same to, or
making the same available for, the payment or performance of any
liability in priority to the payment of the ordinary, unsecured
creditors of that Person, including any "ADVERSE CLAIM" (as defined in
Section 8-302(b) of each applicable Uniform Commercial Code) in the
case of any Capital Stock. For purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any asset that Person has
acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, Capital Lease or other title retention
agreement relating to that asset.

"LITIGATION" means any action, case, proceeding, claim, grievance,
suit or investigation or other proceeding conducted by or pending before
any Governmental Authority or any arbitration proceeding.

"MATERIAL" means, as applied to any specified Entity, material to
the business, operations, property or assets, liabilities, financial
condition or results of operations of the specified Entity and its
Subsidiaries considered as a whole.

"MATERIAL ADVERSE EFFECT" means, with respect to the consequences
of any fact or circumstance (including the occurrence or non-occurrence
of any event) to the Company (or after the Effective Time the Surviving
Corporation and its Subsidiaries, if any, considered as a whole), that
such fact or circumstance has caused, is causing or can reasonably be
expected to cause, directly or indirectly, singly or in the aggregate
with other facts and circumstances, any Damages in excess of the
Threshold Amount.

"MATERIAL AGREEMENT" of an Entity means any contract or agreement
(a) to which the Entity or any of its Subsidiaries is a party, or by
which the Entity or any of its Subsidiaries is bound or to which any
property or assets of the Entity or any of its Subsidiaries is subject
and (b) which is Material to the Entity.

"MERGER CONSIDERATION" has the meaning specified in Section
2.4(a).

"MERGER SUB" means AXCES Acquisition, Inc., a Delaware
corporation.

"MERGER SUB COMMON STOCK" means the common stock, par value $1.00
per share, of Merger Sub.

"MINIMUM WORKING CAPITAL AMOUNT" means an amount equal to (i) the
sum of $600,000 plus the Recent Operating Profits, minus (ii) the amount
of any cash generated from Recent Operating Profits used to pay Agreed
Settlement Costs.

"MOODY'S" means Moody's Investors Service, Inc.

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<PAGE>

"MTM STOCKHOLDERS" means Michael Avignon, Michael Macaluso and
Timothy Till.

"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.

"OPERATING PROFITS" means the net income plus non-cash expenses of
the Company determined in accordance with GAAP.

"ORGANIZATION STATE" means, as applied to (a) any corporation, its
state or other jurisdiction of incorporation, (b) any limited liability
company or limited partnership, the state or other jurisdiction under
whose laws it is organized and existing in that legal form, and (c) any
other Entity, the state or other jurisdiction whose laws govern that
Entity's internal affairs.

"OTHER AGREEMENTS" has the meaning specified in the Preliminary
Statements in this Agreement.

"OTHER COMPENSATION PLAN" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored by
the Company, or to which the Company contributes, on behalf of any of its
employees, nonemployee directors or officers or other natural persons
performing consulting or other independent contractor services for the
Company, including all such arrangements, plans, policies, practices or
programs providing for severance pay, deferred compensation, incentive,
bonus or performance awards or the actual or phantom ownership of any
Capital Stock or Derivative Securities of the Company, but excluding all
Company ERISA Pension Plans and Employment Agreements.

"OTHER FOUNDING COMPANIES" has the meaning specified in the
Preliminary Statements in this Agreement.

"OTHER TRANSACTION DOCUMENTS" means the Other Agreements and the
other written agreements, documents, instruments and certificates at any
time executed pursuant to or in connection with the Other Agreements
(other than the Transaction Documents and the Underwriting Agreement),
all as amended, modified or supplemented from time to time.

"PARTIES" means the parties to this Agreement.

"PBGC" means the Pension Benefit Guaranty Corporation.

11
<PAGE>

social security legislation (other than pursuant to ERISA or Section
412(n) of the Code); (d) Liens incurred in the ordinary course of that
Person's business in connection with deposit accounts or to secure the
performance of bids, tenders, Services Contracts, trade contracts,
statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of like nature; (e)
easements, rights-of-way, reservations, restrictions and other similar
encumbrances incurred in the ordinary course of that Person's business
or existing on property and not materially interfering with the
ordinary conduct of that Person's business or the use of that
property; (f) defects or irregularities in that Person's title to its
real properties which do not materially diminish the value of the
surface estate or interfere with the ordinary conduct of that Person's
business or the use of any of such properties; (g) any interest or
title of a lessor of assets being leased by any Person pursuant to any
Capital Lease disclosed in SCHEDULE 4.19 or any lease that, under
GAAP, would be accounted for as an operating lease; and (h) Liens
securing purchase money Indebtedness disclosed in SCHEDULE 4.18 or
4.19 so long as the Liens do not attach to any property or assets
other than the properties or assets purchased with the proceeds of
such Indebtedness.

"PERSON" means any natural person, Entity, estate, trust, union or
employee organization or Governmental Authority or, for the purpose of
the definition of "ERISA Affiliate," any trade or business.

"PLAN" has the meaning specified in Section 4.26(a).

"PRIVATE PLACEMENT MEMORANDUM" means the Purchaser Private
Placement Memorandum dated as of June 22, 1999, relating to the offer of
Purchaser Common Stock, the Purchaser Preferred Stock and cash in
connection with the Merger.

"PROHIBITED TRANSACTION" means any transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA.

"PROPERTY, PLANT AND EQUIPMENT" means at any time any property
that then would be included and classified as property, plant and
equipment on a consolidated balance sheet, prepared in accordance with
GAAP, of the Company.

"PROPORTIONATE DEFERRED TAX LIABILITY" shall mean, with respect to
each MTM Stockholder, such MTM Stockholder's proportionate part of the
Company Deferred Tax Liability.

"PROPRIETARY RIGHTS" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States
and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology,

12
<PAGE>

technical data and customer lists, and all documentation relating to
any of the foregoing; (iii) all copyrights, copyrights registrations
and applications therefor and all other rights corresponding thereto
throughout the world; (iv) all mask works, mask work registrations and
applications therefor; (v) all industrial designs and any registrations
and applications therefor throughout the world; (vi) all trade names,
logos, common law trademarks and service marks; trademark and service
mark registrations and applications therefor and all goodwill
associated therewith throughout the world; (vii) all databases and
data collections and all rights therein throughout the world; (viii)
all computer software including all source code, object code,
firmware, development tools, files, records and data, all media on
which any of the foregoing is recorded, all Uniform Resource Locators,
Web addresses, sites and domain names, (ix) any similar, corresponding
or equivalent rights to any of the foregoing, and (x) all documentation
related to any of the foregoing, that are used in and/or necessary to
the conduct of the Company's business as it currently is conducted or
is currently contemplated by the Company to be conducted, including,
without limitation, the design, development, manufacture, use, import
and sale of the products, technology and services of the Company
(including products, technology or services currently under
development).

"PRO RATA SHARE" means for each MTM Stockholder the fraction
expressed as a percentage and set forth in SCHEDULE 2.4, (a) the
numerator of which is the number of shares of outstanding common stock of
the Stockholder owned by that MTM Stockholder, as set forth in SCHEDULE
2.4, and (b) the denominator of which is the total number of shares of
outstanding common stock of the Stockholder owned by all MTM
Stockholders, as set forth in SCHEDULE 2.4.

"PURCHASER" means OmniLynx Communications Corporation, a Delaware
corporation.

"PURCHASER ACQUISITION CANDIDATE" means any Entity which shall
have been called on by any of the Company, Purchaser or a Subsidiary of
the Company or Purchaser in connection with the possible acquisition by
any of them of that Entity or with respect to which any of them has made
an acquisition analysis.

"PURCHASER COMMON STOCK" means the common stock, par value $.0001
per share, of Purchaser.

"PURCHASER INDEMNIFIED LOSS" has the meaning specified in Section
9.2(a).

"PURCHASER INDEMNIFIED PARTY" means Purchaser and its Affiliates
and each of their respective officers, directors, employees, agents and
counsel; PROVIDED, HOWEVER, that none of the Stockholder or any MTM
Stockholder will be a Purchaser Indemnified Party for purposes of this
Agreement, notwithstanding that the Stockholder or any MTM Stockholder is
a Purchaser Indemnified Party for purposes of one or more of the Other
Agreements.

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<PAGE>

"PURCHASER PREFERRED STOCK" means the Series B Convertible,
Redeemable Preferred Stock, par value $.0001 per share, of Purchaser, the
relative preferences, rights and limitations of which will be
substantially as set forth in the Certificate of Designation,
Preferences, Rights and Limitations of Series B 8% Cumulative Convertible
Preferred Stock Par Value $.0001 Per Share, of OmniLynx Communications
Corporation attached hereto as EXHIBIT 1.1-B.

"PURCHASER STOCK" means the Purchaser Common Stock and the
Purchaser Preferred Stock.

"QUALIFIED PLANS" has the meaning specified in Section 4.26(b).

"RECENT OPERATING PROFITS" means the Operating Profits of the
Company for the period from May 1, 1999 until the Closing Date.

"REGISTERED PROPRIETARY RIGHTS" means all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations
or applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work registrations
and applications to register mask works; and (v) any other Company
Proprietary Rights that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded
by, any state, government or other public legal authority, that are used
in and/or necessary to the conduct of the Company's business as it
currently is conducted or is currently contemplated by the Company to be
conducted, including, without limitation, the design, development,
manufacture, use, import and sale of the products, technology and
services of the Company (including products, technology or services
currently under development).

"REGISTRATION STATEMENT" means the registration statement
(including (a) each preliminary prospectus included therein prior to the
date on which that registration statement is declared effective under the
Securities Act (including any prospectus filed with the SEC pursuant to
Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments thereof and all supplements and exhibits thereto) filed by
Purchaser with the SEC to register shares of Purchaser Common Stock under
the Securities Act for public offering and sale in the IPO.

"RELATED PARTY AGREEMENT" means any contract or other agreement,
written or oral, to which the Company is a party or is bound or by which
any property of the Company is bound or may be subject and (a) to which
the Stockholder or any of the Stockholder's Related Persons or Affiliates
also is a party, (b) of which the Stockholder or the Stockholder's
Related Persons or Affiliates is a beneficiary, or (c) as to which any
transaction contemplated thereby properly would be characterized (without
regard to the

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<PAGE>

amount involved) as a related party transaction for purposes of
applying the disclosure requirements of GAAP or the SEC applicable to
the Registration Statement.

"RELATED PERSON" of the Stockholder means: (a) if the Stockholder
is a natural person, (i) any Immediate Family Member of the Stockholder,
(ii) any Estate of the Stockholder or any Immediate Family Member of the
Stockholder, (iii) the trustee of any inter vivos or testamentary trust
of which all the beneficiaries are Immediate Family Members of the
Stockholder, and (iv) any Entity the entire equity interest in which is
owned by any one or more of the Stockholder and Immediate Family Members
of the Stockholder; and (b) if the Stockholder is an Entity, Estate or
trust, (i) any Person who owns an equity interest in the Stockholder on
the date hereof, (ii) any Person who would be a Related Person under
clause (a) of this definition of a natural person who is an ultimate
beneficial owner of the Stockholder, or (iii) any other Entity the entire
equity interest in which is owned by any one or more of the Stockholder
and Immediate Family Members of the Stockholder. As used in this
definition, "ESTATE" means, as to any natural person who has died or been
adjudicated mentally incompetent by a court of competent jurisdiction,
(i) that person's estate or (ii) the administrator, conservator,
executor, guardian or representative of that person's estate.

"REPRESENTATIVES" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including
independent certified public accountants), advisors, attorneys,
consultants or other agents of that Person, or any other representatives
of that Person or of any of that Person's directors, officers, employees,
Affiliates, accountants (including independent certified public
accountants), advisors, attorneys, consultants or other agents.

"REPORTABLE EVENT" means, with respect to any Company ERISA
Pension Plan, (a) the occurrence of any of the events set forth in
Section 4043(b) or 4043(c) (other than a Reportable Event as to which the
provision of 30 days' notice to the PBGC is waived under applicable
regulations), 4062(e) or 4063(a) of ERISA with respect to that plan,
(b) any event requiring the Company or any ERISA Affiliate to provide
security to that plan under Section 401(a)(29) of the Code, or (c) any
failure to make a payment required by Section 412(m) of the Code with
respect to that plan.

"RCRA" means the Resource Conservation and Recovery Act of 1976,
as amended.

"RESPONSIBLE OFFICER" means either Michael Avignon or Michael
Macaluso.

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<PAGE>

to obtain the surrender of, any then outstanding Capital Stock of the
Entity or any Affiliate of the Entity or any then outstanding
warrants, options or other rights to acquire or subscribe for or
purchase unissued or treasury Capital Stock of the Entity or any of
its Affiliates.

"RETURNS" means the returns, reports or statements (including any
information returns) any Governmental Requirement requires to be filed
for purposes of any Tax.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SERVICES CONTRACT" means any written or oral contract,
subcontract or other agreement under which the Company is or may become
obligated to provide services to or for any Person.

"SOLID WASTES, HAZARDOUS WASTES OR HAZARDOUS SUBSTANCES" have the
meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the Company
which imparts a broader meaning to any of those terms than does CERCLA or
RCRA.

"STOCKHOLDER INDEMNIFIED LOSS" has the meaning specified in
Section 9.3.

"STOCKHOLDER INDEMNIFIED PARTY" means (a) the Stockholder and each
of the Stockholder's Affiliates (other than the Company or, following the
Effective Time, the Surviving Corporation or Purchaser or any of its
Subsidiaries, if the Stockholder is an Affiliate of Purchaser), agents
and counsel and (b) prior to the Effective Time, the Company and each of
its officers, directors, employees, agents and counsel who are not
Stockholder Indemnified Parties within the meaning of clause (a) of this
definition.

"SUBSIDIARY" of any specified Person means at any time, any Entity
a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.

"SUPPLEMENTAL INFORMATION" has the meaning specified in
Section 6.6.

"SURVIVING CORPORATION" means Merger Sub, which is to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.

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<PAGE>

any Governmental Requirement, whether disputed or not, together with
any interest, penalties, additions to tax or additional amounts with
respect thereto.

"TAX LIABILITY" means the amount of any federal income tax
liability of the Company, the Stockholder or the MTM Stockholders
resulting from the taxable profits of the Company for the period
beginning January 1, 1999, and ending on the Closing Date, including
without limitation any built-in gains tax under Section 1374 of the Code
or any similar corporate level tax imposed on the Company by any taxing
authority.

"TAX LIABILITY RESERVE AMOUNT" means the amount of any (i)
unsecured credit available to Purchaser on any day from its existing
credit agreements, (ii) cash on hand, and (iii) holdings of debt or
equity securities readily tradeable on an established market and cash
equivalents such as certificates of deposit and money market shares.

"TAXING AUTHORITY" means any Governmental Authority having or
exercising jurisdiction with respect to any Tax.

"TERMINATION EVENT" means, with respect to any Company ERISA
Pension Plan, (a) any Reportable Event with respect to that plan which is
likely to result in the termination of that plan, (b) the termination of,
or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of ERISA, or (c) the institution of proceedings to terminate, or
the appointment of a trustee to administer, that plan under Section 4042
of ERISA.

"TERRITORY" has the meaning specified in Section 10.1(a).

"THIRD PARTY CLAIM" has the meaning specified in Section 9.4(b).

"THRESHOLD AMOUNT" means $200,000.

"TRADING DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are generally not traded
on the securities exchange or in the securities market applicable to the
Purchaser Common Stock, or if there is no applicable securities exchange
or market, on the New York Stock Exchange.

"TRANSACTION DOCUMENTS" means this Agreement, the Certificate of
Merger, the General Release and the other written agreements, documents,
instruments and certificates executed pursuant to or in connection with
this Agreement (other than the Other Transaction Documents and the
Underwriting Agreement), including those specified in Article VII to be
delivered at or before the Closing, all as amended, modified or
supplemented from time to time.

"TRANSFER TAXES" has the meaning specified in Section 12.7.

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<PAGE>

"UNDERWRITER" means, collectively, (a) the investment banking
firms that prospectively may enter into the Underwriting Agreement and
(b) from and after the IPO Pricing Date, the investment banking firms
parties to the Underwriting Agreement.

"UNDERWRITING AGREEMENT" has the meaning specified in
Section 7.2(a)(iii).

"WELFARE PLAN" means an "employee welfare benefit plan" as defined
in Section 3(1) of ERISA.

"WORKING CAPITAL" means the working capital of the Company
determined in accordance with GAAP; provided that for purposes of making
such determination, the Allowable New Indebtedness and the proceeds
thereof shall not be included therein.

"YEAR 2000 COMPLIANT" means a product's ability to record, store,
process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) September 9, 1999 and January 1,
2000, and calculate any information dependent on or relating to such
dates in the same manner, and with the same functionality, data integrity
and performance, as such product's ability to record, store, process,
calculate and present calendar dates on or before September 8, 1999 and
December 31, 1999, or calculate any information dependent on or relating
to such dates.

Section 1.2. DEFINITIONS. Capitalized terms used in this Agreement
but not defined in Section 1.1 have the meanings assigned to them in the
Preliminary Statements or elsewhere in this Agreement, as the case may be.

ARTICLE II

THE MERGER AND RELATED MATTERS

Section 2.1. CERTIFICATE OF MERGER. On the terms and subject to the
conditions of this Agreement, the Company will cause a Certificate of Merger to
be duly executed and delivered on or promptly after the date of the Closing to
the Secretary of State of the State of Delaware.

Section 2.2. THE EFFECTIVE TIME. The effective time of the Merger
(the "EFFECTIVE TIME") will be the time specified in the Certificate of Merger
or, if the Certificate of Merger does not specify another time, on filing of the
Certificate of Merger.

Section 2.3. CERTAIN EFFECTS OF THE MERGER. At and as of the
Effective Time, (a) the Company will be merged with and into Merger Sub in
accordance with the provisions of the DGCL, (b) the Company will cease to exist
as a separate legal Entity, (c) Merger Sub will be the Surviving Corporation
and, as such, will, all with the effect provided by the DGCL, (i) possess all
the properties and rights, and be subject to all the restrictions and duties, of
the Company and Merger Sub and (ii) be governed by the laws of the State of
Delaware, (d) the Charter Documents of Merger

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<PAGE>

Sub then in effect will become and thereafter remain (until changed in
accordance with (i) applicable law, in the case of the certificate or
articles of incorporation or (ii) their terms, in the case of the bylaws) the
Charter Documents of the Surviving Corporation, provided the name of the
Surviving Corporation will be changed to "AXCES, Inc.," (e) the initial board
of directors of the Surviving Corporation will be the Persons named in
SCHEDULE 2.3, who will hold the office of director of the Surviving
Corporation subject to the provisions of the applicable laws of the State of
Delaware and the Charter Documents of the Surviving Corporation, and (f) the
officers of the Surviving Corporation immediately following the Merger will
be as set forth in SCHEDULE 2.3, and each of the Persons so designated in
SCHEDULE 2.3 will serve in each office specified for that Person in SCHEDULE
2.3, subject to the provisions of the Charter Documents of the Surviving
Corporation, until his or her successor is duly elected to, and, if
necessary, qualified for, that office.

Section 2.4. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the
Effective Time, as a result of the Merger and without any action on the part of
any holder thereof:

(a) the shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares referred to in
Section 2.4(b) below) will (i) be converted into the right to receive,
without interest, on surrender of the certificate evidencing those
shares, the amount of cash and the number of whole and fractional shares
of Purchaser Common Stock and Purchaser Preferred Stock set forth or
determined as provided in SCHEDULE 2.4 (the "MERGER CONSIDERATION"),
(ii) cease to be outstanding and to exist, and (iii) be canceled and
retired;

(b) each share of Company Common Stock held in the treasury
of the Company will (i) cease to be outstanding and to exist and (ii) be
canceled and retired; and

(c) each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time will be converted
into one share of Common Stock, $1.00 par value per share, of the
Surviving Corporation, and the shares of Common Stock of the Surviving
Corporation issued on such conversion will constitute all the issued and
outstanding shares of Capital Stock of the Surviving Corporation.

Each holder of a certificate representing shares of Company Common Stock
immediately prior to the Effective Time (other than the shares referred to in
Section 2.4(b) above) will, as of the Effective Time and thereafter, cease to
have any rights respecting those shares other than the right to receive, without
interest, the Merger Consideration.

Section 2.5. DELIVERY, EXCHANGE AND PAYMENT.

(a) At or after the Effective Time: (i) the Stockholder, as
the holder of certificates representing shares of Company Common Stock,
will, on surrender of its certificates to Purchaser (or any agent which
may be appointed by Purchaser for purposes of this Section 2.5), receive,
and Purchaser will pay and issue to the Stockholder, in each

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case subject to the provisions of Section 2.6, the Merger
Consideration; and (ii) until any certificate representing Company
Common Stock has been surrendered and replaced pursuant to this
Section 2.5, that certificate will, for all purposes, be deemed to
evidence ownership of the number of whole shares of Purchaser Common
Stock and Purchaser Preferred Stock included in the Merger
Consideration payable in respect of that certificate pursuant to
Section 2.4. All shares of Purchaser Common Stock and Purchaser
Preferred Stock issuable in the Merger will be deemed for all purposes
to have been issued by Purchaser at the Effective Time.

(b) The Stockholder will deliver to Purchaser (or any agent
that may be appointed by Purchaser for purposes of this Section 2.5), on
or before the IPO Closing Date, the certificates representing Company
Common Stock owned by the Stockholder, duly endorsed in blank by it, or
accompanied by stock powers duly executed by it in blank, and with all
necessary transfer tax and other revenue stamps, acquired at its expense,
affixed and canceled. The Stockholder shall cure any deficiencies in the
endorsement of the certificates or other documents of conveyance
respecting, or in the stock powers accompanying, the certificates
representing Company Common Stock delivered by it.

(c) No dividends (or interest) or other distributions
declared or earned after the Effective Time with respect to Purchaser
Common Stock and payable to the holders of record thereof after the
Effective Time will be paid to the holder of any unsurrendered
certificates representing shares of Company Common Stock for which shares
of Purchaser Common Stock have been issued in the Merger until the
unsurrendered certificates are surrendered as provided herein, but (i) on
such surrender, Purchaser will cause to be paid, to the Person in whose
name the certificates representing such shares of Purchaser Common Stock
shall then be issued, the amount of dividends or other distributions
previously paid with respect to such whole shares of Purchaser Common
Stock with a record date, or which have accrued, subsequent to the
Effective Time, but prior to surrender, and the amount of any cash
payable to such Person for and in lieu of fractional shares pursuant to
Section 2.06 and (ii) at the appropriate payment date or as soon as
practicable thereafter, Purchaser will cause to be paid to that Person
the amount of dividends or other distributions with a record date, or
which have been accrued, subsequent to the Effective Time, but which are
not payable until a date subsequent to surrender, which are payable with
respect to such number of whole shares of Purchaser Common Stock, subject
in all cases to any applicable escheat laws. No interest will be payable
with respect to the payment of such dividends or other distributions (or
cash for and in lieu of fractional shares) on surrender of outstanding
certificates.

Section 2.6. FRACTIONAL SHARES. Notwithstanding any other provision
of this Article II, no fractional shares of Purchaser Stock will be issued, and
if the Stockholder is otherwise entitled to receive a fractional share of
Purchaser Stock but for this Section 2.6, it will instead be entitled to receive
a whole share in lieu thereof.

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
AND EACH MTM STOCKHOLDER JOINTLY AND SEVERALLY

Each MTM Stockholder, severally with respect to representations relating
to him and jointly and severally with the Stockholder with respect to
representations relating to the Stockholder, and the Stockholder, with respect
to representations relating to the Stockholder, represents and warrants to
Purchaser that all the following representations and warranties in this
Article III are true and correct:

Section 3.1. INVESTMENT REPRESENTATIONS. (i) The Stockholder will be
acquiring the shares of Purchaser Stock to be issued to it pursuant to Section
2.4 solely for the Stockholder's account, for investment purposes only and with
no current intention or plan to distribute, sell or otherwise dispose of any of
those shares in connection with any distribution; (ii) neither the Stockholder
nor such MTM Stockholder is a party to any agreement or other arrangement for
the disposition of any shares of Purchaser Stock other than this Agreement;
(iii) unless otherwise specified on Schedule 3.1, the Stockholder and such MTM
Stockholder is an "accredited investor" as defined in Securities Act Rule
501(a); (iv) the Stockholder and such MTM Stockholder (A) is able to bear the
economic risk of the Stockholder's investment in the Purchaser Stock to be
acquired by it pursuant to this Agreement, (B) can afford to sustain a total
loss of that investment, (C) has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
proposed investment in the Purchaser Stock, (D) has had an adequate opportunity
to ask questions and receive answers from the officers of Purchaser concerning
any and all matters relating to the transactions contemplated by this Agreement,
including the background and experience of the current and proposed officers and
directors of Purchaser and the plans for the operations of the business of
Purchaser, and (E) has asked all questions of the nature described in preceding
clause (D), and all those questions have been answered to its satisfaction; and

Section 3.2. OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The
Stockholder is the record and beneficial owner of all of the issued and
outstanding shares of Company Capital Stock free and clear of all Liens. No
Derivative Securities of the Company are outstanding and there are no contracts,
agreements or plans obligating the Company to issue any Derivative Securities.

Section 3.3. POWER OF THE STOCKHOLDER; APPROVAL OF THE MERGER.

(a) The Stockholder and such MTM Stockholder has the full
power, legal capacity and authority to execute and deliver this Agreement
and each other Transaction Document to which the Stockholder or such MTM
Stockholder is a party and to perform the Stockholder's and such MTM
Stockholder's obligations in this Agreement and in all other Transaction
Documents to which the Stockholder and such MTM Stockholder are a party.
This Agreement constitutes, and each such other Transaction Document,
when executed and delivered by the Stockholder and such MTM Stockholder,
will constitute, the legal, valid and

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<PAGE>

binding obligation of the Stockholder and such MTM Stockholder,
enforceable against the Stockholder and such MTM Stockholder in
accordance with its terms, except as their enforceability may be (i)
limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and (ii) subject to general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law). The Stockholder and such MTM Stockholder have, in
accordance with all applicable Governmental Requirements and, with
respect to the Stockholder, its Charter Documents, obtained all
approvals and taken all actions necessary for the authorization,
execution, delivery and performance by the Stockholder and such MTM
Stockholder of this Agreement and the other Transaction Documents to
which the Stockholder and such MTM Stockholder are a party.

(b) The Stockholder has voted all the shares of Company
Capital Stock owned by it and entitled to a vote or votes on the
consummation of the Merger, in any one or more of the manners prescribed
or permitted by the Company's Charter Documents or the Governmental
Requirements of the Company's Organization State, whichever are
controlling, to approve this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement.

Section 3.4. NO CONFLICTS OR LITIGATION. The execution, delivery and
performance in accordance with their respective terms by the Stockholder and
such MTM Stockholder of this Agreement and the other Transaction Documents to
which the Stockholder and such MTM Stockholder are or will be a party do not and
will not (a) violate any Governmental Requirement, (b) breach or constitute a
default under any agreement or instrument to which the Stockholder or such MTM
Stockholder is a party or by which the Stockholder, such MTM Stockholder or any
of the shares of Company Capital Stock owned by the Stockholder is bound,
(c) result in the creation or imposition of, or afford any Person the right to
obtain, any Lien upon any of the shares of Company Capital Stock owned by the
Stockholder (or upon any revenues, income or profits of the Stockholder
therefrom) or (d) violate the Stockholder's Charter Documents. No Litigation is
pending or, to the knowledge of the Stockholder and such MTM Stockholder,
threatened to which the Stockholder or such MTM Stockholder is or may become a
party which (a) questions or involves the validity or enforceability of any of
the Stockholder's or such MTM Stockholder's obligations under any Transaction
Document or (b) seeks (or reasonably may be expected to seek) (i) to prevent or
delay the consummation by the Stockholder and such MTM Stockholder of the
transactions contemplated by this Agreement to be consummated by the Stockholder
and such MTM Stockholder or (ii) Damages in connection with any consummation by
the Stockholder and such MTM Stockholder of the transactions contemplated by
this Agreement.

Section 3.5. NO BROKERS. Neither the Stockholder nor such MTM
Stockholder has, directly or indirectly, in connection with this Agreement or
the transactions contemplated hereby (a) employed any broker, finder or agent or
(b) agreed to pay or incurred any obligation to pay any broker's or finder's
fee, any sales commission or any similar form of compensation.

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<PAGE>

Section 3.6. PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the
right of the Stockholder to receive shares of Purchaser Stock as a result of the
Merger or to acquire Purchaser Stock pursuant to any written option or warrant
granted by Purchaser to the Stockholder, the Stockholder and such MTM
Stockholder either (a) does not have any statutory or contractual preemptive or
other right of any kind (including any right of first offer or refusal) to
acquire any shares of Company Capital Stock or Purchaser Stock or (b) hereby
irrevocably waives each such right of that type the Stockholder or such MTM
Stockholder has or may have.

Section 3.7. CONTROL OF RELATED BUSINESSES. Except as accurately set
forth in SCHEDULE 3.7, neither the Stockholder nor such MTM Stockholder is,
alone or with one or more other Persons, the controlling Affiliate of any
Entity, business or trade (other than the Company) that (a) is engaged in any
line of business which is the same as or similar to any line of business in
which the Company is engaged or (b) is, or has within the three-year period
ending on the date of this Agreement, engaged in any transaction or been a party
to any agreement with the Company.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
THE COMPANY, THE STOCKHOLDER AND THE MTM STOCKHOLDERS

The Company and the Stockholder jointly and severally represent and
warrant to, and agree with, and each MTM Stockholder severally with respect to
themselves but jointly and severally with the Company and the Stockholder,
represents and warrants to, and agrees with, Purchaser that all the following
representations and warranties in this Article IV are true and correct:

Section 4.1. ORGANIZATION.

(a) The Organization State of the Company is the State of
Delaware, and the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of that State and (ii) has
the corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on
its business as now conducted; and

(b) the authorized Capital Stock of the Company is comprised
of 1,000 shares of Company Common Stock, of which 1,000 shares have been
issued and are now outstanding, no shares are held by the Company as
treasury shares and no outstanding Derivative Securities of the Company
exist.

Section 4.2. QUALIFICATION. SCHEDULE 4.2 accurately lists all the
jurisdictions in which the Company is authorized or qualified to own or lease
and to operate its properties or to carry on its business as now conducted. The
Company does not own, lease or operate property or carry on any business in any
jurisdiction not listed in SCHEDULE 4.2.

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<PAGE>

Section 4.3. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.

(a) The execution, delivery and performance by the Company of
this Agreement and each other Transaction Document to which it is or will
be a party, and the effectuation of the Merger and the other transactions
contemplated hereby and thereby, are within its corporate or other power
under its Charter Documents and all applicable Governmental Requirements
of its Organization State and have been duly authorized by all
proceedings, including actions permitted to be taken in lieu of
proceedings, required under its Charter Documents and all applicable
Governmental Requirements of the Organization State.

(b) This Agreement has been, and each of the other
Transaction Documents to which the Company is or will be a party, when
executed and delivered to Purchaser (or, in the case of the Certificate
of Merger, the applicable Governmental Authorities) will have been, duly
executed and delivered by the Company and is, or when so executed and
delivered will be, the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms,
except as enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).

(c) The execution, delivery and performance in accordance
with their respective terms by the Company of the Transaction Documents
to which it is a party do not and will not (i) violate, breach or
constitute a default under (A) the Charter Documents of the Company,
(B) any Governmental Requirement applicable to the Company or (C) except
as set forth in SCHEDULE 4.3, any Material Agreement of the Company,
(ii) except as set forth in SCHEDULE 4.3, result in the acceleration or
mandatory prepayment of any Indebtedness, or any Guaranty not
constituting Indebtedness, of the Company or afford any holder of any of
that Indebtedness, or any beneficiary of any of those Guaranties, the
right to require the Company to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform any of those
Guaranties, (iii) cause or result in the imposition of, or afford any
Person the right to obtain, any Lien upon any property or assets of the
Company (or upon revenues, income or profits of the Company therefrom),
(iv) except as set forth in SCHEDULE 4.3, result in the revocation,
cancellation, suspension or material modification, in any single case or
in the aggregate, of any Governmental Approval possessed by the Company
at the date hereof and necessary for the ownership or lease or the
operation of its properties or the carrying on of its business as now
conducted, including any necessary Governmental Approval under each
applicable Environmental Law, or (v) except as set forth in SCHEDULE 4.3,
entitle any Person other than the Company to revoke, cancel, suspend or
materially modify any Company Commitment.

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<PAGE>

and (iii) as may be required by the HSR Act or the applicable state
securities or blue sky laws, no Governmental Approvals are required to be
obtained, and no reports or notices to or filings with any Governmental
Authority are required to be made, by the Company for the execution,
delivery or performance by the Company of the Transaction Documents to
which it is a party, the enforcement against the Company of its
obligations thereunder or the effectuation of the Merger and the other
transactions contemplated thereby and no approvals or consents of third
Persons are necessary to consummate the transactions contemplated hereby.

Section 4.4. CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. The Company
has caused true, complete and correct copies of the Charter Documents, each as
in effect on the date hereof, and the minute books and similar corporate or
other records of the Company to be delivered or otherwise made available to
Purchaser. No breach or violation of any Charter Document of the Company has
occurred and is continuing.

Section 4.5. NO DEFAULTS. No act or omission by the Company has
occurred, and to the knowledge of the Company, the MTM Stockholders and the
Stockholder, no other condition or state of facts exists, or, with the giving of
notice or the lapse of time or both, would exist, which (a) entitles any holder
of any outstanding Indebtedness, or any Guaranty not constituting Indebtedness,
of the Company, or a representative of the holder, to accelerate the maturity,
or require a mandatory prepayment of that Indebtedness or Guaranty, or affords
the holder or its representative, or any beneficiary of that Guaranty, the right
to require the Company to redeem, purchase or otherwise acquire, reacquire or
repay any of that Indebtedness, or to perform that Guaranty in whole or in part,
(b) entitles any Person to obtain any Lien (other than a Permitted Lien) upon
any properties or assets of any of the Company (or upon revenues, income or
profits of the Company therefrom), or (c) constitutes a violation or breach of,
or a default under, any Material Agreement of the Company by the Company.

Section 4.6. COMPANY SUBSIDIARIES. The Company does not own, and has
never owned, of record or beneficially, directly or indirectly through any
Person, and does not control, directly or indirectly through any Person or
otherwise, any Capital Stock or Derivative Securities of any Entity.

Section 4.7. CAPITAL STOCK OF THE COMPANY. All the issued and
outstanding shares of Capital Stock of the Company have been duly authorized and
validly issued in accordance with the applicable Governmental Requirements of
its Organization State and Charter Documents and are fully paid and
nonassessable. The Company has not issued or sold any shares of its outstanding
Capital Stock in breach or violation of (a) any applicable federal or state
securities laws, any statutory or contractual preemptive rights, or any other
rights of any kind (including any rights of first offer or refusal), of any
Person or (b) the terms of any of its Derivative Securities which then were
outstanding. No Person has, otherwise than solely by reason of that Person's
right, if any, to vote shares of the Capital Stock of the Company it holds (to
the extent those shares afford their holder any voting rights) any right to vote
on any matter with the holders of Capital Stock of the Company.

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<PAGE>

Section 4.8. TRANSACTIONS IN CAPITAL STOCK. Except as accurately set
forth in SCHEDULE 4.8: (a) the Company has no fixed or contingent obligation to
purchase, redeem or otherwise acquire or reacquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof, and (b) no transaction has been effected, and no action has
been taken, respecting the equity ownership of the Company, in either case in
contemplation of the transactions described in this Agreement.

Section 4.9. NO BONUS SHARES. Except as accurately set forth in
SCHEDULE 4.9, no outstanding share of Capital Stock of the Company was issued
for less than its fair market value at the time of its issuance or was issued in
exchange for any consideration other than cash.

Section 4.10. PREDECESSOR STATUS; ETC. SCHEDULE 4.10 accurately lists
all the legal and assumed names of all predecessor companies for the past five
years of the Company including the names of any Entities from which the Company
previously acquired material assets. Except as accurately disclosed in SCHEDULE
4.10, the Company has not been a Subsidiary or division of another corporation
or a part of an acquisition that was later rescinded.

Section 4.11. RELATED PARTY AGREEMENTS. Except as set forth in
SCHEDULE 4.11, each Related Party Agreement in effect on the date of this
Agreement will have been terminated as of the IPO Closing Date, and no Related
Party Agreement will exist then or thereafter.

Section 4.12. LITIGATION. Except as accurately disclosed in SCHEDULE
4.12, no Litigation is pending or, to the knowledge of the Company, the MTM
Stockholders and the Stockholder, threatened to which the Company is or may
become a party.

Section 4.13. FINANCIAL STATEMENTS; DISCLOSURE.

(a) FINANCIAL STATEMENTS. Except as accurately disclosed in
SCHEDULE 4.13, the Financial Statements (including in each case the
related Sections and notes) delivered to Purchaser by the Company
present fairly, in all material respects, the financial position of the
Company at the respective dates of the balance sheets included therein
and the results of its operations and its cash flows for the respective
periods set forth therein and have been prepared in accordance with GAAP
(except in the case of unaudited statements for the omission of footnotes
and normal year end audit adjustments). As of the date of each balance
sheet included in all previously delivered Financial Statements, the
Company did not have any outstanding Indebtedness to any Person or any
liabilities of any kind (including contingent obligations, Tax
assessments or forward or long-term commitments), or any unrealized or
anticipated loss, which in the aggregate then were Material to the
Company and required to be reflected in those Financial Statements or in
the notes related thereto in accordance with GAAP which were not so
reflected.

(b) DISCLOSURE. To the knowledge of the Company, the MTM
Stockholders and the Stockholder:

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<PAGE>

(1) all Information (other than financial budgets and
projections) that (A) is set forth in the Schedules hereto,
(B) has been delivered to Purchaser by or on behalf of the Company
pursuant to an express requirement of this Agreement, or (C) has
been furnished to Purchaser by or on behalf of the Company and
included in the Registration Statement under the captions "THE
COMPANY," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS," "BUSINESS," "MANAGEMENT,"
and "CERTAIN TRANSACTIONS" in any prospectus forming a part of the
Registration Statement is, taken together, true and correct in all
material respects and does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements contained therein not materially misleading
in light of the circumstances under which the statements were
made; and

(2) all financial budgets and projections that have been
or are hereafter from time to time prepared by the Company or any
of its Representatives and made available prior to the Effective
Time to Purchaser pursuant to or in connection with this
Agreement, any other Transaction Document or the transactions
contemplated hereby or thereby have been and will be prepared and
furnished to Purchaser in good faith and were and will be based on
facts and assumptions that are believed by the management of the
Company to be reasonable in light of the then current and
reasonably foreseeable business conditions of the Company and
represented and will represent management's good faith estimate of
the projected financial performance of the Company based on the
information available to the Responsible Officer at the time so
furnished (it being acknowledged by Purchaser that the budgets and
projections referred to in this clause (ii) are derived from
judgments made by the Company's management and are only estimates
of future results based on assumptions made at the time of their
preparation, and that there can be no assurance that the budgets
or projections will be obtained or maintained or that actual
results will not be different from those budgeted or projected).

Section 4.14. COMPLIANCE WITH LAWS.

(a) Except as accurately disclosed in SCHEDULE 4.14, (i) the
Company possesses all necessary licenses, registrations and
qualifications required for the conduct of its business, and (ii) to the
knowledge of the Stockholder, the MTM Stockholders, and the Company, the
Company is in compliance in all material respects with the terms and
conditions of all Governmental Approvals necessary for the ownership or
lease and the operation of its properties (including all the facilities
and sites it owns or holds under any lease) and the carrying on of its
business as now conducted. The Company has identified in SCHEDULE 4.14
all the Governmental Approvals it possesses. To the knowledge of the
Company, the Stockholder and the MTM Stockholders, all the Governmental
Approvals identified in SCHEDULE 4.14, are valid. Except as accurately
disclosed in SCHEDULE 4.14, the Company has

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<PAGE>

not received any notice from any Governmental Authority of its
intention to cancel, terminate or not renew any of those Governmental
Approvals.

(b) Except as accurately disclosed in SCHEDULE 4.14, the
Company: (i) has been and continues to be in compliance in all material
respects with all Governmental Requirements applicable to it or any of
its presently or previously owned or operated properties (including all
the facilities and sites now or previously owned or held by it under any
lease), businesses or operations, including all applicable Governmental
Requirements under ERISA and Environmental Laws and (ii)(A) the Company
has not received any notice from any Governmental Authority which
asserts, or raises the possibility of assertion of, any noncompliance by
the Company with any Governmental Requirements and (B) to the knowledge
of the Company, the MTM Stockholders and the Stockholder, no condition or
state of facts exists which would provide a valid basis for any such
assertion.

Section 4.15. CERTAIN ENVIRONMENTAL MATTERS. Except as accurately
disclosed in SCHEDULE 4.15: (a) to the knowledge of the Company, the MTM
Stockholders and the Stockholder, the Company has complied, and remains in
compliance, with the provisions of all Environmental Laws applicable to it or
any of its presently owned or operated facilities, sites or other properties,
businesses and operations and which relate to the reporting by the Company of
all sites presently owned or operated by it where Solid Wastes, Hazardous Wastes
or Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (b) no release (as defined in the applicable Environmental Laws) at,
from, in or on any site owned or operated by the Company has occurred which, if
all relevant facts were known to the relevant Governmental Authorities,
reasonably could be expected to require remediation to avoid deed record
notices, restrictions, liabilities or other consequences that would not be
applicable if the release had not occurred; (c) the Company has not transported
or arranged for the transportation of any Solid Wastes, Hazardous Wastes or
Hazardous Substances to, or disposed or arranged for the disposition of any
Solid Wastes, Hazardous Wastes or Hazardous Substances at, any off-site location
that could lead to any valid claim against the Company, Purchaser or Merger Sub,
as a potentially responsible party or otherwise, for any clean-up costs,
remedial work, damage to natural resources, personal injury or property damage,
including any claim under CERCLA; and (d) no storage tanks exist, or, to the
knowledge of the Company, the MTM Stockholders and the Stockholder, have
existed, on or under any of the properties owned or operated by the Company from
which any Solid Wastes, Hazardous Wastes or Hazardous Substances have been
released into the surrounding environment. The Company has provided Purchaser
with copies (or if not available, accurate written summaries) of all
environmental investigations, studies, audits, reviews and other analyses
conducted by or on its behalf, or which otherwise are in the possession, of the
Company respecting any facility, site or other property now or previously owned
or operated by the Company.

Section 4.16. LIABILITIES AND OBLIGATIONS. SCHEDULE 4.16 accurately
lists all present liabilities, of every kind, character and description and
whether accrued, absolute, fixed, contingent or otherwise, of the Company which
exceed or reasonably could be expected to exceed $25,000 and which (a) are not
otherwise reflected on SCHEDULE 4.12, (b) had been incurred prior to the Current

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<PAGE>

Balance Sheet Date, but are not reflected on the Current Balance Sheet, or
(c) were incurred after the Current Balance Sheet otherwise than in the ordinary
course of business, and consistent with the past practice, of the Company, in
each case other than (i) obligations and liabilities of the Company in respect
of the Company Commitments, (ii) obligations and liabilities of the Company in
respect of each Company ERISA Benefit Plan, and (iii) obligations and
liabilities of the Company set forth in the Sections hereto. SCHEDULE 4.16 also
accurately lists and describes, for the Company: (a) each of its outstanding
secured and unsecured Guaranties not constituting its Indebtedness and, for each
of those Guaranties, whether the Stockholder or Related Person or Affiliate of
the Stockholder is a Person whose obligation is covered by that Guaranty, and
(b) for each of the items listed under clause (a) of this sentence, (i) if that
item is secured by any property or asset of the Company, the nature of the
security, and (ii) if that item is covered in whole or in part by a Guaranty of
the Stockholder or any Related Person or Affiliate of the Stockholder, the name
of the guarantor.

Section 4.17. RECEIVABLES. Except as accurately set forth in SCHEDULE
4.17, all the accounts and notes or other advances receivable of the Company
reflected on the Current Balance Sheet were collected, or are, in the good faith
belief of the Company's management, collectible, in the respective amounts so
reflected, net of the reserves, if any, reflected in the Current Balance Sheet.

Section 4.18. OWNED AND LEASED REAL PROPERTIES.

(a) SCHEDULE 4.18 accurately lists and correctly describes in
all material respects: (i) all real properties owned by the Company and,
for each of those properties, its address, the type and square footage of
each structure located thereon and the nature of its use in the business
of the Company; (ii) all real properties of which the Company is the
lessee and, for each of those properties, its address, the type and
square footage of each structure located thereon which the Company is
leasing, the annual rental rate, the expiration date of its lease and the
use made of the leased property in the business of the Company; and
(iii) in the case of each real property listed as being owned, whether it
was previously owned, and in the case of each real property listed as
being leased, whether it is presently owned, by the Stockholder or any of
its Related Persons or Affiliates (other than the Company).

(b) The Company has provided Purchaser with true, complete
and correct copies of all title reports and title insurance policies
owned or in the possession of the Company and relating to any of the real
properties identified in SCHEDULE 4.18 as being owned. Except as
accurately set forth in that Section or those reports and policies, and
except for Permitted Liens, the Company owns in fee, and has good, valid
and indefeasible title to, free and clear of all Liens, each property
listed in that Section as being owned.

(c) The Company has provided Purchaser with true, correct and
complete copies of all leases under which the Company is leasing each of
the real properties listed in SCHEDULE 4.18 as being leased, and, except
as accurately set forth in SCHEDULE 4.18, (i) each of the listed leases
is, to the knowledge of the Company, the MTM Stockholders, and the

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<PAGE>

Stockholder, valid and binding on the lessor party thereto, and (ii) the
lessee party thereto has not sublet any of the leased space to any Person
other than the Company.

(d) The fixed assets of the Company are affixed only to one
or more of the real properties listed in SCHEDULE 4.18 and, except as
accurately set forth in that Section, are well-maintained and adequate
for the purposes for which they presently are being used or held for use,
ordinary wear and tear excepted.

(e) The Company has accurately described, in all material
respects, in SCHEDULE 4.18 all plans or projects involving the opening of
new operations, the expansion of any existing operations or the
acquisition of any real property or existing business, with respect to
which management of the Company has made any expenditure in the two-year
period prior to the date of the Agreement in excess of $25,000, or which
if pursued by the Company would require additional capital expenditures
in excess of $25,000.

Section 4.19. OWNED AND LEASED PERSONAL PROPERTY.

(a) SCHEDULE 4.19 accurately lists, in all material respects,
all machinery, equipment and other personal property included in the
Property, Plant and Equipment owned and leased by the Company, which list
states, in the case of each of those properties listed as being owned,
whether it was previously owned, and in the case of each of those
properties listed as being leased, whether it is presently owned, by the
Stockholder or any of its Related Persons or Affiliates (other than the
Company).

(b) Except as accurately set forth in SCHEDULE 4.19 and
except for Permitted Liens, the Company has good, valid and indefeasible
title to, free and clear of all Liens, each asset listed in that Section
as being owned, free and clear of all Liens.

(c) The Company has provided Purchaser with true, correct and
complete copies of all leases under which the Company is leasing each of
the properties listed in SCHEDULE 4.19 as being leased and all leases
referred to in SCHEDULE 4.21 and, except as accurately set forth in
SCHEDULE 4.19, (i) each of those leases is, to the knowledge of the
Company, the MTM Stockholders and the Stockholder, valid and binding on
the lessor party thereto, and (ii) the Company has not sublet any of the
leased property to any other Person.

(d) Except as accurately set forth in SCHEDULE 4.19, all
items of machinery, equipment and other personal property listed therein
are in good working order and condition, ordinary wear and tear excepted,
and adequate for the purposes for which they presently are being used or
held for use.

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Section 4.20. PROPRIETARY RIGHTS.

(a) SCHEDULE 4.20(a) lists all Proprietary Rights and lists
any proceedings or actions before any court, tribunal (including the
United States Patent and Trademark Office (the "PTO") or equivalent
authority anywhere in the world) related to any of the Proprietary
Rights.

(b) Except as set forth in SCHEDULE 4.20(b), the Company
(i) owns or has the legal right to use all Proprietary Rights, including
all Proprietary Rights licensed to the Company, that are necessary to the
conduct of its business as now conducted, in each case free of any claims
or infringements known to the Company, (ii) is the exclusive owner of all
trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any
products or technology or the provision of any services by the Company,
and (iii) owns exclusively, and has good title to, all copyrighted works
that are Company products or other works of authorship that the Company
otherwise purports to own.

(c) To the extent that any Proprietary Rights have been
developed or created by any person other than the Company for which the
Company has, directly or indirectly, paid, the Company has a written
agreement with such person with respect thereto and the Company thereby
has obtained ownership of, and is the exclusive owner of, all such
Proprietary Rights by operation of law or by valid assignment.

(d) Except as set forth in SCHEDULE 4.20(d), the Company has
not transferred ownership of or granted any license of or right to use or
authorized the retention of any rights to use any of the Proprietary
Rights to any other person.

(e) Other than "shrink-wrap" and similar widely available
commercial end-user licenses, the contracts, licenses and agreements
listed in SCHEDULE 4.20(e) include all contracts, licenses and agreements
to which the Company is a party with respect to any Proprietary Rights.
No person who has licensed Proprietary Rights to the Company has
ownership rights or license rights to improvements made by the Company in
such Proprietary Rights which have been licensed to the Company.

(f) SCHEDULE 4.20(f) lists all contracts, licenses and
agreements between the Company and any other person wherein or whereby
the Company has agreed to, or assumed, any obligation or duty to warrant,
indemnify, reimburse, hold harmless, guaranty or otherwise assume or
incur any obligation or liability or provide a right of rescission with
respect to the infringement or misappropriation by the Company or such
other person of the Proprietary Rights of any person other than the
Company.

(g) The operation of the business of the Company as it
currently is conducted or is currently contemplated by the Company to be
conducted, including but not limited to

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<PAGE>

the Company's design, development, use, import, manufacture and
sale of the products, technology or services (including products,
technology or services currently under development) of the Company
does not infringe or misappropriate the Proprietary Rights of any
person, violate the rights of any person (including rights to privacy
or publicity), or constitute unfair competition or trade practices
under the laws of any jurisdiction, and the Company has not received
notice from any person claiming that such operation or any act,
product, technology or service (including products, technology or
services currently under development) of the Company infringes or
misappropriates the Proprietary Rights of any person or constitutes
unfair competition or trade practices under the laws of any
jurisdiction (nor is the Company aware of any basis therefor).

(h) Each item of Registered Proprietary Rights is valid and
subsisting, all necessary registration, maintenance and renewal fees in
connection with such Registered Proprietary Rights have been paid and all
necessary documents and certificates in connection with such Registered
Proprietary Rights have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Proprietary Rights.

(i) There are no contracts, licenses or agreements between
the Company and any other person with respect to Proprietary Rights under
which there is any dispute known to the Company regarding the scope of
such agreement, or performance under such agreement including with
respect to any payments to be made or received by the Company thereunder.

(j) Except as set forth in SCHEDULE 4.20(j), to the knowledge
of the Company, the MTM Stockholders and the Stockholder, no person is
infringing or misappropriating any of the Proprietary Rights.

(k) The Company has taken commercially reasonable steps to
protect the Company's rights in confidential information and trade
secrets of the Company or provided by any other person to the Company.

(l) No Proprietary Rights or product, technology or service
of the Company are subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation that restricts in any manner
the use, transfer or licensing thereof by the Company or may affect the
validity, use or enforceability of such Proprietary Rights.

(m) To the Company's, the MTM Stockholders' and the
Stockholder's knowledge, no (i) product, technology, service or
publication of the Company, (ii) material published or distributed by the
Company, or (iii) conduct or statement of Company constitutes obscene
material, a defamatory statement or material, false advertising or
otherwise violates any law or regulation.

<PAGE>

(n) The Company neither manufacturers nor sells products the
functionality of which is dependent upon such products being Year 2000
Compliant. The Company's internal computer and technology products and
systems are Year 2000 Compliant.

Section 4.21. TITLE TO OTHER PROPERTIES. In each case, free and clear
of all Liens except for Permitted Liens and as accurately set forth in SCHEDULE
4.21, the Company has good and valid title to, or holds under a lease valid and
binding on the lessor party thereto, all its tangible personal properties and
assets (other than Property, Plant and Equipment) that individually is or in the
aggregate are Material to the Company.

Section 4.22. COMMITMENTS.

(a) In SCHEDULE 4.22(a), the Company has completely and
accurately listed each of the following (each a "COMPANY COMMITMENT") to
which the Company is a party or by which any of its properties is bound
and which presently remains executory in whole or in any part:

(i) each partnership, joint venture or cost-sharing
agreement;

(ii) each guaranty or suretyship, indemnification or
contribution agreement or performance bond;

(iii) each instrument, agreement or other obligation
evidencing or relating to Indebtedness of the Company or to money
lent or to be lent to another Person;

(iv) each contract to purchase or sell real property;

(v) each Services Contract for which either the contract
price or the cost of performance will or could reasonably be
expected to exceed $25,000 (each a "MATERIAL SERVICES CONTRACT"),
except Service Contracts with Company customers for providing long
distance service;

(vi) each Related Party Agreement involving total
payments within any 12-month period in excess of $10,000 and which
is not terminable without penalty on no more than 30 days' prior
notice;

(vii) each agreement (other than Services Contracts
and routine purchase orders or purchase order acknowledgments
issued or received in the ordinary course of business) for the
acquisition or provision of services, supplies, equipment,
inventory, fixtures or other property involving more than $25,000
in the aggregate;

(viii) each contract containing any noncompetition
agreement, covenant or undertaking; or

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<PAGE>

(ix) each other agreement or commitment not made in the
ordinary course of business that is Material to the Company.

True, correct and complete copies of all written Company Commitments, and
true, correct and complete written descriptions of all oral Company
Commitments, have been delivered or made available to Purchaser. Except
as accurately set forth in SCHEDULE 4.22(a): (i) there are no existing or
asserted defaults, events of default or events, occurrences, acts or
omissions that, with the giving of notice or lapse of time or both, would
constitute defaults or events of default under any Company Commitment
which is Material to the Company by the Company or, to the knowledge of
the Company, the MTM Stockholders and the Stockholder, any other party
thereto; and (ii) no penalties have been incurred, nor are amendments
pending, with respect to any Company Commitment which is Material to the
Company. The Company Commitments are in full force and effect and are
valid and enforceable obligations of the Company and, to the knowledge of
the Company, the MTM Stockholders and the Stockholder, the other parties
thereto, in accordance with their respective terms, and no defenses,
off-sets or counterclaims have been asserted or, to the knowledge of the
Company, the MTM Stockholders and the Stockholder, may be made by any
party thereto (other than by the Company), nor has the Company waived any
rights thereunder, except as accurately described in SCHEDULE 4.22(a).

(b) Except as accurately disclosed in SCHEDULE 4.22(b) or
contemplated hereby or by any other Transaction Document to which the
Company or the Stockholder is a party: (i) neither the Company nor the
Stockholder has received notice of any plan or intention of any other
party to any Company Commitment to exercise any right to cancel or
terminate any Company Commitment, and neither the Company nor the
Stockholder knows of any condition or state of facts, including the
consummation of the Merger, which would justify the exercise of such a
right; and (ii) neither the Company nor the Stockholder currently
contemplates, or has reason to believe any other Person currently
contemplates, any amendment or change to any Company Commitment.

Section 4.23. CAPITAL EXPENDITURES. The Company has not currently
budgeted any amounts for capital expenditures to be incurred by the Company
during the balance of the Company's current and next ensuing fiscal years.

Section 4.24. INSURANCE. Except as accurately set forth in SCHEDULE
4.24: (a) the Company has provided Purchaser with: (i) a list of all insurance
policies carried by the Company; (ii) an accurate list of all insurance loss
runs and worker's compensation claims received for the most recently ended three
policy years; and (iii) true, complete and correct copies of all insurance
policies carried by the Company which are in effect, all of which have been
issued by insurers of recognized responsibility and currently are, and will
remain without interruption through the IPO Closing Date (or will be renewed or
replaced with comparable coverage), in full force and effect; (b) no insurance
carried by the Company has been canceled by the insurer during the past five
years, and the Company has never been denied coverage; and (c) neither the
Company nor the Stockholder has

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<PAGE>

received any notice or other communication from any issuer of any listed
insurance policy of any material increase in any deductibles, retained
amounts or the premiums payable thereunder, and, to the knowledge of the
Company, the MTM Stockholders and the Stockholder, no such increase in
deductibles, retainages or premiums is threatened.

Section 4.25. EMPLOYEE MATTERS.

(a) CASH COMPENSATION. SCHEDULE 4.25(a) accurately lists the
names, titles and rates of annual Cash Compensation, at the Current
Balance Sheet Date and at the date hereof (and the portions thereof
attributable to salary or the equivalent, fixed bonuses, discretionary
bonuses and other Cash Compensation, respectively) of all key employees
(including all employees who are officers or directors), nonemployee
officers, nonemployee directors and key consultants and independent
contractors of the Company.

(b) EMPLOYMENT AGREEMENTS. SCHEDULE 4.25(b) accurately lists
all Employment Agreements remaining executory in whole or in part on the
date hereof, complete and correct copies of all of which have been
provided to Purchaser by the Company. The Company is not a party to any
oral Employment Agreement which is a term agreement.

(c) OTHER COMPENSATION PLANS. SCHEDULE 4.25(c) accurately
lists all Other Compensation Plans either remaining executory at the date
of this Agreement or to later become effective. The Company has provided
Purchaser with a true, correct and complete copy of each of the listed
Other Compensation Plans that is in writing and an accurate description
of each of the listed Other Compensation Plans that is not written.
Except as accurately set forth in SCHEDULE 4.25(c), each of the Other
Compensation Plans, including each that is a Welfare Plan, may be
unilaterally amended or terminated by the Company without liability to
it, except as to benefits accrued thereunder prior to amendment or
termination.

(d) ERISA BENEFIT PLANS. SCHEDULE 4.25(d) accurately
(i) lists each ERISA Pension Benefit Plan (A) the funding requirements of
which (under Section 301 of ERISA or Section 412 of the Code) are, or at
any time during the six-year period ending on the date of this Agreement
were, in whole or in part, the responsibility of the Company, or
respecting which the Company is, or at any time during that period was, a
"contributing sponsor" or an "employer" as defined in Sections
4001(a)(13) and 3(5), respectively, of ERISA (each plan described in this
clause (A) being a "COMPANY ERISA PENSION PLAN"), (B) each other ERISA
Pension Benefit Plan respecting which an ERISA Affiliate is, or at any
time during that period was, such a "contributing sponsor" or "employer"
(each plan described in this clause (B) being an "ERISA AFFILIATE PENSION
PLAN"), and (C) each other ERISA Employee Benefit Plan that is being, or
at any time during that period was, sponsored, maintained or contributed
to by the Company (each plan described in this clause (C) and each
Company ERISA Pension Plan being a "COMPANY ERISA BENEFIT PLAN"),
(ii) states the termination date of each Company ERISA Benefit Plan and
ERISA Affiliate Pension Plan that has been

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<PAGE>

terminated, and (iii) identifies for each ERISA Affiliate Pension Plan
the relevant ERISA Affiliates. The Company has provided Purchaser with
true, complete and correct copies of (i) each Company ERISA Benefit
Plan and ERISA Affiliate Pension Plan, (ii) each trust agreement
related thereto, and (iii) all amendments to all such plans and trust
agreements. Except as accurately set forth in SCHEDULE 4.25(d), (i)
the Company is not, nor at any time during the six-year period ended on
the date of this Agreement was not, a member of any ERISA Group that
currently includes, or included when the Company was a member, among
its members any Person other than the Company, and (ii) no Person
is an ERISA Affiliate of the Company.

(e) EMPLOYEE POLICIES AND PROCEDURES. SCHEDULE 4.25(e)
accurately lists all Employee Policies and Procedures. The Company has
provided Purchaser with a copy of all written Employee Policies and
Procedures and a written description of all material unwritten Employee
Policies and Procedures the continuance or discontinuance of which could
reasonably be expected to have a Material Adverse Effect.

(f) UNWRITTEN AMENDMENTS. Except as accurately described in
SCHEDULE 4.25(f), no material unwritten amendments have been made,
whether by oral communication, pattern of conduct or otherwise, with
respect to any of the Employment Agreements, Other Compensation Plans or
Employee Policies and Procedures.

(g) LABOR COMPLIANCE. The Company has been and is in
compliance in all material respects with all applicable Governmental
Requirements respecting employment and employment practices, terms and
conditions of employment and wages and hours, and the Company is not
liable for any arrears of wages or penalties for failure to comply with
any of the foregoing. The Company has not engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment conditions
or practices. Except as accurately set forth in SCHEDULE 4.25(g), there
are no (i) unfair labor practice charges or complaints or racial, color,
religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the knowledge of the
Company, the MTM Stockholders and the Stockholder, threatened against the
Company before any Governmental Authority (nor, to the knowledge of the
Company, the MTM Stockholders and the Stockholder, does any valid basis
therefor exist) or (ii) existing or, to the knowledge of the Company, the
MTM Stockholders and the Stockholder, threatened labor strikes, disputes,
grievances, controversies or other labor troubles affecting the
Company (nor, to the knowledge of the Company, the MTM Stockholders and
the Stockholder, does any valid basis therefor exist).

(h) UNIONS. Neither the Company nor any ERISA Affiliate has
ever been a party to any agreement with any union, labor organization or
collective bargaining unit. No employees of the Company are represented
by any union, labor organization or collective bargaining unit. Except
as accurately set forth in SCHEDULE 4.25(h), to the knowledge of the
Company, the MTM Stockholders and the Stockholder, none of the employees
of the

36
<PAGE>

Company have threatened to organize or join a union, labor organization
or collective bargaining unit.

(i) NO ALIENS. All employees of the Company are citizens of,
or are authorized in accordance with federal immigration laws to be
employed in, the United States.

(j) CHANGE OF CONTROL BENEFITS. Except as accurately set
forth in SCHEDULE 4.25(j), the Company is not a party to any agreement,
and has not established any policy, practice or program, requiring it to
make a payment or provide any other form of compensation or benefit or
vesting rights to any person performing services for the Company which
would not be payable or provided in the absence of this Agreement or the
consummation of the transactions contemplated by this Agreement,
including any parachute payment under Section 280G of the Code.

(k) RETIREES. The Company does not have any obligation or
commitment to provide medical, dental or life insurance benefits to or on
behalf of any of its employees who may retire or any of its former
employees who have retired except (i) as may be required pursuant to the
continuation of coverage provisions of Section 4980B of the Code, the
applicable parallel provisions of ERISA and any applicable state law,
(ii) continuation of benefits in the event of disability, and
(iii) conversion privileges provided under any insured Company ERISA
Employee Benefit Plans.

Section 4.26. COMPLIANCE WITH ERISA, ETC.

(a) COMPLIANCE. Each of the Company ERISA Benefit Plans and
Other Compensation Plans (each, a "PLAN") (i) is in substantial
compliance with all applicable provisions of ERISA, as well as with all
other applicable Governmental Requirements, and (ii) has been
administered, operated and managed in accordance with its governing
documents.

(b) QUALIFICATION. All Plans that are intended to qualify
under Section 401(a) of the Code (the "QUALIFIED PLANS") are so qualified
and have been determined by the IRS to be so qualified (or application
for determination letters have been timely submitted to the IRS). The
Company has provided Purchaser with true, complete and correct copies of
the current plan determination letters, most recent actuarial valuation
reports, if any, most recent Form 5500, or, as applicable, Form 5500-C/R,
filed with respect to each Qualified Plan and most recent trustee or
custodian report. To the extent that any Qualified Plans have not been
amended to comply with applicable Governmental Requirements, the remedial
amendment period permitting retroactive amendment of these Qualified
Plans has not expired and will not expire within 120 days after the
Effective Time. All reports and other documents required to be filed
with any governmental agency or distributed to plan participants or
beneficiaries (including annual reports, summary annual reports,
actuarial reports, PBGC-1 Forms, audits or Returns) have been timely
filed or distributed.

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<PAGE>

(c) NO PROHIBITED TRANSACTIONS, ETC. None of the
Stockholder, the MTM Stockholders, any Plan or the Company has engaged in
any Prohibited Transaction. No Plan has incurred an accumulated funding
deficiency, as defined in Section 412(a) of the Code and Section 302(a)
of ERISA, and no circumstances exist under which the Company could have
any direct or indirect liability whatsoever (including being subject to
any statutory Lien to secure payment of any such liability), to the PBGC
under Title IV of ERISA or to the IRS for any excise tax or penalty with
respect to any Plan maintained or contributed to by the Company or any of
its ERISA Affiliates. Further:

(i) there have been no terminations, partial
terminations or discontinuances of contributions to any Qualified
Plan without a determination by the IRS that such action does not
adversely affect the tax-qualified status of that plan;

(ii) no Termination Event has occurred;

(iii) no Reportable Event has occurred with respect
to any Plan which was not properly reported;

(iv) the valuation of assets of any Qualified Plan, as of
the Effective Time, will equal or exceed the actuarial present
value of all "BENEFIT LIABILITIES" (within the meaning of Section
40001(a)(16) of ERISA) under that plan in accordance with the
assumptions contained in the Regulations of the PBGC governing the
funding of terminated defined benefit plans;

(v) with respect to Plans qualifying as "GROUP HEALTH
PLANS" under Section 4980B of the Code or Section 607(l) or 609 of
ERISA and related regulations (relating to the benefit
continuation rights imposed by "COBRA" or qualified medical child
support orders), the Company, the MTM Stockholders and the
Stockholder have complied in all material respects with all
reporting, disclosure, notice, election and other benefit
continuation and coverage requirements imposed thereunder as and
when applicable to those plans, and the Company has not incurred
(or will not incur) any direct or indirect liability or is (or
will be) subject to any loss, assessment, excise tax penalty, loss
of federal income tax deduction or other sanction, arising on
account of or in respect of any direct or indirect failure by the
Company, any MTM Stockholder or the Stockholder, at any time prior
to the Effective Time, to comply with any such federal or state
benefit continuation or coverage requirement, which is capable of
being assessed or asserted before or after the Effective Time
directly or indirectly against the Company, the Stockholder, any
MTM Stockholder, the Surviving Corporation or Purchaser with
respect to any of those group health plans;

(vi) the Financial Statements as of the Current Balance
Sheet Date reflect the approximate total pension, medical and
other benefit liability for all Plans, and

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<PAGE>

no material funding changes or irregularities are reflected
thereon which would cause those Financial Statements to be
not representative of prior periods; and

(vii) the Company has not incurred liability under
Section 4062 of ERISA.

(d) MULTIEMPLOYER PLANS. Except as set forth in SCHEDULE
4.26(d), the Company and no ERISA Affiliate, is not or at any time
during the six-year period ended on the date of this Agreement was not
obligated to contribute to a Multiemployer Plan. The Company and no
ERISA Affiliate of any of them, has not made a complete or partial
withdrawal from a Multiemployer Plan so as to incur withdrawal liability
as defined in Section 4201 of ERISA.

(e) CLAIMS AND LITIGATION. Except as accurately set forth in
SCHEDULE 4.26(d), no Litigation or claims (other than routine claims for
benefits) are pending or, to the knowledge of the Company, the
Stockholder and the MTM Stockholders, threatened against, or with
respect to, any of the Plans or with respect to any fiduciary,
administrator or sponsor thereof (in their capacities as such), or any
party-in-interest thereof.

(f) EXCISE TAXES, DAMAGES AND PENALTIES. No act, omission or
transaction has occurred which would result in the imposition on the
Company of (i) breach of fiduciary duty liability damages under Section
409 of ERISA, (ii) a civil penalty assessed pursuant to Section 502 of
ERISA or (iii) any excise tax under applicable provisions of the Code
with respect to any Plan.

(g) VEBA WELFARE TRUST. Any trust funding a Plan which is
intended to be exempt from federal income taxation pursuant to Section
501(c)(9) of the Code, satisfies the requirements of that section and has
received a favorable determination letter from the IRS regarding the
Plan's exempt status and has not, since receipt of the most recent
favorable determination letter, been amended or operated in a way that
would adversely affect its exempt status.

Section 4.27. TAXES.

(a) Each of the following representations and warranties in
this Section 4.27 is qualified to the extent set forth in SCHEDULE 4.27.

(b) All Returns required to be filed with respect to any Tax
for which the Company is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such
Return has been paid, each Tax payable by the Company by assessment has
been timely paid in the amount assessed, and adequate reserves have been
established on the consolidated books of the Company for all Taxes for
which the Company is liable, but the payment of which is not yet due.
The Company is not and never has been, liable for any Tax payable by
reason of the income or property of a Person other

39
<PAGE>

than the Company. The Company has timely filed true, correct and
complete declarations of estimated Tax in each jurisdiction in which
any such declaration is required to be filed by it. No Liens for Taxes
exist upon the assets of the Company except Liens for Taxes which are
not yet due. The Company is not, and never has been, subject to Tax in
any jurisdiction outside of the United States. No Litigation with
respect to any Tax for which the Company is asserted to be liable is
pending or, to the knowledge of the Company, the MTM Stockholders or
the Stockholder, threatened, and no basis which the Company, the MTM
Stockholders or the Stockholder believes to be valid exists on which
any claim for any such Tax can be asserted against the Company. There
are no requests for rulings or determinations in respect of any Taxes
pending between the Company and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and for
which the Company is or may be liable has been granted to any Taxing
Authority. The Company is not and never has been a party to any tax
allocation or sharing agreement. All amounts required to be withheld
by the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes
have been collected or withheld and paid to the proper Taxing
Authority. The Company has made all deposits required by law to be
made with respect to employees' withholding and other employment Taxes.

(c) Neither the Company nor the Stockholder is a "foreign
person," as that term is referred to in Section 1445(f)(3) of the Code.

(d) The Company has not filed a consent pursuant to Section
341(f) of the Code or any comparable provision of any other tax statute
and has not agreed to have Section 341(f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition of
an asset. No asset of the Company is subject to any provision of
applicable law which eliminates or reduces the allowance for depreciation
or amortization in respect of that asset below the allowance generally
available to an asset of this type. No accounting method changes of the
Company exist or are proposed or threatened which could give rise to an
adjustment under Section 481 of the Code.

(e) The Stockholder made an effective, valid and binding
election to treat the Company as a qualified subchapter S subsidiary
pursuant to Section 1361 of the Code effective January 1, 1998 and has,
or caused to have been, maintained the Company's status as a qualified
subchapter S subsidiary without lapse or interruption from the date of
said election until the date hereof. The Stockholder (i) made an
effective, valid and binding S election pursuant to Section 1362 of the
Code effective January 1, 1998, and (ii) maintained its status as an
S Corporation pursuant to Section 1361 of the Code without lapse or
interruption from the date of said election until the date hereof.

Section 4.28. GOVERNMENT CONTRACTS. Except as accurately set forth in
SCHEDULE 4.28, the Company is not a party to any governmental contract subject
to price redetermination or renegotiation.

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<PAGE>

Section 4.29. ABSENCE OF CHANGE. Since the Current Balance Sheet Date,
except as accurately set forth in SCHEDULE 4.29, none of the following has
occurred with respect to the Company:

(a) any circumstance, condition, event or state of facts
(either singly or in the aggregate), other than conditions affecting the
economy industry generally, which has caused, is causing or could
reasonably be expected to cause a Material Adverse Effect on the Company;

(b) any change in its authorized Capital Stock or in any of
its outstanding Capital Stock or Derivative Securities;

(d) any increase in, or any commitment or promise to
increase, the rates of Cash Compensation as of the date hereof, or the
amounts or other benefits paid or payable under any Company ERISA Pension
Plan or Other Compensation Plan, except for ordinary and customary
bonuses and salary increases for employees (other than the MTM
Stockholders or their respective Immediate Family Members) at the times
and in the amounts consistent with its past practice;

(e) any work interruptions, labor grievances or claims filed,
or any similar event or condition of any character, that will have a
Material Adverse Effect on the Surviving Corporation following the
Effective Time;

(f) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or
properties of any kind which singly is or in the aggregate are Material
to the Company, other than distributions, sales or transfers in the
ordinary course of this business and consistent with its past practices
to Persons other than to the Stockholder, the MTM Stockholders and their
respective Immediate Family Members and Affiliates;

(g) any cancellation, or agreement to cancel, any
Indebtedness, obligation or other liability owing to it, including any
Indebtedness, obligation or other liability of the Stockholder or any
Related Person or Affiliate thereof except for adjustments to bills in
the course of good faith disputes with customers in a manner consistent
with past practice that do exceed $10,000 in the aggregate;

(h) any plan, agreement or arrangement granting any
preferential rights to purchase or acquire any interest in any of its
assets, property or rights or requiring consent of any Person to the
transfer and assignment of any such assets, property or rights;

41
<PAGE>

(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of its business or not consistent with its
past practices;

(j) any waiver of any of its rights or claims that singly is
or in the aggregate are Material to the Company;

(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices and which involves in
excess of $25,000;

(l) any incurrence by it of any Indebtedness or any Guaranty
not constituting its Indebtedness, or any Company Commitment to incur any
Indebtedness or any such Guaranty;

(m) any investment in the Capital Stock, Derivative
Securities or Indebtedness of any Person, other than a Permitted
Investment;

(n) except in accordance with the Company's consolidated
capital expenditure budget for the Company's current fiscal year, any
capital expenditure or series of related capital expenditures by the
Company in excess of $25,000, or commitments by the Company to make
capital expenditures totaling in excess of $25,000; or

(o) any cancellation or termination of a Material Agreement
of the Company.

Section 4.30. BANK RELATIONS; POWERS OF ATTORNEY. SCHEDULE 4.30
accurately lists and identifies:

(a) the name of each financial institution in which the
Company has borrowing or investment arrangements, deposit or checking
accounts or safe deposit boxes;

(b) the types of those arrangements and accounts, including,
as applicable, names in which accounts or boxes are held, the account or
box numbers and the name of each Person authorized to draw thereon or
have access thereto; and

(c) the name of each Person holding a general or special
power of attorney from the Company and a description of the terms of each
such power.

Section 4.31. NO BROKERS. The Company and the Stockholders have not,
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby, employed any broker, finder or agent, or agreed to pay or
incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation.

<PAGE>

Section 4.32. COUNSEL. The Company, the Stockholder and each MTM
Stockholder have been represented by attorneys, accountants and other counsel of
their own choosing, and have not relied in any way on any statements, advice or
opinion, whether written or oral, of Counsel for Purchaser and Merger Sub with
respect to this Agreement, the transactions contemplated hereby and any actual
or potential consequences, including any actual or potential Tax consequences,
hereof and thereof on Purchaser, the Company, the Stockholder and such MTM
Stockholder, except the opinion of Counsel for Purchaser and Merger Sub to be
delivered pursuant to Section 7.3(ii)(B).

ARTICLE V

REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND MERGER SUB

Purchaser and Merger Sub jointly and severally represent and warrant to
the Company and the Stockholder that all the following representations and
warranties in this Article V are true and correct:

Section 5.1. MERGER SUB. (a) Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) no Derivative Securities of Merger Sub are outstanding, and
(c) Merger Sub has been organized for the sole purpose of participating in the
Merger and has not, and will not, engage in any activities other than those
necessary to effectuate the Merger.

Section 5.2. ORGANIZATION; POWER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each of Purchaser and Merger Sub has all requisite corporate power
and authority under the laws of this Organization State and its Charter
Documents to own or lease and to operate its properties presently and following
the Effective Time and to carry on its business as now conducted and as proposed
to be conducted following the Effective Time. Merger Sub has not engaged in any
operations since its organization other than in connection with their formation
and capitalization and the transactions contemplated by this Agreement and the
Other Agreements.

Section 5.3. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.

(a) The execution, delivery and performance by each of
Purchaser and Merger Sub of this Agreement and each other Transaction
Document to which it is a party, and the effectuation of the Merger and
the other transactions contemplated hereby and thereby, are within its
corporate power under its Charter Documents and the applicable
Governmental Requirements of its Organization State and have been duly
authorized by all proceedings, including actions permitted to be taken in
lieu of proceedings, required under its Charter Documents and the
applicable Governmental Requirements of its Organization State.

<PAGE>

(b) This Agreement has been, and each of the other
Transaction Documents to which either of Purchaser or Merger Sub is a
party, when executed and delivered to the other parties thereto (or, in
the case of the Certificate of Merger, the applicable Governmental
Authorities), will have been, duly executed and delivered by it and is,
or when so executed and delivered will be, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except
as enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).

(c) The execution, delivery and performance in accordance
with their respective terms by each of Purchaser and Merger Sub of the
Transaction Documents to which it is a party do not and will not
(i) violate, breach or constitute a default under (A) the Charter
Documents of Purchaser or Merger Sub, (B) any Governmental Requirement
applicable to Purchaser or Merger Sub or (C) any Material Agreement of
Purchaser or Merger Sub, (ii) result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of Purchaser or Merger Sub or afford any holder of any of
that Indebtedness, or any beneficiary of any of those Guaranties, the
right to require Purchaser or Merger Sub to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform any
of those Guaranties, (iii) cause or result in the imposition of, or
afford any Person the right to obtain, any Lien upon any property or
assets of Purchaser or Merger Sub (or upon any revenues, income or
profits of either Purchaser or Merger Sub therefrom) or (iv) result in
the revocation, cancellation, suspension or material modification, in any
single case or in the aggregate, of any Governmental Approval possessed
by Purchaser or Merger Sub at the date of this Agreement and necessary
for the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law.

(d) Except for (i) the filing of the Certificate of Merger
with the applicable Governmental Authorities, (ii) filings of the
Registration Statement under the Securities Act and a registration
statement on Form 8-A with respect to the registration of the Purchaser
Common Stock under the Exchange Act and the SEC order declaring those
registration statements effective under the Securities Act and the
Exchange Act, respectively, and (iii) as may be required by the HSR Act
or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or
filings with any Governmental Authority are required to be made, by
Purchaser or Merger Sub for the execution, delivery or performance by
Purchaser or Merger Sub of the Transaction Documents to which it is a
party, the enforcement against Purchaser or Merger Sub, as the case may
be, of its obligations thereunder or the effectuation of the Merger and
the other transactions contemplated thereby.

Section 5.4. CHARTER DOCUMENTS. Purchaser has delivered to the
Company true, complete and correct copies of the Charter Documents of each of
Purchaser and Merger Sub. No breach or

<PAGE>

violation of any Charter Document of either Purchaser or Merger Sub has
occurred and is continuing.

Section 5.5. CAPITAL STOCK OF PURCHASER AND MERGER SUB.

(a) Immediately prior to the Effective Time, (i) the
authorized Capital Stock of Purchaser will be comprised of (A) 25,000,000
shares of Purchaser Common Stock and (B) 3,000,000 shares of preferred
stock, $.0001 par value per share, (ii) before giving effect to the
Merger and the merger transactions contemplated by the Other Agreements,
(A) the number of shares of Purchaser Common Stock then issued and
outstanding, will be as set forth in the Registration Statement when it
becomes effective under the Securities Act, (B) no shares of the
Purchaser preferred stock then will be issued or outstanding, and
(C) Purchaser will have authorized and reserved for issuance, pursuant to
Other Compensation Plans or the exercise of Derivative Securities the
number of shares of Purchaser Common Stock set forth in the Registration
Statement when it becomes effective under the Securities Act.

(b) The authorized Capital Stock of Merger Sub is comprised
of 1,000 shares of Merger Sub Common Stock, all of which shares are
issued, outstanding and owned, of record and beneficially, by Purchaser.

(c) All shares of Purchaser Common Stock and Merger Sub
Common Stock outstanding immediately prior to the Effective Time, and all
shares of Purchaser Common Stock and Purchaser Preferred Stock to be
issued pursuant to Section 2.4, when issued, will have been duly
authorized and validly issued in accordance with the DGCL and their
issuer's Charter Documents, and will be fully paid and nonassessable.
None of the shares of Purchaser Stock to be issued pursuant to
Section 2.4 will, when issued, have been issued in breach or violation of
(i) any applicable statutory or contractual preemptive rights, or any
other rights of any kind (including any rights of first offer or
refusal), of any Person or (ii) the terms of any of its Derivative
Securities then outstanding.

Section 5.6. SUBSIDIARIES. Immediately prior to the IPO Closing Date,
(a) Purchaser will have no Subsidiaries other than as described in the Private
Placement Memorandum, (b) Merger Sub will have no Subsidiaries, and (c) neither
Purchaser nor Merger Sub will own, of record or beneficially, directly or
indirectly through any Person or otherwise (except pursuant hereto or to the
Other Agreements), any Capital Stock or Derivative Securities of any Entity not
described in this Section 5.6 as a Subsidiary of Purchaser (in the case of
Purchaser) or any Entity (in the case of Merger Sub).

Section 5.7. LIABILITIES. Except as disclosed in the Private
Placement Memorandum, neither Purchaser nor Merger Sub has any material
liabilities of any kind other than those incurred in connection with this
Agreement and the Other Agreements and the transactions contemplated hereby and
thereby, including the IPO.

<PAGE>

Section 5.8. COMPLIANCE WITH LAWS; NO LITIGATION. Each of Purchaser
and Merger Sub is in compliance with all Governmental Requirements applicable to
it, and no Litigation is pending or, to the knowledge of Purchaser, threatened
to which Purchaser or Merger Sub is or may become a party which questions or
involves the validity or enforceability of any obligation of Purchaser or Merger
Sub under any Transaction Document, or which seeks (or reasonably may be
expected to seek) (a) to prevent or delay consummation by Purchaser or Merger
Sub of the transactions contemplated by this Agreement to be consummated by
Purchaser or Merger Sub, as the case may be, or (b) Damages from Purchaser or
Merger Sub in connection with any such consummation.

Section 5.9. NO BROKERS. Neither Purchaser nor Merger Sub has
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby, employed any broker, finder or agent, or agreed to pay or
incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation, other than fees payable to
Benchmark Equity Group, Inc. as disclosed in the Private Placement Memorandum or
the Registration Statement.

Section 5.10. PRIVATE PLACEMENT MEMORANDUM. At the date hereof, the
Private Placement Memorandum (other than the historical financial statements,
including the notes thereto, of the Founding Companies (other than the Company)
and the historical information contained therein respecting the Company and the
Stockholder, to which this Section 5.10 does not apply) does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
the light of the circumstances under which those statements are made.

Section 5.11. REGISTRATION AND OTHER RIGHTS. Except as set forth in
the Private Placement Memorandum or the Registration Statement, at the Effective
Time Purchaser will have no (a) commitment to any Person to cause securities of
Purchaser to be registered under the Securities Act or the securities laws of
any state, (b) outstanding Derivative Securities, or (c) outstanding agreements
or commitments of any character committing Purchaser to issue or acquire shares
of its Capital Stock or Derivative Securities.

Section 5.12. COUNSEL. Purchaser and Merger Sub have been represented
by attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of Counsel for the Company, the Stockholder and the MTM Stockholders, with
respect to this Agreement, the transactions contemplated hereby and any actual
or potential consequences, including any actual or potential Tax consequences,
hereof and thereof on Purchaser and Merger Sub, except the opinion of Counsel
for the Company, the Stockholder and the MTM Stockholders to be delivered
pursuant to Section 7.4(a)(ii)(B).

<PAGE>

ARTICLE VI

COVENANTS EXTENDING TO THE EFFECTIVE TIME

Section 6.1. ACCESS AND COOPERATION; DUE DILIGENCE.

(a) From the date of this Agreement until the IPO Closing
Date, the Company, for the benefit of Purchaser and each Other Founding
Company, will (i) afford to the Representatives of Purchaser and each
Other Founding Company reasonable access to all the key employees, sites,
properties, books and records of the Company, (ii) provide Purchaser with
such additional financial and operating data and other information
relating to the business and properties of the Company as Purchaser or
any Other Founding Company may from time to time reasonably request, and
(iii) cooperate with Purchaser and each Other Founding Company and their
respective Representatives in the preparation of any documents or other
material which may be required in connection with any Transaction
Documents or any Other Transaction Documents. Purchaser and Merger Sub
agree, for the benefit of the Company, the Stockholder and the MTM
Stockholders, that they will treat all Confidential Information of the
Company, the Stockholder and each MTM Stockholder obtained by them in
connection with the negotiation and performance of this Agreement as
confidential in accordance with the provisions of Section 12.1. In
addition, Purchaser will cause each Other Founding Company to enter into
a provision identical to this Section 6.1 to require each Other Founding
Company to (i) provide to the Company such information relating to such
Other Founding Company as the Company may reasonably request in relation
to the transactions contemplated by this Agreement and the Other
Agreements and (ii) keep confidential any Confidential Information
respecting the Company obtained by that Other Founding Company.

(b) Each of the Company, the Stockholder and the MTM
Stockholders will use its best efforts to secure, as soon as practicable
after the execution of this Agreement, all approvals or consents of third
Persons as may be necessary to consummate the transactions contemplated
hereby.

(c) From the date hereof until the IPO Closing Date,
Purchaser and Merger Sub will (i) afford to the Representatives of the
Company, the Stockholder and the MTM Stockholders access to all sites,
properties, books and records of Purchaser and Merger Sub, (ii) provide
the Company with such additional financial and operating data and other
information relating to the business and properties of Purchaser and
Merger Sub as the Company, the Stockholder or any MTM Stockholder may
from time to time reasonably request, and (iii) cooperate with the
Company, the Stockholder and the MTM Stockholders and their respective
Representatives in the preparation of any documents or other material
which may be required in connection with any Transaction Documents. Each
MTM Stockholder, the Stockholder and the Company agree, for the benefit
of Purchaser and each Other Founding Company, that they will treat all
Confidential Information of Purchaser,

<PAGE>

Merger Sub and the Other Founding Companies obtained by them in
connection with the negotiation and performance of this Agreement or the
due diligence investigations conducted with respect to each Other
Founding Company as confidential in accordance with the provisions of
Section 12.1.

(d) If this Agreement is terminated pursuant to Section 11.1,
(i) Purchaser promptly will return all written Confidential Information
of the Company, the Stockholder and each MTM Stockholder it then
possesses to the Company, and (ii) the Company, the Stockholder and each
MTM Stockholder promptly will return all written Confidential Information
of Purchaser, Merger Sub and the Other Founding Companies it then
possesses to Purchaser.

Section 6.2. CONDUCT OF BUSINESS PENDING CLOSING. From the date of
this Agreement until the Effective Time, the Company will, except as and only to
the extent set forth in SCHEDULE 6.2:

(a) carry on its businesses in substantially the same manner
as it has before, and not introduce any material new method of
management, operation or accounting;

(b) maintain its properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;

(d) keep in full force and effect, without interruption, all
its present insurance policies or other comparable insurance coverage;

(e) use reasonable commercial efforts to (i) maintain and
preserve its business organization intact, (ii) retain its present
employees, and (iii) maintain its relationships with suppliers,
subcontractors, customers and others having business relations with it;

(f) comply with all applicable Governmental Requirements; and

(g) except as required or expressly permitted by this
Agreement, maintain the instruments and agreements governing its
outstanding Indebtedness and leases on their present terms and not enter
into new or amended Indebtedness (except the Allowable New Indebtedness)
or lease instruments or agreements involving amounts over $5,000 in any
case or $25,000 in the aggregate, except for Service Contracts with
Company customers for providing long distance service in accordance with
current practice, without the prior written consent of Purchaser (which
consent will not be unreasonably withheld).

<PAGE>

Section 6.3. PROHIBITED ACTIVITIES. From the date of this Agreement
until the Effective Time, without the prior written consent of Purchaser (which
will not be unreasonably withheld) or unless as required or expressly permitted
by this Agreement, the Company will not:

(a) make any change in its Charter Documents;

(b) issue any of its Capital Stock or issue or otherwise
create any of its Derivative Securities;

(c) make any Restricted Payment, other than as provided in
this Section 6.3 and except for distributions or dividends of cash by the
Company to the Stockholder which, including the proceeds of the Allowable
New Indebtedness, in the aggregate do not exceed $6,500,000 and which do
not cause the Working Capital to be less than the Minimum Working Capital
Amount on the Closing Date;

(d) make any investments (other than Permitted Investments)
in the Capital Stock, Derivative Securities or Indebtedness of any
Person;

(e) enter into any contract or commitment (other than a
Services Contract with a Company customer for providing long distance
service in accordance with current practice) or incur or agree to incur
any liability or make any capital expenditures in a single transaction or
a series of related transactions involving an aggregate amount of more
than $25,000 otherwise than in the ordinary course of its business and
consistent with its past practice;

(f) increase or commit or promise to increase the Cash
Compensation payable or to become payable to any officer, director,
stockholder, employee or agent, consultant or independent contractor of
the Company or make any discretionary bonus or management fee payment to
any such Person, except bonuses or salary increases to employees (other
than the MTM Stockholders or their Immediate Family Members), and bonuses
to the MTM Stockholders (in their capacities as employees of the Company)
as a result of the current calendar year performance of the Company, at
the times and in the amounts consistent with its past practice, which
bonuses do not cause the Working Capital to be less than the Minimum
Working Capital Amount;

(g) create or assume any Liens (other than Permitted Liens)
upon any of its assets or properties, whether now owned or hereafter
acquired, except for purchase money Liens incurred in connection with the
acquisition of equipment with an aggregate cost not in excess of $10,000
and necessary or desirable for the conduct of the business of the
Company;

(h) adopt, establish, amend or terminate any ERISA Employee
Benefit Plan, or any Other Compensation Plan or Employee Policies and
Procedures, or take any

<PAGE>

discretionary action, or omit to take any contractually required action,
if that action or omission could either (i) deplete the assets of any
ERISA Employee Benefit Plan or any Other Compensation Plan or (ii)
increase the liabilities or obligations under any such plan;

(i) sell, assign, lease or otherwise transfer or dispose of
any of its owned or leased Property, Plant or Equipment otherwise than in
the ordinary course of its business and consistent with its past
practice;

(j) negotiate for the acquisition of any business or the
start-up of any new business;

(k) merge, consolidate or effect a share exchange with, or
agree to merge, consolidate or effect a share exchange with, any other
Entity;

(l) waive any of its material rights or claims, provided that
it may negotiate and adjust bills in the course of good faith disputes
with customers in a manner consistent with past practice;

(m) commit a material breach of or amend materially or
terminate any Material Agreement of the Company or any of its
Governmental Approvals;

(n) enter into any other transaction (i) outside the ordinary
course of its business and not consistent with its past practice or
(ii) prohibited hereby; or

(o) settle, or pay any amounts in settlement of, any
Litigation; provided that the Company may pay Agreed Settlement Costs if
the aggregate Recent Operating Costs at the time of payment thereof are
positive and the payment of such Agreed Settlement Costs will not cause
such aggregate Recent Operating Profits to be negative.

Section 6.4. NO SHOP: RELEASE OF DIRECTORS.

(a) Each of the Company, the Stockholder and the MTM
Stockholders agrees that, from the date of this Agreement until the
Effective Time, neither the Company, the Stockholder nor such MTM
Stockholder, nor any of their respective officers and directors shall,
and the Company, the Stockholder and each MTM Stockholder will direct and
use their best efforts to cause each of their respective Representatives
not to, initiate, solicit or encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer
(including any proposal or offer to the Stockholder or the MTM
Stockholders) with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of, the Company or the
Stockholder (any such proposal or offer being herein called an
"ACQUISITION PROPOSAL") or engage in any activities, discussions or
negotiations concerning, or provide any Confidential Information
respecting, the Company, any Other

<PAGE>

Founding Company or Purchaser to, or have any discussions with, any
Person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. The
Company, the Stockholder and each MTM Stockholder will: (i) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Persons previously conducted with respect to any
of the foregoing, and each will take the steps necessary to inform the
Persons referred to in the first sentence of this Section 6.4(a) of the
obligations undertaken in this Section 6.4(a); and (ii) notify Purchaser
immediately if any such inquiries or proposals are received by, any such
information is requested from or any such discussions or negotiations are
sought to be initiated or continued with the Company, the Stockholder or
any MTM Stockholder.

(b) Each of the Company, the Stockholder and the MTM
Stockholders hereby (i) waives every right, if any, the Governmental
Requirements of the Company's Organization State afford the Company, the
Stockholder or the MTM Stockholders to require the Company's directors,
in the exercise of their fiduciary duties in their capacity as such, to
engage in any of the activities prohibited by this Section 6.4 and
(ii) releases each such person from any and all liability he might
otherwise have to the Company, the Stockholder or any MTM Stockholders
but for this release.

Section 6.5. NOTIFICATION OF CERTAIN MATTERS. The Stockholder, the
MTM Stockholders and the Company shall give prompt notice to Purchaser of
(a) the existence or occurrence of each condition or state of facts which
becomes known to them and which will or reasonably could be expected to cause
any representation or warranty of the Company, the Stockholder or any MTM
Stockholder contained herein to be untrue or incorrect in any material respect
at or prior to the Closing or on the IPO Closing Date and (b) any material
failure of the Stockholder, any MTM Stockholder or the Company to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
that Person hereunder. Purchaser shall give prompt notice to the Company of
(a) the existence or occurrence of each condition or state of facts which will
or reasonably could be expected to cause any representation or warranty of
Purchaser or Merger Sub contained herein to be untrue or inaccurate at or prior
to the Closing or on the IPO Closing Date and (b) any material failure of
Purchaser or Merger Sub to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of any
notice pursuant to this Section 6.5 shall not be deemed to (a) modify the
representations or warranties herein of the party delivering that notice, or any
other party, which modification may be made only pursuant to Section 6.6,
(b) modify the conditions set forth in Article VII or (c) limit or otherwise
affect the remedies available hereunder to the party receiving that notice.

Section 6.6. SUPPLEMENTAL INFORMATION. Each of the Company, the
Stockholder and the MTM Stockholders agrees that, with respect to its
representations and warranties contained in this Agreement, it will have the
continuing obligation until the Closing to provide Purchaser promptly with such
additional supplemental Information (collectively, the "SUPPLEMENTAL
INFORMATION"), in the form of (a) amendments to then existing Schedules or
(b) additional Schedules, as would be necessary, in the light of the
circumstances, conditions, events and states of facts then known to the

<PAGE>

Company, the Stockholder or any MTM Stockholder, to make each of those
representations and warranties true and correct as of the Closing and on the
IPO Closing Date. For purposes only of determining whether the conditions to
the obligations of Purchaser and Merger Sub which are specified in Sections
7.4(a)(i) and 7.4(b)(ii) have been satisfied, and not for any purpose under
Article IX, the Schedules as of the Closing and on the IPO Closing Date shall
be deemed to be the Schedules as of the date hereof as amended or
supplemented by the Supplemental Information provided to Purchaser prior to
the Closing pursuant to this Section 6.6; PROVIDED, HOWEVER, that if the
Supplemental Information so provided discloses the existence of
circumstances, conditions, events or states of facts which, in any
combination thereof, (a) have had a Material Adverse Effect on the Company
which was not reflected in the determination of the Merger Consideration or,
in the judgment of Purchaser (which shall be conclusive for purposes of this
Section 6.6 and Article XI, but not for any purpose of Article IX), (b) are
having or will have a Material Adverse Effect on the Company or the Surviving
Corporation, as the case may be, Purchaser will be entitled to terminate this
Agreement pursuant to Section 11.1(a)(iv) and treat as Purchaser Indemnified
Losses for all purposes of Article IX (which treatment will not prejudice the
right of the Stockholder or any MTM Stockholder under Article IX to contest
Damage Claims made by Purchaser in respect of those Purchaser Indemnified
Losses) all Damages to the Company or the Surviving Corporation which are
attributable to the circumstances, conditions, events and states of facts
first disclosed herein after the date hereof in the Supplemental Information;
and PROVIDED FURTHER, HOWEVER, that if the circumstances, conditions, events
or states of facts disclosed in the Supplemental Information and having or
judged to have in the future such a Material Adverse Effect (A) have not
resulted from a breach by the Company, the Stockholder or the MTM
Stockholders of any of their covenants set forth in Article VI or elsewhere
in this Agreement and (B) do not indicate that any representation or warranty
of the MTM Stockholders, the Stockholder and the Company made in Articles III
and IV shall have been untrue or inaccurate at the date of this Agreement,
then Purchaser shall only be entitled to terminate this Agreement pursuant to
Section 11.1(a)(iv), and shall not be entitled to treat as Purchaser
Indemnified Losses any such Damages to the Company or the Surviving
Corporation. Purchaser will provide the Company with copies of the
Registration Statement, including all pre-effective amendments thereto,
promptly after the filing thereof with the SEC under the Securities Act.

Section 6.7. COOPERATION IN CONNECTION WITH THE IPO. The Company, the
Stockholder and the MTM Stockholders will (a) provide Purchaser and the
Underwriter with all the Information concerning the Company, the Stockholder or
any of the MTM Stockholders which is reasonably requested by Purchaser and the
Underwriter from time to time in connection with effecting the IPO and
(b) cooperate with Purchaser and the Underwriter and their respective
Representatives in the preparation and amendment of the Registration Statement
(including the Financial Statements) and in responding to the comments of the
SEC staff, if any, with respect thereto. The Company, the Stockholder and each
MTM Stockholder agree promptly to (a) advise Purchaser if, at any time during
the period in which a prospectus relating to the IPO is required to be delivered
under the Securities Act, any information contained in the then current
Registration Statement prospectus concerning the Company, the Stockholder or the
MTM Stockholders becomes incorrect or

<PAGE>

incomplete in any material respect and (b) provide Purchaser with the
information needed to correct or complete that information.

Section 6.8. HSR ACT MATTERS. If Purchaser shall determine that
filings under the HSR Act are necessary or appropriate in connection with the
effectuation of the Merger or the consummation of the acquisitions contemplated
by the Other Agreements, and advises the Company in writing of that
determination, the Company promptly will compile and file under the HSR Act such
information respecting it as the HSR Act requires of an Entity to be acquired,
and the expiration or termination of the applicable waiting period and any
extension thereof under the HSR Act shall be deemed a condition precedent set
forth in Section 7.2(b).

ARTICLE VII

THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION

Section 7.1. THE CLOSING AND CERTAIN CONDITIONS. On or before the IPO
Pricing Date, the Parties will take all actions necessary to (i) effect the
Merger on the IPO Closing Date (including, as permitted by the DGCL, (A) the
execution of a Certificate of Merger meeting the requirements of DGCL and
providing that the Merger will become effective on the IPO Closing Date and
(B) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware), (ii) verify the existence and ownership of the certificates
evidencing the Company Common Stock to be exchanged for the Merger Consideration
pursuant to Section 2.5, and (iii) satisfy the document delivery requirements to
which the obligations of the Parties to effect the Merger and the other
transactions contemplated hereby are conditioned by the provisions of this
Article VII (all those actions collectively being the "CLOSING"). The Closing
will take place at the offices of Porter & Hedges, L.L.P., 700 Louisiana,
Houston, Texas at 10:00 a.m., Houston time, or at such later time on the IPO
Pricing Date as Purchaser shall specify by written notice to the Company. The
actions taken at the Closing will not include the completion of either the
Merger or the delivery of the Company Common Stock or the Merger Consideration
pursuant to Section 2.5. Instead, on the IPO Closing Date, the Certificate of
Merger will become effective pursuant to Section 2.2, and all transactions
contemplated by this Agreement to be closed or completed on or before the IPO
Closing Date, including the surrender of the Company Common Stock in exchange
for the Merger Consideration will be closed or completed, as the case may be.
During the period from the Closing to the IPO Closing Date, this Agreement may
be terminated by the parties only pursuant to Section 11.1 (b)(i).

<PAGE>

Section 7.2. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.

(a) The obligation of each Party to take the actions
contemplated to be taken by that Party at the Closing is subject to the
satisfaction or waiver of each of the following conditions on or before
the date of the Closing:

(i) NO LITIGATION. No Litigation shall be pending on
the date of the Closing to restrain, prohibit or otherwise
interfere with, or to obtain material damages or other relief from
Purchaser or the Surviving Corporation in connection with, the
consummation of the Merger or the IPO;

(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals
(other than the acceptance for filing of the Certificate of
Merger) required to be obtained by any of the Company, Purchaser
and Merger Sub in connection with the consummation of the Merger
and the IPO shall have been obtained; and

(iii) THE REGISTRATION STATEMENT. (A) The Registration
Statement shall have been declared effective under the
Securities Act by the SEC; (B) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued by the SEC, and the SEC shall not have initiated or
threatened to initiate Litigation for that purpose; (C) the
Underwriter shall have agreed in writing (the "UNDERWRITING
AGREEMENT," which term includes the related pricing agreement,
if any) to purchase from Purchaser on a firm commitment basis
for resale to the public initially at the IPO Price, subject to
the conditions set forth in the Underwriting Agreement, such
number of shares of Purchaser Common Stock covered by the
Registration Statement; and (D) neither the Registration
Statement nor the Final Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under
which those statements are made.

(b) The obligation of each Party hereto with respect to the
actions to be taken on the IPO Closing Date is subject to the
satisfaction on that date of each of the following conditions:

(i) NO LITIGATION. No Litigation shall be pending on
the IPO Closing Date to restrain, prohibit or otherwise interfere
with, or to obtain material damages or other relief from Purchaser
or the Surviving Corporation in connection with, the consummation
of the Merger or the IPO;

(ii) GOVERNMENTAL APPROVALS. All Governmental Approvals
required to be obtained by the Company (including, without
limitation, the Governmental Approvals shown on SCHEDULE 4.3 for
which consents are required), Purchaser and

<PAGE>

Merger Sub in connection with the consummation of the Merger and
the IPO shall have been obtained;

(iii) REGISTRATION STATEMENT AND FINAL PROSPECTUS.
Neither the Registration Statement, in its form at the Effective
Time, nor the Final Prospectus shall contain any untrue statement
of a material fact or omit to state any material fact necessary in
order to make the statements contained therein not materially
misleading in the light of the circumstances under which those
statements are made; and

(iv) REGISTRATION RIGHTS AGREEMENT. The Stockholder and
the Purchaser shall have entered into the Registration Rights
Agreement in the form of EXHIBIT 7.2 hereto.

Section 7.3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, THE
STOCKHOLDER AND THE MTM STOCKHOLDERS. The obligations of the Company, the
Stockholder and each MTM Stockholder with respect to actions to be taken by them
at or before the Closing and the actions to be taken on the IPO Closing Date are
subject to the satisfaction, or the written waiver by the Company on behalf of
itself, the Stockholder and each MTM Stockholder pursuant to Section 12.5 on or
before the date of the Closing of, in addition to the conditions specified in
Section 7.2(a) or 7.2(b), as applicable, all the following conditions:

(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of Purchaser and Merger Sub in
Article V shall be true and correct in all material respects as of
the Closing as though made at that time;

(ii) DELIVERY OF DOCUMENTS. Purchaser shall have
delivered to the Company, with copies for each Stockholder:

(A) a Purchaser officer's certificate respecting
the representations and warranties of Purchaser and
Merger Sub in Article V and compliance with the covenants
of Purchaser and Merger Sub in Article VI and in the form
thereof attached as an exhibit to the Closing Memorandum;

(B) opinions dated the IPO Closing Date and
addressed to the Company and the Stockholder from Counsel
for Purchaser and Merger Sub substantially in the form
thereof attached as exhibits hereto;

<PAGE>

respecting the Transaction Documents and the transactions
contemplated thereby; (c) a certificate respecting the
incumbency and true signatures of the Purchaser and Merger
Sub officers who execute the Transaction Documents on
behalf of Purchaser and Merger Sub, respectively; (d) a
specimen certificate evidencing shares of Purchaser Common
Stock and a specimen certificate evidencing shares of
Purchaser Preferred Stock; (e) the prospectus included in
the Registration Statement when it became effective; and
(f) a facsimile copy of the Underwriting Agreement as
executed and delivered by Purchaser and the Underwriter;
and

(D) a certificate, dated as of a Current Date,
duly issued by the Secretary of State of the State of
Delaware, showing Purchaser to be in good standing and
authorized to do business in that State.

Section 7.4. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND MERGER
SUB.

(a) The obligations of Purchaser and Merger Sub with respect
to actions to be taken by them at or before the Closing are subject to
the satisfaction on or before the date of the Closing of, in addition to
the conditions specified in Section 7.2 (a) and Section 7.2(b), all the
following conditions:

(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of the Stockholder, each MTM
Stockholder and the Company in Articles III and IV shall be true
and correct in all material respects as of the Closing as though
made at that time;

(ii) DELIVERY OF DOCUMENTS. The Stockholder, the MTM
Stockholders and the Company shall have delivered to Purchaser:

(A) a Company officer's certificate, signed by a
Responsible Officer of the Company, a Stockholder
officer's certificate, signed by a Responsible Officer of
the Stockholder, and a certificate from each MTM
Stockholder, signed by such MTM Stockholder, in each case
respecting the representations and warranties of the
Stockholder, such MTM Stockholder and the Company in
Articles III and IV and compliance with the covenants of
the Stockholder, such MTM Stockholder and the Company in
Article VI and in the form thereof attached as an exhibit
to the Closing Memorandum;

(B) opinions dated the IPO Closing Date and
addressed to Purchaser from Counsel for the Company, the
Stockholder and the MTM Stockholders substantially in the
form thereof attached as exhibits hereto;

<PAGE>

(C) a certificate of the secretary or any
assistant secretary of the Company in the form thereof
(without attachments thereto) attached as an exhibit to
the Closing Memorandum and respecting, and to which is
attached, (a) the Charter Documents of the Company;
(b) the resolutions of the board of directors of the
Company respecting the Transaction Documents and the
transactions contemplated thereby; and (c) a certificate
respecting the incumbency and true signatures of the
Responsible Officers who execute the Transaction
Documents on behalf of the Company;

(D) from the Stockholder and each MTM
Stockholder, a General Release duly executed and
delivered by the Stockholder or that MTM Stockholder; and

(E) for the Company, a certificate, dated as of a
Current Date, duly issued by the appropriate Governmental
Authorities in its Organization State and, unless waived
by Purchaser, in each other jurisdiction listed for it in
SCHEDULE 4.2 showing it to be in good standing and
authorized to do business in its Organization State and
those other jurisdictions and that all state franchise
and/or income tax returns and taxes due by it in its
Organization State and those other jurisdictions for all
periods prior to the Closing have been filed and paid;

(iii) TERMINATION OF PLAN. The Company shall have
terminated the AXCES, Inc. 401(k) Plan; and

(iv) WORKING CAPITAL. The Working Capital shall not be
less than the Minimum Working Capital Amount.

(b) The obligations of Purchaser and Merger Sub with respect
to the actions to be taken on the IPO Closing Date are subject to the
satisfaction on that date of (i) all the conditions set forth in Section
7.02(b), if any, and (ii) the condition that all the representations and
warranties of the Stockholder, the MTM Stockholders and the Company in
Articles III and IV shall be true and correct in all material respects as
of the IPO Closing Date as though made on that date.

ARTICLE VIII

COVENANTS FOLLOWING THE EFFECTIVE TIME

Section 8.1. OF EACH PARTY OTHER THAN THE COMPANY. From and after the
Effective Time, subject to the waiver provisions of SCHEDULE 11.5, each Party
(other than the Company) will comply with the following covenants.

<PAGE>

(a) DISCLOSURE. If, subsequent to the IPO Pricing Date and
prior to the 25th day after the date of the Final Prospectus, the
Stockholder becomes aware of any fact or circumstance which would change
a representation or warranty of the Company or the Stockholder in this
Agreement or would affect any document delivered pursuant hereto in any
material respect, Stockholder will promptly give notice of that fact or
circumstance to Purchaser.

(b) PREPARATION AND FILING OF TAX RETURNS. Each party hereto
will, and will cause its Affiliates to, provide to each of the other
parties hereto such cooperation and information as any of them reasonably
may request in filing any Return, amended Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes or in
conducting any audit or other proceeding in respect of Taxes. This
cooperation and information shall include providing copies of all
relevant portions of the relevant Returns, together with such
accompanying Sections and work papers, documents relating to rulings or
other determinations by Taxing Authorities and records concerning the
ownership and Tax bases of property as are relevant which a party
possesses. Each party will make its employees, if any, reasonably
available on a mutually convenient basis at its cost to provide an
explanation of any documents or information so provided. Subject to the
preceding sentence, each party required to file Returns pursuant to this
Agreement shall bear all costs attributable to the preparation and filing
of those Returns.

Section 8.2. TAX LIABILITY. Following the Closing Date, the Surviving
Corporation shall, and Purchaser shall cause the Surviving Corporation to, pay
to the Stockholder and the MTM Stockholders the amount of the Tax Liability and
the reasonable fees and actual expenses of and disbursements by ("TAX EXPERT
COSTS") attorneys, accountants, financial advisors or other consultants engaged
to provide advice, documentation or representation relating to methods to
decrease or defer any Tax Liability ("TAX EXPERTS"), not to exceed in the
aggregate $1,600,000 for the Tax Liability and the Tax Expert Costs. Such
payments shall be payable on written demand, not to exceed in the aggregate
$400,000 in any calendar quarter, which written demand, with respect to any
amounts in excess of $800,000 in the aggregate, shall be accompanied and
supported by (a) documentation of corporate or personal estimated income tax
deposits, (b) signed corporate or personal income tax returns or extension
requests, or (c) documentation of Tax Expert Costs reasonably acceptable to
Purchaser. If the amount of the Tax Liability plus the Tax Expert Costs exceeds
$1,600,000 in the aggregate (such excess amount being "EXCESS TAX OBLIGATIONS"),
the Stockholder and the MTM Stockholders, severally with respect to each other
but jointly and severally with the Stockholder, shall assume and be liable to
pay the Excess Tax Obligations. If at any time while the Surviving Corporation
is obligated to pay any amounts to the Stockholder or any MTM Stockholder
pursuant to this Section 8.2 Purchaser's Tax Liability Reserve Amount is less
than the excess, if any, of (y) $1,600,000 over (z) the total Tax Liability and
Tax Expert Costs previously paid to the Stockholder and the MTM Stockholders by
the Surviving Corporation, the Stockholder shall have the option to require that
Purchaser obtain a letter of credit from a commercial bank or other financial
institution reasonably acceptable to the Stockholder in the amount of such
deficiency and which may be drawn on by the Stockholder in the event the Company
fails to pay timely any Tax Liability or Deferred

<PAGE>

Tax Expert Costs for which it is liable hereunder. Notwithstanding any
provision herein to the contrary, in no event shall the Surviving Corporation
or the Purchaser (i) be liable for any federal or state income tax due on
income reportable for tax purposes and attributable to operations of the
Company prior to January 1, 1999 ("PRIOR TAX LIABILITY"), or (ii) be
obligated to take any position, including on any tax return or otherwise,
based on any Tax Expert advice or opinion not satisfactory to the Purchaser
in its sole, absolute and unfettered discretion.

ARTICLE IX

INDEMNIFICATION

Section 9.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the Effective Time
notwithstanding any investigation at any time made by or on behalf of any party
hereto or the provision of any Supplemental Information pursuant to Section 6.6,
provided that (a) the representations and warranties of the Stockholder and the
MTM Stockholders in this Agreement and in any certificate delivered pursuant
hereto will survive for a period of two years from the Effective Time; and
(b) the representations and warranties of Purchaser, Merger Sub and the Company
in this Agreement and in any certificate delivered pursuant hereto will
terminate and expire at the Effective Time. After a representation and warranty
has terminated and expired, no indemnification will or may be sought on the
basis of that representation and warranty by any Person who would have been
entitled pursuant to this Article IX to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that, in the case of each representation and warranty that will terminate and
expire as provided in this Section 9.1, no claim presented in writing for
indemnification pursuant to this Article IX on the basis of that representation
and warranty prior to its termination and expiration will be affected in any way
by the termination and expiration.

Section 9.2. INDEMNIFICATION OF PURCHASER INDEMNIFIED PARTIES.

(a) Subject to the applicable provisions of Sections 9.1 and
9.6, the Stockholder and each MTM Stockholder, jointly and severally,
except that, with respect to the indemnity in clause (v) below, each MTM
Stockholder shall be joint and several with the Stockholder and several
among themselves as to such MTM Stockholder's proportionate part of any
Excess Tax Obligations and any Prior Tax Liability, covenants and agrees
that it will indemnify each Purchaser Indemnified Party against, and hold
each Purchaser Indemnified Party harmless from and in respect of, all
Damages that arise from, are based on or relate or otherwise are
attributable to (i) any breach of the representations and warranties of
the Stockholder or the Company set forth herein or in certificates
delivered in connection herewith, (ii) any nonfulfillment of any covenant
or agreement on the part of the Stockholder or the Company under this
Agreement, (iii) any liability under the Securities Act, the Exchange Act
or other applicable Governmental Requirement which arises out of or is
based on (A) any untrue statement of a material fact relating to the
Stockholder and the Company,

<PAGE>

or either of them, which is (1) provided to Purchaser or its counsel by
the Company or the Stockholder and (2) contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or
supplement thereto, or (B) any omission or alleged omission to state
therein a material fact relating to the Stockholder and the Company, or
either of them, required to be stated therein or necessary to make the
statements therein not misleading, and not provided to Purchaser or its
counsel by the Company or the Stockholder, (iv) the litigation, claims
and other matters described on SCHEDULE 4.12 (except to the extent such
Damages constitute fees of, expenses of and disbursements, by attorneys,
consultants, experts or other Representatives and Litigation costs), or
(v) the amount of any Excess Tax Obligations and any Prior Tax Liability
(each such Damage Claim and each Damage Claim described in Section
9.02(b) being a "PURCHASER INDEMNIFIED LOSS").

(b) Subject to the applicable provisions of Sections 9.1 and
9.6, each MTM Stockholder, severally and not jointly with any other
Person, covenants and agrees that he will indemnify each Purchaser
Indemnified Party against, and hold each Purchaser Indemnified Party
harmless from and in respect of, all Damage Claims that arise from, are
based on or relate or otherwise are attributable to (i) any breach of the
representations and warranties of that MTM Stockholder herein or in any
certificates delivered in connection herewith, (ii) any nonfulfillment of
any several, and not joint and several, agreement on the part of that MTM
Stockholder under this Agreement or (iii) any liability under the
Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement
or alleged untrue statement of a material fact relating solely to that
MTM Stockholder which is (1) provided to Purchaser or its counsel by that
MTM Stockholder and (2) contained in any preliminary prospectus relating
to the IPO, the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or (B) any
omission or alleged omission to state therein a material fact relating
solely to that MTM Stockholder required to be stated therein or necessary
to make the statements therein not misleading, and not provided to
Purchaser or its counsel by that MTM Stockholder.

Section 9.3. INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
Purchaser covenants and agrees that it will indemnify each Stockholder
Indemnified Party against, and hold each Stockholder Indemnified Party harmless
from and in respect of, all Damage Claims (that arise from, are based on or
relate or otherwise are attributable to (i) any breach by Purchaser or Merger
Sub of their representations and warranties set forth herein or in their
certificates delivered to the Company or the Stockholders in connection
herewith, (ii) any nonfulfillment of any covenant or agreement on the part of
Purchaser or Merger Sub under this Agreement (each such Damage Claim being a
"STOCKHOLDER INDEMNIFIED LOSS"); (iii) any liability under the Securities Act,
the Exchange Act or other applicable Governmental Requirement which arises out
of or is based on (A) any untrue statement or alleged untrue statement of a
material fact relating to Purchaser, Merger Sub or any of the Other Founding
Companies contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or

<PAGE>

any amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating to Purchaser, Merger Sub
or any of the Other Founding Companies, or any of them, required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made or (iv) the Tax
Liability plus the Tax Liability Costs to the extent that the amount thereof
does not exceed $1,600,000 in the aggregate.

Section 9.4. CONDITIONS OF INDEMNIFICATION.

(a) All claims for indemnification under this Agreement shall
be asserted and resolved as provided in this Section 9.4.

(b) A party claiming indemnification under this Agreement (an
"INDEMNIFIED PARTY") shall promptly (i) notify the party from whom
indemnification is sought (the "INDEMNIFYING PARTY") of any third-party
claim or claims asserted against the Indemnified Party ("THIRD PARTY
CLAIM") that could give rise to a right of indemnification under this
Agreement and (ii) transmit to the Indemnifying Party a written notice
("CLAIM NOTICE") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to the claim (if
any), an estimate of the amount of damages attributable to the Third
Party Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of the claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement.
Except as set forth in Section 9.2, the failure to promptly deliver a
Claim Notice shall not relieve the Indemnifying Party of its obligations
to the Indemnified Party with respect to the related Third Party Claim
except to the extent that the resulting delay is materially prejudicial
to the defense of the claim. Within 15 days after receipt of any Claim
Notice (the "ELECTION PERIOD"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article IX with
respect to the Third Party Claim and (ii) if the Indemnifying Party does
not dispute its potential liability to the Indemnified Party with respect
to the Third Party Claim, whether the Indemnifying Party desires, at the
sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against the Third Party Claim.

<PAGE>

otherwise restrict in any way, any Indemnified Party or any Affiliate of
any Indemnified Party without the prior consent of that Indemnified Party
(which consent may be withheld in the reasonable discretion of that
Indemnified Party). The Indemnified Party is hereby authorized, at the
sole cost and expense of the Indemnifying Party if found liable
hereunder, to file, during the Election Period, any motion, answer or
other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party.
The Indemnified Party may participate in, but not control, any defense or
settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 9.4(c) and will bear its own costs and expenses
with respect to its participation; PROVIDED, HOWEVER, that if the named
parties to any such action (including any impleaded parties) include both
the Indemnifying Party and the Indemnified Party, and the Indemnified
Party has been advised in writing by counsel that there may be one or
more legal defenses available to it which are different from or
additional to those available to the Indemnifying Party, then the
Indemnified Party may employ separate counsel at the expense of the
Indemnifying Party, and, on its written notification of that employment,
the Indemnifying Party shall not have the right to assume or continue the
defense of the action on behalf of the Indemnified Party.

(d) If the Indemnifying Party (i) within the Election Period
(A) disputes its potential liability to the Indemnified Party under this
Article IX, (B) elects not to defend the Indemnified Party pursuant to
Section 9.4(c) or (C) fails to notify the Indemnified Party that the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 9.4(c) or (ii) elects to defend the Indemnified Party pursuant to
Section 9.4(c) but fails diligently and promptly to prosecute or settle
the Third Party Claim, then the Indemnified Party shall have the right to
defend, at the sole cost and expense of the Indemnifying Party (if the
Indemnified Party is entitled to indemnification hereunder), the Third
Party Claim by all appropriate proceedings, which proceedings shall be
promptly and vigorously prosecuted by the Indemnified Party to a final
conclusion or settled. The Indemnified Party shall have full control of
such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified
Party to the effect that the Indemnifying Party disputes its potential
liability to the Indemnified Party under this Article IX and if such
dispute is resolved in favor of the Indemnifying Party, the Indemnifying
Party shall not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this Section 9.4 or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party
in full for all reasonable and appropriate costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party pursuant to
this Section 9.4(d), and the Indemnifying Party shall bear its own costs
and expenses with respect to such participation.

<PAGE>

detail the nature of the claim, an estimate of the amount of Damages
attributable to that claim to the extent feasible (which estimate shall
not be conclusive of the final amount of the claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement. If
the Indemnifying Party does not notify the Indemnified Party within 15
days from its receipt of the Indemnity Notice that the Indemnifying Party
disputes the claim, the claim specified by the Indemnified Party in the
Indemnity Notice shall be deemed a liability of the Indemnifying Party
hereunder. If the Indemnifying Party has timely disputed the claim, as
provided above, the dispute shall be resolved by proceedings in an
appropriate court of competent jurisdiction if the parties do not reach a
settlement of such dispute within 30 days after notice of the dispute is
given.

(f) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article IX relating to a Third Party Claim shall be made
within 30 days after the latest of (i) the settlement of that Third Party
Claim, (ii) the expiration of the period for appeal of a final
adjudication of that Third Party Claim or (iii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's
liability to the Indemnified Party under this Agreement. Payments of all
amounts owing by an Indemnifying Party pursuant to Section 9.4(e) shall
be made within 30 days after the later of (i) the expiration of the
30-day Indemnity Notice period or (ii) the expiration of the period for
appeal of a final adjudication of the Indemnifying Party's liability to
the Indemnified Party under this Agreement. Any payments owing by a
Stockholder Indemnifying Party under this Article IX may, at such
Stockholder Indemnifying Party's sole option, be paid either in cash or
by surrendering a number of shares of Purchaser Preferred Stock that
would be convertible into a number of shares of Purchaser Common Stock,
and if all of the Purchaser Indemnifying Party's Purchaser Preferred
Stock has been surrendered, a number of shares of Purchaser Common Stock,
equal to the amount obtained by dividing the amount of the payment by the
Current Market Price; provided that if such Stockholder Indemnifying
Party elects to pay such obligation by surrendering shares of Purchaser
Common Stock and/or Purchaser Preferred Stock and the aggregate Current
Market Price of all of such Stockholder Indemnifying Party's shares is
less than its liability, the surrender to the Indemnified Party by such
Stockholder Indemnifying Party of all of its Purchaser Common Stock and
Purchaser Preferred Stock shall constitute complete satisfaction of all
of its indemnity obligations under this Agreement.

Section 9.5. REMEDIES EXCLUSIVE. Except as otherwise expressly
provided in this Agreement, the remedies provided in this Article IX are the
exclusive remedies available to one party against the other, either at law or in
equity, in respect of any matter indemnified against in this Article IX.

Section 9.6. LIMITATIONS ON INDEMNIFICATION.

(a) Notwithstanding the provisions of Section 9.2(a), neither
the MTM Stockholders nor the Stockholder shall be required to indemnify
or hold harmless any of the Purchaser Indemnified Parties on account of
any Purchaser Indemnified Loss under Section 9.2(a) unless the liability
of the MTM Stockholders and the Stockholder in respect of that Purchaser
Indemnified Loss, when aggregated with the liability of the MTM
Stockholders and the Stockholders in respect of all Purchaser Indemnified
Losses under Section 9.2(a), exceeds, and only to the extent the
aggregate amount of all those Purchaser Indemnified Losses does exceed,
the Threshold Amount; provided that for purposes of the indemnity
obligation pursuant to Section 9.2(a)(iv), the Threshold Amount shall be
increased by the excess of any Recent Operating Profits over Agreed
Settlement Costs. In no event shall (i) the aggregate joint and

<PAGE>

several liability of the MTM Stockholders and the Stockholder under this
Agreement, including Sections 9.2(a) and 9.2(b), exceed the Ceiling
Amount or (ii) the aggregate liability of any MTM Stockholder under this
Agreement, including Sections 9.2(a) and 9.2(b), exceed the sum of
$2,000,000. The foregoing limitations in this Section 9.6(a) shall not
apply to the indemnity obligations of the Purchaser and the MTM
Stockholders with respect to any Excess Tax Obligations or Prior Tax
Liability.

(b) Notwithstanding the provisions of Section 9.3, Purchaser
shall not be required to indemnify or hold harmless any of the
Stockholder Indemnified Parties on account of the Stockholder Indemnified
Loss unless the liability of Purchaser in respect of that Stockholder
Indemnified Loss, when aggregated with the liability of Purchaser in
respect of all Stockholder Indemnified Losses, exceeds, and only to the
extent the aggregate amount of all those Stockholder Indemnified Losses
does exceed, the Threshold Amount, other than for a failure to deliver
the Merger Consideration (but then only to the extent of the undelivered
Merger Consideration) and with respect to its agreement to cause the
Surviving Corporation to pay, and its indemnity obligations relating to,
Tax Liability and Tax Expert Costs. In no event shall Purchaser be
liable under this Agreement, including Section 9.3, (i) for any amount in
excess of the Ceiling Amount, other than for a failure to deliver the
Merger Consideration (but then only to the extent of the undelivered
Merger Consideration), (ii) for any amount of Tax Liability plus Tax
Expert Costs in excess of (A) $1,600,000 in the aggregate, or (B)
$400,000 in any calendar quarter, or (iii) for any Prior Tax Liability.

ARTICLE X

LIMITATIONS ON COMPETITION

Section 10.1. PROHIBITED ACTIVITIES. The Stockholder and each MTM
Stockholder agrees that it will not during the period beginning on the date
hereof and ending on the third anniversary of the date hereof, directly or
indirectly, for any reason, for its own account or on behalf of or together with
any other Person:

(a) engage as an officer, director or in any other managerial
capacity or as an owner, co-owner or other investor of or in, whether as
an employee, independent contractor, consultant or advisor, in any
business in competition with the Company, Purchaser or any Subsidiary of
Purchaser (Purchaser and its Subsidiaries collectively being called
"Purchaser" for purposes of this Article X) within any territory
surrounding any office or facility (each a "FACILITY") in which the
Company was engaged in business on the date hereof or immediately prior
to the Effective Time (for purposes of this Article X, the territory
surrounding a facility shall be: (i) the city, town or village in which
the facility is located, (ii) the county or parish in which the facility
is located, (iii) the counties or parishes contiguous to the county or
parish in which the facility is located, and (iv) the area located within
100 miles of the facility, all of such locations being herein
collectively called the "TERRITORY");

<PAGE>

(b) call on any natural Person who is at that time employed
by the Company or Purchaser with the purpose or intent of attracting that
person from the employ of the Company or Purchaser, provided that the
Stockholder and the MTM Stockholders may call on and hire any of their
respective Immediate Family Members;

(c) call on any Person that at that time is, or at any time
within one year prior to that time was, a customer of the Company or
Purchaser within the Territory, (i) for the purpose of soliciting or
selling any product or service in competition with the Company or
Purchaser within the Territory and (ii) with the knowledge of the
customer relationship; or

(d) call on any Purchaser Acquisition Candidate, with the
knowledge of that Person's status as an Purchaser Acquisition Candidate,
for the purpose of acquiring that Person or arranging the acquisition of
that Person by any Person other than Purchaser.

Notwithstanding the foregoing, the Stockholder and the MTM Stockholders may own
and hold as a passive investment up to 5% in the aggregate of a class of the
outstanding Capital Stock of a competing Entity business if that class of
Capital Stock is publicly traded.

Section 10.2. DAMAGES. Because of the difficulty of measuring economic
losses to Purchaser as a result of any breach by the Stockholder or any MTM
Stockholder of its covenants in Section 10.1, and because of the immediate and
irreparable damage that could be caused to Purchaser for which it would have no
other adequate remedy, the Stockholder and each MTM Stockholder agrees that
Purchaser may enforce the provisions of Section 10.1 by injunctions and
restraining orders against the Stockholder and each MTM Stockholder if it
breaches any of those provisions.

Section 10.3. REASONABLE RESTRAINT. The Parties each agree that
Sections 10.1 and 10.2 impose a reasonable restraint on the Stockholder and each
MTM Stockholder in light of the activities and business of Purchaser on the date
hereof, the current business plans of Purchaser and the investment by the
Stockholder and each MTM Stockholder in Purchaser as a result of the Merger.

Section 10.4. SEVERABILITY; REFORMATION. The covenants in this Article
X are severable and separate. The unenforceability of any specific covenant in
this Article X is not intended by any Party to, and shall not, affect the
provisions of any other covenant in this Article X. If any court of competent
jurisdiction determines that the scope, time or territorial restrictions set
forth in Section 10.1 are unreasonable as applied to the Stockholder or any MTM
Stockholder, the Parties acknowledge their mutual intention and agreement that
those restrictions be enforced to the fullest extent the court deems reasonable,
and thereby shall be reformed to that extent as applied to the Stockholder or
such MTM Stockholder.

Section 10.5. INDEPENDENT COVENANT. All the covenants in this Article
X are intended by each Party to, and shall, be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of the Stockholder against Purchaser,

<PAGE>

whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Purchaser of any covenant in this Article X. It
is specifically agreed that the period specified in Section 10.1 shall be
computed in the case of the Stockholder and each MTM Stockholder by excluding
from that computation any time during which the Stockholder or such MTM
Stockholder is in violation of any provision of Section 10.1. The covenants
contained in this Article X shall not be affected by any breach of any other
provision of this Agreement by any Party.

Section 10.6. MATERIALITY. The Company, each MTM Stockholder and the
Stockholder, severally and not jointly with any other Person, hereby agree that
this Article X is a material and substantial part of the transactions
contemplated by this Agreement.

ARTICLE XI

TERMINATION

Section 11.1. TERMINATION OF THIS AGREEMENT.

(a) This Agreement may be terminated at any time prior to the
Closing solely:

(i) by the mutual written consent of Purchaser and the
Company;

(ii) by the Stockholder or the Company, on the one hand,
or by Purchaser, on the other hand, if the transactions
contemplated by this Agreement to take place at the Closing shall
not have been consummated by October 31, 1999, unless the failure
of such transactions to be consummated results from the willful
failure of the Party (or in the case of the Stockholder and the
Company, either of them or any MTM Stockholder) seeking to
terminate this Agreement to perform or adhere to any agreement
required hereby to be performed or adhered to by that Party prior
to or at the Closing or thereafter on the IPO Closing Date;

(iii) by the Stockholder or the Company, on the one
hand, or by Purchaser, on the other hand, if a material breach or
default shall be made by the other Party (or in the case of the
Stockholder and the Company, either of them or any MTM
Stockholder) in the observance or in the due and timely
performance of any of the covenants, agreements or conditions
contained herein; or

(iv) by Purchaser if it is entitled to do so as provided
in Section 6.6;

(b) This Agreement may be terminated after the Closing
solely:

(i) by Purchaser or the Company if the Underwriting
Agreement is terminated pursuant to its terms after the Closing
and prior to the consummation of the IPO; or

<PAGE>

(ii) automatically and without action on the part of any
party hereto if the IPO is not consummated within 15 Business Days
after the date of the Closing.

(c) If this Agreement is terminated pursuant to this Section
11.1, the Merger will be deemed for all purposes to have been abandoned
and of no force or effect. If this Agreement is terminated pursuant to
this Section 11.1 after the Certificate of Merger has been filed with the
Secretary of State of the State of Delaware, but before the IPO has been
consummated, Purchaser will take all actions that Counsel for the Company
and the Stockholders advises Purchaser are required by the applicable
laws of the State of Delaware to rescind the Merger.

Section 11.2. LIABILITIES IN EVENT OF TERMINATION. If this Agreement
is terminated pursuant to Section 11.1, there shall be no liability or
obligation on the part of any Party except (a) as provided in Section 12.7, (b)
to the extent that such liability is based on the breach of that Party of any of
its or his representations, warranties or covenants set forth in of this
Agreement.

ARTICLE XII

GENERAL PROVISIONS

Section 12.1. TREATMENT OF CONFIDENTIAL INFORMATION.

(a) (i) Each of the Company, each MTM Stockholder and the
Stockholder, severally and not jointly with any other Person,
acknowledges that it has or may have had in the past, currently has and
in the future may have access to Confidential Information of the Company,
the Other Founding Companies and their Subsidiaries and Purchaser and its
Subsidiaries. Each of the Company, each MTM Stockholder and the
Stockholder, severally and not jointly with any other Person, agrees that
it will keep confidential all such Confidential Information furnished to
it and, except with the specific prior written consent of Purchaser will
not disclose such Confidential Information to any Person except
(a) Representatives of Purchaser (on a need to know basis), (b) its own
Representatives, provided that these Representatives (other than counsel)
agree to the confidentiality provisions of this Section 12.1; and
provided, further, that Confidential Information shall not include
(i) such information which becomes known to the public generally through
no fault of the Stockholder or such MTM Stockholder, (ii) information
required to be disclosed by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any
information pursuant to this clause (ii), the Stockholder or such MTM
Stockholder shall, if possible, give prior written notice thereof to
Purchaser and provide Purchaser with the opportunity to contest such
disclosure, or (iii) information the disclosure of which the disclosing
party reasonably believes is required in connection with the defense of a
lawsuit against the disclosing party. In the event of a breach or
threatened breach by the Stockholder or any MTM Stockholder of the
provisions of this Section 12.1 with respect to any Confidential
Information, Purchaser shall be entitled to an injunction restraining the

<PAGE>

Stockholder or such MTM Stockholder from disclosing, in whole or in part,
that Confidential Information. Nothing herein shall be construed as
prohibiting Purchaser from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.

(ii) Each of Purchaser and Merger Sub, severally and not
jointly with any other Person, acknowledges that it has or may have had
in the past, currently has and in the future may have access to
Confidential Information of the Company, the Stockholder and each MTM
Stockholder. Each of Purchaser and Merger Sub, severally and not jointly
with any other Person, agrees that it will keep confidential all such
Confidential Information furnished to it and, except with the specific
prior written consent of the Stockholder will not disclose such
Confidential Information to any Person except (a) Representatives of
Purchaser or Merger Sub (on a need to know basis), (b) its own
Representatives, provided that these Representatives (other than counsel,
accountants and underwriters) agree to the confidentiality provisions of
this Section 12.1; and provided, further, that Confidential Information
shall not include (i) such information which becomes known to the public
generally through no fault of the Purchaser or Merger Sub
(ii) information required to be disclosed by law or the order of any
governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii), Purchaser or
Merger Sub shall, if possible, give prior written notice thereof to the
Stockholder and provide the Stockholder with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that
such disclosure is required in connection with the defense of a lawsuit
against the disclosing party. In the event of a breach or threatened
breach by the Purchaser and Merger Sub of the provisions of this
Section 12.1 with respect to any Confidential Information, the
Stockholder shall be entitled to an injunction restraining the Purchaser
or Merger Sub from disclosing, in whole or in part, that Confidential
Information. Nothing herein shall be construed as prohibiting the
Stockholder from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. The obligations of
Purchaser and Merger Sub, and the rights and remedies of the Stockholder
and each MTM Stockholder, under Section 6.1(a) and this Section
12.1(a)(ii) shall terminate with respect to Confidential Information of
the Company on the IPO Closing Date.

(b) Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants in Section 12.1(a), and
because of the immediate and irreparable damage that would be caused to
the nonbreaching Party for which it would have no other adequate remedy
each Party agrees that the nonbreaching Party may enforce the provisions
of Section 12.1(a) by injunctions and restraining orders against each of
Party who breaches any of those provisions.

<PAGE>

Section 12.2. RESTRICTIONS ON TRANSFERS OF PURCHASER COMMON STOCK.

(a) During the two-year period following the IPO Closing Date
(the "RESTRICTED PERIOD"), the Stockholder will not voluntarily:
(i) sell, assign, exchange, transfer, encumber, pledge, distribute,
appoint or otherwise dispose of (A) any shares of Purchaser Common Stock
and Purchaser Preferred Stock (and shares of Purchaser Common Stock
issued on conversion thereof, if any) received by the Stockholder in the
Merger or (B) any interest in (including any option to buy or sell) any
such shares of Purchaser Common Stock and Purchaser Preferred Stock (and
shares of Purchaser Common Stock issued on conversion thereof, if any),
in whole or in part, and Purchaser will have no obligation to, and shall
not, treat any such attempted transfer as effective for any purpose; or
(ii) engage in any transaction, whether or not with respect to any shares
of Purchaser Common Stock and Purchaser Preferred Stock (and shares of
Purchaser Common Stock issued on conversion thereof, if any) or any
interest therein, the intent or effect of which is to reduce the risk of
owning the shares of Purchaser Common Stock and Purchaser Preferred Stock
(and shares of Purchaser Common Stock issued on conversion thereof, if
any) acquired pursuant to Section 2.04 (including, for example engaging
in put, call, short-sale, straddle or similar market transactions);
PROVIDED, HOWEVER, that if the average closing price of the Purchaser
Common Stock (as reported by the principal exchange or market upon which
the Purchaser Common Stock is then listed) for the ten trading day period
prior to (i) the end of the twelfth month following the IPO Closing Date,
(ii) the end of the fifteenth month following the IPO Closing Date, (iii)
the end of the eighteenth month following the IPO Closing Date, or (iv)
the end of the twenty-first month following the IPO Closing Date, each
such ten trading day period a "Measurement Period," is greater than or
equal to $17 per share, then (i) ten percent, (ii) an additional twenty
percent, (iii) an additional thirty percent or (iv) an additional forty
percent, respectively, of Purchaser Common Stock and shares of Purchaser
Common Stock actually issued upon conversion of Purchaser Preferred
Stock, if any, received by Stockholder in the Merger shall irrevocably be
released from the restrictions of this Section 12.2(a) following the
applicable Measurement Period; and, PROVIDED, FURTHER, that this Section
12.2 shall not restrict any transfer of Purchaser Common Stock and
Purchaser Preferred Stock (and shares of Purchaser Common Stock issued on
conversion thereof, if any) acquired by the Stockholder pursuant to
Section 2.4 to any of that Stockholder's Related Persons who agree in
writing to be bound by the provisions of Section 12.1 and this Section
12.2. The certificates evidencing the Purchaser Common Stock delivered
to the Stockholder pursuant to Section 2.5 and upon conversion of the
Purchaser Preferred Stock and the Purchaser Preferred Stock will bear a
legend substantially in the form set forth below and containing such
other information as Purchaser may deem necessary or appropriate:

EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF
MERGER AMONG THE ISSUER, THE HOLDER OF THIS CERTIFICATE AND
THE OTHER PARTIES THERETO, THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE VOLUNTARILY SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED,
APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL
NOT

<PAGE>

BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED VOLUNTARY
SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF
THOSE SHARES, DURING THE ___-MONTH PERIOD ENDING ON
________ (THE "RESTRICTED PERIOD"). ON THE WRITTEN
REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP
ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE EXPIRATION
OF THE RESTRICTED PERIOD.

(b) The Stockholder (i) acknowledges that the shares of
Purchaser Common Stock to be delivered to it pursuant to Section 2.4 and
upon conversion of the Purchaser Preferred Stock and the shares of
Purchaser Preferred Stock (A) have not been and, subject to the
Stockholder's rights under the Registration Rights Agreement, will not be
registered under the Securities Act and therefore may not be resold by it
without compliance with the Securities Act and (B) will, as a result of
their restrictions on transferability which are imposed by this Agreement
during the Restricted Period, have a value materially less at the
Effective Time than the value of then freely tradeable shares of
Purchaser Common Stock and Purchaser Preferred Stock, and (ii) covenants
that none of the shares of Purchaser Common Stock issued to it pursuant
to SCHEDULE 2.4 or upon conversion of the Purchaser Preferred Stock or
the shares of Purchaser Preferred Stock will be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of except after
full compliance with all the applicable provisions of the Securities Act
and the rules and regulations of the SEC and applicable state securities
laws and regulations. All certificates evidencing shares of Purchaser
Common Stock issued pursuant to SCHEDULE 2.4 and, subject to the
Stockholder's rights under the Registration Agreement, upon conversion of
the Purchaser Preferred Stock and the shares of Purchaser Preferred Stock
will bear the following legend in addition to the legend prescribed by
Section 12.2(a):

In addition, certificates evidencing shares of Purchaser Common Stock
issued to the Stockholder pursuant to SCHEDULE 2.4 and upon conversion of
the Purchaser Preferred and the shares of Purchaser Preferred Stock will
bear any legend required by (i) the securities or blue sky laws of the
state in which that Stockholder resides or (ii) the Underwriter in
connection with any agreement of that Stockholder with the Underwriter to
the effect set forth in Section 12.2(a).

Section 12.3. BROKERS AND AGENTS. The Stockholder and each MTM
Stockholder jointly and severally represents and warrants to Purchaser that
neither the Stockholder, such MTM Stockholder nor the Company has not directly
or indirectly employed or become obligated to pay any broker or similar agent in
connection with the transactions contemplated hereby and agree,

<PAGE>

without regard to the Threshold Amount limitations set forth in Article IX,
to indemnify Purchaser against all Damage Claims arising out of claims for
any and all fees and commissions of brokers or similar agents employed or
promised payment by the Company. The Purchaser and Merger Sub each jointly
and severally represents and warrants to Purchaser and each MTM Stockholder
that neither Purchaser nor Merger Sub has directly or indirectly employed or
become obligated to pay any broker or similar agent in connection with the
transactions contemplated hereby, other than fees payable to Benchmark Equity
Group, Inc. as disclosed in the Private Placement Memorandum or the
Registration Statement, and agree, without regard to the Threshold Amount
limitations set forth in Article IX, to indemnify the Stockholder and each
MTM Stockholder against all Damage Claims arising out of claims for any and
all fees and commissions of brokers similar agents employed or promised
payment by the Purchaser or Merger Sub.

Section 12.4. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
and the rights of its Parties may not be assigned (except by operation of law)
and shall be binding on and inure to the benefit of the Parties and their
respective heirs, legal representatives, successors and permitted assigns.
Neither this Agreement nor any other Transaction Document is intended, or shall
be construed, deemed or interpreted, to confer on any Person not a party hereto
or thereto any rights or remedies hereunder or thereunder, except as provided in
Section 6.4(b), in Article IX, or as otherwise provided expressly herein or
therein.

Section 12.5. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement and
the documents delivered pursuant to it constitute the entire agreement and
understanding among the Parties and supersede all prior agreements and
understandings, both written and oral, relating to the subject matter of this
Agreement. This Agreement may be amended, modified or supplemented, and any
right hereunder may be waived, if, but only if, the amendment, modification,
supplement or waiver is in writing and signed by the Stockholder, each MTM
Stockholder, the Company and Purchaser. The waiver of any of the terms and
conditions of this Agreement shall not be construed or interpreted as, or deemed
to be, a waiver of any of its other term or conditions.

Section 12.6. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which will be an original, but all of which together will
constitute one and the same instrument.

Section 12.7. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) Purchaser will pay the fees, expenses and
disbursements of Purchaser and Merger Sub and their Representatives which are
incurred in connection with the subject matter of this Agreement and any
amendments to this Agreement including all costs and expenses incurred in the
performance of and compliance with all conditions to be performed by Purchaser
and Merger Sub under this Agreement, including the costs of preparing the
Registration Statement, (b) the Company may pay any reasonable fees, expenses
and disbursements of Counsel for the Company and the Stockholder incurred in
connection with the subject matter of this Agreement and the Registration
Statement on or before the IPO Closing Date, and (c) the Stockholder will pay
from its funds, and not from funds of the Company all sales, use, transfer and
other similar taxes and fees (collectively,

<PAGE>

"TRANSFER TAXES") incurred in connection with the transactions contemplated
hereby. The Stockholder will file all necessary documentation and Returns
with respect to all Transfer Taxes. In addition, the Stockholder
acknowledges that it, and not the Company, Purchaser or the Surviving
Corporation, will pay all Taxes due upon receipt of the Merger Consideration
payable to the Stockholder pursuant to Article II.

Section 12.8. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the Party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Business Day next following the day when placed in the mail,
postage prepaid, certified or registered, addressed to the appropriate Party or
Parties, at the address of such Party set forth below (or at such other address
as such party may designate by written notice to all other Parties in accordance
herewith):

(1) if to Purchaser or Merger Sub, addressed to it at:

OmniLynx Communications Corporation
700 Gemini St.
Houston, TX 77058
Attn.: Christopher Efird,
Chief Executive Officer

with copies (which shall not constitute notice for purposes of
this Agreement) to:

Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002-2764
Attn: Robert G. Reedy
Telephone: (713) 226-0674
Telecopy No.: (713) 226-0274

Joseph Gregori
ARC Networks
1770 Motor Parkway, Suite 300
Hauppage, New York 11788
Telephone: (516) 582-2222
Telecopy No.: (516) 582-1240

<PAGE>

(2) if to the Stockholder, addressed to it at:

MTM Holdings, Inc.
2748 Bingle
Houston, Texas 77055
Attn: Michael Macaluso
Telecopy No.: (713) 464-7239

(3) if to the Company, addressed to it at:

AXCES, Inc.
2500 Wilcrest, Suite 540
Houston, Texas 77042
Attn: Michael Avignon
Telecopy No.: (713) 781-9396

with copies (which shall not constitute notice for purposes of
this Agreement) to:

Verner, Liipfert, Bernhard, McPherson and Hand,
Chartered
1111 Bagby, Suite 4700
Houston, Texas 77002
Attn: Steven A. Buxbaum
Telecopy No.: (713) 752-2199

(4) if to the MTM Stockholders, addressed to them at
their respective addresses shown on the signature
pages hereto.

SECTION 12.9. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE, WITH THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.

Section 12.10. EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay or omission in the exercise of any right, power or
remedy accruing to any Party as a result of any breach or default hereunder by
any other Party shall impair any such right, power or remedy, nor shall it be
construed, deemed or interpreted as a waiver of or acquiescence in any such
breach or default, or of any similar breach or default occurring later; nor
shall any waiver of any single breach or default be construed, deemed or
interpreted as a waiver of any other breach or default hereunder occurring
before or after that waiver.

Section 12.11. TIME. Time is of the essence in the performance of this
Agreement in all respects.

<PAGE>

Section 12.12. REFORMATION AND SEVERABILITY. If any provision of this
Agreement is invalid, illegal or unenforceable, that provision shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the Parties as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.

Section 12.13. RESPECTING THE IPO. Each of the Company, the MTM
Stockholders and the Stockholder acknowledges and agrees that: (a) no firm
commitment, binding agreement or promise or other assurance of any kind, whether
express or implied, oral or written, exists at the date hereof that the
Registration Statement will become effective or that the IPO will occur at a
particular price or within a particular range of prices or occur at all;
(b) neither Purchaser or any of its Representatives nor any prospective
underwriters in the IPO will have any liability to the Company, the Stockholder,
any MTM Stockholder or any of their respective Affiliates or associates for any
failure of (i) the Registration Statement to become effective (provided,
however, that Purchaser will use its reasonable best efforts to cause the
Registration Statement to become effective prior to October 31, 1999) or
(ii) the IPO to occur at a particular price or within a particular range of
prices or to occur at all; and (c) the decision of Stockholder and each MTM
Stockholder to enter into this Agreement, or to vote in favor of or consent to
the Merger, has been or will be made independent of, and without reliance on,
any statements, opinions or other communications of, or due diligence
investigations that have been or will be made or performed by, any prospective
underwriter relative to Purchaser or the IPO. The Underwriter shall have no
obligation to any of the Company, any MTM Stockholder and the Stockholder with
respect to any disclosure contained in the Registration Statement.

Section 12.14. TERMINATION OF THE AXCES, INC. 401(k) PLAN. The Company
hereby covenants and agrees to amend and terminate the AXCES, Inc. 401(k) Plan
(the "DESIGNATED PLAN") prior to the Closing Date by adopting board resolutions
and an agreement for amendment and termination of the Designated Plan and by
requesting a determination letter from the IRS to the effect that the
Designated Plan is a qualified plan under Section 401(a) of the Code upon its
termination and that the trust used to fund the Designated Plan is tax exempt
under Section 501(a) of the Code. After the effective date of termination of
the Designated Plan, the Designated Plan shall be "frozen" pending distribution
of its assets to participants and their beneficiaries. No persons who are not
participants as of the termination date shall be eligible to participate in the
Designated Plan or receive benefits thereunder, and no distributions shall be
made by the Designated Plan except normal distributions in the ordinary course
of business to or on behalf of employees who have separated service with the
Company. As soon as administratively practicable following receipt of a
favorable IRS determination letter, the trustee of the Designated Plan shall
effectuate distributions of all remaining assets from the Designated Plan and,
thereafter, it shall be liquidated. After liquidation of the Designated Plan,
the Surviving Corporation agrees to file a final IRS form 5500 for the Plan with
the IRS.

<PAGE>

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.

OMNILYNX COMMUNICATIONS CORPORATION

By: /s/ Christopher H. Efird
------------------------------------------
Christopher H. Efird,
Chief Executive Officer

AXCES ACQUISITION INC.

By: /s/ Christopher H. Efird
------------------------------------------
Christopher H. Efird,
President

AXCES, INC.

By: /s/ Michael Avignon
------------------------------------------
Michael Avignon
Chairman and Chief Executive Officer

MTM HOLDINGS CORPORATION

By: /s/ Michael Macaluso
------------------------------------------
Michael Macaluso
President

<PAGE>

"MTM STOCKHOLDERS"

/s/ Michael Avignon
---------------------------------------------
Michael Avignon
12631 Broken Bough
Houston, Texas 77024

/s/ Timothy Till
---------------------------------------------
Timothy Till
12511 Overcup
Houston, Texas 77024

/s/ Michael Macaluso
---------------------------------------------
Michael Macaluso
37 Lana Lane
Houston, Texas 77027

<PAGE>

SCHEDULE 2.3

Directors: Joe Gregori
Michael Macaluso

Officers: Joseph Gregori, President and Secretary

<PAGE>

SCHEDULE 2.4

MERGER CONSIDERATION

(1) 700,000 shares of Purchaser Common Stock; and

(2) 60,000 shares of Purchaser Preferred Stock.

<PAGE>

Exhibit 2.3

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

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF JUNE 30, 1999

BY AND AMONG

OMNILYNX COMMUNICATIONS CORPORATION,

INFO ACQUISITION, INC.,

INFO-HIGHWAY INTERNATIONAL, INC.

AND ITS

STOCKHOLDERS NAMED THEREIN

- --------------------------------------------------------------------------------
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TABLE OF CONTENTS

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ARTICLE I

DEFINITIONS

Section 1.01. Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.02. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE II

THE MERGER AND RELATED MATTERS

Section 2.01. Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.02. The Effective Time . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.03. Certain Effects of the Merger. . . . . . . . . . . . . . . . . . . 17
Section 2.04. Effect of the Merger on Capital Stock. . . . . . . . . . . . . . . 18
Section 2.05. Delivery, Exchange and Payment . . . . . . . . . . . . . . . . . . 18
Section 2.06. Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.07. Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

Section 3.01. By each Stockholder. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.02. Ownership and Status of Company Capital Stock. . . . . . . . . . . 21
Section 3.03. Power of the Stockholder; Approval of the Merger . . . . . . . . . 21
Section 3.04. No Conflicts or Litigation . . . . . . . . . . . . . . . . . . . . 22
Section 3.05. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.06. Preemptive and Other Rights; Waiver. . . . . . . . . . . . . . . . 22
Section 3.07. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SIGNIFICANT STOCKHOLDERS

Section 4.01. By the Company and Each Significant Stockholder. . . . . . . . . . 23
Section 4.02. Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.03. Authorization; Enforceability; Absence of Conflicts; Required
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.04. Charter Documents and Records; No Violation. . . . . . . . . . . . 24
Section 4.05. No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.06. Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.07. Capital Stock of the Company . . . . . . . . . . . . . . . . . . . 25
Section 4.08. Transactions in Capital Stock. . . . . . . . . . . . . . . . . . . 25
Section 4.09. No Bonus Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.10. Predecessor Status; etc. . . . . . . . . . . . . . . . . . . . . . 26
Section 4.11. Related Party Agreements; Related Business . . . . . . . . . . . . 26
Section 4.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.13. Financial Statements; Disclosure . . . . . . . . . . . . . . . . . 26
Section 4.14. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.15. Certain Environmental Matters. . . . . . . . . . . . . . . . . . . 28
Section 4.16. Liabilities and Obligations. . . . . . . . . . . . . . . . . . . . 28
Section 4.17. Receivables; Customer Retention. . . . . . . . . . . . . . . . . . 29
Section 4.18. Owned and Leased Real Properties . . . . . . . . . . . . . . . . . 29
Section 4.19. Owned and Leased Personal Property . . . . . . . . . . . . . . . . 30
Section 4.20. Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.21. Title to Other Properties. . . . . . . . . . . . . . . . . . . . . 33
Section 4.22. Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.23. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.24. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.25. Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.26. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.27. Government Contracts . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.28. Absence of Change. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.29. Bank Relations; Powers of Attorney . . . . . . . . . . . . . . . . 40
Section 4.30. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.31. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO

Section 5.01. By Purchaser and Newco . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.02. Organization; Power. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.03. Authorization; Enforceability; Absence of Conflicts; Required
Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 5.04. Charter Documents. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.05. Capital Stock of Purchaser and Newco . . . . . . . . . . . . . . . 42
Section 5.06. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.07. Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.08. Compliance With Laws; No Litigation. . . . . . . . . . . . . . . . 43
Section 5.09. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.10. Private Placement Memorandum . . . . . . . . . . . . . . . . . . . 44
Section 5.11. Registration and Other Rights. . . . . . . . . . . . . . . . . . . 44
Section 5.12. Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE VI

COVENANTS EXTENDING TO THE EFFECTIVE TIME

Section 6.01. Access and Cooperation; Due Diligence. . . . . . . . . . . . . . . 44
Section 6.02. Conduct of Business Pending Closing. . . . . . . . . . . . . . . . 45
Section 6.03. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.04. No Shop: Release of Directors. . . . . . . . . . . . . . . . . . . 47
Section 6.05. Notification of Certain Matters. . . . . . . . . . . . . . . . . . 48
Section 6.06. Supplemental Information . . . . . . . . . . . . . . . . . . . . . 48
Section 6.07. Cooperation in Connection With the IPO . . . . . . . . . . . . . . 49
Section 6.08. HSR Act Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 49

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ARTICLE VII

THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION

Section 7.01. The Closing and Certain Conditions . . . . . . . . . . . . . . . . 50
Section 7.02. Conditions to the Obligations of Each Party. . . . . . . . . . . . 50
Section 7.03. Conditions to the Obligations of the Company and the
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.04. Conditions to the Obligations of Purchaser and Newco . . . . . . . 53

ARTICLE VIII

COVENANTS FOLLOWING THE EFFECTIVE TIME

Section 8.01. Of Each Party Other Than the Company . . . . . . . . . . . . . . . 54
Section 8.02. Repayment of Company Indebtedness. . . . . . . . . . . . . . . . . 54

ARTICLE IX

INDEMNIFICATION

Section 9.01. Survival of Representations and Warranties . . . . . . . . . . . . 55
Section 9.02. Indemnification of Purchaser Indemnified Parties . . . . . . . . . 55
Section 9.03. Indemnification of Stockholder Indemnified Parties . . . . . . . . 56
Section 9.04. Conditions of Indemnification. . . . . . . . . . . . . . . . . . . 56
Section 9.05. Remedies Exclusive . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 9.06. Limitations on Indemnification . . . . . . . . . . . . . . . . . . 59

ARTICLE X

LIMITATIONS ON COMPETITION

Section 10.01. Prohibited Activities. . . . . . . . . . . . . . . . . . . . . . . 60
Section 10.02. Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.03. Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.04. Severability; Reformation. . . . . . . . . . . . . . . . . . . . . 61
Section 10.05. Independent Covenant . . . . . . . . . . . . . . . . . . . . . . . 61
Section 10.06. Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

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ARTICLE XI

TERMINATION

Section 11.01. Termination of This Agreement. . . . . . . . . . . . . . . . . . . 62
Section 11.02. Liabilities in Event of Termination. . . . . . . . . . . . . . . . 63

ARTICLE XII

GENERAL PROVISIONS

Section 12.01. Treatment of Confidential Information. . . . . . . . . . . . . . . 63
Section 12.02. Restrictions on Transfers of Purchaser Common Stock. . . . . . . . 64
Section 12.03. Brokers and Agents . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.04. Assignment; No Third Party Beneficiaries . . . . . . . . . . . . . 66
Section 12.05. Entire Agreement; Amendment; Waivers . . . . . . . . . . . . . . . 66
Section 12.06. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.07. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 12.08. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 12.09. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.10. Exercise of Rights and Remedies. . . . . . . . . . . . . . . . . . 68
Section 12.11. Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.12. Reformation and Severability . . . . . . . . . . . . . . . . . . . 68
Section 12.13. Respecting the IPO . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 12.14. Termination of the InfoHighway International, Inc. 1998
Incentive Stock Option Plan . . . . . . . . . . . . . . . . . . . 69
</TABLE>

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<PAGE>

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT") is made as
of June ___, 1999, among OmniLynx Communications Corporation, a Delaware
corporation ("PURCHASER"), INFO Acquisition, Inc., a Texas corporation and a
wholly owned subsidiary of Purchaser ("NEWCO"), Info-Highway International,
Inc., a Texas corporation (the "COMPANY"), and the persons listed on the
signature pages of this Agreement under the caption "STOCKHOLDERS"
(collectively, the "STOCKHOLDERS," and each of them, individually, a
"STOCKHOLDER").

PRELIMINARY STATEMENTS

The parties to this Agreement wish to effect a business combination
pursuant to which:

(i) Newco will merge into the Company (the
"MERGER") on the terms and subject to the conditions of this
Agreement;

(ii) Purchaser has acquired the stock of the entities
other than the Company identified in the accompanying Addendum I
(each an "OTHER FOUNDING COMPANY" and, collectively with the
Company, the "FOUNDING COMPANIES") under agreements entered into
among the Other Founding Companies, their stockholders,
Purchaser and other subsidiaries of Purchaser (collectively, the
"OTHER AGREEMENTS"); and

(iii) Purchaser proposes to effect a public offering
of shares of its common stock.

The respective boards of directors of Purchaser, Newco and the Company
have approved and adopted this Agreement to effect a transaction involving a
reorganization described in Section 368 of the Code.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and undertakings contained in this Agreement, the
parties to this Agreement agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms have the meanings assigned to them below in this Section 1.01:

1
<PAGE>

"ACQUISITION PROPOSAL" has the meaning specified in
Section 6.04.

"AFFILIATE" means, as to any specified Person, any other Person
who, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with
the specified Person. As used in this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through
ownership of Capital Stock of the Person, by contract, or otherwise).

"AGREEMENT" means this Agreement, including the Disclosure
Statement relating to this Agreement and all attached Schedules,
Addendum, Annexes and Exhibits, as each of them may be amended, modified
or supplemented from time to time under their provisions or the
provisions of this Agreement.

"BUSINESS CORPORATION ACT" means the Texas Business Corporation
Act.

"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in New York, New York or Houston, Texas are
authorized or obligated to close.

"CAPITAL LEASE" means a lease of (or other agreement conveying
the right to use) real or personal property that is required to be
classified and accounted for as a capital lease under GAAP as in effect
on the date of this Agreement.

"CAPITAL STOCK" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in the corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit
of participation or other equivalent (however designated) of an equity
interest in the Entity.

"CASH COMPENSATION" means, as applied to any employee,
nonemployee director or officer of, or any natural person who performs
consulting or other independent contractor services for, the Company or
any Company Subsidiary, the wages, salaries, bonuses (discretionary and
formula), fees and other cash compensation paid or payable by the
Company and each Company Subsidiary to that employee or other natural
person.

"CEILING AMOUNT" means $9,045,790.

"CERCLA" means the Comprehensive Environmental Response,
Conservation, and Liability Act of 1980.

"CERTIFICATE OF MERGER" means the articles or certificate of
merger respecting the Merger which contains the information required by
the laws of the Company's Organization State to effect the Merger.

2
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"CHARTER DOCUMENTS" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time,
the articles or certificate of formation, incorporation or organization
(or the equivalent organizational documents) of the Entity, (b) the
bylaws or limited liability company agreement or regulations (or the
equivalent governing documents) of the Entity, and (c) each document
setting forth the designation, amount and relative rights, limitations
and preferences of any class or series of the Entity's Capital Stock or
of any rights in respect of the Entity's Capital Stock.

"CLAIM NOTICE" has the meaning specified in Section 9.04.

"CLOSING" has the meaning specified in Section 7.01(a).

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

"COMPANY COMMITMENT" has the meaning specified in Section 4.22.

"COMPANY COMMON STOCK" means the common stock, no par value per
share, of the Company.

"COMPANY ERISA GROUP" means any "group of organizations" within
the meaning of Section 414(b), (c), (m) or (o) of the Code, or any
"controlled group" as defined in Section 4001 (a)(14) of ERISA, of which
the Company is a member.

"COMPANY SUBSIDIARY" means at any time any Entity that is a
Subsidiary of the Company at that time.

"CONFIDENTIAL INFORMATION" means, with respect to any Person,
all trade secrets and other confidential, nonpublic and/or proprietary
information of that Person, including information derived from designs,
reports, investigations, research, testing, development,
work-in-progress, codes, marketing and sales programs, capital
expenditure projects, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with
any Governmental Authority and any other confidential, nonpublic
concepts, methods of doing business, ideas, materials or information
prepared or performed for, by or on behalf of that Person.

"CONTINGENT STOCK ISSUE RIGHTS" means the rights to acquire
shares of Purchaser Common Stock as part of the Merger Consideration,
which rights have the terms and

3
<PAGE>

conditions as set forth in the form of Certificate of Contingent Stock
Issue Rights attached as Exhibit 1.02-A hereto.

"COUNSEL FOR PURCHASER AND NEWCO" means Porter & Hedges, L.L.P.

"COUNSEL FOR THE COMPANY AND THE STOCKHOLDERS" means Mayor, Day,
Caldwell and Keeton, LLP.

"CURRENT BALANCE SHEET" means the unaudited balance sheet of the
Company at March 31, 1999, which is included in the Initial Financial
Statements.

"CURRENT BALANCE SHEET DATE" means March 31, 1999.

"CURRENT DATE" means any day during the 20-day period ending on
the date of the Closing.

"DAMAGE" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or
expense (including reasonable and necessary or appropriate fees and
actual expenses of and disbursements by attorneys, consultants, experts
or other Representatives and Litigation costs) to, any fine of or
penalty on, or any liability (including loss of earnings or profits) of,
any other nature of that Person.

"DERIVATIVE SECURITIES" of a specified Entity means any Capital
Stock or debt security or other Indebtedness of the specified Entity or
any other Person which is convertible into or exchangeable for, or any
option, warrant or other right to acquire, (a) any unissued Capital
Stock of the specified Entity or (b) any Capital Stock of the specified
Entity which has been issued and is being held by the Entity directly or
indirectly as treasury Capital Stock.

"DGCL" means the General Corporation Law of the State of
Delaware.

"DISCLOSURE STATEMENT" means the written statement executed by
the Company and each of the Stockholders and delivered to Purchaser
prior to the execution and delivery of this Agreement, in which either
(a) exceptions are taken to each of certain of the representations and
warranties made by the Company and the Stockholders in this Agreement or
(b) it is confirmed that no exception is taken to that representation
and warranty.

"EFFECTIVE TIME" has the meaning specified in Section 2.02.

4
<PAGE>

"ELECTION PERIOD" has the meaning specified in Section 9.04(b).

"EMPLOYEE POLICIES AND PROCEDURES" means at any time all
employee manuals and all material policies, procedures and work-related
rules that apply at that time to any employee, nonemployee director or
officer of, or any other natural person performing consulting or other
independent contractor services for, the Company or any Company
Subsidiary.

"EMPLOYMENT AGREEMENT" means at any time any agreement to which
the Company is a party which then relates to the direct or indirect
employment or engagement, or arises from the past employment or
engagement, of any natural person by the Company, whether as an
employee, a nonemployee officer or director, a consultant or other
independent contractor, a sales representative or a distributor of any
kind, including any employee leasing or service agreement and any
noncompetition agreement.

"ENVIRONMENTAL LAWS" means any and all Governmental Requirements
relating to the environment or worker health, including ambient air,
surface water, land surface or subsurface strata, or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes
(including Solid Wastes, Hazardous Wastes or Hazardous Substances) or
noxious noise or odor into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, recycling, removal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes (including petroleum, petroleum distillates, asbestos or
asbestos-containing material, polychlorinated biphenyls,
chlorofluorocarbons or hydrochlorofluorocarbons).

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

"ERISA AFFILIATE" means, with respect to any specified Person at
any time, any other Person, including an Affiliate of the specified
Person, that is, or at any time within six years of that time was, a
member of any ERISA Group of which the specified Person is or was a
member at the same time.

"ERISA AFFILIATE PENSION PLAN" means any ERISA Employee Benefit
Plan respecting which an ERISA Affiliate is or was a contributing
sponsor or employer.

"ERISA EMPLOYEE BENEFIT PLAN" means any "employee benefit plan"
as defined in Section 3(3) of ERISA and includes any ERISA Pension
Benefit Plan.

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<PAGE>

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

"FINAL PROSPECTUS" means the prospectus included in the
Registration Statement at the time it becomes effective, except that if
the prospectus first furnished to the Underwriter after the Registration
Statement becomes effective for use in connection with the IPO differs
from the prospectus included in the Registration Statement at the time
it becomes effective (whether or not the prospectus so furnished to the
Underwriter is required to be filed with the SEC pursuant to Securities
Act Rule 424(b)), the prospectus so furnished will be the "FINAL
PROSPECTUS."

"FINANCIAL STATEMENTS" means the Initial Financial Statements
and the other financial statements of the Company delivered to Purchaser
prior to the Effective Time pursuant to Section 6.06.

"GENERAL RELEASE" means the general release of the Company and
the Company Subsidiaries to be executed at or before, and delivered to
Purchaser and the Company at, the Closing, effective as of the Effective
Time, by each Significant Stockholder, which general release shall be in
the form of the attached Exhibit 1.02-B, with its blanks appropriately
completed.

"GOVERNMENTAL AUTHORITY" means any national, state, county,
municipal or other government, domestic or foreign, or any agency,
board, bureau, commission, court, department or other instrumentality of
any such government.

"GOVERNMENTAL REQUIREMENT" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, order, writ, edict, award, authorization or other
requirement of any Governmental Authority in effect at that time or
(b) any obligation included in any certificate, certification,
franchise, permit or license issued by any

6
<PAGE>

Governmental Authority or resulting from binding arbitration, including
any requirement under common law, at that time.

"GUARANTY" means, for any specified Person, without duplication,
any liability, contingent or otherwise, of that Person guaranteeing or
otherwise representing liability for any obligation of any other Person
(the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
and including any liability of the specified Person, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or
payment of) the other Person's obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of
that obligation, (b) to purchase property, securities or services for
the purpose of assuring the owner of that obligation of its payment, or
(c) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable
the primary obligor to pay that obligation; PROVIDED, HOWEVER, that the
term "GUARANTY" excludes endorsements for collection or deposit in the
ordinary course of the endorser's business.

"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.

"IMMEDIATE FAMILY MEMBER" of a Stockholder means at any time:
(a) if the Stockholder is a natural person, any child or grandchild (by
blood or legal adoption) or spouse of the Stockholder at that time, or
any child of the Stockholder's spouse; and (b) if the Stockholder is an
Entity which has as an ultimate beneficial owner one or more natural
persons, or a natural person and his spouse, any child or grandchild (by
blood or legal adoption) or spouse at that time (if not then an ultimate
beneficial owner of the Entity), or any child of the spouse, of the
ultimate beneficial owner or owners of the Entity.

"INDEBTEDNESS" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds,
letters of credit, banker's acceptances and similar instruments), for
the deferred purchase price of property or services or arising under
conditional sale or other title retention agreements, other than trade
payables arising in the ordinary course of business, (ii) evidenced by
notes, bonds, debentures or similar instruments, (iii) in respect of
Capital Leases, or (iv) in respect of Interest Rate Protection
Agreements, (b) any liability secured by any Lien upon any property or
assets of that Person (or upon any revenues, income or profits of that
Person therefrom), whether or not that Person has assumed the liability
or otherwise become liable for its payment, or (c) any liability of
others of the type described in the preceding clause (a) or (b) in
respect of which that Person has incurred, assumed or acquired a
liability by means of a Guaranty.

"INDEMNITY NOTICE" has the meaning specified in Section 9.04(e).

"INDEMNIFIED PARTY" has the meaning specified in
Section 9.04(b).

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<PAGE>

"INDEMNIFYING PARTY" has the meaning specified in
Section 9.04(b).

"INFORMATION" means written information, including (a) data,
certificates, reports and statements (excluding Financial
Statements) and (b) summaries of unwritten agreements, arrangements,
contracts, plans, policies, programs or practices or of unwritten
amendments or modifications of, supplements to or waivers under any of
the foregoing documents.

"INITIAL FINANCIAL STATEMENTS" means (a) the audited balance
sheets of the Company at December 31, 1998, 1997 and 1996 and the
related audited statements of operations, stockholders' equity and cash
flows for each of the Company's three fiscal years in the three-year
period ended December 31, 1998, together with the related audit report
of KPMG Peat Marwick, and (b) the Current Balance Sheet and the related
unaudited statements of operations, stockholders' equity and cash flows
for the three month period ended on the Current Balance Sheet.

"IPO" means the first time after May 1, 1999 a registration
statement filed under the Securities Act and respecting an underwritten
primary offering by Purchaser of shares of Purchaser Common Stock is
declared effective under the Securities Act and all the shares
registered by that registration statement are issued and sold by
Purchaser.

"IPO CLOSING DATE" means the date on which Purchaser first
receives payment for the shares of Purchaser Common Stock it sells to
the Underwriter in the IPO.

"IPO PRICE" means the price per share of Purchaser Common Stock
which is set forth as the "price to public" on the cover page of the
Final Prospectus.

"IPO PRICING DATE" means the date, if any, on which Purchaser
and the Underwriter agree in the Underwriting Agreement to the price per
share of Common Stock at which the Underwriter, subject to the terms and
conditions of the Underwriting Agreement, will purchase newly issued
shares of Purchaser Common Stock from Purchaser on the IPO Closing Date.

"IRS" means the Internal Revenue Service.

"LIEN" means, with respect to any property or asset of any
Person (or any revenues, income or profits of that Person therefrom), in
each case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise, (a) any
mortgage, lien, security interest, pledge, attachment, levy or other
charge or encumbrance

8
<PAGE>

of any kind thereupon or in respect thereof or (b) any other arrangement
under which the same is transferred, sequestered or otherwise identified
with the intention of subjecting the same to, or making the same
available for, the payment or performance of any liability in priority
to the payment of the ordinary, unsecured creditors of that Person,
including any "ADVERSE CLAIM" (as defined in Section 8-302(b) of each
applicable Uniform Commercial Code) in the case of any Capital Stock.
For purposes of this Agreement, a Person shall be deemed to own subject
to a Lien any asset that Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to that asset.

"LITIGATION" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or
pending before any Governmental Authority or any arbitration proceeding.

"MAJORITY STOCKHOLDERS" means any Stockholder or combination of
Stockholders who at the date of this Agreement own shares of Company
Common Stock representing more than two-thirds of the total number of
shares of Company Common Stock outstanding at the date of this
Agreement.

"MATERIAL" means, as applied to any specified Entity, material
to the business, operations, property or assets, liabilities, financial
condition or results of operations of the specified Entity and its
Subsidiaries considered as a whole.

"MATERIAL ADVERSE EFFECT" means, with respect to the
consequences of any fact or circumstance (including the occurrence or
non-occurrence of any event) to the Company (or after the Effective Time
the Surviving Corporation), that such fact or circumstance has caused,
is causing or can reasonably be expected to cause, directly or
indirectly, singly or in the aggregate with other facts and
circumstances, any Damages in excess of the Threshold Amount.

"MATERIAL AGREEMENT" of an Entity means any contract or
agreement (a) to which the Entity or any of its Subsidiaries is a party,
or by which the Entity or any of its Subsidiaries is bound or to which
any property or assets of the Entity or any of its Subsidiaries is
subject and (b) which is Material to the Entity.

"MERGER CONSIDERATION" has the meaning specified in
Section 2.04.

"MOODY'S" means Moody's Investors Service, Inc.

"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.

"NEWCO" means INFO Acquisition, Inc., a Texas corporation.

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<PAGE>

"NEWCO COMMON STOCK" means the common stock, par value $1 per
share, of Newco.

"NEW EMPLOYMENT AGREEMENTS" means the Employment Agreements
entered into as of June ___, 1999, between the Purchaser and Tony
Howlett and Glenn Kramer.

"ORGANIZATION STATE" means, as applied to (a) any corporation,
its state or other jurisdiction of incorporation, (b) any limited
liability company or limited partnership, the state or other
jurisdiction under whose laws it is organized and existing in that legal
form, and (c) any other Entity, the state or other jurisdiction whose
laws govern that Entity's internal affairs.

"OTHER AGREEMENTS" has the meaning specified in the Preliminary
Statements in this Agreement.

"OTHER COMPENSATION PLAN" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored
by the Company or any Company Subsidiary, or to which the Company or any
Company Subsidiary contributes, on behalf of any of its employees,
nonemployee directors or officers or other natural persons performing
consulting or other independent contractor services for the Company or
any Company Subsidiary, including all such arrangements, plans,
policies, practices or programs providing for severance pay, deferred
compensation, incentive, bonus or performance awards or the actual or
phantom ownership of any Capital Stock or Derivative Securities of the
Company or any Company Subsidiary, but excluding all Company ERISA
Pension Plans and Employment Agreements.

"PARTIES" means the parties to this Agreement.

"PBGC" means the Pension Benefit Guaranty Corporation.

"PERMITTED INVESTMENTS" means at the time of their purchase or
other acquisition by the Company or any Company Subsidiary
(a) obligations issued or guaranteed by the United States of America
with a remaining maturity not exceeding one year, (b) commercial paper
with maturities of not more than 270 days and a published rating of not
less than A-1 by S&P or P-1 by Moody's, and (c) certificates of deposit
and bankers' acceptances having maturities of not more than one year of
any commercial bank or trust company if (A) the issuing bank or trust
company has a combined capital and surplus of at least $5 million and
(B) its unsecured long-term debt obligations, or those of a holding
company of which it is a Subsidiary, are rated not less than A- by S&P
or A3 by Moody's.

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<PAGE>

"PERMITTED LIENS" means, as applied to the property or assets of
any Person (or any revenues, income or profits of that Person
therefrom): (a) Liens for Taxes if the same are not at the time due and
delinquent; (b) Liens of carriers, warehousemen, mechanics, laborers and
materialmen for sums not yet due; (c) Liens incurred in the ordinary
course of that Person's business in connection with worker's
compensation, unemployment insurance and other social security
legislation (other than pursuant to ERISA or Section 412(n) of the
Code); (d) Liens incurred in the ordinary course of that Person's
business in connection with deposit accounts or to secure the
performance of bids, tenders, Services Contracts, trade contracts,
statutory obligations, surety and appeal bonds, performance and
return-of-money bonds and other obligations of like nature; (e)
easements, rights-of-way, reservations, restrictions and other similar
encumbrances incurred in the ordinary course of that Person's business
or existing on property and not materially interfering with the ordinary
conduct of that Person's business or the use of that property; (f)
defects or irregularities in that Person's title to its real properties
which do not materially diminish the value of the surface estate or
interfere with the ordinary conduct of that Person's business or the use
of any of such properties; (g) any interest or title of a lessor of
assets being leased by any Person pursuant to any Capital Lease
disclosed in Section 4.19 of the Disclosure Statement or any lease that,
under GAAP, would be accounted for as an operating lease; and (h) Liens
securing purchase money Indebtedness disclosed in Section 4.18 or 4.19
of the Disclosure Statement so long as the Liens do not attach to any
property or assets other than the properties or assets purchased with
the proceeds of such Indebtedness.

"PERSON" means any natural person, Entity, estate, trust, union
or employee organization or Governmental Authority or, for the purpose
of the definition of "ERISA Affiliate," any trade or business.

"PLAN" has the meaning specified in Section 4.26(a).

"PRIVATE PLACEMENT MEMORANDUM" means the Purchaser Private
Placement Memorandum dated as of June 22, 1999, relating to the offer of
Purchaser Common Stock and Contingent Stock Issue Rights in connection
with the Merger.

"PROPRIETARY RIGHTS" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United
States and foreign patents and applications therefor and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable
or not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists,
and all documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor and all
other rights

11
<PAGE>

corresponding thereto throughout the world; (iv) all mask works, mask
work registrations and applications therefor; (v) all industrial designs
and any registrations and applications therefor throughout the world;
(vi) all trade names, logos, common law trademarks and service marks;
trademark and service mark registrations and applications therefor and
all goodwill associated therewith throughout the world; (vii) all
databases and data collections and all rights therein throughout the
world; (viii) all computer software including all source code, object
code, firmware, development tools, files, records and data, all media
on which any of the foregoing is recorded, all Uniform Resource
Locators, Web addresses, sites and domain names, (ix) any similar,
corresponding or equivalent rights to any of the foregoing, and (x) all
documentation related to any of the foregoing, that are used in and/or
necessary to the conduct of the Company's business as it currently is
conducted or is currently contemplated by the Company or any Company
Subsidiary to be conducted, including, without limitation, the design,
development, manufacture, use, import and sale of the products,
technology and services of the Company or any Company Subsidiary
(including products, technology or services currently under
development).

"PURCHASER" means OmniLynx Communications Corporation, a
Delaware corporation.

"PURCHASER COMMON STOCK" means the common stock, par value
$.0001 per share, of Purchaser.

"PURCHASER INDEMNIFIED LOSS" has the meaning specified in
Section 9.02(a).

"PURCHASER INDEMNIFIED PARTY" means Purchaser and its Affiliates
and each of their respective officers, directors, employees, agents and
counsel; PROVIDED, HOWEVER, that no Person who indemnifies any Purchaser
Indemnified Parties under this Agreement in his capacity as a
Stockholder will be an Purchaser Indemnified Party for purposes of this
Agreement, notwithstanding that the Person is an Purchaser Indemnified
Party for purposes of one or more of the Other Agreements.

"PURCHASER MERGER SECURITIES" means the Purchaser Common Stock
and Contingent Stock Issue Rights issued as part of the Merger
Consideration, and the Purchaser Common Stock issued, if any, pursuant
to the Contingent Stock Issue Rights.

"QUALIFIED PLANS" has the meaning specified in Section 4.26(b).

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<PAGE>

"REGISTERED PROPRIETARY RIGHTS" means all United States,
international and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations
or applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work
registrations and applications to register mask works; and (v) any other
Company Proprietary Rights that is the subject of an application,
certificate, filing, registration or other document issued by, filed
with, or recorded by, any state, government or other public legal
authority, that are used in and/or necessary to the conduct of the
Company's business as it currently is conducted or is currently
contemplated by the Company or any Company Subsidiary to be conducted,
including, without limitation, the design, development, manufacture,
use, import and sale of the products, technology and services of the
Company or any Company Subsidiary (including products, technology or
services currently under development).

"REGISTRATION STATEMENT" means the registration statement
(including (a) each preliminary prospectus included therein prior to the
date on which that registration statement is declared effective under
the Securities Act (including any prospectus filed with the SEC pursuant
to Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments thereof and all supplements and exhibits thereto) filed by
Purchaser with the SEC to register shares of Purchaser Common Stock
under the Securities Act for public offering and sale in the IPO.

"RETURNS" means the returns, reports or statements (including
any information returns) any Governmental Requirement requires to be
filed for purposes of any Tax.

"RELATED PARTY AGREEMENT" means any contract or other agreement,
written or oral, other than the New Employment Agreements, to which the
Company is a party or is bound or by which any property of the Company
is bound or may be subject and (a) to which any Stockholder or any of
that Stockholder's Related Persons or Affiliates also is a party, (b) of
which any Stockholder or any Stockholder's Related Persons or Affiliates
is a beneficiary, or (c) as to which any transaction contemplated
thereby properly would be characterized (without regard to the amount
involved) as a related party transaction for purposes of applying the
disclosure requirements of GAAP or the SEC applicable to the
Registration Statement.

"RELATED PERSON" of a Stockholder means: (a) if the Stockholder
is a natural person, (i) any Immediate Family Member of the Stockholder,
(ii) any Estate of the Stockholder or any Immediate Family Member of the
Stockholder, (iii) the trustee of any inter vivos or testamentary trust
of which all the beneficiaries are Immediate Family Members of the
Stockholder, and (iv) any Entity the entire equity interest in which is
owned by any one or more of the Stockholder and Immediate Family Members
of the Stockholder; and (b) if the Stockholder is an Entity, Estate or
trust, (i) any Person who owns an equity interest in the Stockholder on
the date hereof, (ii) any Person who would be a Related Person under
clause

13
<PAGE>

(a) of this definition of a natural person who is an ultimate beneficial
owner of the Stockholder, or (iii) any other Entity the entire equity
interest in which is owned by any one or more of the Stockholder and
Immediate Family Members of the Stockholder. As used in this
definition, "Estate" means, as to any natural person who has died or
been adjudicated mentally incompetent by a court of competent
jurisdiction, (i) that person's estate or (ii) the administrator,
conservator, executor, guardian or representative of that person's
estate.

"REPRESENTATIVES" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including
independent certified public accountants), advisors, attorneys,
consultants or other agents of that Person, or any other representatives
of that Person or of any of that Person's directors, officers,
employees, Affiliates, accountants (including independent certified
public accountants), advisors, attorneys, consultants or other agents.

"REPORTABLE EVENT" means, with respect to any Company ERISA
Pension Plan, (a) the occurrence of any of the events set forth in
Section 4043(b) or 4043(c) (other than a Reportable Event as to which
the provision of 30 days' notice to the PBGC is waived under applicable
regulations), 4062(e) or 4063(a) of ERISA with respect to that plan,
(b) any event requiring the Company or any ERISA Affiliate to provide
security to that plan under Section 401 (a)(29) of the Code, or (c) any
failure to make a payment required by Section 412(m) of the Code with
respect to that plan.

"RCRA" means the Resource Conservation and Recovery Act of 1976.

"RESPONSIBLE OFFICER" means any of Tony Howlett, Glenn Kramer or
Don Trapp.

"RESTRICTED PAYMENT" means, with respect to any Entity at any
time, any of the following effected by the Entity: (a) any declaration
or payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of the
Entity or (b) any direct or indirect redemption, retirement, purchase or
other acquisition for value of, or any direct or indirect purchase,
payment or sinking fund or similar deposit for the redemption,
retirement, purchase or other acquisition for value of, or to obtain the
surrender of, any then outstanding Capital Stock of the Entity or any
Affiliate of the Entity or any then outstanding warrants, options or
other rights to acquire or subscribe for or purchase unissued or
treasury Capital Stock of the Entity or any of its Affiliates.

"RESTRICTED STOCKHOLDER" has the meaning specified in
Section 10.1.

"SEC" means the Securities and Exchange Commission.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

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<PAGE>

"SERVICES CONTRACT" means any written or oral contract,
subcontract or other agreement under which the Company is or may become
obligated to provide to or for any Person.

"SHAREHOLDERS AGREEMENTS" means (i) the Shareholders' Agreement
effective as of November 24, 1994 among Tony Howlett, David H. Magnum
and John Mabie; (ii) the Shareholders' Agreement effective as of
December 7, 1994 between Tom Brodrick and Steve McNeely; and (iii) the
Shareholders' Agreement effective as of December 14, 1994 for Ray Boyd.

"SIGNIFICANT STOCKHOLDER CEILING AMOUNT" means $6,433,840.

"SIGNIFICANT STOCKHOLDER PRO RATA SHARE" means for each
Significant Stockholder, the fraction expressed as a percentage, (a) the
numerator of which is the number of shares of outstanding Company Common
Stock owned by that Significant Stockholder, as set forth in Schedule
2.04, and (b) the denominator of which is the total number of shares of
outstanding Company Common Stock owned by all Significant Stockholders,
as set forth in Schedule 2.04.

"SIGNIFICANT STOCKHOLDERS" means Tony Howlett, AMICI Online
Investments, L.L.C., Mangum Family Limited Partnership, Krueger
Investment Company, Glenn Kramer, John Mabie, Robert Mokhtarian, David
Mangum, Darin Mangum, Don Trapp and Gary Maxwell.

"SOLID WASTES, HAZARDOUS WASTES OR HAZARDOUS SUBSTANCES" have
the meanings ascribed to those terms in CERCLA, RCRA or any other
Environmental Law applicable to the business or operations of the
Company or any Company Subsidiary which imparts a broader meaning to any
of those terms than does CERCLA or RCRA.

"S&P" means Standard and Poor's Rating Group.

"STOCKHOLDER INDEMNIFIED PARTY" means (a) each Stockholder and
each of that Stockholder's Affiliates (other than the Company or,
following the Effective Time, the Surviving Corporation or Purchaser or
any of its Subsidiaries, if the Stockholder is an Affiliate of
Purchaser), agents and counsel and (b) prior to the Effective Time, the
Company and each of its officers, directors, employees, agents and
counsel who are not Stockholder Indemnified Parties within the meaning
of clause (a) of this definition.

"STOCKHOLDER INDEMNIFIED LOSS" has the meaning specified in
Section 9.03.

"STOCKHOLDER PRO RATA SHARE" means for each Stockholder, the
fraction expressed as a percentage, (a) the numerator of which is the
number of shares of outstanding Company Common Stock owned by that
Stockholder, as set forth on Schedule 2.04, and (b) the

15
<PAGE>

denominator of which is the total number of shares of outstanding
Company Common Stock owned by all Stockholders, as set forth on
Schedule 2.04.

"SUBSIDIARY" of any specified Person means at any time, any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.

"SUPPLEMENTAL INFORMATION" has the meaning specified in
Section 6.06.

"SURVIVING CORPORATION" means the Company, which is to be
designated in the Certificate of Merger as the surviving corporation of
the Merger.

"TAX" or "TAXES" means all net or gross income, gross receipts,
net proceeds, sales, use, ad valorem, value added, franchise,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges or
assessments of any nature imposed by any Governmental Requirement,
whether disputed or not, together with any interest, penalties,
additions to tax or additional amounts with respect thereto.

"TAXING AUTHORITY" means any Governmental Authority having or
exercising jurisdiction with respect to any Tax.

"TERMINATION EVENT" means, with respect to any Company ERISA
Pension Plan, (a) any Reportable Event with respect to that plan which
is likely to result in the termination of that plan, (b) the termination
of, or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of ERISA, or (c) the institution of proceedings to terminate, or
the appointment of a trustee to administer, that plan under Section 4042
of ERISA.

"TERRITORY" has the meaning specified in Section 10.01(a).

"THIRD PARTY CLAIM" has the meaning specified in
Section 9.04(b).

"THRESHOLD AMOUNT" means 1% of the Ceiling Amount.

"TRANSACTION DOCUMENT" means this Agreement, the Certificates of
Merger, the General Release and the other written agreements, documents,
instruments and certificates executed pursuant to or in connection with
this Agreement (other than the Other Transaction Documents and the
Underwriting Agreement), including those specified in Article VII to be
delivered at or before the Closing, all as amended, modified or
supplemented from time to time.

"TRANSFER TAXES" has the meaning specified in Section 12.07.

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<PAGE>

"UNDERWRITING AGREEMENT" has the meaning specified in
Section 7.02(a)(iii).

"WELFARE PLAN" means an "employee welfare benefit plan" as
defined in Section 3(1) of ERISA.

"WHOLLY OWNED SUBSIDIARY" means any corporation or other Entity
all of the outstanding Capital Stock of which, on a fully diluted basis,
is owned and controlled, directly or indirectly through another Wholly
Owned Subsidiary, by the Company.

Section 1.02. DEFINITIONS. Capitalized terms used in this Agreement
but not defined in this Section 1.01 have the meanings assigned to them in the
Preliminary Statements or elsewhere in this Agreement, as the case may be.

ARTICLE II

THE MERGER AND RELATED MATTERS

Section 2.01. CERTIFICATE OF MERGER. On the terms and subject to the
conditions of this Agreement, the Company will cause a Certificate of Merger to
be duly executed and delivered on or promptly after the date of the Closing to
the Secretary of State of the State of Texas.

Section 2.02. THE EFFECTIVE TIME. The effective time of the Merger
(the "EFFECTIVE TIME") will be the time on the IPO Closing Date which the
Certificate of Merger specifies or, if the Certificate of Merger does not
specify another time, 8:00 a.m., eastern time, on the IPO Closing Date.

Section 2.03. CERTAIN EFFECTS OF THE MERGER. At and as of the
Effective Time, (a) Newco will be merged with and into the Company in accordance
with the provisions of the Business Corporation Act, (b) Newco will cease to
exist as a separate legal entity, (c) the articles of incorporation of the
Company will be amended to change its authorized capital stock to 1,000 shares,
par value $1.00 per share, of Common Stock, (d) the Company will be the
Surviving Corporation and, as such, will, all with the effect provided by the
Business Corporation Act, (i) possess all the properties and rights, and be
subject to all the restrictions and duties, of the Company and Newco and (ii) be
governed by the laws of the State of Texas, (e) the Charter Documents of Newco
then in effect (after giving effect to the amendment of the Company's articles
of incorporation specified in clause (c) of this sentence) will become and
thereafter remain (until changed in accordance with (i) applicable law, in the
case of the articles of incorporation or (ii) their terms, in the case of the
bylaws) the Charter Documents of the Surviving Corporation, (f) the initial
board of directors of the

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<PAGE>

Surviving Corporation will be the Persons named in Schedule 2.03, who will
hold the office of director of the Surviving Corporation subject to the
provisions of the applicable laws of the State of Texas and the Charter
Documents of the Surviving Corporation, and (g) the officers of the Surviving
Corporation immediately following the Merger will be as set forth in Schedule
2.03, and each of the Persons so designated in Schedule 2.03 will serve in
each office specified for that Person in Schedule 2.03, subject to the
provisions of the Charter Documents of the Surviving Corporation, until his
or her successor is duly elected to, and, if necessary, qualified for, that
office.

Section 2.04. EFFECT OF THE MERGER ON CAPITAL STOCK. As of the
Effective Time, as a result of the Merger and without any action on the part of
any holder thereof:

(a) the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares
referred to in Section 2.04(b) below and Dissenting Shares (as defined
in Section 2.08 below) will (i) be converted into the right to receive,
without interest, on surrender of the certificate evidencing those
shares, the number of whole and fractional shares of Purchaser Common
Stock and Contingent Stock Issue Rights set forth or determined as
provided in Schedule 2.04 (the "MERGER CONSIDERATION"), (ii) cease to be
outstanding and to exist, and (iii) be canceled and retired;

(b) each share of Company Common Stock held in the treasury
of the Company or by any Company Subsidiary will (i) cease to be
outstanding and to exist and (ii) be canceled and retired; and

(c) each share of Newco Common Stock issued and outstanding
immediately prior to the Effective Time will be converted into one share
of Common Stock, par value $1.00 per share, of the Surviving
Corporation, and the shares of Common Stock of the Surviving Corporation
issued on such conversion will constitute all the issued and outstanding
shares of Capital Stock of the Surviving Corporation.

Each holder of a certificate representing shares of Company Common Stock
immediately prior to the Effective Time (other than the shares referred to in
Section 2.04(b) below and Dissenting Shares) will, as of the Effective Time and
thereafter, cease to have any rights respecting those shares other than the
right to receive, without interest, the Merger Consideration owing with respect
to those shares as provided in Section 2.06.

Section 2.05. DELIVERY, EXCHANGE AND PAYMENT.

(a) At or after the Effective Time: (i) each Stockholder,
as the holder of certificates representing shares of Company Common
Stock, will, on surrender of his certificates to Purchaser (or any agent
which may be appointed by Purchaser for purposes of this Section 2.05),
receive, and Purchaser will pay and issue to each Stockholder, in each
case subject to the provisions of Section 2.06, the Merger
Consideration; and (ii) until any certificate representing Company
Common Stock has been surrendered and replaced

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<PAGE>

pursuant to this Section 2.05, that certificate will, for all purposes,
be deemed to evidence ownership of the number of whole shares of
Purchaser Common Stock and Contingent Stock Issue Rights included in the
Merger Consideration payable in respect of that certificate pursuant to
Section 2.04. All shares of Purchaser Common Stock and Contingent Stock
Issue Rights issuable in the Merger will be deemed for all purposes to
have been issued by Purchaser at the Effective Time.

(b) Each Stockholder will deliver to Purchaser (or any agent
that may be appointed by Purchaser for purposes of this Section 2.05),
on or before the IPO Closing Date, the certificates representing Company
Common Stock owned by the Stockholder, duly endorsed in blank by him, or
accompanied by stock powers duly executed by him in blank, and with all
necessary transfer tax and other revenue stamps, acquired at his
expense, affixed and canceled. Each Stockholder shall cure any
deficiencies in the endorsement of the certificates or other documents
of conveyance respecting, or in the stock powers accompanying, the
certificates representing Company Common Stock delivered by him.

(c) No dividends (or interest) or other distributions
declared or earned after the Effective Time with respect to Purchaser
Common Stock and payable to the holders of record thereof after the
Effective Time will be paid to the holder of any unsurrendered
certificates representing shares of Company Common Stock for which
shares of Purchaser Common Stock have been issued in the Merger until
the unsurrendered certificates are surrendered as provided herein, but
(i) on such surrender, Purchaser will cause to be paid, to the Person in
whose name the certificates representing such shares of Purchaser Common
Stock shall then be issued, the amount of dividends or other
distributions previously paid with respect to such whole shares of
Purchaser Common Stock with a record date, or which have accrued,
subsequent to the Effective Time, but prior to surrender, and the amount
of any cash payable to such Person for and in lieu of fractional shares
pursuant to Section 2.06 and (ii) at the appropriate payment date or as
soon as practicable thereafter, Purchaser will cause to be paid to that
Person the amount of dividends or other distributions with a record
date, or which have been accrued, subsequent to the Effective Time, but
which are not payable until a date subsequent to surrender, which are
payable with respect to such number of whole shares of Purchaser Common
Stock, subject in all cases to any applicable escheat laws. No interest
will be payable with respect to the payment of such dividends or other
distributions (or cash for and in lieu of fractional shares) on
surrender of outstanding certificates.

Section 2.06. FRACTIONAL SHARES. Notwithstanding any other provision
of this Article II, no fractional shares of Purchaser Common Stock and
Contingent Stock Issue Rights will be issued, and any Stockholder otherwise
entitled to receive a fractional share of Purchaser Common Stock and Contingent
Stock Issue Rights but for this Section 2.06 will instead be entitled to receive
a cash payment for and in lieu thereof in the amount (rounded to the nearest
whole cent) equal to that Person's fractional interest in a share of Purchaser
Common Stock and Contingent Stock Issue Rights multiplied by $10.

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<PAGE>

Section 2.07. DISSENTING SHARES.

(a) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock that are held by any record
holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal rights in accordance Sections
5.11 and 5.12 of the Business Corporation Act (the "Dissenting Shares")
shall not be converted into the right to receive the Merger
Consideration but shall become the right to receive such consideration
as may be determined to be due in respect of such Dissenting Shares
pursuant to the Business Corporation Act; provided, however, that any
holder of Dissenting Shares who shall have failed to perfect or shall
have withdrawn or lost his rights to appraisal of such Dissenting
Shares, in each case under the Business Corporation Act, shall forfeit
the right to appraisal of such Dissenting Shares, and such Dissenting
Shares shall be deemed to have been converted into the right to receive,
as of the Effective Time, the Merger Consideration without interest.
Parent and the Surviving Corporation shall comply with all of their
obligations under the Business Corporation Act with respect to holders
of Dissenting Shares.

(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by
the Company and any other related instruments served pursuant to
Delaware Law and received by the Company and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for
appraisal under the Business Corporation Act. The Company shall not,
except with the prior written consent of Parent, make any payment with
respect to any demands for appraisal or offer to settle or settle any
such demands.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER

Section 3.01. BY EACH STOCKHOLDER. Each Stockholder, severally as to
himself or herself only, represents and warrants to Purchaser that all the
following representations and warranties in this Article III are true and
correct: (i) the Stockholder will be acquiring the shares of Purchaser Merger
Securities to be issued to him pursuant to Section 2.04 solely for the
Stockholder's account, for investment purposes only and with no current
intention or plan to distribute, sell or otherwise dispose of any of those
Purchaser Merger Securities in connection with any distribution; (ii) the
Stockholder is not a party to any agreement or other arrangement for the
disposition of any shares of Purchaser Merger Securities other than this
Agreement; (iii) unless otherwise specified on Schedule 2.04, the Stockholder is
an "accredited investor" as defined in Securities Act Rule 501 (a); (iv) the
Stockholder (A) is able to bear the economic risk of an investment in the
Purchaser Merger Securities to be acquired by him pursuant to this Agreement,
(B) can afford to sustain a total loss of that investment, (C) has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of the proposed investment in the Purchaser
Merger

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<PAGE>

Securities, (D) has had an adequate opportunity to ask questions and receive
answers from the officers of Purchaser concerning any and all matters
relating to the transactions contemplated by this Agreement, including the
background and experience of the current and proposed officers and directors
of Purchaser, and the plans for the operations of the business of Purchaser,
and (E) has asked all questions of the nature described in preceding clause
(D), and all those questions have been answered to his satisfaction.

Section 3.02. OWNERSHIP AND STATUS OF COMPANY CAPITAL STOCK. The
Stockholder is the record and beneficial owner (or, if the Stockholder is a
trust or the estate of a deceased natural person, the legal owner) of the number
of shares of Company Capital Stock set forth, by class, and by each series in
each class, opposite the Stockholder's name in Schedule 2.04, free and clear of
all Liens, except for the Liens accurately set forth in Schedule 2.04, all of
which will be released at or before the Effective Time.

Section 3.03. POWER OF THE STOCKHOLDER; APPROVAL OF THE MERGER.

(a) The Stockholder has the full power, legal capacity and
authority to execute and deliver this Agreement and each other
Transaction Document to which the Stockholder is a party and to perform
the Stockholder's obligations in this Agreement and in all other
Transaction Documents to which the Stockholder is a party. This
Agreement constitutes, and each such other Transaction Document, when
executed in the Stockholder's individual capacity and delivered by the
Stockholder, will constitute, the legal, valid and binding obligation of
the Stockholder, enforceable against the Stockholder in accordance with
its terms, except as their enforceability may be (i) limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). If
the Stockholder is an Entity, the Stockholder has, in accordance with
all applicable Governmental Requirements and its Charter Documents,
obtained all approvals and taken all actions necessary for the
authorization, execution, delivery and performance by the Stockholder of
this Agreement and the other Transaction Documents to which the
Stockholder is a party. If the Stockholder is acting otherwise than in
his individual capacity (whether as an executor or a guardian or in any
other fiduciary or representative capacity), all actions on the part of
the Stockholder and all other Persons (including any court) necessary
for the authorization, execution, delivery and performance by the
Stockholder of this Agreement and the other Transaction Documents to
which the Stockholder is a party have been duly taken.

(b) The Stockholder, acting in each capacity in which he is
entitled, by reason of the Company's Charter Documents or the
Governmental Requirements of the Company's Organization State or for any
other reason, to vote to approve or disapprove the consummation of the
Merger, has voted all the shares of Company Capital Stock owned by him
and entitled to a vote or votes on that matter, in any one or more of
the manners prescribed or permitted by the Company's Charter Documents
or the Governmental

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<PAGE>

Requirements of the Company's Organization State, whichever are
controlling, to approve this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement.

Section 3.04. NO CONFLICTS OR LITIGATION. The execution, delivery and
performance in accordance with their respective terms by the Stockholder of this
Agreement and the other Transaction Documents to which the Stockholder is or
will be a party do not and will not (a) violate any Governmental Requirement,
(b) breach or constitute a default under any agreement or instrument to which
the Stockholder is a party or by which the Stockholder or any of the shares of
Company Capital Stock owned by the Stockholder is bound, (c) result in the
creation or imposition of, or afford any Person the right to obtain, any Lien
upon any of the shares of Company Capital Stock owned by the Stockholder (or
upon any revenues, income or profits of the Stockholder therefrom) or (d) if the
Stockholder is an Entity, violate the Stockholder's Charter Documents. No
Litigation is pending or, to the knowledge of the Stockholder, threatened to
which the Stockholder is or may become a party which (a) questions or involves
the validity or enforceability of any of the Stockholder's obligations under any
Transaction Document or (b) seeks (or reasonably may be expected to seek) (i) to
prevent or delay the consummation by the Stockholder of the transactions
contemplated by this Agreement to be consummated by the Stockholder or
(ii) Damages in connection with any consummation by the Stockholder of the
transactions contemplated by this Agreement.

Section 3.05. NO BROKERS. The Stockholder has not, directly or
indirectly, in connection with this Agreement or the transactions contemplated
hereby (a) employed any broker, finder or agent or (b) agreed to pay or incurred
any obligation to pay any broker's or finder's fee, any sales commission or any
similar form of compensation.

Section 3.06. PREEMPTIVE AND OTHER RIGHTS; WAIVER. Except for the
right of the Stockholder to receive shares of Purchaser Common Stock and
Contingent Stock Issue Rights as a result of the Merger or to acquire Purchaser
Common Stock pursuant to any written option or warrant granted by Purchaser to
the Stockholder, the Stockholder either (a) does not have any statutory or
contractual preemptive or other right of any kind (including any right of first
offer or refusal) to acquire any shares of Company Capital Stock or Purchaser
Common Stock or (b) hereby irrevocably waives each such right of that type the
Stockholder has or may have. Further, by execution of this Agreement, the
Stockholder irrevocably waives any statutory or contractual preemptive or other
right of any kind to acquire any shares of Company Capital Stock with respect to
any prior issuances of Company Capital Stock.

Section 3.07. COUNSEL. The Stockholder has been given the opportunity
to obtain the advice of attorneys, accountants and other counsel of their own
choosing, and have not relied in any way on any statements, advice or opinion,
whether written or oral, of the Counsel for Purchaser and Newco or the counsel
for the Company with respect to this Agreement, the transactions contemplated
hereby and any actual or potential consequences, including any actual or
potential Tax

22
<PAGE>

consequences, hereof and thereof on the Purchaser, Newco, the Company, the
Stockholder or the Significant Stockholders.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SIGNIFICANT STOCKHOLDERS

Section 4.01. BY THE COMPANY AND EACH SIGNIFICANT STOCKHOLDER. The
Company and each Significant Stockholder severally represent and warrant to, and
agree with, Purchaser that all the following representations and warranties in
this Article IV are true and correct:

(a) the Organization State of the Company is the State of
Texas, and the Company (i) is a corporation duly organized, validly
existing and in good standing under the laws of that State and (ii) has
the corporate power and authority under those laws and its Charter
Documents to own or lease and to operate its properties and to carry on
its business as now conducted; and

(b) the authorized Capital Stock of the Company is comprised
of 20,000,000 shares of Company Common Stock, of which 10,807,756 shares
have been issued and are now outstanding and no shares are held by the
Company as treasury shares, and no outstanding Derivative Securities of
the Company exist.

Section 4.02. QUALIFICATION. Section 4.02 of the Disclosure Statement
accurately lists all the jurisdictions in which the Company are authorized or
qualified to own or lease and to operate their properties or to carry on their
business as now conducted. The Company does not own, lease or operate
properties or carry on its business in any jurisdiction not listed in Section
4.02 of the Disclosure Statement.

Section 4.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.

(a) The execution, delivery and performance by the Company
of this Agreement and each other Transaction Document to which it is or
will be a party, and the effectuation of the Merger and the other
transactions contemplated hereby and thereby, are within its corporate
or other power under its Charter Documents and all applicable
Governmental Requirements of its Organization State and have been duly
authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and all
applicable Governmental Requirements Organization State.

23
<PAGE>

been, duly executed and delivered by the Company and is, or when so
executed and delivered will be, the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms, except as enforceability may be (i) limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and
(ii) subject to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).

(c) The execution, delivery and performance in accordance
with their respective terms by the Company of the Transaction Documents
to which it is a party do not and will not (i) violate, breach or
constitute a default under (A) the Charter Documents of the Company,
(B) any Governmental Requirement applicable to the Company or (C) except
as set forth in Section 4.03 of the Disclosure Statement, any Material
Agreement of the Company, (ii) except as set forth in Section 4.03 of
the Disclosure Statement, result in the acceleration or mandatory
prepayment of any Indebtedness, or any Guaranty not constituting
Indebtedness, of the Company or afford any holder of any of that
Indebtedness, or any beneficiary of any of those Guaranties, the right
to require the Company to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform any of those
Guaranties, (iii) cause or result in the imposition of, or afford any
Person the right to obtain, any Lien upon any property or assets of the
Company (or upon revenues, income or profits of the Company therefrom),
(iv) except as set forth in Section 4.03 of the Disclosure Statement,
result in the revocation, cancellation, suspension or material
modification, in any single case or in the aggregate, of any
Governmental Approval possessed by the Company at the date hereof and
necessary for the ownership or lease or the operation of its properties
or the carrying on of its business as now conducted, including any
necessary Governmental Approval under each applicable Environmental Law,
or (v) except as set forth in Section 4.03 of the Disclosure Statement,
entitle any Person other than the Company to revoke, cancel, suspend or
materially modify any Company Commitment.

(d) Except for (i) the filing of the Certificates of Merger
with the applicable Governmental Authorities, (ii) filings of the
Registration Statement under the Securities Act and the SEC order
declaring the Registration Statement effective under the Securities Act,
and (iii) as may be required by the HSR Act or the applicable state
securities or blue sky laws, no Governmental Approvals are required to
be obtained, and no reports or notices to or filings with any
Governmental Authority are required to be made, by the Company for the
execution, delivery or performance by the Company of the Transaction
Documents to which it is a party, the enforcement against the Company of
its obligations thereunder or the effectuation of the Merger and the
other transactions contemplated thereby.

(e) The Company has terminated the Shareholders Agreements
and the Shareholders Agreements have no further force and effect.

Section 4.04. CHARTER DOCUMENTS AND RECORDS; NO VIOLATION. The
Company has caused true, complete and correct copies of the Charter Documents,
each as in effect on the date hereof, and

24
<PAGE>

the minute books and similar corporate or other Entity records of the Company
to be delivered or otherwise made available to Purchaser. No breach or
violation of any Charter Document of the Company has occurred and is
continuing.

Section 4.05. NO DEFAULTS. No act or omission by the Company has
occurred, and to the knowledge of the Company (which for purposes of this
Article IV means the actual knowledge of any Responsible Officer and any
information which any Responsible Officer should have known in the reasonable
performance of their duties), no other condition or state of facts exists, or,
with the giving of notice or the lapse of time or both, would exist, which
(a) entitles any holder of any outstanding Indebtedness, or any Guaranty not
constituting Indebtedness, of the Company, or a representative of the holder, to
accelerate the maturity, or require a mandatory prepayment of that Indebtedness
or Guaranty, or affords the holder or its representative, or any beneficiary of
that Guaranty, the right to require the Company to redeem, purchase or otherwise
acquire, reacquire or repay any of that Indebtedness, or to perform that
Guaranty in whole or in part, (b) entitles any Person to obtain any Lien (other
than a Permitted Lien) upon any properties or assets of the Company (or upon
revenues, income or profits of the Company therefrom), or (c) constitutes a
violation or breach of, or a default under, any Material Agreement of the
Company by the Company.

Section 4.06. COMPANY SUBSIDIARIES. The Company does not have, and
has never had, any Company Subsidiaries. Except as accurately set forth in
Section 4.06 of the Disclosure Statement, the Company does not own, of record or
beneficially, directly or indirectly through any Person, and does not control,
directly or indirectly through any Person or otherwise, any Capital Stock or
Derivative Securities of any Entity.

Section 4.07. CAPITAL STOCK OF THE COMPANY. All the issued and
outstanding shares of Capital Stock of the Company have been duly authorized and
validly issued in accordance with the applicable Governmental Requirements of
its Organization State and Charter Documents and are fully paid and
nonassessable. The Company has not issued or sold any shares of its outstanding
Capital Stock in breach or violation of (a) any applicable federal or state
securities laws, any statutory or contractual preemptive rights, or any other
rights of any kind (including any rights of first offer or refusal), of any
Person or (b) the terms of any of its Derivative Securities which then were
outstanding. No Person has, otherwise than solely by reason of that Person's
right, if any, to vote shares of the Capital Stock of the Company it holds (to
the extent those shares afford their holder any voting rights) any right to vote
on any matter with the holders of Capital Stock of the Company.

Section 4.08. TRANSACTIONS IN CAPITAL STOCK. Except as accurately set
forth in Section 4.08 of the Disclosure Statement: (a) the Company has no fixed
or contingent obligation to purchase, redeem or otherwise acquire or reacquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof, and (b) no transaction has been
effected, and no action has been taken, respecting the equity ownership of the
Company, in either case in contemplation of the transactions described in this
Agreement.

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<PAGE>

Section 4.09. NO BONUS SHARES. Except as accurately set forth in
Section 4.09 of the Disclosure Statement, no outstanding share of Capital Stock
of the Company was issued for less than its fair market value at the time of its
issuance or was issued in exchange for any consideration other than cash.

Section 4.10. PREDECESSOR STATUS; ETC. Section 4.10 of the Disclosure
Statement accurately lists all the legal and assumed names of all predecessor
companies for the past five years of the Company, including the names of any
Entities from which the Company previously acquired material assets. Except as
accurately disclosed in Section 4.10 of the Disclosure Statement, the Company
has not been a Subsidiary or division of another corporation or a part of an
acquisition that was later rescinded.

Section 4.11. RELATED PARTY AGREEMENTS; RELATED BUSINESS. Except as
set forth in Schedule 4.11, each Related Party Agreement in effect on the date
of this Agreement will have been terminated as of the IPO Closing Date, and no
Related Party Agreement will exist then or thereafter. Except as set forth in
Schedule 4.11, each Stockholder is not, alone or with one or more other Persons,
the controlling Affiliate of any Entity, business or trade (other than the
Company, if a Stockholder is an Affiliate of the Company) that (a) is engaged in
any line of business which is the same as or similar to any line of business in
which the Company is engaged or (b) is, or has within the three-year period
ending on the date of this Agreement, engaged in any transaction or been a party
to any agreement with the Company.

Section 4.12. LITIGATION. Except as accurately disclosed in Section
4.12 of the Disclosure Statement, no Litigation is pending or, to the knowledge
of the Company threatened to which the Company is or may become a party.

Section 4.13. FINANCIAL STATEMENTS; DISCLOSURE.

(a) FINANCIAL STATEMENTS. The Financial Statements
(including in each case the related schedules and notes) delivered to
Purchaser by the Company present fairly, in all material respects, the
financial position of the Company at the respective dates of the balance
sheets included therein and the results of their operations and their
cash flows for the respective periods set forth therein and have been
prepared in accordance with GAAP (except in the case of unaudited
statements for the omission of footnotes and normal year end audit
adjustments). As of the date of each balance sheet included in all
previously delivered Financial Statements, the Company did not have any
outstanding Indebtedness to any Person or any liabilities of any kind
(including contingent obligations, Tax assessments or forward or
long-term commitments), or any unrealized or anticipated loss, which in
the aggregate then were Material to the Company and required to be
reflected in those Financial Statements or in the notes related thereto
in accordance with GAAP which were not so reflected.

(b) DISCLOSURE. To the knowledge of the Company:

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<PAGE>

(i) all Information (other than financial budgets
and projections) concerning the Company that (A) is set forth in
the Disclosure Statement, (B) has been delivered to Purchaser by
or on behalf of the Company pursuant to an express requirement
of this Agreement, or (C) has been furnished to Purchaser by or
on behalf of the Company for inclusion in the Registration
Statement under the captions "THE COMPANY," "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," "BUSINESS," "MANAGEMENT," and "CERTAIN
TRANSACTIONS" in any prospectus forming a part of the
Registration Statement is, taken together, true and correct in
all material respects and does not contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not materially
misleading in light of the circumstances under which the
statements were made; and

(ii) except as set forth in Section 4.13 of the
Disclosure Schedule, all financial budgets and projections that
have been or are hereafter from time to time prepared by the
Company or any of its Representatives and made available prior
to the Effective Time to Purchaser pursuant to or in connection
with this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby have been and will
be prepared and furnished to Purchaser in good faith and were
and will be based on facts and assumptions that are believed by
the management of the Company to be reasonable in light of the
then current and reasonably foreseeable business conditions of
the Company and represented and will represent management's good
faith estimate of the projected financial performance of the
Company based on the information available to the Responsible
Officer at the time so furnished (it being acknowledged by
Purchaser that the budgets and projections referred to in this
clause (ii) are derived from judgments made by the Company's
management and are only estimates of future results based on
assumptions made at the time of their preparation, and that
there can be no assurance that the budgets or projections will
be obtained or maintained or that actual results will not be
different from those budgeted or projected).

Section 4.14. COMPLIANCE WITH LAWS.

(a) Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, (i) the Company possesses all necessary licenses,
registrations and qualifications required for the conduct of its
business, and (ii) to the knowledge of the Company, the Company is in
compliance in all material respects with the terms and conditions of all
Governmental Approvals necessary for the ownership or lease and the
operation of its properties (including all the facilities and sites it
owns or holds under any lease) and the carrying on of its business as
now conducted. The Company has identified in Section 4.14 of the
Disclosure Statement all the Governmental Approvals it possesses. To
the knowledge of the Company, all the Governmental Approvals identified
in Section 4.14 of the Disclosure Statement, are valid. Except as
accurately disclosed in Section 4.14 of the Disclosure Statement, the
Company has

27
<PAGE>

not received any notice from any Governmental Authority of its intention
to cancel, terminate or not renew any of those Governmental Approvals.

(b) Except as accurately disclosed in Section 4.14 of the
Disclosure Statement, the Company: (i) has been and continues to be in
compliance in all material respects with all Governmental Requirements
applicable to it or any of its presently or previously owned or operated
properties (including all the facilities and sites now or previously
owned or held by it under any lease), businesses or operations, and
(ii)(A) the Company has not received any notice from any Governmental
Authority which asserts, or raises the possibility of assertion of, any
noncompliance by the Company with any Governmental Requirements and
(B) to the knowledge of the Company and the Significant Stockholders, no
condition or state of facts exists which would provide a valid basis for
any such assertion.

Section 4.15. CERTAIN ENVIRONMENTAL MATTERS. Except as accurately
disclosed in Section 4.15 of the Disclosure Statement: (a) to the knowledge of
the Company, the Company has complied, and remains in compliance, with the
provisions of all Environmental Laws applicable to it or any of it presently
owned or operated facilities, sites or other properties, businesses and
operations and which relate to the reporting by the Company of all sites
presently owned or operated by any of it where Solid Wastes, Hazardous Wastes or
Hazardous Substances have been treated, stored, disposed of or otherwise
handled; (b) no release (as defined in the applicable Environmental Laws) at,
from, in or on any site owned or operated by the Company has occurred which, if
all relevant facts were known to the relevant Governmental Authorities,
reasonably could be expected to require remediation to avoid deed record
notices, restrictions, liabilities or other consequences that would not be
applicable if the release had not occurred; (c) the Company has not transported
or arranged for the transportation of any Solid Wastes, Hazardous Wastes or
Hazardous Substances to, or disposed or arranged for the disposition of any
Solid Wastes, Hazardous Wastes or Hazardous Substances at, any off-site location
that could lead to any valid claim against the Company, Purchaser or Newco, as a
potentially responsible party or otherwise, for any clean-up costs, remedial
work, damage to natural resources, personal injury or property damage, including
any claim under CERCLA; and (d) no storage tanks exist, or, to the knowledge of
the Company, has existed, on or under any of the properties owned or operated by
the Company from which any Solid Wastes, Hazardous Wastes or Hazardous
Substances have been released into the surrounding environment. The Company has
provided Purchaser with copies (or if not available, accurate written summaries)
of all environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of the
Company respecting any facility, site or other property now or previously owned
or operated by the Company.

Section 4.16. LIABILITIES AND OBLIGATIONS. Section 4.16 of the
Disclosure Statement accurately lists all present liabilities, of every kind,
character and description and whether accrued, absolute, fixed, contingent or
otherwise, of each of the Company which exceed or reasonably could be expected
to exceed $10,000 and which (a) had been incurred prior to the Current Balance
Sheet Date, but are not reflected on the Current Balance Sheet, or (b) were
incurred after the Current Balance Sheet otherwise than in the ordinary course
of business, and consistent with the past

28
<PAGE>

practice, of the Company, in each case other than (i) obligations and
liabilities of the Company in respect of the Company Commitments, (ii)
obligations and liabilities of the Company in respect of each Company ERISA
Benefit Plan, and (iii) obligations and liabilities of the Company set forth
in the Disclosure Statement. Section 4.16 of the Disclosure Statement also
accurately lists and describes, for the Company: (a) each of its outstanding
secured and unsecured Guaranties not constituting its Indebtedness and, for
each of those Guaranties, whether any Stockholder or Related Person or
Affiliate of any Stockholder is a Person whose obligation is covered by that
Guaranty, and (b) for each of the items listed under clause (a) of this
sentence, (i) if that item is secured by any property or asset of the
Company, the nature of the security, and (ii) if that item is covered in
whole or in part by a Guaranty of any Stockholder or any Related Person or
Affiliate of any Stockholder, the name of the guarantor.

Section 4.17. RECEIVABLES; CUSTOMER RETENTION. Except as accurately
set forth in Section 4.17 of the Disclosure Statement, all the accounts and
notes or other advances receivable of the Company reflected on the Current
Balance Sheet were collected, or are, in the good faith belief of the Company's
management, collectible, in the respective amounts so reflected, net of the
reserves, if any, reflected in the Current Balance Sheet. The Company has not
lost any customers or customer accounts in excess of the number of customers
lost by the Company during the twelve month period ended on the Current Balance
Sheet Date, and the Company has no reason to believe that its customers will
terminate their accounts with the Company in excess of the number of customers
lost by the Company during such twelve month period, whether as a result of the
consummation of the transaction contemplated by this Agreement or otherwise.

Section 4.18. OWNED AND LEASED REAL PROPERTIES.

(a) Section 4.18 of the Disclosure Statement accurately
lists and correctly describes in all material respects: (i) all real
properties owned by the Company and, for each of those properties, its
address, the type and square footage of each structure located thereon
and the nature of its use in the business of the Company; (ii) all real
properties of which the Company is the lessee and, for each of those
properties, its address, the type and square footage of each structure
located thereon which the Company is leasing, the annual rental rate,
the expiration date of its lease and the use made of the leased property
in the business of the Company; and (iii) in the case of each real
property listed as being owned, whether it was previously owned, and in
the case of each real property listed as being leased, whether it is
presently owned, by any Stockholder or any of his Related Persons or
Affiliates (other than the Company, if the Stockholder is an Affiliate
of the Company).

(b) The Company has provided Purchaser with true, complete
and correct copies of all title reports and title insurance policies
owned or in the possession of the Company and relating to any of the
real properties identified in Section 4.18 of the Disclosure Statement
as being owned. Except as accurately set forth in that Section or those
reports and policies, and except for Permitted Liens, the Company owns
in fee, and has good, valid and

29
<PAGE>

indefeasible title to, free and clear of all Liens, each property listed
in that Section as being owned.

(c) The Company has provided Purchaser with true, correct
and complete copies of all leases under which the Company is leasing
each of the real properties listed in Section 4.18 of the Disclosure
Statement as being leased, and, except as accurately set forth in
Section 4.18 of the Disclosure Statement, (i) each of the listed leases
is, to the knowledge of the Company, valid and binding on the lessor
party thereto, and (ii) the lessee party thereto has not sublet any of
the leased space to any Person other than the Company.

(d) The fixed assets of each of the Company are affixed only
to one or more of the real properties listed in Section 4.18 of the
Disclosure Statement and, except as accurately set forth in that
Section, are well-maintained and adequate for the purposes for which
they presently are being used or held for use, ordinary wear and tear
excepted.

(e) The Company has accurately described, in all material
respects, in Section 4.18 of the Disclosure Statement all plans or
projects involving the opening of new operations, the expansion of any
existing operations or the acquisition of any real property or existing
business, with respect to which management of the Company has made any
expenditure in the two-year period prior to the date of the Agreement in
excess of $25,000, or which if pursued by the Company would require
additional capital expenditures in excess of $25,000.

Section 4.19. OWNED AND LEASED PERSONAL PROPERTY.

(a) Section 4.19 of the Disclosure Statement accurately
lists, in all material respects, of all machinery, equipment and other
personal property with a current net book value of $2,500 or more
included in the Property, Plant and Equipment owned and leased by the
Company, which list states, in the case of each of those properties
listed as being owned, whether it was previously owned, and in the case
of each of those properties listed as being leased, whether it is
presently owned, by any Stockholder or any of his Related Persons or
Affiliates (other than the Company, if the Stockholder is an Affiliate
of the Company).

(b) Except as accurately set forth in Section 4.19 of the
Disclosure Statement and except for Permitted Liens, the Company has
good, valid and indefeasible title to, free and clear of all Liens, each
asset listed in that Section as being owned, free and clear of all
Liens.

(c) The Company has provided Purchaser with true, correct
and complete copies of all leases under which the Company is leasing
each of the properties listed in Section 4.19 of the Disclosure
Statement as being leased and all leases referred to in Section 4.21
and, except as accurately set forth in Section 4.19 of the Disclosure
Statement, (i) each of those leases is, to the knowledge of the Company,
valid and binding on the lessor party thereto,

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and (ii) the lessee party thereto has not sublet any of the leased
property to any Person other than the Company.

(d) Except as accurately set forth in Section 4.19 of the
Disclosure Statement, all items of machinery, equipment and other
personal property listed therein are in good working order and
condition, ordinary wear and tear excepted, and adequate for the
purposes for which they presently are being used or held for use.

Section 4.20. PROPRIETARY RIGHTS.

(a) Section 4.20(a) of the Disclosure Schedule lists all
Proprietary Rights which are Material to the Company and lists any
proceedings or actions before any court, tribunal (including the United
States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of the Proprietary Rights.

(b) Except as set forth in Section 4.20(b) of the Disclosure
Schedule, the Company (i) owns or has the legal right to use all
Proprietary Rights, including all Proprietary Rights licensed to the
Company, that are necessary to the conduct of its business as now
conducted, in each case free of any claims or infringements known to the
Company, (ii) to the knowledge of the Company, is the exclusive owner of
all trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any
products or technology or the provision of any services by the Company,
and (iii) to the knowledge of the Company, owns exclusively, and has
good title to, all copyrighted works that are Company products or other
works of authorship that the Company otherwise purports to own.

(d) Except as set forth in Section 4.20(d) of the Disclosure
Schedule, the Company has not transferred ownership of or granted any
license of or right to use or authorized the retention of any rights to
use any of the Proprietary Rights to any other person.

(e) Other than "shrink-wrap" and similar widely available
commercial end-user licenses, the contracts, licenses and agreements
listed in Section 4.20(e) of the Disclosure Schedule include all
contracts, licenses and agreements to which the Company or any Company
Subsidiary is a party with respect to any Proprietary Rights. No person
who has licensed Proprietary Rights to the Company has ownership rights
or license rights to

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<PAGE>

improvements made by the Company in such Proprietary Rights which have
been licensed to the Company.

(f) Section 4.20(f) of the Disclosure Schedule lists all
contracts, licenses and agreements between the Company and any other
person wherein or whereby the Company has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless,
guaranty or otherwise assume or incur any obligation or liability or
provide a right of rescission with respect to the infringement or
misappropriation by the Company or such other person of the Proprietary
Rights of any person other than the Company.

(g) The operation of the business of the Company as it
currently is conducted or is currently contemplated by the Company to be
conducted, including but not limited to the Company's design,
development, use, import, manufacture and sale of the products,
technology or services (including products, technology or services
currently under development) of the Company does not infringe or
misappropriate the Proprietary Rights of any person, violate the rights
of any person (including rights to privacy or publicity), or constitute
unfair competition or trade practices under the laws of any
jurisdiction, and the Company has not received notice from any person
claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development)
of the Company infringes or misappropriates the Proprietary Rights of
any person or constitutes unfair competition or trade practices under
the laws of any jurisdiction (nor is the Company aware of any basis
therefor).

(h) Each item of Registered Proprietary Rights is valid and
subsisting, all necessary registration, maintenance and renewal fees in
connection with such Registered Proprietary Rights have been paid and
all necessary documents and certificates in connection with such
Registered Proprietary Rights have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property.

(i) There are no contracts, licenses or agreements between
the Company and any other person with respect to Proprietary Rights
under which there is any dispute known to the Company regarding the
scope of such agreement, or performance under such agreement including
with respect to any payments to be made or received by the Company
thereunder.

(j) To the knowledge of the Company, no person is infringing
or misappropriating any of the Proprietary Rights.

(k) The Company has taken commercially reasonable steps to
protect the Company's rights in confidential information and trade
secrets of the Company or provided by any other person to the Company.

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<PAGE>

(l) No Proprietary Rights or product, technology or service
of the Company are subject to any proceeding or outstanding decree,
order, judgment, agreement or stipulation that restricts in any manner
the use, transfer or licensing thereof by the Company or any Company
Subsidiary or may affect the validity, use or enforceability of such
Proprietary Rights.

(m) To the Company's knowledge, no (i) product, technology,
service or publication of the Company, (ii) material published or
distributed by the Company, or (iii) conduct or statement of Company
constitutes obscene material, a defamatory statement or material, false
advertising or otherwise violates any law or regulation.

(n) All of the Company's products will record, store,
process, calculate and present calendar dates falling on and after (and
if applicable, spans of time including) September 9, 1999 and January 1,
2000, and will calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data
integrity and performance, as the products record, store, process,
calculate and present calendar dates on or before September 8, 1999 and
December 31, 1999, or calculate any information dependent on or relating
to such dates (collectively, "Year 2000 Compliant"). The Company's
internal computer and technology products and systems are Year 2000
Compliant.

Section 4.21. TITLE TO OTHER PROPERTIES. The Company has good and
valid title to, or holds under a lease valid and binding on the lessor party
thereto, all its tangible personal properties and assets (other than Property,
Plant and Equipment) that individually is or in the aggregate are Material to
the Company in each case, free and clear of all Liens except for Permitted Liens
and as set forth in Section 4.21 of the Disclosure Statement.

Section 4.22. COMMITMENTS.

(a) In Section 4.22(a) of the Disclosure Statement, the
Company has completely and accurately listed each of the following (each
a "COMPANY COMMITMENT") to which the Company is a party or by which any
of its properties is bound and which presently remains executory in
whole or in any part:

(i) each partnership, joint venture or cost-sharing
agreement;

(ii) each guaranty or suretyship, indemnification or
contribution agreement or performance bond;

(iii) each instrument, agreement or other obligation
evidencing or relating to Indebtedness of the Company or to
money lent or to be lent to another Person;

(iv) each contract to purchase or sell real property;

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<PAGE>

(v) each Services Contract for which either the
contract price or the cost of performance will or could
reasonably be expected to exceed $25,000 (each a "MATERIAL
SERVICES CONTRACT");

(vi) each Related Party Agreement involving total
payments within any 12-month period in excess of $10,000 and
which is not terminable without penalty on no more than 30 days'
prior notice;

(viii) each contract containing any noncompetition
agreement, covenant or undertaking; or

(ix) each other agreement or commitment not made in
the ordinary course of business that is Material to the Company.

True, correct and complete copies of all written Company Commitments,
and true, correct and complete written descriptions of all oral Company
Commitments, have been delivered or made available to Purchaser. Except
as accurately set forth in Section 4.22(a) of the Disclosure Statement:
(i) there are no existing or asserted defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice
or lapse of time or both, would constitute defaults or events of default
under any Company Commitment which is Material to the Company or, to the
knowledge of the Company, any other party thereto; and (ii) no penalties
have been incurred, nor are amendments pending, with respect to any
Company Commitment which is Material to the Company. The Company
Commitments are in full force and effect and are valid and enforceable
obligations of the Company and, to the knowledge of the Company, the
other parties thereto, in accordance with their respective terms, and no
defenses, off-sets or counterclaims have been asserted or, to the
knowledge of the Company, may be made by any party thereto (other than
by the Company), nor has the Company, as the case may be, waived any
rights thereunder, except as accurately described in Section 4.22 of the
Disclosure Statement.

(b) Except as accurately disclosed in Section 4.22(b) of the
Disclosure Statement or contemplated hereby or by any other Transaction
Document to which the Company or Stockholder is a party: (i) neither the
Company nor any Significant Stockholder has received notice of any plan
or intention of any other party to any Company Commitment to exercise
any right to cancel or terminate any Company Commitment, and neither the
Company nor any Significant Stockholder knows of any condition or state
of facts, including the consummation of the Merger, which would justify
the exercise of such a right; and (ii) neither the Company nor any
Significant Stockholder currently contemplates, or has

34
<PAGE>

reason to believe any other Person currently contemplates, any amendment
or change to any Company Commitment.

Section 4.23. CAPITAL EXPENDITURES. Section 4.23 of the Disclosure
Statement accurately sets forth the total amount of capital expenditures
currently budgeted to be incurred by the Company during the balance of the
Company's current and next ensuing fiscal years. Except as accurately set forth
in Section 4.23 of the Disclosure Statement, to the knowledge of the Company and
the Significant Stockholders, no condition or state of facts exists which will
cause the total capital expenditures of the Company which will be required to
replace worn-out or obsolete Property, Plant and Equipment in the Company's
current and next ensuing fiscal years to exceed the amount budgeted for capital
expenditures by the Company for the current and next ensuing fiscal years in
order to maintain the types and levels of sales and services the Company
presently make or provide.

Section 4.24. INSURANCE. Except as accurately set forth in Section
4.24 of the Disclosure Statement: (a) the Company has provided Purchaser with:
(i) a list of all insurance policies carried by each of the Company; (ii) an
accurate list of all insurance loss runs and worker's compensation claims
received for the most recently ended three policy years; and (iii) true,
complete and correct copies of all insurance policies carried by each of the
Company which are in effect, all of which have been issued by insurers of
recognized responsibility and currently are, and will remain without
interruption through the IPO Closing Date, in full force and effect; (b) no
insurance carried by the Company has been canceled by the insurer during the
past five years, and the Company has never been denied coverage; and (c) neither
the Company nor any Significant Stockholder has received any notice or other
communication from any issuer of any listed insurance policy of any material
increase in any deductibles, retained amounts or the premiums payable
thereunder, and, to the knowledge of the Company and the Significant
Stockholders, no such increase in deductibles, retainages or premiums is
threatened.

Section 4.25. EMPLOYEE MATTERS.

(a) CASH COMPENSATION. Section 4.25 of the Disclosure
Statement accurately lists the names, titles and rates of annual Cash
Compensation, at the Current Balance Sheet Date and at the date hereof
(and the portions thereof attributable to salary or the equivalent,
fixed bonuses, discretionary bonuses and other Cash Compensation,
respectively) of all employees who are officers or directors or who have
an annual salary of at least $70,000, nonemployee officers, nonemployee
directors and key consultants and independent contractors of the
Company.

(b) EMPLOYMENT AGREEMENTS. Section 4.25(b) of the
Disclosure Statement accurately lists all Employment Agreements
remaining executory in whole or in part on the date hereof, complete
and correct copies of all of which have been provided to Purchaser by
the Company. The Company is not a party to any oral Employment
Agreement.

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<PAGE>

(c) OTHER COMPENSATION PLANS. Section 4.25(c) of the
Disclosure Statement accurately lists all Other Compensation Plans
either remaining executory at the date of this Agreement or to later
become effective. The Company has provided Purchaser with a true,
correct and complete copy of each of the listed Other Compensation Plans
that is in writing and an accurate description of each of the listed
Other Compensation Plans that is not written. Except as accurately set
forth in Section 4.26(c) of the Disclosure Statement, each of the Other
Compensation Plans, including each that is a Welfare Plan, may be
unilaterally amended or terminated by the Company or any Company
Subsidiary without liability to any of them, except as to benefits
accrued thereunder prior to amendment or termination.

(d) ERISA BENEFIT PLANS. The Company has no, and has never
had any, ERISA Employee Benefit Plan, ERISA Pension Benefit Plan and
ERISA Affiliate Pension Plan. Except as accurately set forth in Section
4.26(d) of the Disclosure Statement, (i) the Company is not and has
never been a member of any ERISA Group that currently includes, or
included when the Company was a member, among its members any Person
other than the Company, and (ii) no Person is an ERISA Affiliate of the
Company (other than the Company).

(e) EMPLOYEE POLICIES AND PROCEDURES. Section 4.25(e) of
the Disclosure Statement accurately lists all Employee Policies and
Procedures. The Company has provided Purchaser with a copy of all
Material written Employee Policies and Procedures and a written
description of all Material unwritten Employee Policies and Procedures
the continuance or discontinuance of which could reasonably be expected
to have a Material Adverse Effect.

(f) UNWRITTEN AMENDMENTS. Except as accurately described in
Section 4.25(f) of the Disclosure Statement, no material unwritten
amendments have been made, whether by oral communication, pattern of
conduct or otherwise, with respect to any of the Employment Agreements,
Other Compensation Plans or Employee Policies and Procedures.

(g) LABOR COMPLIANCE. The Company has been and is in
compliance in all material respects with all applicable Governmental
Requirements respecting employment and employment practices, terms and
conditions of employment and wages and hours, and the Company is not
liable for any arrears of wages or penalties for failure to comply with
any of the foregoing. The Company has not engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment
conditions or practices. Except as accurately set forth in Section
4.25(g) of the Disclosure Statement, to the knowledge of the Company
there are no (i) unfair labor practice charges or complaints or racial,
color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the knowledge of the
Company, threatened against the Company before any Governmental
Authority (nor, to the knowledge of the Company, does any valid basis
therefor exist) or (ii) existing or, to the knowledge of the Company,
threatened labor strikes, disputes, grievances, controversies or

36
<PAGE>

other labor troubles affecting the Company (nor, to the knowledge of the
Company, does any valid basis therefor exist).

(h) UNIONS. Neither the Company nor any ERISA Affiliate has
ever been a party to any agreement with any union, labor organization or
collective bargaining unit. No employees of the Company are represented
by any union, labor organization or collective bargaining unit. Except
as accurately set forth in Section 4.25(h) of the Disclosure Statement,
to the knowledge of the Company, none of the employees of the Company
has threatened to organize or join a union, labor organization or
collective bargaining unit.

(i) NO ALIENS. All employees of each of the Company are
citizens of, or are authorized in accordance with federal immigration
laws to be employed in, the United States.

(j) CHANGE OF CONTROL BENEFITS. Except as accurately set
forth in Section 4.25(j) of the Disclosure Statement, the Company is not
a party to any agreement, or has established any policy, practice or
program, requiring it to make a payment or provide any other form of
compensation or benefit or vesting rights to any person performing
services for the Company which would not be payable or provided in the
absence of this Agreement or the consummation of the transactions
contemplated by this Agreement, including any parachute payment under
Section 280G of the Code.

(k) RETIREES. The Company has no obligation or commitment
to provide medical, dental or life insurance benefits to or on behalf of
any of its employees who may retire or any of its former employees who
have retired except (i) as may be required pursuant to the continuation
of coverage provisions of Section 4980B of the Code, the applicable
parallel provisions of ERISA and any applicable state law,
(ii) continuation of benefits in the event of disability, and
(iii) conversion privileges provided under any insured Company ERISA
Employee Benefit Plans.

Section 4.26. TAXES.

(a) Each of the following representations and warranties in
this Section 4.26 is qualified to the extent set forth in Section 4.26
of the Disclosure Statement.

(b) All Returns required to be filed with respect to any Tax
for which the Company is liable have been duly and timely filed with the
appropriate Taxing Authority, each Tax shown to be payable on each such
Return has been paid, each Tax payable by the Company by assessment has
been timely paid in the amount assessed, and adequate reserves have been
established on the books of the Company for all Taxes for which the
Company is liable, but the payment of which is not yet due. The Company
is not and never has been, liable for any Tax payable by reason of the
income or property of a Person other than the Company. The Company has
timely filed true, correct and complete declarations of estimated Tax in
each jurisdiction in which any such declaration is required to be filed
by it.

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<PAGE>

No Liens for Taxes exist upon the assets of the Company except Liens for
Taxes which are not yet due. The Company has not, and never has been,
subject to Tax in any jurisdiction outside of the United States. No
Litigation with respect to any Tax for which the Company is asserted to
be liable is pending or, to the knowledge of the Company, threatened,
and no basis which the Company believes to be valid exists on which any
claim for any such Tax can be asserted against the Company. There are
no requests for rulings or determinations in respect of any Taxes
pending between the Company and any Taxing Authority. No extension of
any period during which any Tax may be assessed or collected and for
which the Company is or may be liable has been granted to any Taxing
Authority. The Company is not or has not been a party to any tax
allocation or sharing agreement. All amounts required to be withheld by
the Company and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes
have been collected or withheld and paid to the proper Taxing Authority.
The Company has made all deposits required by law to be made with
respect to employees' withholding and other employment Taxes.

(c) The Company has not filed a consent pursuant to Section
341(f) of the Code or any comparable provision of any other tax statute
and has not agreed to have Section 341(f)(2) of the Code or any
comparable provision of any other Tax statute apply to any disposition
of an asset. No asset of the Company is subject to any provision of
applicable law which eliminates or reduces the allowance for
depreciation or amortization in respect of that asset below the
allowance generally available to an asset of its type. No accounting
method changes of the Company exists or is proposed or threatened which
could give rise to an adjustment under Section 481 of the Code.

Section 4.27. GOVERNMENT CONTRACTS. Except as accurately set forth in
Section 4.27 of the Disclosure Statement, the Company is not a party to any
governmental contract subject to price redetermination or renegotiation.

Section 4.28. ABSENCE OF CHANGE. Since the Current Balance Sheet
Date, except as accurately set forth in Section 4.28 of the Disclosure
Statement, none of the following has occurred with respect to the Company:

(a) any circumstance, condition, event or state of facts
(either singly or in the aggregate), other than conditions affecting the
economy generally or the industry in which the Company operates, which
has caused, is causing or could reasonably be expected to cause a
Material Adverse Effect on the Company;

(b) any change in its authorized Capital Stock or in any of
its outstanding Capital Stock or Derivative Securities;

(c) any Restricted Payment, except any declaration or
payment of dividends by any Company Subsidiary solely to the Company;

38
<PAGE>

(d) any increase in, or any commitment or promise to
increase, the rates of Cash Compensation as of the date hereof, or the
amounts or other benefits paid or payable under any ERISA Pension
Benefit Plan or Other Compensation Plan, except for ordinary and
customary bonuses and salary increases for employees (other than the
Stockholders or their Immediate Family Members) at the times and in the
amounts consistent with its past practice;

(e) any work interruptions, labor grievances or claims
filed, or any similar event or condition of any character, that will
have a Material Adverse Effect on the Surviving Corporation following
the Effective Time;

(f) any distribution, sale or transfer of, or any Company
Commitment to distribute, sell or transfer, any of its assets or
properties of any kind which singly is or in the aggregate are Material
to the Company, other than distributions, sales or transfers in the
ordinary course of its business and consistent with its past practices
to Persons other than to the Stockholders and their Immediate Family
Members and Affiliates;

(g) any cancellation, or agreement to cancel, any
Indebtedness, obligation or other liability owing to it, including any
Indebtedness, obligation or other liability of any Stockholder or any
Related Person or Affiliate thereof, provided that the Company may
negotiate and adjust bills in the course of good faith disputes with
customers in a manner consistent with past practice, if the adjustments
are (i) included in the Supplemental Information provided Purchaser
pursuant to Section 6.07 or (ii) do exceed $10,000 in the aggregate;

(j) any waiver of any of its rights or claims that singly is
or in the aggregate are Material to the Company;

(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices and which involves in
excess of $10,000;

(l) any incurrence by it of any Indebtedness or any Guaranty
not constituting its Indebtedness, or any Company Commitment to incur
any Indebtedness or any such Guaranty;

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<PAGE>

(m) any investment in the Capital Stock, Derivative
Securities or Indebtedness of any Person, other than a Permitted
Investment;

(n) except in accordance with the Company's capital
expenditure budget for the Company's current fiscal year, any capital
expenditure or series of related capital expenditures by the Company
collectively in excess of $25,000, or commitments by the Company to make
capital expenditures totaling in excess of $25,000; or

(o) any cancellation or termination of a Material Agreement
of the Company.

Section 4.29. BANK RELATIONS; POWERS OF ATTORNEY. Section 4.29 of the
Disclosure Statement accurately lists and identifies:

(a) the name of each financial institution in which the
Company has borrowing or investment arrangements, deposit or checking
accounts or safe deposit boxes;

(c) the name of each Person holding a general or special
power of attorney from the Company and a description of the terms of
each such power.

Section 4.30. NO BROKERS. Except as set forth on Section 4.30 of the
Disclosure Schedule, the Company and the Significant Stockholders have not,
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby, employed any broker, finder or agent, or agreed to pay or
incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation.

Section 4.31. COUNSEL. The Company has been represented by and the
Significant Stockholders have been given the opportunity to obtain the advice of
attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of the Counsel for Purchaser and Newco with respect to this Agreement, the
transactions contemplated hereby and any actual or potential consequences,
including any actual or potential Tax consequences, hereof and thereof on the
Purchaser, Newco, the Company, the Stockholder or the Significant Stockholders.

40
<PAGE>

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND NEWCO

Section 5.01. BY PURCHASER AND NEWCO. Purchaser and Newco jointly and
severally represent and warrant to the Company and each Stockholder that all the
following representations and warranties in this Article V are true and correct:
(a) Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Texas, (b) no Derivative Securities of Newco are
outstanding, and (c) Newco has been organized for the sole purpose of
participating in the Merger and has not, and will not, engage in any activities
other than those necessary to effectuate the Merger.

Section 5.02. ORGANIZATION; POWER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and each of Purchaser and Newco has all requisite corporate power and
authority under the laws of its Organization State and its Charter Documents to
own or lease and to operate its properties presently and following the Effective
Time and to carry on its business as now conducted and as proposed to be
conducted following the Effective Time. Neither Purchaser nor Newco has engaged
in any operations since its organization other than in connection with their
formation and capitalization and the transactions contemplated by this Agreement
and the Other Agreements.

Section 5.03. AUTHORIZATION; ENFORCEABILITY; ABSENCE OF CONFLICTS;
REQUIRED CONSENTS.

(a) The execution, delivery and performance by each of
Purchaser and Newco of this Agreement and each other Transaction
Document to which it is a party, and the effectuation of the Merger and
the other transactions contemplated hereby and thereby, are within its
corporate power under its Charter Documents and the applicable
Governmental Requirements of its Organization State and have been duly
authorized by all proceedings, including actions permitted to be taken
in lieu of proceedings, required under its Charter Documents and the
applicable Governmental Requirements of its Organization State.

(b) This Agreement has been, and each of the other
Transaction Documents to which either of Purchaser or Newco is a party,
when executed and delivered to the other parties thereto (or, in the
case of the Certificate of Merger, the applicable Governmental
Authorities), will have been, duly executed and delivered by it and is,
or when so executed and delivered will be, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except
as enforceability may be (i) limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and (ii) subject to general
principles of equity (regardless of whether enforceability is considered
in a proceeding in equity or at law).

(c) The execution, delivery and performance in accordance
with their respective terms by each of Purchaser and Newco of the
Transaction Documents to which it is a party

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<PAGE>

do not and will not (i) violate, breach or constitute a default under
(A) the Charter Documents of Purchaser or Newco, (B) any Governmental
Requirement applicable to Purchaser or Newco or (C) any Material
Agreement of Purchaser or Newco, (ii) result in the acceleration or
mandatory prepayment of any Indebtedness, or any Guaranty not
constituting Indebtedness, of Purchaser or Newco or afford any holder
of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require Purchaser or Newco to redeem, purchase
or otherwise acquire, reacquire or repay any of that Indebtedness, or to
perform any of those Guaranties, (iii) cause or result in the imposition
of, or afford any Person the right to obtain, any Lien upon any property
or assets of Purchaser or Newco (or upon any revenues income or profits
of either Purchaser or Newco therefrom) or (iv) result in the
revocation, cancellation, suspension or material modification, in any
single case or in the aggregate, of any Governmental Approval possessed
by Purchaser or Newco at the date of this Agreement and necessary for
the ownership or lease and the operation of its properties or the
carrying on of its business as now conducted, including any necessary
Governmental Approval under each applicable Environmental Law.

(d) Except for (i) the filing of the Certificate of Merger
with the applicable Governmental Authorities, (ii) filings of the
Registration Statement under the Securities Act and a registration
statement on Form 8-A with respect to the registration of the Purchaser
Common Stock under the Exchange Act and the SEC order declaring those
registration statements effective under the Securities Act and the
Exchange Act, respectively, and (iii) as may be required by the HSR Act
or the applicable state securities or blue sky laws, no Governmental
Approvals are required to be obtained, and no reports or notices to or
filings with any Governmental Authority are required to be made, by
Purchaser or Newco for the execution, delivery or performance by
Purchaser or Newco of the Transaction Documents to which it is a party,
the enforcement against Purchaser or Newco, as the case may be, of its
obligations thereunder or the effectuation of the Merger and the other
transactions contemplated thereby.

Section 5.04. CHARTER DOCUMENTS. Purchaser has delivered to the
Company true, complete and correct copies of the Charter Documents of each of
Purchaser and Newco. No breach or violation of any Charter Document of either
Purchaser or Newco has occurred and is continuing.

Section 5.05. CAPITAL STOCK OF PURCHASER AND NEWCO.

(a) Immediately prior to the Effective Time, (i) the
authorized Capital Stock of Purchaser will be comprised of
(A) 25,000,000 shares of Purchaser Common Stock and (B) 3,000,000 shares
of preferred stock, $.0001 par value per share, (ii) before giving
effect to the Merger and the merger transactions contemplated by the
Other Agreements, (A) the number of shares of Purchaser Common Stock
then issued and outstanding, will be as set forth in the Registration
Statement when it becomes effective under the Securities Act, (B) no
shares of the Purchaser preferred stock then will be issued or
outstanding, and (C) Purchaser will have authorized and reserved for
issuance, pursuant to Other

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Compensation Plans or the exercise of Derivative Securities the number
of shares of Purchaser Common Stock set forth in the Registration
Statement when it becomes effective under the Securities Act.

(b) The authorized Capital Stock of Newco is comprised of
1,000 shares of Newco Common Stock, all of which shares are issued,
outstanding and owned, of record and beneficially, by Purchaser.

(c) All shares of Purchaser Common Stock and Newco Common
Stock outstanding immediately prior to the Effective Time, and all
shares of Purchaser Common Stock to be issued pursuant to Section 2.04,
when issued, will have been duly authorized and validly issued in
accordance with the DGCL and their issuer's Charter Documents, and will
be fully paid and nonassessable. None of the shares of Purchaser Common
Stock to be issued pursuant to Section 2.04 will, when issued, have been
issued in breach or violation of (i) any applicable statutory or
contractual preemptive rights, or any other rights of any kind
(including any rights of first offer or refusal), of any Person or
(ii) the terms of any of its Derivative Securities then outstanding.

Section 5.06. SUBSIDIARIES. Immediately prior to the IPO Closing
Date, (a) Purchaser will have no Subsidiaries other than Newco and each Entity
defined as "Newco" in each of the Other Agreements, (b) Newco will have no
Subsidiaries, and (c) neither Purchaser nor Newco will own, of record or
beneficially, directly or indirectly through any Person or otherwise (except
pursuant hereto or to the Other Agreements), any Capital Stock or Derivative
Securities of any Entity not described in this Section 5.06 as a Subsidiary of
Purchaser (in the case of Purchaser) or any Entity (in the case of Newco).

Section 5.07. LIABILITIES. Except as disclosed in the Private
Placement Memorandum, neither Purchaser nor Newco has any material liabilities
of any kind other than those incurred in connection with this Agreement and the
Other Agreements and the transactions contemplated hereby and thereby, including
the IPO.

Section 5.08. COMPLIANCE WITH LAWS; NO LITIGATION. Each of Purchaser
and Newco is in compliance with all Governmental Requirements applicable to it,
and no Litigation is pending or, to the knowledge of Purchaser, threatened to
which Purchaser or Newco is or may become a party which questions or involves
the validity or enforceability of any obligation of Purchaser or Newco under any
Transaction Document, or which seeks (or reasonably may be expected to seek)
(a) to prevent or delay consummation by Purchaser or Newco of the transactions
contemplated by this Agreement to be consummated by Purchaser or Newco, as the
case may be, or (b) Damages from Purchaser or Newco in connection with any such
consummation.

Section 5.09. NO BROKERS. Purchaser has not, directly or indirectly,
in connection with this Agreement or the transactions contemplated hereby,
employed any broker, finder or agent, or agreed

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to pay or incurred any obligation to pay any broker's or finder's fee, any
sales commission or any similar form of compensation.

Section 5.10. PRIVATE PLACEMENT MEMORANDUM. At the date hereof, the
Private Placement Memorandum (other than the historical financial statements,
including the notes thereto, of the Founding Companies (other than the Company)
and the historical information contained therein respecting the Company and the
Stockholders, to which this Section 5.10 does not apply) does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
the light of the circumstances under which those statements are made.

Section 5.12. COUNSEL. Purchaser and Newco have been represented by
attorneys, accountants and other counsel of their own choosing, and have not
relied in any way on any statements, advice or opinion, whether written or oral,
of Counsel for the Company and the Stockholders with respect to this Agreement,
the transactions contemplated hereby and any actual or potential consequences,
including any actual or potential Tax consequences, hereof and thereof on
Purchaser and Newco.

ARTICLE VI

COVENANTS EXTENDING TO THE EFFECTIVE TIME

Section 6.01. ACCESS AND COOPERATION; DUE DILIGENCE.

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Information obtained by them in connection with the negotiation and
performance of this Agreement or the due diligence investigations
conducted with respect to each Other Founding Company as confidential in
accordance with the provisions of Section 12.01. In addition, Purchaser
will cause each Other Founding Company to enter into a provision
identical to this Section 6.01 to require each Other Founding Company to
keep confidential any Confidential Information respecting the Company
obtained by that Other Founding Company.

(b) Each of the Company and the Stockholders will use its
commercially reasonable best efforts to secure, as soon as practicable
after the execution of this Agreement, all approvals or consents of
third Persons as may be necessary to consummate the transactions
contemplated hereby.

(c) From the date hereof until the IPO Closing Date,
Purchaser and Newco will (i) afford to the Representatives of the
Company and the Stockholders access to all sites, properties, books and
records of Purchaser and Newco, (ii) provide the Company with such
additional financial and operating data and other information relating
to the business and properties of Purchaser and Newco as the Company or
any Stockholder may from time to time reasonably request, and
(iii) cooperate with the Company and the Stockholders and their
respective Representatives in the preparation of any documents or other
material which may be required in connection with any Transaction
Documents.

(d) If this Agreement is terminated pursuant to Section
12.01, Purchaser promptly will return all written Confidential
Information of the Company it then possesses to the Company.

Section 6.02. CONDUCT OF BUSINESS PENDING CLOSING. From the date of
this Agreement until the Effective Time, the Company will, except as and only to
the extent set forth in Schedule 6.02:

(a) carry on its businesses in substantially the same manner
as it has before, and not introduce any material new method of
management, operation or accounting;

(b) maintain its properties and facilities, including those
held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;

(d) keep in full force and effect, without interruption, all
its present insurance policies or other comparable insurance coverage;

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(f) comply with all applicable Governmental Requirements;
and

(g) except as required or expressly permitted by this
Agreement, maintain the instruments and agreements governing its
outstanding Indebtedness and leases on their present terms and not enter
into new or amended Indebtedness or lease instruments or agreements
involving amounts over $5,000 in any case or $25,000 in the aggregate,
without the prior written consent of Purchaser (which consent will not
be unreasonably withheld).

Section 6.03. PROHIBITED ACTIVITIES. From the date of this Agreement
until the Effective Time, without the prior written consent of Purchaser (which
will not be unreasonably withheld) or unless as required or expressly permitted
by this Agreement, the Company will not (other than as provided in Schedule
6.03):

(a) make any change in its Charter Documents;

(b) issue any of its Capital Stock or issue or otherwise
create any of its Derivative Securities;

(d) make any investments (other than Permitted Investments)
in the Capital Stock, Derivative Securities or Indebtedness of any
Person;

(e) enter into any contract or commitment (other than an
Services Contract) or incur or agree to incur any liability or make any
capital expenditures in a single transaction or a series of related
transactions involving an aggregate amount of more than $25,000
otherwise than in the ordinary course of its business and consistent
with its past practice;

(g) create or assume any Liens (other than Permitted Liens)
upon any of its assets or properties, whether now owned or hereafter
acquired, except for purchase money Liens incurred in connection with
the acquisition of equipment with an aggregate cost not

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in excess of $10,000 and necessary or desirable for the conduct of the
business of the Company;

(h) adopt, establish, amend or terminate any ERISA Employee
Benefit Plan, or any Other Compensation Plan or Employee Policies and
Procedures, or take any discretionary action, or omit to take any
contractually required action, if that action or omission could either
(i) deplete the assets of any ERISA Employee Benefit Plan or any Other
Compensation Plan or (ii) increase the liabilities or obligations under
any such plan;

(i) sell, assign, lease or otherwise transfer or dispose of
any of its owned or leased Property, Plant or Equipment otherwise than
in the ordinary course of its business and consistent with its past
practice;

(j) negotiate for the acquisition of any business or the
start-up of any new business;

(k) merge, consolidate or effect a share exchange with, or
agree to merge, consolidate or effect a share exchange with, any other
Entity;

(l) waive any of its material rights or claims, provided
that it may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice, but
such adjustments will not be deemed to be included in Section 4.17 of
the Disclosure Statement unless specifically listed in the Supplemental
Information;

(m) commit a material breach of or amend materially or
terminate any Material Agreement of the Company or any of its
Governmental Approvals; or

(n) enter into any other transaction (i) outside the
ordinary course of its business and consistent with its past practice or
(ii) prohibited hereby.

Section 6.04. NO SHOP: RELEASE OF DIRECTORS.

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have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal. The Company and each Stockholder
will: (i) immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any Persons previously
conducted with respect to any of the foregoing, and each will take the
steps necessary to inform the Persons referred to in the first sentence
of this Section 6.04(a) of the obligations undertaken in this Section
6.04(a); and (ii) notify Purchaser immediately if any such inquiries
or proposals are received by, any such information is requested from or
any such discussions or negotiations are sought to be initiated or
continued with the Company or any Stockholder.

(b) Each of the Company and the Stockholders hereby
(i) waives every right, if any, the Governmental Requirements of the
Company's Organization State afford the Company or Stockholders to
require the Company's directors (or their equivalents if the Company is
not a corporation), in the exercise of their fiduciary duties in their
capacity as such, to engage in any of the activities prohibited by this
Section 6.04 and (ii) releases each such person from any and all
liability he might otherwise have to the Company or any Stockholders but
for this release.

Section 6.05. NOTIFICATION OF CERTAIN MATTERS. The Stockholders and
the Company shall give prompt notice to Purchaser of (a) the existence or
occurrence of each condition or state of facts which becomes known to them and
which will or reasonably could be expected to cause any representation or
warranty of the Company or any Stockholder contained herein to be untrue or
incorrect in any material respect at or prior to the Closing or on the IPO
Closing Date and (b) any material failure of any Stockholder or the Company to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by that Person hereunder. Purchaser shall give prompt notice to
the Company of (a) the existence or occurrence of each condition or state of
facts which will or reasonably could be expected to cause any representation or
warranty of Purchaser or Newco contained herein to be untrue or inaccurate at or
prior to the Closing or on the IPO Closing Date and (b) any material failure of
Purchaser or Newco to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder. The delivery of any
notice pursuant to this Section 6.05 shall not be deemed to (a) modify the
representations or warranties herein of the party delivering that notice, or any
other party, which modification may be made only pursuant to Section 6.06,
(b) modify the conditions set forth in Article VII or (c) limit or otherwise
affect the remedies available hereunder to the party receiving that notice.

Section 6.06. SUPPLEMENTAL INFORMATION. Each of the Company and the
Stockholders agrees that, with respect to its representations and warranties
contained in this Agreement, it will have the continuing obligation until the
Closing to provide Purchaser promptly with such additional supplemental
Information (collectively, the "SUPPLEMENTAL INFORMATION"), in the form of
(a) amendments to then existing Schedules or Sections of the Disclosure
Statement or (b) additional Schedules or Sections of the Disclosure Statement,
as would be necessary, in the light of the circumstances, conditions, events and
states of facts then known to the Company or any Stockholder, to make each of
those representations and warranties true and correct as of the Closing and on
the

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IPO Closing Date. For purposes only of determining whether the conditions
to the obligations of Purchaser and Newco which are specified in Sections
7.04(a)(i) and 7.04(b)(ii) have been satisfied, and not for any purpose under
Article IX, the Schedules and the Disclosure Statement as of the Closing and on
the IPO Closing Date shall be deemed to be the Schedules and the Disclosure
Statement as of the date hereof as amended or supplemented by the Supplemental
Information provided to Purchaser prior to the Closing pursuant to this
Section 6.06; PROVIDED, HOWEVER, that if the Supplemental Information so
provided discloses the existence of circumstances, conditions, events or states
of facts which, in any combination thereof, (a) have had a Material Adverse
Effect on the Company which was not reflected in the determination of the Merger
Consideration or, in the judgment of Purchaser (which shall be conclusive for
purposes of this Section 6.06 and Article XII, but not for any purpose of
Article IX), (b) are having or will have a Material Adverse Effect on the
Company or the Surviving Corporation, as the case may be, Purchaser will be
entitled to terminate this Agreement pursuant to Section 11.01(a)(iv) and to
treat as Purchaser Indemnified Losses for all purposes of Article IX (which
treatment will not prejudice the right of any Stockholder under Article IX to
contest Damage Claims made by Purchaser in respect of those Purchaser
Indemnified Losses) all Damages to the Company or the Surviving Corporation
which are attributable to the circumstances, conditions, events and states of
facts first disclosed herein after the date hereof in the Supplemental
Information; and PROVIDED FURTHER, HOWEVER, that if the circumstances,
conditions, events or states of facts disclosed in the Supplemental Information
and having or judged to have in the future such a Material Adverse Effect
(A) have not resulted from a breach by the Company or the Stockholders of any of
their covenants set forth in Article VI or elsewhere in this Agreement and
(B) do not indicate that any representation or warranty of the Stockholders and
the Company made in Articles III and IV shall have been untrue or inaccurate at
the date of this Agreement, then Purchaser shall only be entitled to terminate
this Agreement pursuant to Section 11.01(a)(iv), and shall not be entitled to
treat as Purchaser Indemnified Losses any such Damages to the Company or the
Surviving Corporation. Purchaser will provide the Company with copies of the
Registration Statement, including all pre-effective amendments thereto, promptly
after the filing thereof with the SEC under the Securities Act.

Section 6.07. COOPERATION IN CONNECTION WITH THE IPO. The Company and
the Stockholders will (a) provide Purchaser and the Underwriter with all the
Information concerning the Company or any of the Stockholders which is
reasonably requested by Purchaser and the Underwriter from time to time in
connection with effecting the IPO and (b) cooperate with Purchaser and the
Underwriter and their respective Representatives in the preparation and
amendment of the Registration Statement (including the Financial Statements) and
in responding to the comments of the SEC staff, if any, with respect thereto.
The Company and each Stockholder agree promptly to (a) advise Purchaser if, at
any time during the period in which a prospectus relating to the IPO is required
to be delivered under the Securities Act, any information contained in the then
current Registration Statement prospectus concerning the Company, any Company
Subsidiary or the Stockholders becomes incorrect or incomplete in any material
respect and (b) provide Purchaser with the information needed to correct or
complete that information.

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Section 6.08. HSR ACT MATTERS. If Purchaser shall determine that
filings under the HSR Act are necessary or appropriate in connection with the
effectuation of the Merger or the consummation of the acquisitions contemplated
by the Other Agreements, and advises the Company in writing of that
determination, the Company promptly will compile and file under the HSR Act such
information respecting it as the HSR Act requires of an Entity to be acquired,
and the expiration or termination of the applicable waiting period and any
extension thereof under the HSR Act shall be deemed a condition precedent set
forth in Section 7.02(b).

ARTICLE VII

THE CLOSING AND CONDITIONS TO CLOSING AND CONSUMMATION

Section 7.01. THE CLOSING AND CERTAIN CONDITIONS. On or before the
IPO Pricing Date, the Parties will take all actions necessary to (i) effect the
Merger on the IPO Closing Date (including, as permitted by the Business
Corporation Act, (A) the execution of a Certificate of Merger meeting the
requirements of the Business Corporation Act and providing that the Merger will
become effective on the IPO Closing Date and (B) the filing of the Certificate
of Merger with the Secretary of State of the State of Texas), (ii) verify the
existence and ownership of the certificates evidencing the Company Common Stock
to be exchanged for the Merger Consideration pursuant to Section 2.05, and
(iii) satisfy the document delivery requirements to which the obligations of the
Parties to effect the Merger and the other transactions contemplated hereby are
conditioned by the provisions of this Article VII (all those actions
collectively being the "CLOSING"). The Closing will take place at the offices
of Porter & Hedges, L.L.P., 700 Louisiana, Houston, Texas at 10:00 a.m., Houston
time, or at such later time on the IPO Pricing Date as Purchaser shall specify
by written notice to the Company. The actions taken at the Closing will not
include the completion of either the Merger or the delivery of the Company
Common Stock or the Merger Consideration pursuant to Section 2.05. Instead, on
the IPO Closing Date, the Certificate of Merger will become effective pursuant
to Section 2.02, and all transactions contemplated by this Agreement to be
closed or completed on or before the IPO Closing Date, including the surrender
of the Company Common Stock in exchange for the Merger Consideration will be
closed or completed, as the case may be. During the period from the Closing to
the IPO Closing Date, this Agreement may be terminated by the parties only
pursuant to Section 11.01 (b)(i).

Section 7.02. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.

(i) NO LITIGATION. No Litigation shall be pending
on the date of the Closing to restrain, prohibit or otherwise
interfere with, or to obtain material

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damages or other relief from Purchaser or the Surviving
Corporation in connection with, the consummation of the Merger
or the IPO;

(ii) GOVERNMENTAL APPROVALS. All Governmental
Approvals (other than the acceptance for filing of the
Certificate of Merger) required to be obtained by any of the
Company, Purchaser and Newco in connection with the consummation
of the Merger and the IPO shall have been obtained; and

(iii) THE REGISTRATION STATEMENT. (A) The
Registration Statement shall have been declared effective under
the Securities Act by the SEC; (B) no stop order suspending the
effectiveness of the Registration Statement shall have been
issued by the SEC, and the SEC shall not have initiated or
threatened to initiate Litigation for that purpose; (C) the
Underwriter shall have agreed in writing (the "UNDERWRITING
AGREEMENT," which term includes the related pricing agreement,
if any) to purchase from Purchaser on a firm commitment basis
for resale to the public initially at the IPO Price, subject to
the conditions set forth in the Underwriting Agreement, such
number of shares of Purchaser Common Stock covered by the
Registration Statement; and (D) neither the Registration
Statement nor the Final Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under
which those statements are made.

(b) The obligation of each Party hereto with respect to the
actions to be taken on the IPO Closing Date is subject to the
satisfaction on that date of each of the following conditions:

(i) NO LITIGATION. No Litigation shall be pending
on the IPO Closing Date to restrain, prohibit or otherwise
interfere with, or to obtain material damages or other relief
from Purchaser or the Surviving Corporation in connection with,
the consummation of the Merger or the IPO;

(ii) GOVERNMENTAL APPROVALS. All Governmental
Approvals required to be obtained by the Company, Purchaser and
Newco in connection with the consummation of the Merger and the
IPO shall have been obtained;

(iii) REGISTRATION STATEMENT AND FINAL PROSPECTUS.
Neither the Registration Statement, in its form at the Effective
Time, nor the Final Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements contained therein not
materially misleading in the light of the circumstances under
which those statements are made; and

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(iv) REGISTRATION RIGHTS AGREEMENT. Each of the
Stockholders and the Purchaser shall have entered into the
Registration Rights Agreement in the form of Exhibit 7.02
hereto.

Section 7.03. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE
STOCKHOLDERS. The obligations of the Company and each Stockholder with respect
to actions to be taken by them at or before the Closing and the actions to be
taken on the IPO Closing Date are subject to the satisfaction, or the written
waiver by the Company on behalf of itself and each Stockholder pursuant to
Section 12.05 on or before the date of the Closing of, in addition to the
conditions specified in Section 7.02 (a) or 7.02 (b), as applicable, all the
following conditions:

(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of Purchaser and Newco in Article
V shall be true and correct in all material respects as of the
Closing as though made at that time;

(ii) DELIVERY OF DOCUMENTS. Purchaser shall have
delivered to the Company, with copies for each Stockholder:

(A) a Purchaser officer's certificate
respecting the representations and warranties of
Purchaser and Newco in Article V and compliance with the
covenants of Purchaser and Newco in Article VI and in
the form thereof attached as an exhibit to the Closing
Memorandum;

(B) opinions dated the IPO Closing Date and
addressed to the Company and the Stockholders from
Counsel for Purchaser and Newco substantially in the
forms thereof attached as exhibits to the Closing
Memorandum;

(C) a certificate of the secretary or any
assistant secretary of Purchaser in the form thereof
(without attachments thereto) attached as an exhibit to
the Closing Memorandum and respecting, and to which
there shall be attached, (a) the Charter Documents of
Purchaser and Newco (certified by the Secretary of State
of the State of Delaware in the case of the certificates
of incorporation of Purchaser included therein); (b) the
resolutions of the boards of directors of Purchaser and
Newco respecting the Transaction Documents and the
transactions contemplated thereby; (c) a certificate
respecting the incumbency and true signatures of the
Purchaser and Newco officers who execute the Transaction
Documents on behalf of Purchaser and Newco,
respectively; (d) a specimen certificate evidencing
shares of Purchaser Common Stock; (e) the prospectus
included in the Registration Statement when it became
effective; and (f) a facsimile copy of the Underwriting
Agreement as executed and delivered by Purchaser and the
Underwriter;

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(D) a certificate, dated as of a Current
Date, duly issued by the Secretary of State of the State
of Delaware, showing Purchaser to be in good standing
and authorized to do business in that State.

Section 7.04. CONDITIONS TO THE OBLIGATIONS OF PURCHASER AND NEWCO.

(a) The obligations of Purchaser and Newco with respect to
actions to be taken by them at or before the Closing are subject to the
satisfaction on or before the date of the Closing of, in addition to the
conditions specified in Section 7.02 (a) and Section 7.02(b), all the
following conditions:

(i) REPRESENTATIONS AND WARRANTIES. All the
representations and warranties of the Stockholders and the
Company in Articles III and IV shall be true and correct in all
material respects as of the Closing as though made at that time;

(ii) DELIVERY OF DOCUMENTS. The Stockholders and the
Company shall have delivered to Purchaser:

(A) a Company officer's certificate, signed
by a Responsible Officer, respecting the representations
and warranties of the Stockholders and the Company in
Articles III and IV and compliance with the covenants of
the Stockholders and the Company in Article VI and in
the form thereof attached as an exhibit to the Closing
Memorandum;

(B) opinions dated the IPO Closing Date and
addressed to Purchaser from Counsel for the Company and
the Stockholders substantially in the form thereof
attached as exhibits to the Closing Memorandum;

(D) from each Significant Stockholder, a
General Release duly executed and delivered by that
Significant Stockholder; and

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it in Section 4.02 of the Disclosure Statement, showing
it to be in good standing and authorized to do business
in its Organization State and those other jurisdictions
and that all state franchise and/or income tax returns
and taxes due by it in its Organization State and those
other jurisdictions for all periods prior to the Closing
have been filed and paid.

(iii) CLOSING OF STOCK PURCHASE. Robert Moktarian
shall have acquired approximately 535,453 shares of Company
Common Stock pursuant to the terms of that Agreement between
Robert Moktarian and the shareholder of the Info-Highway
International, Inc. dated as of June __, 1999.

(iv) TERMINATION OF PLAN. The Company shall have
amended and terminated the InfoHighway International, Inc. 1998
Incentive Stock Option Plan pursuant to Section 12.14 of this
Agreement.

(b) The obligations of Purchaser and Newco with respect to
the actions to be taken on the IPO Closing Date are subject to the
satisfaction on that date of (i) all the conditions set forth in Section
7.02(b), if any, and (ii) the condition that all the representations and
warranties of the Stockholders and the Company in Articles III and IV
shall be true and correct in all material respects as of the IPO Closing
Date as though made on that date.

ARTICLE VIII

COVENANTS FOLLOWING THE EFFECTIVE TIME

Section 8.01. OF EACH PARTY OTHER THAN THE COMPANY. From and after
the Effective Time, subject to the waiver provisions of Section 11.05, each
Party(other than the Company) will comply with the following covenants. If,
subsequent to the IPO Pricing Date and prior to the 25th day after the date of
the Final Prospectus, any Stockholder becomes aware of any material fact or
circumstance which would change (or, if after the Effective Time, would have
changed) a representation or warranty of the Company or any Stockholder in this
Agreement or would affect any material document delivered pursuant hereto in any
material respect, that Stockholder will promptly give notice of that fact or
circumstance to Purchaser.

Section 8.02. REPAYMENT OF COMPANY INDEBTEDNESS. Within 30 days
following the Effective Time, the Purchaser will repay the Company Indebtedness
listed in Schedule 8.02. The provisions of this Section 8.02 shall survive the
Closing.

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ARTICLE IX

INDEMNIFICATION

Section 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All the
provisions of this Agreement will survive the Closing and the Effective Time
notwithstanding any investigation at any time made by or on behalf of any party
hereto or the provision of any Supplemental Information pursuant to
Section 6.06, provided that the representations and warranties set forth in
Articles IV, V and VI and in any certificate delivered in connection herewith
with respect to any of those representations and warranties will terminate and
expire two years after the IPO Closing Date, except the representations and
warranties of Purchaser and the Company will terminate and expire at the
Effective Time. After a representation and warranty has terminated and expired,
no indemnification will or may be sought on the basis of that representation and
warranty by any Person who would have been entitled pursuant to this Article IX
to indemnification on the basis of that representation and warranty prior to its
termination and expiration, provided that, in the case of each representation
and warranty that will terminate and expire as provided in this Section 9.01, no
claim presented in writing for indemnification pursuant to this Article IX on
the basis of that representation and warranty prior to its termination and
expiration will be affected in any way by the termination and expiration.

Section 9.02. INDEMNIFICATION OF PURCHASER INDEMNIFIED PARTIES.

(a) Subject to the applicable provisions of Sections 9.01
and 9.06, the Significant Stockholders covenant and agree that each of
them, severally will indemnify each Purchaser Indemnified Party against,
and hold each Purchaser Indemnified Party harmless from and in respect
of, all Damages that arise from, are based on or relate or otherwise are
attributable to (i) any breach of the representations and warranties of
the Significant Stockholders or the Company set forth herein (other than
in Article III) or in certificates delivered in connection herewith
(other than in respect of certificates relating only to the
representations and warranties in Article III), (ii) any nonfulfillment
of any covenant or agreement on the part of the Significant Stockholders
or the Company under this Agreement, (iii) any liability under the
Securities Act, the Exchange Act or other applicable Governmental
Requirement which arises out of or is based on (A) any untrue statement
of a material fact relating to the Company, or any of them, which is
(1) provided to Purchaser or its counsel by the Company and
(2) contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating to the Company
required to be stated therein or necessary to make the statements
therein not misleading, and not provided to Purchaser or its counsel by
the Company or the Significant Stockholders (each such Damage Claim and
each Damage Claim described in Section 9.02(b) being an "PURCHASER
INDEMNIFIED LOSS").

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(b) Each Stockholder, severally and not jointly with any
other Person, covenants and agrees that he will indemnify each Purchaser
Indemnified Party against, and hold each Purchaser Indemnified Party
harmless from and in respect of, all Damage Claims that arise from, are
based on or relate or otherwise are attributable to (i) any breach of
the representations and warranties of that Stockholder solely as to that
Stockholder set forth in Article III or in certificates delivered by
that Stockholder and relating to those representations and warranties,
(ii) any nonfulfillment of any agreement on the part of that Stockholder
under this Agreement or (iii) any liability under the Securities Act,
the Exchange Act or other applicable Governmental Requirement which
arises out of or is based on (A) any untrue statement or alleged untrue
statement of a material fact relating solely to that Stockholder which
is (1) provided to Purchaser or its counsel by that Stockholder and
(2) contained in any preliminary prospectus relating to the IPO, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or (B) any omission or alleged
omission to state therein a material fact relating solely to that
Stockholder required to be stated therein or necessary to make the
statements therein not misleading, and not provided to Purchaser or its
counsel by that Stockholder.

Section 9.03. INDEMNIFICATION OF STOCKHOLDER INDEMNIFIED PARTIES.
Purchaser covenants and agrees that it will indemnify each Stockholder
Indemnified Party against, and hold each Stockholder Indemnified Party harmless
from and in respect of, all Damage Claims (that arise from, are based on or
relate or otherwise are attributable to (i) any breach by Purchaser or Newco of
their representations and warranties set forth herein or in their certificates
delivered to the Company or the Stockholders in connection herewith, (ii) any
nonfulfillment of any covenant or agreement on the part of Purchaser or Newco
under this Agreement (each such Damage Claim being a "STOCKHOLDER INDEMNIFIED
LOSS"); or (iii) any liability under the Securities Act, the Exchange Act or
other applicable Governmental Requirement which arises out of or is based on
(A) any untrue statement or alleged untrue statement of a material fact relating
to Purchaser, Newco or any of the Other Founding Companies contained in any
preliminary prospectus relating to the IPO, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or (B) any omission or alleged omission to state therein a material
fact relating to Purchaser, Newco or any of the Other Founding Companies, or any
of them, required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.

Section 9.04. CONDITIONS OF INDEMNIFICATION.

(a) All claims for indemnification under this Agreement
shall be asserted and resolved as provided in this Section 9.04.

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Agreement and (ii) transmit to the Indemnifying Party a written notice
("CLAIM NOTICE") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to the claim (if
any), an estimate of the amount of damages attributable to the Third
Party Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of the claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement.
Except as set forth in Section 9.02, the failure to promptly deliver a
Claim Notice shall not relieve the Indemnifying Party of its obligations
to the Indemnified Party with respect to the related Third Party Claim
except to the extent that the resulting delay is materially prejudicial
to the defense of the claim. Any Third Party Claim asserted by
Purchaser against the Significant Stockholders pursuant to
Section 9.02(a) will be made against all, but not less than all, of the
Significant Stockholders. Within 15 days after receipt of any Claim
Notice (the "ELECTION PERIOD"), the Indemnifying Party shall notify the
Indemnified Party (i) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article IX with
respect to the Third Party Claim and (ii) if the Indemnifying Party does
not dispute its potential liability to the Indemnified Party with
respect to the Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against the Third Party Claim.

(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume
the defense of the Third Party Claim, then the Indemnifying Party shall
have the right to defend, at its sole cost and expense, the Third Party
Claim by all appropriate proceedings, which proceedings shall be
prosecuted diligently by the Indemnifying Party to a final conclusion or
settled at the discretion of the Indemnifying Party in accordance with
this Section 9.04(c) and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession with respect
to the Third Party Claim and otherwise cooperate with the Indemnifying
Party in the defense of the Third Party Claim; PROVIDED, HOWEVER, that
the Indemnifying Party shall not enter into any settlement with respect
to any Third Party Claim that purports to limit the activities of, or
otherwise restrict in any way, any Indemnified Party or any Affiliate of
any Indemnified Party without the prior consent of that Indemnified
Party (which consent may be withheld in the sole discretion of that
Indemnified Party). The Indemnified Party is hereby authorized, at the
sole cost and expense of the Indemnifying Party if found liable
hereunder, to file, during the Election Period, any motion, answer or
other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party.
The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying
Party pursuant to this Section 9.04(c) and will bear its own costs and
expenses with respect to its participation; PROVIDED, HOWEVER, that if
the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised in writing by counsel that there may
be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying

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Party, then the Indemnified Party may employ separate counsel at the
expense of the Indemnifying Party, and, on its written notification of
that employment, the Indemnifying Party shall not have the right to
assume or continue the defense of the action on behalf of the
Indemnified Party.

(d) If the Indemnifying Party (i) within the Election Period
(A) disputes its potential liability to the Indemnified Party under this
Article IX, (B) elects not to defend the Indemnified Party pursuant to
Section 9.04(c) or (C) fails to notify the Indemnified Party that the
Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 9.04(c) or (ii) elects to defend the Indemnified Party pursuant
to Section 9.04(c) but fails diligently and promptly to prosecute or
settle the Third Party Claim, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the Indemnifying Party
(if the Indemnified Party is entitled to indemnification hereunder), the
Third Party Claim by all appropriate proceedings, which proceedings
shall be promptly and vigorously prosecuted by the Indemnified Party to
a final conclusion or settled. The Indemnified Party shall have full
control of such defense and proceedings. Notwithstanding the foregoing,
if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article IX and
if such dispute is resolved in favor of the Indemnifying Party, the
Indemnifying Party shall not be required to bear the costs and expenses
of the Indemnified Party's defense pursuant to this Section 9.04 or of
the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable and appropriate costs and
expenses of such litigation. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified
Party pursuant to this Section 9.04(d), and the Indemnifying Party shall
bear its own costs and expenses with respect to such participation.

(e) If any Indemnified Party should have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim,
the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "INDEMNITY NOTICE") describing in reasonable detail the
nature of the claim, an estimate of the amount of Damages attributable
to that claim to the extent feasible (which estimate shall not be
conclusive of the final amount of the claim) and the basis of the
Indemnified Party's request for indemnification under this Agreement.
Any claim that does not involve a Third Party Claim asserted by
Purchaser against the Significant Stockholders under Section 9.02(a)
will be made against all, but not less than all, of the Significant
Stockholders. If the Indemnifying Party does not notify the Indemnified
Party within 15 days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes the claim, the claim specified by the
Indemnified Party in the Indemnity Notice shall be deemed a liability of
the Indemnifying Party hereunder. If the Indemnifying Party has timely
disputed the claim, as provided above, the dispute shall be resolved by
proceedings in an appropriate court of competent jurisdiction if the
parties do not reach a settlement of such dispute within 30 days after
notice of the dispute is given.

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Section 9.05. REMEDIES EXCLUSIVE. Except as otherwise expressly
provided in this Agreement, the remedies provided in this Article IX are the
exclusive remedies available to one party against the other, either at law or in
equity, in respect of any matter indemnified against in this Article IX.

Section 9.06. LIMITATIONS ON INDEMNIFICATION.

(a) Notwithstanding the provisions of Section 9.02(a),
neither the Company nor any of the Significant Stockholders shall be
required to indemnify or hold harmless any of the Purchaser Indemnified
Parties on account of any Purchaser Indemnified Loss under Section
9.02(a) unless the liability of the Company and the Significant
Stockholders in respect of that Purchaser Indemnified Loss, when
aggregated with the liability of the Company and the Significant
Stockholders in respect of all Purchaser Indemnified Losses under
Section 9.02 (a), exceeds, and only to the extent the aggregate amount
of all those Purchaser Indemnified Losses does exceed, the Threshold
Amount. In no event shall (i) the liability of any Significant
Stockholder under Section 9.02(a) exceed that Significant Stockholder's
Pro Rata Share of the Significant Stockholder Ceiling Amount or (ii) the
aggregate liability of each Stockholder under Section 9.02(b) exceed
that Stockholder's Stockholder Pro Rata Share of the Ceiling Amount.

(b) Notwithstanding the provisions of Section 9.03,
Purchaser shall not be required to indemnify or hold harmless any of the
Stockholder Indemnified Parties on account of any Stockholder
Indemnified Loss unless the liability of Purchaser in respect of that
Stockholder Indemnified Loss, when aggregated with the liability of
Purchaser in respect of all Stockholder Indemnified Losses, exceeds, and
only to the extent the aggregate amount of all those Stockholder
Indemnified Losses does exceed, the Threshold Amount. In no event shall
Purchaser be liable under this Agreement, including Section 9.03, for
any amount in excess of the Ceiling Amount.

<PAGE>

ARTICLE X

LIMITATIONS ON COMPETITION

Section 10.01. PROHIBITED ACTIVITIES. Each of Tony Howlett, Glenn
Kramer and Don Trapp (each a "Restricted Stockholder") severally agrees that he
will not during the period beginning on the date hereof and ending on the second
anniversary of the date hereof, directly or indirectly, for any reason, for his
own account or on behalf of or together with any other Person:

(a) engage as an officer, director or in any other
managerial capacity or as an owner, co-owner or other investor of or in,
whether as an employee, independent contractor, consultant or advisor,
in any business in competition with the Company, any Company Subsidiary
or Purchaser or any Subsidiary of Purchaser (Purchaser and its
Subsidiaries collectively being called "Purchaser" for purposes of this
Article X) within any territory surrounding any office or facility (each
a "facility") in which the Company was engaged in business on the date
hereof or immediately prior to the Effective Time (for purposes of this
Article X, the territory surrounding a facility shall be: (i) the city,
town or village in which the facility is located, (ii) the county or
parish in which the facility is located, (iii) the counties or parishes
contiguous to the county or parish in which the facility is located, and
(iv) the area located within 100 miles of the facility, all of such
locations being herein collectively called the "TERRITORY");

(b) call on any natural Person who is at that time employed
by the Company, any Company Subsidiary or Purchaser with the purpose or
intent of attracting that person from the employ of the Company, any
Company Subsidiary or Purchaser, provided that a Stockholder may call on
and hire any of his Immediate Family Members;

(c) call on any Person that at that time is, or at any time
within one year prior to that time was, a customer of the Company, any
Company Subsidiary or Purchaser within the Territory, (i) for the
purpose of soliciting or selling any product or service in competition
with the Company, any Company Subsidiary or Purchaser within the
Territory and (ii) with the knowledge of the customer relationship; or

Notwithstanding the foregoing, any Restricted Stockholder may own and hold as a
passive investment up to 1% of a class of the outstanding Capital Stock of a
competing Entity if that class of Capital Stock is publicly traded.

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Section 10.02. DAMAGES. Because of the difficulty of measuring
economic losses to Purchaser as a result of any breach by a Restricted
Stockholder of his covenants in Section 10.01, and because of the immediate and
irreparable damage that could be caused to Purchaser for which it would have no
other adequate remedy, each Restricted Stockholder agrees that Purchaser may
enforce the provisions of Section 10.01 by injunctions and restraining orders
against the Restricted Stockholder if he breaches any of those provisions.

Section 10.03. REASONABLE RESTRAINT. The Parties each agree that
Sections 10.01 and 10.02 impose a reasonable restraint on the Restricted
Stockholder in light of the activities and business of Purchaser on the date
hereof, the current business plans of Purchaser and the investment by each
Restricted Stockholder in Purchaser as a result of the Merger.

Section 10.04. SEVERABILITY; REFORMATION. The covenants in this
Article X are severable and separate. The unenforceability of any specific
covenant in this Article X is not intended by any Party to, and shall not,
affect the provisions of any other covenant in this Article X. If any court of
competent jurisdiction determines that the scope, time or territorial
restrictions set forth in Section 10.01 are unreasonable as applied to any
Restricted Stockholder, the Parties, including the Restricted Stockholder in
question, acknowledge their mutual intention and agreement that those
restrictions be enforced to the fullest extent the court deems reasonable, and
thereby shall be reformed to that extent as applied to that Restricted
Stockholder and any other Restricted Stockholder similarly situated.

Section 10.05. INDEPENDENT COVENANT. All the covenants in this Article
X are intended by each Party to, and shall, be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of any Restricted Stockholder against Purchaser,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Purchaser of any covenant in this Article X. It is
specifically agreed that the period specified in Section 10.01 shall be computed
in the case of each Restricted Stockholder by excluding from that computation
any time during which the Restricted Stockholder is in violation of any
provision of Section 10.01. The covenants contained in this Article X shall not
be affected by any breach of any other provision of this Agreement by any Party.

Section 10.06. MATERIALITY. The Company and each Restricted
Stockholder, severally and not jointly with any other Person, hereby agree that
this Article X is a material and substantial part of the transactions
contemplated by this Agreement.

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ARTICLE XI

TERMINATION

Section 11.01. TERMINATION OF THIS AGREEMENT.

(a) This Agreement may be terminated at any time prior to
the Closing solely:

(i) by the mutual written consent of Purchaser and
the Company;

(ii) by the Majority Stockholders or the Company, on
the one hand, or by Purchaser, on the other hand, if the
transactions contemplated by this Agreement to take place at the
Closing shall not have been consummated by October 31, 1999,
unless the failure of such transactions to be consummated
results from the willful failure of the Party (or in the case of
the Stockholders and the Company, any of them) seeking to
terminate this Agreement to perform or adhere to any agreement
required hereby to be performed or adhered to by that Party
prior to or at the Closing or thereafter on the IPO Closing
Date;

(iii) by the Majority Stockholders or the Company, on
the one hand, or by Purchaser, on the other hand, if a material
breach or default shall be made by the other Party (or in the
case of the Stockholders and the Company, any of them) in the
observance or in the due and timely performance of any of the
covenants, agreements or conditions contained herein; or

(iv) by Purchaser if it is entitled to do so as
provided in Section 6.06;

(b) This Agreement may be terminated after the Closing
solely:

(i) by Purchaser or the Company if the Underwriting
Agreement is terminated pursuant to its terms after the Closing
and prior to the consummation of the IPO; or

(ii) automatically and without action on the part of
any party hereto if the IPO is not consummated within 7 Business
Days after the date of the Closing.

(c) If this Agreement is terminated pursuant to this Section
11.01, the Merger will be deemed for all purposes to have been abandoned
and of no force or effect. If this Agreement is terminated pursuant to
this Section 11.01 after the Certificate of Merger has been filed with
the Secretary of State of the State of Texas, but before the IPO has
been consummated, Purchaser will take all actions that Counsel for the
Company and the Stockholders advises Purchaser are required by the
applicable laws of the State of Texas to rescind the Merger.

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Section 11.02. LIABILITIES IN EVENT OF TERMINATION. If this Agreement
is terminated pursuant to Section 11.01, there shall be no liability or
obligation on the part of any Party except (a) as provided in Section 12.07, (b)
to the extent that such liability is based on the breach of that Party of any of
its or his representations, warranties or covenants set forth in of this
Agreement.

ARTICLE XII

GENERAL PROVISIONS

Section 12.01. TREATMENT OF CONFIDENTIAL INFORMATION.

(a) Each of the Company and the Stockholders, severally and
not jointly with any other Person, acknowledges that it has or may have
had in the past, currently has and in the future may have access to
Confidential Information of the Company and the Company Subsidiaries,
the Other Founding Companies and their Subsidiaries and Purchaser and
its Subsidiaries. Each of the Company and the Stockholders, severally
and not jointly with any other Person, agrees that it will keep
confidential all such Confidential Information furnished to it and,
except with the specific prior written consent of Purchaser will not
disclose such Confidential Information to any Person except
(a) Representatives of Purchaser, (b) its own Representatives, provided
that these Representatives (other than counsel) agree to the
confidentiality provisions of this Section 12.01; and provided, further,
that Confidential Information shall not include (i) such information
which becomes known to the public generally through no fault of any
Stockholder, (ii) information required to be disclosed by law or the
order of any governmental authority under color of law, provided, that
prior to disclosing any information pursuant to this clause (ii), each
Stockholder shall, if possible, give prior written notice thereof to
Purchaser and provide Purchaser with the opportunity to contest such
disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit
against the disclosing party. In the event of a breach or threatened
breach by any Stockholder of the provisions of this Section 12.01 with
respect to any Confidential Information, Purchaser shall be entitled to
an injunction restraining such Stockholder from disclosing, in whole or
in part, that Confidential Information. Nothing herein shall be
construed as prohibiting Purchaser from pursuing any other available
remedy for such breach or threatened breach, including the recovery of
damages.

(b) Because of the difficulty of measuring economic losses
as a result of the breach of the foregoing covenants in Section
12.01(a), and because of the immediate and irreparable damage that would
be caused to Purchaser for which it would have no other adequate remedy,
each of the Company and the Stockholders agrees that Purchaser may
enforce the provisions of Section 12.01(a) by injunctions and
restraining orders against each of them who breaches any of those
provisions.

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(d) The obligations of the parties under this Section 12.01
shall survive the termination of this Agreement for a period of three
years.

Section 12.02. RESTRICTIONS ON TRANSFERS OF PURCHASER COMMON STOCK.

(a) During the two year period following the IPO Closing
Date (the "RESTRICTED PERIOD"), no Stockholder voluntarily will:
(i) sell, assign, exchange, transfer, encumber, pledge, distribute,
appoint or otherwise dispose of (A) any shares of Purchaser Common Stock
and Contingent Stock Issue Rights (and shares of Purchaser Common Stock
issued thereunder, if any) received by any Stockholder in the Merger or
(B) any interest in (including any option to buy or sell) any such
shares of Purchaser Common Stock and Contingent Stock Issue Rights (and
shares of Purchaser Common Stock issued thereunder, if any), in whole or
in part, and Purchaser will have no obligation to, and shall not, treat
any such attempted transfer as effective for any purpose; or (ii) engage
in any transaction, whether or not with respect to any shares of
Purchaser Common Stock and Contingent Stock Issue Rights (and shares of
Purchaser Common Stock issued thereunder, if any) or any interest
therein, the intent or effect of which is to reduce the risk of owning
the shares of Purchaser Common Stock and Contingent Stock Issue Rights
(and shares of Purchaser Common Stock issued thereunder, if any)
acquired pursuant to Section 2.04 (including, for example engaging in
put, call, short-sale, straddle or similar market transactions);
PROVIDED, HOWEVER, that if the average closing price of the Purchaser
Common Stock (as reported by the principal exchange or market upon which
the Purchaser Common Stock is then listed) for the ten trading day
period prior to (i) the end of the twelfth month following the IPO
Closing Date, (ii) the end of the fifteenth month following the IPO
Closing Date, (iii) the end of the eighteenth month following the IPO
Closing Date, or (iv) the end of the twenty-first month following the
IPO Closing Date, each such ten trading day period a "Measurement
Period," is greater than or equal to $17 per share, then (i) ten
percent, (ii) twenty percent, (iii) thirty percent or (iv) forty
percent, respectively, of Purchaser Common Stock and shares of Purchaser
Common Stock actually issued pursuant to the Contingent Stock Issue
Rights, if any, received by each Stockholder in the Merger shall
irrevocably be released from the restrictions of this Section 12.02(a)
following the applicable Measurement Period; and, PROVIDED, FURTHER,
that this Section 12.02 shall not restrict any transfer of Purchaser
Common Stock and Contingent Stock Issue Rights acquired by a Stockholder
pursuant to Section 2.04 to any of that Stockholder's Related Persons
who agree in writing to be bound by the provisions of Section 12.01 and
this Section 12.02. The certificates evidencing the Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) delivered to each Stockholder pursuant
to Section 2.05 will bear a legend substantially in the form set forth
below and containing such other information as Purchaser may deem
necessary or appropriate:

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EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN
OF REORGANIZATION AMONG THE ISSUER, THE HOLDER OF THIS
CERTIFICATE AND THE OTHER PARTIES THERETO, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED,
PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE DISPOSED
OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT
TO ANY ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT
OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING THE
TWO-YEAR PERIOD ENDING ON __________ (THE "RESTRICTED
PERIOD"). ON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENT) AFTER THE EXPIRATION OF THE RESTRICTED
PERIOD.

(b) Each Stockholder, severally and not jointly with any
other Person, (i) acknowledges that the shares of Purchaser Common Stock
and Contingent Stock Issue Rights (and shares of Purchaser Common Stock
issued thereunder, if any) to be delivered to him pursuant to Section
2.04 (A) have not been and will not be registered under the Securities
Act and therefore may not be resold by him without compliance with the
Securities Act and (B) will, as a result of their restrictions on
transferability which are imposed by this Agreement during the
Restricted Period, have a value materially less at the Effective Time
than the value of then freely tradeable shares of Purchaser Common
Stock, and (ii) covenants that none of the shares of Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) issued to him pursuant to Section 2.04
will be offered, sold, assigned, pledged, hypothecated, transferred or
otherwise disposed of except after full compliance with all the
applicable provisions of the Securities Act and the rules and
regulations of the SEC and applicable state securities laws and
regulations. All certificates evidencing shares of Purchaser Common
Stock and Contingent Stock Issue Rights (and shares of Purchaser Common
Stock issued thereunder, if any) issued pursuant to Section 2.04 will
bear the following legend in addition to the legend prescribed by
Section 12.02(a):

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THAT ACT AND OTHER APPLICABLE
SECURITIES LAWS.

In addition, certificates evidencing shares of Purchaser Common Stock
and Contingent Stock Issue Rights issued to each Stockholder pursuant to
Section 2.04 will bear any legend required by (i) the securities or blue
sky laws of the state in which that Stockholder resides or (ii) the
Underwriter in connection with any agreement of that Stockholder with
the Underwriter to the effect set forth in Section 12.02(a).

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Section 12.03. BROKERS AND AGENTS. The Stockholders jointly and
severally represent and warrant to Purchaser that the Company has not directly
or indirectly employed or become obligated to pay any broker or similar agent,
except as set forth on Section 4.30 of the Disclosure Schedule, in connection
with the transactions contemplated hereby and agree, without regard to the
Threshold Amount limitations set forth in Article IX, to indemnify Purchaser
against all Damage Claims arising out of claims for any and all fees and
commissions of brokers or similar agents employed or promised payment by the
Company.

Section 12.04. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights of its Parties may not be assigned (except by operation
of law) and shall be binding on and inure to the benefit of the Parties, the
successors of Purchaser, and the heirs and legal representatives of the
Stockholders (and, in the case of any trust, the successor trustees of the
trust). Neither this Agreement nor any other Transaction Document is intended,
or shall be construed, deemed or interpreted, to confer on any Person not a
party hereto or thereto any rights or remedies hereunder or thereunder, except
as provided in Section 6.04(b), in Article IX, or as otherwise provided
expressly herein or therein.

Section 12.05. ENTIRE AGREEMENT; AMENDMENT; WAIVERS. This Agreement
and the documents delivered pursuant to it constitute the entire agreement and
understanding among the Parties and supersede all prior agreements and
understandings, both written and oral, relating to the subject matter of this
Agreement. This Agreement may be amended, modified or supplemented, and any
right hereunder may be waived, if, but only if, the amendment, modification,
supplement or waiver is in writing and signed by the Majority Stockholders, the
Company and Purchaser. The waiver of any of the terms and conditions of this
Agreement shall not be construed or interpreted as, or deemed to be, a waiver of
any of its other term or conditions.

Section 12.06. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which will be an original, but all of which
together will constitute one and the same instrument.

Section 12.07. EXPENSES. Whether or not the transactions contemplated
hereby are consummated, (a) Purchaser will pay the fees, expenses and
disbursements of Purchaser and Newco and their Representatives which are
incurred in connection with the subject matter of this Agreement and any
amendments to this Agreement including all costs and expenses incurred in the
performance of and compliance with all conditions to be performed by Purchaser
and Newco under this Agreement, including the costs of preparing the
Registration Statement, (b) the Company may pay any fees, expenses and
disbursements of Counsel for the Company and the Stockholders incurred in
connection with the subject matter of this Agreement and the Registration
Statement on or before the IPO Closing Date, up to a maximum of $75,000 in the
aggregate, and (c) the Stockholders will pay from personal funds, and not from
funds of the Company or any Company Subsidiary, (i) all sales, use, transfer and
other similar taxes and fees (collectively, "TRANSFER TAXES") incurred in
connection with the transactions contemplated hereby, and (ii) the fees,
expenses and disbursements in excess of $75,000 in the aggregate of Counsel for
the Company and the Stockholders incurred in

66
<PAGE>

connection with the subject matter of this Agreement and the Registration
Statement on or before the IPO Closing Date. The Stockholders will file all
necessary documentation and Returns with respect to all Transfer Taxes. In
addition, each Stockholder acknowledges that he, and not the Company,
Purchaser or the Surviving Corporation, will pay all Taxes due upon receipt
of the Merger Consideration payable to the Stockholder pursuant to Article
II.

Section 12.08. NOTICES. All notices required or permitted hereunder
shall be in writing, and shall be deemed to be delivered and received (a) if
personally delivered or if delivered by telex, telegram, facsimile or courier
service, when actually received by the Party to whom notice is sent or (b) if
delivered by mail (whether actually received or not), at the close of business
on the third Business Day next following the day when placed in the mail,
postage prepaid, certified or registered, addressed to the appropriate Party or
Parties, at the address of such Party set forth below (or at such other address
as such party may designate by written notice to all other Parties in accordance
herewith):

(i) if to Purchaser or Newco, addressed to it at:

OmniLynx Communications Corporation
700 Gemini, Suite 100
Houston, Texas 77058
Attn.: Christopher H. Efird, President
Telecopy No.: (281) 488-5353

and

OmniLynx Communications Corporation
1770 Motor Parkway, Suite 300
Hauppauge, New York 11788
Attn.: Joseph Gregori
Telecopy No.: (516) 582-1240

with copies (which shall not constitute notice for purposes of
this Agreement) to:

Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002-2764
Attn: Robert G. Reedy
Telephone: (713) 226-0274
Telecopy No.: (713) 228-4935

(ii) if to the Stockholders, addressed to them at
their respective addresses set forth in Schedule 2.04; and

67
<PAGE>

(iii) if to the Company, addressed to it at:

11811 North Freeway, Suite 600
Houston, Texas 77060
Attn: Tony Howlett
Telecopy No.: (281) 447-5425

with copies (which shall not constitute notice for purposes of
this Agreement) to:

Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Telecopy No.: (713) 225-7047
Attn: Ed Rogers

SECTION 12.09. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE, WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
THE CONFLICTS OF LAW PROVISIONS THEREOF.

Section 12.11. TIME. Time is of the essence in the performance of this
Agreement in all respects.

Section 12.13. RESPECTING THE IPO. Each of the Company and the
Stockholders acknowledges and agrees that: (a) no firm commitment, binding
agreement or promise or other assurance of any kind, whether express or implied,
oral or written, exists at the date hereof that the Registration Statement will
become effective or that the IPO will occur at a particular price or within a
particular range of prices or occur at all; (b) neither Purchaser or any of its
Representatives nor any prospective underwriters in the IPO will have any
liability to the Company, the Stockholders or any

68
<PAGE>

of their respective Affiliates or associates for any failure of (i) the
Registration Statement to become effective (provided, however, that Purchaser
will use its reasonable best efforts to cause the Registration Statement to
become effective prior to October 31, 1999) or (ii) the IPO to occur at a
particular price or within a particular range of prices or to occur at all;
and (c) the decision of Stockholders to enter into this Agreement, or to vote
in favor of or consent to the Merger, has been or will be made independent
of, and without reliance on, any statements, opinions or other communications
of, or due diligence investigations that have been or will be made or
performed by, any prospective underwriter relative to Purchaser or the IPO.
The Underwriter shall have no obligation to the Company with respect to any
disclosure contained in the Registration Statement.

Section 12.14. TERMINATION OF THE INFOHIGHWAY INTERNATIONAL, INC. 1998
INCENTIVE STOCK OPTION PLAN. The Company hereby covenants and agrees to
terminate the InfoHighway International, Inc. 1998 Incentive Stock Option Plan
(the "Designated Plan") in accordance with the terms therein prior to the date
of the Closing, and at or prior to the Closing, the Company will provide
evidence reasonably satisfactory to the Purchaser that the Designated Plan has
been terminated.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.

OMNILYNX COMMUNICATIONS CORPORATION

By: /s/ Christopher H. Efird
------------------------------------
Christopher H. Efird, President

INFO ACQUISITION, INC.

By: /s/ Christopher H. Efird
------------------------------------
Christopher H. Efird, President

INFO-HIGHWAY INTERNATIONAL, INC.

By: /s/ Glenn Kramer
------------------------------------
Glenn Kramer
-----------------------,
President

69
<PAGE>

STOCKHOLDERS:

/s/ Tony Howlett /s/ Lorell Hathcock
- ------------------------------------- -----------------------------------
Tony Howlett Lorell Hathcock

/s/ AMICI Online Investments, L.L.C. /s/ H. Spenser /s/ Beverly A. Stone
- ------------------------------------- -----------------------------------
AMICI Online Investments, L.L.C. H. Spenser and Beverly A. Stone

/s/ Darin Mangum, G.P. /s/ Dwight Moody
- ------------------------------------- -----------------------------------
Mangum Family Limited Partnership Dwight Moody

/s/ Glenn Kramer /s/ Bert Campbell
- ------------------------------------- -----------------------------------
Glenn Kramer Bert Campbell

/s/ John Mabie
- ------------------------------------- -----------------------------------
John Mabie Tiffany Earl

/s/ Cynthia Howlett
/s/ Roger C. Krueger /s/ Herbert Davis
- ---------------------------------------- -----------------------------------
Krueger Investment Company Herbert Davis

/s/ Robert Mokterian /s/ Lars Nelson
- ------------------------------------- -----------------------------------
Robert Mokterian Lars Nelson

/s/ Darin Mangum, attorney-in-fact /s/ Patsy Willaimson
- ------------------------------------- -----------------------------------
David Mangum Patsy Willaimson

/s/ Darin Mangum
- ------------------------------------- -----------------------------------
Darin Mangum Mark Benthin

/s/ Don Trapp /s/ Ralph Hamblin /s/ Judy Ridenour
- ------------------------------------- -----------------------------------
Don Trapp Ralph Hamblin and Judy Ridenour

/s/ Gary Maxwell /s/ Ed Rogers
- ------------------------------------- -----------------------------------
Gary Maxwell Ed Rogers

/s/ Shirley Wiss /s/ James Moyle
- ------------------------------------- -----------------------------------
Shirley Wiss James Moyle

/s/ Mac Davis /s/ Lisa Davis /s/ Richard Bateman
- ------------------------------------- -----------------------------------
Mac Davis Richard Bateman

70
<PAGE>

/s/ G.D. Achenbach /s/ Darin Mangum, V.P.
- ------------------------------------- -----------------------------------
G.D. Achenbach Liberty Petroleum

/s/ John E. Bregar
- ------------------------------------- -----------------------------------
John E. Bregar Tom Cabe

/s/ Alfred Cordes, Jr.
/s/ Charline Cordes /s/ Pat Forbes /s/ Byron H. Forbes
- ------------------------------------- -----------------------------------
Alfred Cordes, Jr. & Pat Forbes
Charline Cordes

/s/ Joseph Ace /s/ Joseph Kewish
- ------------------------------------- -----------------------------------
Joseph Ace Joseph Kewish

/s/ Ray Boyd /s/ Ron Jackson
- ------------------------------------- -----------------------------------
Ray Boyd Ron Jackson

/s/ Donald Jensen /s/ Abby Jensen
- ------------------------------------- -----------------------------------
Dudley Rowley Donald and Abby Jensen

/s/ Dennis Tiberius
- ------------------------------------- -----------------------------------
Dennis Tiberius Jill Swift

/s/ Max E. Zent /s/ Kenneth Dunlap
- ------------------------------------- -----------------------------------
Max E. Zent Kenneth Dunlap

/s/ Jerry Malone
- ------------------------------------- -----------------------------------
Michael O'Hanlon Jerry Malone

/s/ Stan Hanks /s/ Nelson Moyle
- ------------------------------------- -----------------------------------
Stan Hanks Nelson Moyle

/s/ James Maxwell
- ------------------------------------- -----------------------------------
James Maxwell Bruce Timm

- ------------------------------------- -----------------------------------
Harvy R. and Marilyn Hulme Leon Hurst

/s/ Joseph Caggiano /s/ Jeffrey Ellena /s/ Linda Ellena
- ------------------------------------- -----------------------------------
Joseph Caggiano Jeffrey and Linda Ellena

71
<PAGE>

/s/ Angela Frye /s/ Stanley Rodman
- ------------------------------------- -----------------------------------
Angela Frye Stanley Rodman

/s/ Brian Thorn
- ------------------------------------- -----------------------------------
Brian Thorn John Rowe

/s/ Winston Patrick Hall /s/ Phillip Sommer
- ------------------------------------- -----------------------------------
Winston Patrick Hall Phillip Sommer

- ------------------------------------- -----------------------------------
Lance Pelley Elizabeth Miller

/s/ Charley Adams /s/ Jane Young
- ------------------------------------- -----------------------------------
Charley Adams Jane Young

/s/ David Silver /s/ David Lockwood /s/ Teresa Lockwood
- ------------------------------------- --------------------------------------
ADS Financial Services David and Teresa Lockwood

/s/ Merwyn Croston
- ------------------------------------- -----------------------------------
Robert and Mary Logan Merwyn Croston

/s/ James D. White /s/ Katherine Hall
- ------------------------------------- -----------------------------------
James D. White Katherine Hall

/s/ Bruce and Jeanne Lindsay /s/ Richard Howlett
- ------------------------------------- -----------------------------------
Bruce and Jeanne Lindsay Richard Howlett

/s/ Jack Manning
- ------------------------------------- -----------------------------------
Jack Manning Thomas Johnson

/s/ Ann Louise Micek
- ------------------------------------- -----------------------------------
Ann Louise Micek Donald Sawyer

/s/ Robert Brunson /s/ H. Paul Barringer
- ------------------------------------- -----------------------------------
Robert Brunson H. Paul Barringer

/s/ Florence Chamberlain /s/ Bert Melnick
- ------------------------------------- -----------------------------------
Florence Chamberlain Bert Melnick

72
<PAGE>

- ------------------------------------- -----------------------------------
Dawn Bailey Antje Franks

/s/ Mary Richardson /s/ Gerald Rivers Shugar
- ------------------------------------- -----------------------------------
Mary Evans Gerald Rivers

/s/ William Rowden
/s/ Dinah Hudnall /s/ Mattie Sheihing Rowden
- ------------------------------------- -----------------------------------
Dinah Hudnall William Rowden

/s/ Patrick O'Kelly
- ------------------------------------- -----------------------------------
Patrick O'Kelly Roger Smith

/s/ Kenneth Trenkelbach /s/ Peter Ryan
- ------------------------------------- -----------------------------------
Kenneth Trenkelbach Peter Ryan

/s/ Michael Jeffers /s/ Louis Braden
- ------------------------------------- -----------------------------------
Michael Jeffers Louis Braden

- ------------------------------------- -----------------------------------
Ray Rowden Gerald Kepner

/s/ David Aitken /s/ Clarence Hammond
- ------------------------------------- -----------------------------------
David Aitken Clarence Hammond

/s/ Doug Sanders /s/ George Spaid
- ------------------------------------- -----------------------------------
Doug Sanders George Spaid

/s/ Edward T. Brauner /s/ John Yozik
- ------------------------------------- -----------------------------------
Edward T. Brauner ISP Net

/s/ Pete Belcher /s/ Joseph Putnam
- ------------------------------------- -----------------------------------
Pete Belcher Joseph Putnam

/s/ Al Klimas /s/ Kent Stephenson
- ------------------------------------- -----------------------------------
Sirius Video Productions Kent Stephenson

/s/ Ed Banaszek /s/ Sean Hammond
- ------------------------------------- -----------------------------------
Ed Banaszek Sean Hammond

73
<PAGE>

/s/ David B. Jordan
- -------------------------------------
David B. Jordan

/s/ Chad Waddell
- -------------------------------------
Chad Waddell

- -------------------------------------
Bruce and Stephanie Kelly

- -------------------------------------
Melissa Whitmer

/s/ Naeem Fayyaz, Director
- -------------------------------------
Trident III, L.L.C.

<PAGE>

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION
OF
GEMINI II, INC.

GEMINI II, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:

1. The name of the corporation is Gemini II, Inc. and the date of
filing of its original Certificate of Incorporation with the Secretary of State
of the State of Delaware was December 9, 1996.

2. This Amended and Restated Certificate of Incorporation restates
and integrates and further amends the Certificate of Incorporation of this
corporation pursuant to Sections 141, 228, 242 and 245 of the General
Corporation Law of the State of Delaware ("DGCL") as follows:

ARTICLE 1
NAME

The name of the corporation is OmniLynx Communications Corporation (the
"Corporation").

ARTICLE 2
REGISTERED OFFICE AND AGENT

The address of its registered office in the State of Delaware is 1013
Centre Road, Wilmington, Delaware 19805-2197, located in New Castle County. The
name of its registered agent at such address is Corporation Service Company.

ARTICLE 3
PURPOSES

The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the DGCL.

<PAGE>

ARTICLE 4
AUTHORIZED CAPITAL STOCK

The aggregate number of shares of all classes of stock which the
Corporation shall have authority to issue is 28,000,000 shares, consisting of:
(i) 25,000,000 shares of common stock, par value $.0001 per share (the "Common
Stock"), and (ii) 3,000,000 shares of preferred stock, par value $.0001 per
share (the "Preferred Stock"). Shares of any class of capital stock of the
Corporation may be issued for such consideration and for such corporate purposes
as the Board of Directors of the Corporation (the "Board of Directors") may from
time to time determine. Each share of Common Stock shall be entitled to one
vote.

The Board of Directors has designated one series of the Corporation's
Preferred Stock. The Statement of Designation setting forth the rights,
preferences, privileges and restrictions relating to the Series A 10%
Convertible Redeemable Preferred Stock (the "Series A Preferred") is attached
hereto as Exhibit A and is incorporated herein by reference.

At the date and time this Amended and Restated Certificate of
Incorporation is filed, each 1.922704 shares of the Common Stock outstanding
shall be split into one (1) share of the Common Stock (the "Reverse Split")
without any further action by the stockholders or Board of Directors of the
Corporation. No fractional shares shall be issued, and the number of shares to
be issued to each stockholder shall be rounded up or down to the nearest whole
number. In addition, as no shares of the Series A Preferred are issued at the
date and time this Amended and Restated Certificate of Incorporation is filed,
the rights, preferences, privileges and restrictions relating to the Series A
Preferred will not be affected by the Reverse Split.

A. PREFERRED STOCK. The Preferred Stock may be divided into and
issued from time to time in one or more series as may be fixed and determined by
the Board of Directors. The relative rights and preferences of the Preferred
Stock of each series shall be such as shall be stated in any resolution or
resolutions adopted by the Board of Directors setting forth the designation of
the series and fixing and determining the relative rights and preferences
thereof (a "Directors' Resolution"). The Board of Directors is hereby
authorized to fix and determine the powers, designations, preferences, and
relative, participating, optional or other rights, including, without
limitation, voting powers, full or limited, preferential rights to receive
dividends or assets upon liquidation, rights of conversion or exchange into
Common Stock, Preferred Stock of any series or other securities, any right of
the Corporation to exchange or convert shares into Common Stock, Preferred Stock
of any series or other securities, or redemption provision or sinking fund
provisions, as between series and as between the Preferred Stock or any series
thereof and the Common Stock, and the qualifications, limitations or
restrictions thereof, if any, all as shall be stated in a Directors' Resolution,
and the shares of Preferred Stock or any series thereof may have full or limited
voting powers, or be without voting powers, all as shall be stated in a
Directors' Resolution. Except where otherwise set forth in the Directors'
Resolution providing for the issuance of any series of Preferred Stock, the
number of shares comprising such series may be increased or decreased (but not
below the number of shares then outstanding) from time to time by like action of
the Board of Directors. The shares of Preferred

<PAGE>

Stock of any one series shall be identical with the other shares in the same
series in all respects except as to the dates from and after which dividends
thereon shall cumulate, if cumulative.

B. REACQUIRED SHARES OF PREFERRED STOCK. Shares of any series of any
Preferred Stock that have been redeemed (whether through the operation of a
sinking fund or otherwise), purchased by the Corporation, or which, if
convertible or exchangeable, have been converted into, or exchanged for, shares
of stock of any other class or classes or any evidences of indebtedness shall
have the status of authorized and unissued shares of Preferred Stock and may be
reissued as a part of the series of which they were originally a part or may be
reclassified and reissued as part of a new series of Preferred Stock or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in the Directors' Resolution providing for
the issuance of any series of Preferred Stock and to any filing required by law.

C. INCREASE IN AUTHORIZED PREFERRED STOCK. The number of authorized
shares of Preferred Stock may be increased or decreased by the affirmative vote
of the holders of a majority of the stock of the Corporation entitled to vote
without the separate vote of holders of Preferred Stock as a class.

ARTICLE 5
EXISTENCE

The existence of the Corporation is to be perpetual.

ARTICLE 6
NO PREEMPTIVE RIGHTS

No stockholder shall be entitled, as a matter of right, to subscribe for
or acquire additional, unissued or treasury shares of any class of capital stock
of the Corporation whether now or hereafter authorized, or any bonds, debentures
or other securities convertible into, or carrying a right to subscribe to or
acquire such shares, but any shares or other securities convertible into, or
carrying a right to subscribe to or acquire such shares may be issued or
disposed of by the Board of Directors to such persons and on such terms as in
its discretion it shall deem advisable.

ARTICLE 7
NO CUMULATIVE VOTING

At each election of directors, every stockholder entitled to vote at such
election shall have the right to vote in person or by proxy the number of shares
owned by him for as many persons as there are directors to be elected and for
whose election he has a right to vote. No stockholder shall have the right to
cumulate his votes in any election of directors.

<PAGE>

ARTICLE 8
NO STOCKHOLDER ACTION WITHOUT A MEETING

Except as otherwise required by law, special meetings of the stockholders
of the Corporation may be called only by the Chairman of the Board, the Chief
Executive Officer, the President, the Board of Directors by the written order of
a majority of the entire Board of Directors, or by such other persons as may be
set forth in the Bylaws of the Corporation (the "Bylaws"); PROVIDED, HOWEVER
that from and after the first date as of which the Corporation has a class or
series of capital stock registered under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any action required or permitted to be taken by
the stockholders of the Corporation must be effected at an annual or special
meeting of stockholders of the Corporation and may not be effected by any
consent in writing by such stockholders, and a special meeting of stockholders
of the Corporation may be called only by the Chairman of the Board, the Chief
Executive Officer, the President or the Board of Directors by the written order
of a majority of the entire Board of Directors, and not by the stockholders
except as otherwise provided by law or the Bylaws.

ARTICLE 9
BOARD OF DIRECTORS

The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. In addition to the authority and
powers conferred upon the Board of Directors by the DGCL or by the other
provisions of this Certificate of Incorporation (this "Certificate of
Incorporation"), the Board of Directors is hereby authorized and empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject to the provisions of the DGCL, this Certificate
of Incorporation and the Bylaws; PROVIDED, HOWEVER, that no Bylaws hereafter
adopted by the stockholders of the Corporation, or any amendments thereto, shall
invalidate any prior act of the Board of Directors that would have been valid if
such Bylaws or amendment had not been adopted.

(i) NUMBER, ELECTION AND TERMS OF DIRECTORS. The number of directors
which shall constitute the whole Board of Directors shall be fixed from time to
time by a majority of the directors then in office and shall be divided into
three classes: Class I, Class II and Class III; PROVIDED, HOWEVER, that from and
after the first date as of which the Corporation has a class or series of
capital stock registered under the Exchange Act, the number of directors which
shall constitute the whole Board of Directors shall be not less than three.
Each director shall serve for a term ending on the third annual meeting
following the annual meeting at which such director was elected; PROVIDED,
HOWEVER, that the directors first elected to Class I shall serve for a term
expiring at the annual meeting next following the end of the calendar year 1999,
the directors first elected to Class II shall serve for a term expiring at the
annual meeting next following the end of the calendar year 2000, and the
directors first elected to Class III shall serve for a term expiring at the
annual meeting next following the end of the calendar year 2001. Each director
shall hold office until the annual meeting at which such director's term expires
and, the foregoing notwithstanding, shall serve until

<PAGE>

his successor shall have been duly elected and qualified or until his earlier
death, resignation or removal.

At such annual election, the directors chosen to succeed those whose
terms then expire shall be of the same class as the directors they succeed,
unless, by reason of any intervening changes in the authorized number of
directors, the Board of Directors shall have designated one or more
directorships whose terms then expires as directorships of another class in
order to more nearly achieve equality of number of directors among the classes.

In the event of any changes in the authorized number of directors, each
director then continuing to serve shall nevertheless continue as a director of
the class of which he is a member until the expiration of his current term, or
his prior death, resignation or removal. The Board of Directors shall specify
the class to which a newly created directorship shall be allocated.

Election of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.

(ii) REMOVAL OF DIRECTORS. No director of the Corporation shall be
removed from office as a director by vote or other action of the stockholders or
otherwise except for cause, and then only by the affirmative vote of the holders
of at least a majority of the voting power of all outstanding shares of capital
stock of the Corporation generally entitled to vote in the election of
directors, voting together as a single class. Except as may otherwise be
provided by law, cause of removal of a director shall be deemed to exist only
if: (i) the director whose removal is proposed has been convicted, or where a
director is granted immunity to testify where another has been convicted, of a
felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal; (ii) such director has been found by the affirmative
vote of a majority of the entire Board of Directors at any regular or special
meeting of the Board of Directors called for that purpose or by a court of
competent jurisdiction to have been grossly negligent or guilty of misconduct in
the performance of his duties to the Corporation in a matter of substantial
importance to the Corporation; or (iii) such director has been adjudicated by a
court of competent jurisdiction to be mentally incompetent, which mental
incompetency directly affects his ability as a director of the Corporation.

(iii) VACANCIES. Newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of Directors
resulting from death, resignation, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred and until such director's successor shall have
been elected and qualified or until his earlier death, resignation or removal.
No decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.

<PAGE>

ARTICLE 10
INDEMNIFICATION

A. MANDATORY INDEMNIFICATION. Each person who at any time is or was
a director or officer of the Corporation, and is threatened to be or is made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative (a
"Proceeding"), by reason of the fact that such person is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, partner, venturer, proprietor, member,
employee, trustee, agent or similar functionary of another domestic or foreign
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other for-profit or non-profit enterprise, whether the basis of
a Proceeding is an alleged action in such person's official capacity or in
another capacity while holding such office, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the DGCL, or any
other applicable law as may from time to time be in effect (but, in the case of
any such amendment or enactment, only to the extent that such amendment or law
permits the Corporation to provide broader indemnification rights than such law
prior to such amendment or enactment permitted the Corporation to provide),
against all expense, liability and loss (including, without limitation, court
costs and attorneys' fees, judgments, fines, excise taxes or penalties, and
amounts paid or to be paid in settlement) actually and reasonably incurred or
suffered by such person in connection with a Proceeding, and such
indemnification shall continue as to a person who has ceased to be a director or
officer of the Corporation or a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other for-profit or non-profit
enterprise, and shall inure to the benefit of such person's heirs, executors and
administrators. The Corporation's obligations under this Section A include, but
are not limited to, the convening of any meeting, and the consideration of any
matter thereby, required by statute in order to determine the eligibility of any
person for indemnification.

B. PREPAYMENT OF EXPENSES. Expenses incurred by a director or
officer of the Corporation in defending a Proceeding shall be paid by the
Corporation in advance of the final disposition of such Proceeding to the
fullest extent permitted by, and only in compliance with, the DGCL or any other
applicable laws as may from time to time be in effect, including, without
limitation, any provision of the DGCL which requires, as a condition precedent
to such expense advancement, the delivery to the Corporation of an undertaking,
by or on behalf of such director or officer, to repay all amounts so advanced if
it shall ultimately be determined that such director or officer is not entitled
to be indemnified under Section A of this Article 10 or otherwise. Repayments
of all amounts so advanced shall be upon such terms and conditions, if any, as
the Corporation's Board of Directors deems appropriate.

C. VESTING. The Corporation's obligation to indemnify and to prepay
expenses under Sections A and B of this Article 10 shall arise, and all rights
granted to the Corporation's directors and officers hereunder shall vest, at the
time of the occurrence of the transaction or event to which a Proceeding
relates, or at the time that the action or conduct to which such Proceeding
relates was first taken or engaged in (or omitted to be taken or engaged in),
regardless of when such Proceeding

<PAGE>

is first threatened, commenced or completed. Notwithstanding any other
provision of this Certificate of Incorporation or the Bylaws of the
Corporation, no action taken by the Corporation, either by amendment of this
Certificate of Incorporation or the Bylaws of the Corporation or otherwise,
shall diminish or adversely affect any rights to indemnification or
prepayment of expenses granted under Sections A and B of this Article 10
which shall have become vested as aforesaid prior to the date that such
amendment or other corporate action is effective or taken, whichever is later.

D. ENFORCEMENT. If a claim under Section A or Section B or both
Sections A and B of this Article 10 is not paid in full by the Corporation
within thirty (30) days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit in a court of
competent jurisdiction against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense of prosecuting such claim. It shall be a
defense to any such suit (other than a suit brought to enforce a claim for
expenses incurred in defending any Proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the DGCL or other applicable law to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. The failure of the Corporation (including
its Board of Directors, independent legal counsel, or stockholders) to have made
a determination prior to the commencement of such suit as to whether
indemnification is proper in the circumstances based upon the applicable
standard of conduct set forth in the DGCL or other applicable law shall neither
be a defense to the action nor create a presumption that the claimant has not
met the applicable standard of conduct. The termination of any Proceeding by
judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal Proceeding, had reasonable cause to believe that his conduct was
unlawful.

E. NONEXCLUSIVE. The indemnification provided by this Article 10
shall not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under any statute, bylaw, other provisions of
this Certificate of Incorporation, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.

F. PERMISSIVE INDEMNIFICATION. The rights to indemnification and
prepayment of expenses which are conferred to the Corporation's directors and
officers by Sections A and B of this Article 10 may be conferred upon any
employee or agent of the Corporation if, and to the extent, authorized by the
Board of Directors.

G. INSURANCE. The Corporation shall have power to purchase and
maintain insurance, at its expense, on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, partner, venturer,
proprietor, member, employee, trustee, agent or similar functionary of another
domestic or foreign corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan

<PAGE>

or other for-profit or non-profit enterprise against any expense, liability
or loss asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such
expense, liability or loss under the provisions of this Article 10, the
Corporation's Bylaws, the DGCL or other applicable law.

H. IMPLEMENTING ARRANGEMENTS. Without limiting the power of the
Corporation to procure or maintain insurance or other arrangement on behalf of
any of the persons as described in Section G of this Article 10, the Corporation
may, for the benefit of persons eligible for indemnification by the Corporation,
(i) create a trust fund, (ii) establish any form of self-insurance, (iii) secure
its indemnity obligation by grant of a security interest or other lien on the
assets of the Corporation, or (iv) establish a letter of credit, guaranty or
surety arrangement.

ARTICLE 11
LIMITED DIRECTOR LIABILITY

No director of the Corporation shall be personally liable to the
Corporation or to its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that this Article 11 shall not eliminate or limit
the liability of a director: (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL, as it may hereafter be amended from
time to time, for any unlawful payment of a dividend or unlawful stock purchase
or redemption, or (iv) for any transaction from which the director derived an
improper personal benefit.

If the DGCL is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended. No amendment to or repeal of this Article
11 will apply to, or have any effect on, the liability or alleged liability of
any director of the Corporation for or with respect to any acts or omissions of
the director occurring prior to such amendment or repeal.

ARTICLE 12
BYLAWS

The Board of Directors is expressly authorized to adopt, amend or repeal
the Bylaws of the Corporation, or adopt new Bylaws, without any action on the
part of the stockholders, except as may be otherwise provided by applicable law
or the Bylaws of the Corporation.

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<PAGE>

ARTICLE 13
ARRANGEMENTS WITH CREDITORS

Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for the Corporation under Section 291 of
Title 8 of the Delaware Code, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If the majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders, of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.

ARTICLE 14
AMENDMENT

The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders are
granted subject to this reservation.

ARTICLE 15
SECTION 203 ELECTION

The Corporation expressly elects not to be governed by Section 203 of the
DGCL.

IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation of Gemini II, Inc. is executed by its President this 23 day of
June, 1999.

/s/ Christopher H. Efird
-----------------------------------
Christopher H. Efird, President

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<PAGE>

EXHIBIT A

STATEMENT OF DESIGNATION

The designation of, the number of shares constituting, and the rights,
preferences, privileges and restrictions relating to, the Series A 10%
Convertible Preferred Stock are as follows:

1. DESIGNATION AND NUMBER OF SHARES. The designation of this series
of one million two hundred seventeen thousand (1,217,000) shares of preferred
stock, par value $.0001 per share ("Preferred Stock"), created by the Board of
Directors of the Corporation pursuant to the authority granted to it by the
certificate of incorporation of the Corporation is "Series A 10% Convertible
Redeemable Preferred Stock," which is hereinafter referred to as the "Series A
Preferred Stock." In the event of the conversion of shares of Series A
Preferred Stock into this Corporation's common stock, par value $.0001 per share
("Common Stock"), pursuant to Paragraph 4 of this Statement of Designation, or
in the event that the Corporation shall redeem any shares of Series A Preferred
Stock pursuant to Paragraph 5 of this Statement of Designation or shall
otherwise acquire and cancel any shares of Series A Preferred Stock, the shares
of Series A Preferred Stock so converted, redeemed or otherwise acquired and
canceled shall have the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such stock is once more designated
as part of a particular series by the Corporation's Board of Directors, and the
number of authorized shares of Series A Preferred Stock shall be reduced by the
number of shares so converted, redeemed or otherwise acquired and canceled. In
addition, if the Corporation shall not issue the maximum number of shares of
Series A Preferred Stock, the Corporation may, from time to time, by resolution
of the Board of Directors, reduce the number of shares of Series A Preferred
Stock authorized, provided, that no such reduction shall reduce the number of
authorized shares to a number which is less than the number of shares of Series
A Preferred Stock then issued or reserved for issuance. The number of shares by
which the Series A Preferred Stock is reduced shall have the status of
authorized but unissued shares of Preferred Stock, without designation as to
series, until such stock is once more designated as part of a particular series
by the Corporation's Board of Directors. The Board of Directors shall cause to
be filed with the Secretary of State of the State of Delaware such certificate
as shall be necessary to reflect any reduction in the number of shares
constituting the Series A Preferred Stock.

2. DIVIDEND RIGHTS.

(a) The holders of the Series A Preferred Stock shall be
entitled to receive, out of funds of this Corporation legally available
therefor, cash dividends at an annual rate of ten cents ($.10) per share.
Dividends shall be payable in annual installments on the first day of March (the
"dividend payment date") in each year, commencing March 1, 2000, to holders of
record of the Series A Preferred Stock as follows. The holders of record of
Series A Preferred Stock on the 15th day of each calendar month, commencing with
the first such day which occurs after the initial issuance of the first share of
Series A Preferred Stock, shall be entitled to a dividend of five-sixth of one
cent ($.008 1/3) per share (the "monthly dividend accrual"). On each dividend
payment date, the Corporation shall pay the monthly dividend accruals for each
month through the monthly

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dividend accrual for the February immediately preceding the dividend payment
date, regardless of whether the shares of Series A Preferred Stock are
outstanding on the dividend payment date.

(b) The amount of any dividends "accrued" on any share of
Series A Preferred Stock at any dividend payment date shall be deemed to be the
amount of any unpaid dividends accumulated thereon to and including such
dividend payment date, whether or not earned or declared, and the amount of
dividends "accrued" on any share of Series A Preferred Stock at any date other
than a dividend payment date shall be calculated as the amount of any unpaid
dividends accumulated thereon to and including the last preceding dividend
payment date, whether or not earned or declared, plus an amount calculated on
the basis of the monthly dividend accrual at the monthly rate of five-sixth of
one cent ($.008 1/3) per share for the period after such last preceding dividend
payment date to and including the date as of which the calculation is made.

(c) Except as provided in this Statement of Designation, no
dividends shall be declared or paid or set aside for payment on any class or
series of capital stock ranking on a parity with or junior to the Series A
Preferred Stock as to dividends for any period unless full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for payment thereof is set aside for such payment on the Series A
Preferred Stock for all dividend periods terminating on or prior to the dividend
payment date of such dividends on any such series or class. When dividends are
not paid in full upon the shares of Series A Preferred Stock and any other
series of Preferred Stock ranking on a parity as to dividends with the Series A
Preferred Stock, all dividends declared upon shares of Series A Preferred Stock
and such other series of Preferred Stock shall be declared PRO RATA so that the
amount of dividends declared per share on the Series A Preferred Stock shall in
all cases bear to each other the same ratio that the accrued dividends per share
on the shares of Series A Preferred Stock and such other series of Preferred
Stock bear to each other. Holders of shares of Series A Preferred Stock shall
not be entitled to dividends thereon, whether payable in cash, property or
stock, in excess of the full cumulative dividends thereon, as provided in this
Statement of Designation. No dividend on Series A Preferred Stock shall be
declared or paid or set apart for payment with respect to any dividend payment
date unless full dividends, including accumulated dividends, if any, on any
series or class of capital stock ranking, as to dividends, prior to Series A
Preferred Stock which are to have been paid on or prior to such dividend payment
date have been or contemporaneously are declared and paid or declared and a sum
sufficient for payment thereof has been set aside for all dividend periods for
such series or class terminating on or prior to such dividend payment date.

(d) As long as any shares of Series A Preferred Stock are
outstanding, no dividends (other than a dividend in any series or class of
capital stock ranking junior to Series A Preferred Stock as to both dividends
and payments in the event of voluntary or involuntary dissolution, liquidation
or winding up), shall be declared or paid or set aside for payment and no other
distribution shall be declared or made upon any such junior series or class of
capital stock, and no such junior series or class of capital stock or any series
of Preferred Stock on a parity with Series A Preferred Stock as to both
dividends and payments in the event of voluntary and involuntary dissolution,
liquidation or winding up shall be redeemed, purchased or otherwise acquired for
any consideration by the Corporation or by any subsidiary (which shall mean any

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corporation or entity, the majority of voting power to elect directors of which
is held directly or indirectly by the Corporation), except by conversion into or
exchange for any such junior series or class of capital stock; unless, in each
case, the full cumulative dividends on all outstanding shares of Series A
Preferred Stock shall have been paid in full for all past dividend periods or
unless the holders of a majority of the Series A Preferred Stock then
outstanding shall consent thereto.

3. VOTING RIGHTS.

(a) Except as otherwise required by law, the holders of the
Series A Preferred Stock shall have no voting rights; provided, however, that,
except as provided in Paragraph 1 of this Statement of Designation, neither this
Statement of Designation nor the Certificate of Designation of which this
Statement of Designation is a part, may not be modified or amended without the
consent of the holders of a majority of the issued and outstanding shares of
Series A Preferred Stock. The consent of the holders of the Series A Preferred
Stock may be given at a meeting of the holders of the Series A Preferred Stock
or by a written consent of the holders of a majority of the outstanding shares
of Series A Preferred Stock.

(b) The Corporation may create other series of Preferred Stock
which may be senior or junior to or on a parity with the Series A Preferred
Stock as to dividends and/or on voluntary or involuntary dissolution,
liquidation or winding up without the consent of the holders of the Series A
Preferred Stock.

4. CONVERSION INTO COMMON STOCK.

(a) (i) Each holder of the Series A Preferred Stock will
have the right, at any time and from time to time, commencing ninety (90) days
from the IPO Date, as hereinafter defined, or earlier with the consent of both
the Corporation and the representative of the underwriters with respect to the
Corporation's initial public offering, to convert any shares of Series A
Preferred Stock into shares of Common Stock, together with, at the election of
the holder thereof, accrued dividends to the date of conversion, at the
Conversion Rate, as hereinafter defined.

(ii) In the event that shares of Series A Preferred Stock
are redeemed by the Corporation pursuant to Paragraph 5 of this Statement of
Designation, the right of the holders of the Series A Preferred Stock to convert
such shares into Common Stock shall, subject to Paragraph 5(e) of this Statement
of Designation, terminate at 5:30 P.M. on the day before the Redemption Date, as
defined in Paragraph 5(b) of this Statement of Designation; provided, that the
Redemption Price, as defined in Paragraph 5(a) of this Statement of is made on
the Redemption Date.

(b) (i) The "Conversion Rate" shall mean the number of
shares of Common Stock issuable upon conversion of one (1) share of Series A
Preferred Stock. The Conversion Rate shall be determined by dividing one dollar
($1.00) by the lesser of (A) the IPO Price, as hereinafter defined, or (B) the
Market Price, as hereinafter defined, subject to adjustment as provided in
Paragraph 4(e) of this Statement of Designation; provided, however, that in no
event shall the

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<PAGE>

Conversion Rate be less than one dollar ($1.00) divided by one-third (1/3) of
the IPO Price (as adjusted pursuant to Paragraph 4(e)(i), (ii) and (iii) of
this Statement of Designation).

(ii) The "IPO Date" shall man the date on which the first
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), relating to an offering by the Corporation of its securities
is declared effective by the Securities and Exchange Commission.

(iii) The "IPO Price" shall mean the price per share at
which the Corporation's Common Stock is sold to the public in its initial public
offering. In the event that the initial public offering consists of units,
which include both shares of Common Stock and warrants, each warrant shall be
valued at 15% of the initial public offering price of the units. The IPO Price
shall be subject to adjustment as provided in Paragraph 4(e) of this Statement
of Designation.

(iv) The "Market Price" shall mean the average of the
closing prices during the five (5) day period ending on the trading day prior to
the date of such conversion, as reported by the principal stock exchange or
market on which the Common Stock is listed; provided, however, that if, on any
of such days there are no reported sales of the Common Stock, the closing low
bid price shall be used for such day. If the Common Stock is listed on the
Nasdaq Stock Market and a regional stock exchange, the Nasdaq Stock Market shall
be the principal market. If, during the five (5) day period referred to in this
Paragraph 4(b)(iii) there shall be an event requiring an adjustment pursuant to
Paragraph 4(e) of this Agreement, the closing or bid price, as the case may be,
for each day prior to such event (a "Pre-Transaction Market Price") shall be
adjusted as provided in said Paragraph 4(e).

(c) Conversion of the Series A Preferred Stock shall be
effected by surrender of the certificate representing the shares of Series A
Preferred Stock being converted to the transfer agent for the Series A Preferred
Stock, or, if none shall have been appointed, to the Corporation, together with
the form of notice of election to convert as may be provided from time to time
by the Corporation.

(d) Shares of Series A Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the day of the
surrender for conversion of the certificate therefor, together with the form of
notice of election provided by the Corporation duly signed by the holder
thereof, and the person or persons entitled to receive shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock as of such time. As promptly as
practicable on or after the conversion date, the Corporation or its transfer
agent shall issue and shall deliver a certificate or certificates for the number
of shares of Common Stock issuable upon such conversion to the person or persons
entitled to receive the same.

(e) The IPO Price and any Pre-Transaction Market Price (the
"Applicable Prices" and each, an "Applicable Price") shall be subject to
adjustment as follows:

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(i) In case the Corporation shall, after the IPO Date,
(A) pay a dividend or make a distribution on its shares of Common Stock in
shares of Common Stock, (B) subdivide, split or reclassify its outstanding
Common Stock into a greater number of shares, (C) effect a reverse split or
otherwise combine or reclassify its outstanding Common Stock into a smaller
number of shares, or (D) issue any shares by reclassification of its shares of
Common Stock, the Applicable Prices in effect at the time of the record date for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted to reflect, in
accordance with generally accepted accounting principles, such dividend,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed in this Paragraph 4(e)(i) shall occur.

(ii) In case the Corporation shall, subsequent to the IPO
Date, issue rights or warrants to all holders of its Common Stock entitling them
to subscribe for or purchase shares of Common Stock (or securities convertible
into Common Stock) at a price (or having a conversion price per share) less than
the current market price of the Common Stock (as defined in Paragraph 4(e)(iv)
of this Statement of Designation) on the record date mentioned below, the
Applicable Prices shall be adjusted so that the same shall equal the price
determined by multiplying the Applicable Prices in effect immediately prior to
the date of such issuance by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on the record date mentioned below
plus the number of shares determined by multiplying the price or the conversion
price at which additional shares of Common Stock are offered by the number of
shares of Common Stock being offered by the number of shares being issued,
including shares being issued upon conversion of any convertible securities, and
dividing the result so obtained by the current market price of the Common Stock,
and of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock offered for subscription or purchased (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent that
shares of Common Stock or securities convertible into Common Stock are not
delivered after the expiration of such rights or warrants, the Applicable Prices
shall be readjusted to the Applicable Prices which would then be in effect had
the adjustments made upon the issuance of such rights or warrants been made upon
the basis of delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered.

(iii) In case the Corporation shall, subsequent to the IPO
Date, distribute to all holders of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions paid out of current earnings
and dividends or distributions referred to in Paragraph 4(e)(i) of this
Statement of Designation) or subscription rights or warrants (excluding those
referred to in Paragraph 4(e)(ii) of this Statement of Designation), then in
each such case the Applicable Prices in effect thereafter shall be determined by
multiplying the Applicable Prices in effect immediately prior thereto by a
fraction, of which the numerator shall be the total number of shares of Common
Stock outstanding multiplied by the current market price per share of Common
Stock (as defined in Paragraph 4(e)(iv) of this Statement of Designation), less
the fair market value

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(as determined in good faith by the Corporation's Board of Directors) of said
assets or evidences of indebtedness so distributed or of such rights or
warrants, and of which the denominator shall be the total number of shares of
Common Stock outstanding multiplied by such current market price per share of
Common Stock. Such adjustment shall be made successively whenever such a
record date is fixed. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.

(iv) For the purpose of any computation under
Paragraphs 4(e)(ii) and (iii) of this Statement of Designation, the current
market price per share of Common Stock at any date shall be deemed to be the
average of the daily closing prices for five (5) consecutive trading days
commencing twenty (20) trading days before such date, as reported by the
principal stock exchange or market on which the Common Stock is listed;
provided, however, that if, on any of such days there are no reported sales of
the Common Stock, the closing low bid price shall be used for such day. If the
Common Stock is not listed or admitted to listed on any stock exchange or
market, the closing low bid prices as reported by the National Quotation Bureau,
Inc. or other similar organization if Nasdaq is no longer reporting such
information, or if not so available, the fair market price as determined by the
Board of Directors.

(v) No increase or decrease in the Applicable Prices
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%); provided, however, that any adjustments which, by
reason of this Paragraph 4(e)(v), are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Paragraph 4(e) shall be made to the nearest one-tenth (1/10) of a
cent.

(vi) The Corporation may retain a firm of independent
public accountants of recognized standing selected by the Board of Directors
(who may be the regular accountants employed by the Corporation) to make any
computation required by this Paragraph 4(e), and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.

(vii) In the event that at any time, as a result of an
adjustment made pursuant this Paragraph 4(e), the holder of shares of Series A
Preferred Stock thereafter shall become entitled to receive any shares of the
Corporation, other than Common Stock, thereafter the number of such other shares
so receivable upon conversion of shares of Series A Preferred Stock shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in this Paragraph 4.

(viii) In addition to the adjustments provided for in this
Paragraph 4(e), the Corporation may modify the Conversion Rate in a manner which
will increase the number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock if the Corporation believes that such adjustment is
necessary or desirable in order to avoid adverse Federal income tax consequences
to the holders of the Common Stock.

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(f) Whenever any adjustment is required by the provisions of
Paragraph 4(e) of this Statement of Designation, the Corporation shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its principal
office and with its stock transfer agent, if any, an officer's certificate
showing the adjustment and the adjusted IPO Price, setting forth in reasonable
detail the facts requiring such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by any holder of
shares of Series A Preferred Stock, and the Corporation shall, forthwith after
each such adjustment, mail a copy of such certificate by first class mail to the
holder of Series A Preferred Stock at such holders' addresses set forth in the
Corporation's books and records.

(g) In case:

(i) the Corporation shall pay any dividend or make any
distribution upon Common Stock (other than a regular cash dividend payable out
of retained earnings or cash surplus); or

(ii) the Corporation shall offer to the holders of Common
Stock for subscription or purchase by them any shares of any class or any other
rights, or

(iii) any reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with or into another
corporation, sale, lease or transfer of all or substantially all of the property
and assets of the Corporation to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Corporation shall be
effected;

then in any such case, the Corporation shall cause to be mailed by first class
mail to the record holders of Series A Preferred Stock at least ten (10) days
prior to the date specified in (A) and (B) below, as the case may be, a notice
containing a brief description of the proposed action and stating the date on
which (A) a record is to be taken for the purpose of such dividend, distribution
or rights, or (B) such reclassification, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.

(h) In case of any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the Corporation, or in
case of any consolidation or merger of the Corporation into another corporation
(other than a merger with a subsidiary in which merger the Corporation is the
continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares of Common Stock or
the class issuable upon conversion of Series A Preferred Stock) or in case of
any sale, lease or conveyance to another corporation of the property of the
Corporation as an entirety, the Corporation shall, as a condition precedent to
such transaction, cause effective provisions to be made so that the holder of
the Series A Preferred Stock shall have the right thereafter by converting the
Series A Preferred Stock, to receive the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance

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by a holder of the number of shares of Common Stock which might have been
received upon conversion of the Series A Preferred Stock immediately prior to
such reclassification, change, consolidation, merger, sale or conveyance.
Any such provision shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Statement of Designation. The foregoing provisions of this Paragraph
4(h) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. The provisions of this
Paragraph 4(h) shall not apply with respect to any merger, consolidation,
sale, conveyance or other transaction if such transaction would be deemed a
liquidation as provided in, and for the purpose of, Paragraph 6 of this
Statement of Designation.

(i) No fractional shares or script representing fractional
shares shall be issued upon the conversion of shares of Series A Preferred
Stock. If, upon conversion of any shares of Series A Preferred Stock, any
holder would, except for the provisions of this Paragraph 4(i), be entitled to
receive a fractional share of Common Stock, then the number of shares of Common
Stock issuable upon such conversion shall be rounded up to the next higher whole
number of shares.

(j) The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock then issuable upon the
conversion of all shares of Series A Preferred Stock then outstanding.

(k) The Common Stock issuable upon conversion of the Series A
Preferred Stock shall, when so issued, be duly and validly authorized and
issued, fully paid and non-assessable.

5. REDEMPTION.

(a) The Corporation may redeem the Series A Preferred Stock in
whole at any time or in part from time to time upon not less than five (5) nor
more than fifteen (15) days' prior written notice at the redemption price per
share equal to one and no/100 dollars ($1.00), plus accrued dividends to the
date of redemption (the "Redemption Price"). The Corporation is not required to
provide for the redemption of any shares of Series A Preferred Stock through the
operation of a sinking fund.

(b) The date on which the Corporation is to redeem any Series A
Preferred Stock pursuant to Paragraph 5(a) of this Statement of Designation is
referred to as the "Redemption Date" with respect to the shares of Series A
Preferred Stock to be redeemed on such date. From and after the close of
business on the business day immediately preceding the Redemption Date, any
shares of Series A Preferred Stock as to which the Corporation shall have
exercised its right of redemption shall cease to have any voting, dividend or
other rights, and the holder of such shares shall only have the right to receive
payment of the Redemption Price; provided, however, that this Paragraph 5(b)
shall not apply if the Corporation shall default in the payment of the
Redemption Price.

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(c) In the event that the Corporation redeems only a portion of
the Series A Preferred Stock, the Corporation shall redeem such shares in a
manner which approximates a prorata redemption of the holders of the Series A
Preferred Stock, and, in making such redemption, the Corporation may fully
redeem holders of Series A Preferred Stock whose holdings are insubstantial
relative to the number of Series A Preferred Stock being redeemed.

(d) (i) In the event that, for any period of five (5)
consecutive trading days (a "Low Price Period") commencing after the IPO Date,
the average last reported price of the Common Stock (or the low bid price for
any day on which there are no reported sales of Common Stock) is less than
one-third (1/3) of the IPO Price (as adjusted pursuant to Paragraph 4(e)(i),
(ii) and (iii) of this Statement of Designation), then either

(A) The Corporation may, within five (5) trading
days after the end of any Low Price Period, redeem all, and not less than all,
of the then outstanding shares of Series A Preferred Stock pursuant to
Paragraph 5(a) of this Statement of Designation, or

(B) Any holder of Series A Preferred Stock may,
on written notice (the "Holder Notice") to the Corporation given within five (5)
trading days after the end of any Low Price Period, require the Corporation to
redeem all of such holder's shares of Series A Preferred Stock at the Redemption
Price.

(ii) If any holder of Series A Preferred Stock shall give
the Holder Notice pursuant to Paragraph 5(d)(i)(B) of this Statement of
Designation, the Corporation shall redeem all of such holder's shares of
Series A Preferred Stock not later than fifteen (15) days after the Holder
Notice is given.

(iii) The right of the Corporation to redeem the Series A
Preferred Stock pursuant to Paragraph 5(d)(i)(A) of this Statement of
Designation shall be in addition to its right to redeem the Series A Preferred
Stock pursuant to Paragraph 5(a) of this Statement of Designation.

(iv) In the event that the Corporation redeems the
Series A Preferred Stock pursuant to this Paragraph 5(d), the right of the
holders of the Series A Preferred Stock to convert their shares of Series A
Preferred Stock shall terminate on the date the holders receive such notice of
redemption. In the event that any holder of Series A Preferred Stock shall give
the Holder Notice, such holder's right to convert the Series A Preferred Stock
shall terminate on the date the Holder Notice is given.

(v) In the event that the Corporation fails to pay the
Redemption Price with respect to any redemption pursuant to this Paragraph 5(d),
the Corporation's right to redeem the Series A Preferred Stock shall terminate;
however, the right of the holders of the Series A Preferred Stock and the
obligations of the Corporation to redeem shares of Series A Preferred Stock
following any Holder Notice shall continue as provided in this Paragraph 5(d).
Such right shall be in addition to any other right any holder may have,
including the right to enforce payment by the Corporation of the Redemption
Price.

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<PAGE>

(e) If (i) any holder of Series A Preferred Stock has demand
registration rights with respect to the shares of Series A Preferred Stock
and/or the Common Stock issued or issuable upon conversion thereof (the
"Conversion Shares") and the Corporation shall have failed to register such
shares pursuant to an effective registration statement under the Securities Act,
within six (6) months after a demand for registration has been made by the
holder or (ii) the Corporation shall have registered such shares of Series A
Preferred Stock and/or Conversion Shares pursuant to the Securities Act, but,
for any reason, the registration statement shall cease to be current and
effective for a period of more than thirty (30) days, then in either of such
cases, any holder may, on thirty (30) days written notice ("Redemption Demand
Notice") to the Corporation, require the Corporation to redeem the Series A
Preferred Stock at the Redemption Price. The Corporation shall pay the
Redemption Price with respect to such shares of Series A Preferred Stock within
fifteen (15) days after the Redemption Demand Notice is given.

(f) In the event that the Corporation fails to pay the
Redemption Price when due pursuant to this Paragraph 5, if any holder of
Series A Preferred Stock commences litigation against the Corporation or
otherwise engages counsel in order to enforce payment of the Redemption Price,
the Corporation shall pay for all reasonable costs and expenses of collection,
including, without limitation, reasonable attorneys' fees and expenses.

(g) If any dividends on Series A Preferred Stock are in
arrears, no purchase or redemption shall be made of any stock ranking junior to
or on a parity with Series A Preferred Stock as to dividends or upon liquidation
(other than a purchase or redemption made by issuance for delivery of such
junior stock); provided, however, that any monies theretofore deposited in any
sinking fund with respect to any Preferred Stock of the Corporation in
compliance with the provisions of such sinking fund thereafter may be applied to
the purchase or redemption of such Preferred Stock in accordance with the terms
of such sinking fund regardless of whether at the time of such application full
cumulative dividends upon shares of Series A Preferred Stock outstanding to the
end of the last completed dividend period shall have been paid or declared and
set aside for payment; and provided, further, however, that the foregoing shall
not prevent the purchase of shares of Preferred Stock ranking on a parity with
Series A Preferred Stock as to dividends and upon liquidation, dissolution or
winding up pursuant to a purchase or exchange offer made on the same terms to
the holders of all the outstanding Preferred Stock so ranking on a parity with
Series A Preferred Stock, including the holders of the Series A Preferred Stock,
as to dividends and upon liquidation, dissolution of winding up.

6. LIQUIDATION RIGHTS.

(a) In the event of the liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, holders of the Series A
Preferred Stock shall be entitled to receive out of the assets of the
Corporation an amount per share equal to one and no/100 dollars ($1.00) per
share, plus a sum equal to all unpaid accrued dividends on the Series A
Preferred Stock before any payment or distribution upon dissolution, liquidation
or winding up shall be made on any series or class of capital stock ranking
junior to Series A Preferred Stock as to such payment or distribution,

A-10
<PAGE>

and after all such payments or distributions have been made on any series or
class of capital stock ranking senior to the Series A Preferred Stock as to
such payment or distribution.

(b) After payment of the preference set forth in
Paragraph 6(a)(i) of this Statement of Designation, the holders of the Series A
Preferred Stock shall have no right to any further payment with respect to their
shares of Series A Preferred Stock.

(c) The sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property and assets of the Corporation shall be deemed a voluntary
dissolution, liquidation or winding up of the Corporation for purposes of this
Paragraph 6. The merger of another corporation into the Corporation, where the
Corporation is the surviving corporation shall not be deemed a voluntary
dissolution, liquidation or winding up. The merger or consolidation of the
Corporation into any other corporation shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purposes of this
Paragraph 6 unless such merger or consolidation shall have been approved by the
holders of a majority of the then outstanding shares of Series A Preferred
Stock.

(d) In the event the assets of the Corporation available for
distribution to the holders of shares of Series A Preferred Stock upon
dissolution, liquidation or winding up of the Corporation, whether voluntary or
involuntary, shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to Paragraph 6(a) of this Statement of
Designation, no such distribution shall be made on account of any shares of any
other class or series of capital stock of the Corporation ranking on a parity
with the shares of Series A Preferred Stock upon such dissolution, liquidation
or winding up unless proportionate distributive amounts shall be paid on account
of the shares of Series A Preferred Stock, ratably, in proportion to the full
distributable amounts for which holders of all such parity shares are
respectively entitled upon such dissolution, liquidation or winding up.

(e) Upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Series A Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders all amounts to which such holders are entitled
pursuant to Paragraph 6(a)(i) of this Statement of Designation before any
payment shall be made to the holders of any class of capital stock of the
Corporation ranking junior upon liquidation to Series A Preferred Stock.

7. NOTICE. Each notice or other communication pursuant to this
Statement of Designation shall be in writing signed by the party giving such
notice, and delivered personally or sent by overnight courier, mail or messenger
against receipt thereof or sent by registered or certified mail, return receipt
requested, to the Corporation at its executive offices, presently c/o Benchmark
Equity Group, Inc., 700 Gemini, Houston, TX 77058, Attention: Chief Executive
Officer, or to such other address or person as the Corporation may advise the
holders of the Series A Preferred Stock by like notice, or to any holder at his
address set forth on the Corporation's records. Notices shall be deemed to have
been received on the date of personal delivery or, if sent by certified or
registered mail, return receipt requested, shall be deemed to be delivered on
the fifth (5th) business day after

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<PAGE>

the date of mailing, except that notice of change in the person or address
shall be effective on actual receipt.

8. RANK OF SERIES. For purposes of this Statement of Designation,
any stock of any series or class of the Corporation shall be deemed to rank:

(a) prior to the shares of Series A Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
the holders of such class or classes shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or priority to the
holders of shares of Series A Preferred Stock;

(b) on a parity with shares of Series A Preferred Stock, as to
dividends or upon liquidation, dissolution or winding up, as the case may be,
whether or not the dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any, be different
from those of Series A Preferred Stock, if the holders of such stock shall be
entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation prices, without
preference or priority, one over the other, as between the holders of such stock
and the holders of shares of Series A Preferred Stock;

(c) junior to shares of Series A Preferred Stock as to
dividends or upon liquidation, dissolution or winding up, as the case may be, if
such class shall be Common Stock or if the holders of shares of Series A
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or classes.

9. TRANSFER AGENT AND REGISTRAR. The Corporation may appoint a
transfer agent and registrar for the issuance, transfer and conversion of the
Series A Preferred Stock and for the payment of dividends to the holders of the
Series A Preferred Stock.

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<PAGE>

Exhibit 3.2

FORM OF

CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS

AND LIMITATIONS OF SERIES B

8% CUMULATIVE CONVERTIBLE PREFERRED STOCK

PAR VALUE $.0001 PER SHARE,

OMNILYNX COMMUNICATIONS CORPORATION

Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, and in accordance with Section 103 thereof, _________________,
Chairman of the Board of Directors and Chief Executive Officer, and
________________, Secretary, of OmniLynx Communications Corporation, a Delaware
corporation (the "CORPORATION"),

DO HEREBY CERTIFY that pursuant to the authority conferred on the Board
of Directors by the Certificate of Incorporation of the Corporation, and
pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware, said Board of Directors, by unanimous consent dated
__________________, 1999, duly adopted resolutions providing for the issuance of
a series of _________ shares of 8% Cumulative Convertible Preferred Stock, par
value $.0001 per share, which resolution are and read as follows:

"RESOLVED that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be,
and it hereby is, authorized and created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof are as follows:

PROVISIONS OF THE 8% CUMULATIVE CONVERTIBLE
PREFERRED STOCK

Section 1. DESIGNATION AND AMOUNT. The Shares of such series shall be
designated as "Series B 8% Cumulative Convertible Preferred Stock" ("SERIES B
PREFERRED STOCK") and the number of shares constituting such series shall be
__________.

Section 2. DIVIDENDS AND DISTRIBUTIONS. (A) Subject to the provisions
for adjustment set forth in Section 2(D), each holder of shares of Series B
Preferred Stock shall be entitled to receive, out of funds legally available
therefor, cumulative cash dividends ("PREFERRED DIVIDENDS") payable quarterly in
arrears, one-quarter on the first Business Day of ____________, one-quarter on
the first

<PAGE>

Business Day of ___________, one-quarter on the first Business Day of
____________ and one-quarter on the first Business Day of _________________
of each year (each a "DIVIDEND PAYMENT DATE") commencing on _______________,
1999, to the holder of record at the start of business on such Dividend
Payment Date. Preferred Dividends on the Series B Preferred Stock shall be 8%
of the Original Issue Price per share per annum from the date of original
issue. Preferred Dividends shall begin to accrue on outstanding shares of
Series B Preferred Stock and to accumulate from the date of issuance of such
shares of Series B Preferred Stock whether or not earned or declared.
Preferred Dividends shall accrue an a daily basis whether or not earned or
declared, but Preferred Dividends for any period less than a full quarterly
period between Dividend Payment Dates shall be computed on the basis of a
360-day year of 30-day months. No interest shall accrue on accumulated but
unpaid Preferred Dividends. At the Corporation's option, any Preferred
Dividend may be paid, all or in part, in shares of Series B Preferred Stock.
The number of shares of Series B Preferred Stock issuable to a holder thereof
with respect to any Preferred Dividend to be paid by the Corporation shall
equal (i) the per share cash amount of such Preferred Dividend to be paid to
such holder, less any amount thereof to be paid in cash to such holder,
multiplied by the number of shares of Series B Preferred Stock held by such
holder, divided by (ii) the Original Issue Price.

(B) As long as any shares of Series B Preferred Stock shall be
outstanding, no dividend shall be declared or paid or set apart for payment on,
and no payment shall be made on account of the purchase, redemption or the
retirement of, any other series of stock ranking on a parity with the Series B
Preferred Stock as to dividends and as to distributions in the event of a
liquidation, distribution or winding up of the corporation, unless there shall
also be or have been declared and paid or set apart for payment on the Series B
Preferred Stock, dividends for all dividend payment periods of the Series B
Preferred Stock ending on or before the dividend payment date, or other payment
date resulting from the repurchase, redemption or retirement of such parity
stock, ratably in proportion to the respective amounts of dividends accumulated
and unpaid through such dividend period on the Series B Preferred Stock and
accumulated and unpaid on such parity stock through the dividend payment period
on such parity stock next preceding such dividend payment date. In the event
that full cumulative dividends on the Series B Preferred Stock have not been
declared and paid or set apart for payment when due, the Corporation shall not
declare or pay or set apart for payment any dividends or make any other
distributions on, or make any payment on account of the purchase, redemption or
other retirement of any other class of stock or series thereof of the
Corporation ranking, as to dividends or as to distributions in the event of a
liquidation, dissolution or winding up of the Corporation, junior to the Series
B Preferred Stock until full cumulative dividends on the Series B Preferred
Stock shall have been paid or declared and set apart for payment; provided
however, that the foregoing shall not apply to (i) any dividend payable solely
in any shares of any stock ranking, as to dividends and as to distributions in
the event of a liquidation, dissolution or winding up of the Corporation, junior
to the Series B Preferred Stock, or (ii) the acquisition of shares of any stock
ranking, as to dividends and as to distributions in the event of a liquidation,
dissolution or winding up of the Corporation, junior to the Series B Preferred
Stock in exchange solely for shares of any other stock ranking, as to dividends
and as to distributions in the event of a liquidation, dissolution or winding up
of the Corporation, junior to the Series B Preferred Stock.

2
<PAGE>

(C) The Corporation shall not permit any Subsidiary to purchase,
redeem, retire or otherwise acquire for consideration any shares of capital
stock of the Corporation unless the Corporation could, pursuant to Section 2(B)
hereof, purchase, redeem, retire or otherwise acquire such shares of capital
stock at such time and in such manner.

(D) In addition to Preferred Dividends, each holder of Series B Stock
shall be entitled to receive, out of funds legally available therefor, any
dividend that is paid to holders of the Corporation's common stock, par value
$.0001 per share ("COMMON STOCK"), on the basis and at the same time as such
dividend is paid to holders of Common Stock; provided, however, that each holder
of Series B Preferred Stock shall be entitled to receive such dividend in an
amount for each share of Series B Preferred Stock held by such holder equal to
(i) the amount of such dividend payable on one share of Common Stock, multiplied
by (ii) the number of shares of Common Stock into which one share of Series B
Preferred Stock is convertible on the day of declaration of such dividend.

Section 3. VOTING RIGHTS. In addition to any other voting rights
required by law, the holders of Series B Preferred Stock shall have the
following voting rights;

(A) Except as otherwise provided herein or by law, the holders of
shares of Series B Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation, including, without limitation, the election of
directors. If the holders of the Common Stock shall be entitled to cumulate
their votes at any election of directors, or upon any other matter, the holders
of the Series B Preferred Stock shall also be entitled to cumulative voting at
such election of directors or upon such other matter. If cumulative voting
shall ever be denied to the holders of the Common Stock, the holders of the
Series B Preferred Stock shall similarly cease to be entitled to cumulative
voting, without any further action or consent by the holders of Series B
Preferred Stock.

(B) When voting together with the holders Common Stock, each holder of
Series B Preferred Stock shall, for each share of Series B Preferred Stock held
by such holder, be entitled to a number of votes equal to the number of shares
of Common Stock into which one share Series B Preferred Stock is convertible on
the day such vote is held.

(C) So long as the Series B Preferred Stock is outstanding, the
Corporation shall not, without the affirmative vote or consent of the holders of
75% of the outstanding Series B Preferred Stock voting separately as a class,
(i) amend, alter or repeal any provision of the Certificate of Incorporation or
the By-Laws of the Corporation so as adversely to affect the relative rights,
preferences, qualifications, limitations or restrictions of the Series B
Preferred Stock, or (ii) authorize or issue, or increase the authorized amount
of any additional class or series of stock, or any security convertible into
stock of such class or series, ranking, as to dividends or as to distributions
in the event of a liquidation, dissolution or winding up of the Corporation,
senior to the Series B Preferred Stock.

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<PAGE>

(D) Except as otherwise required by law or the Certificate of
Incorporation, the holders of Series B Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the extent they
are entitled to vote with the holders of Common Stock of the Corporation as set
forth herein) for taking any corporate action.

Section 4. LIQUIDATION, DISSOLUTION OR WINDING UP. (A) Upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of Series B Preferred Stock shall be entitled to
receive out of assets of the Corporation which remain after satisfaction in full
of all valid claims of creditors of the Corporation and which are available for
payment to stockholders, and before any amount shall be paid or distributed
among the holders of Common Stock or any other shares ranking junior to the
Series B Preferred Stock in respect of distributions upon liquidation,
dissolution or winding up of the Corporation, liquidating distributions in the
amount of the Original Issue Price per share, plus an amount equal to all
accrued and unpaid dividends thereon to the date fixed for distribution. After
receipt of such liquidating distributions, holders of Series B Preferred Stock
shall be entitled to receive liquidating distributions on the same basis and at
the same time as holders of Common Stock; provided that for purposes of such
liquidating distributions, each holder of Series B Preferred Stock shall be
entitled to receive such liquidating distributions in an amount for each share
of Series B Preferred Stock held by such holder equal to (i) the amount of such
liquidating distributions payable on one share of Common Stock, multiplied by
(ii) the number of shares of Common Stock into which one share of Series B
Preferred Stock is convertible on the day immediately preceding the effective
date of such liquidation, dissolution or winding up of the Corporation. If upon
any liquidation, dissolution or winding up of the Corporation, the amounts
payable with respect to the Series B Preferred Stock and any other stock ranking
as to any such distribution on a parity with the Series B Preferred Stock are
not paid in full, the holders of the Series B Preferred Stock and such other
stock shall share ratably in any distribution of assets in proportion to the
full respective preferential amounts to which they are entitled.

(B) Neither the merger or consolidation of the Corporation with or
into any other corporation, nor the merger or consolidation of any other
corporation with or into the Corporation, nor the sale, lease, exchange or other
transfer of all or any portion of the assets of the Corporation, shall be deemed
to be a dissolution, liquidation or winding up of the affairs of the Corporation
for purposes of this Section 4, but the holders of Series B Preferred Stock
shall nevertheless be entitled in the event of any such merger or consolidation
to the rights provided by Section 7 hereof.

(C) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating the payment date or dates
when, and the place or places where, the amounts distributable to each holder of
Series B Preferred Stock in such circumstances shall be payable, shall be given
by first-class mail, postage prepaid, mailed not less than twenty (20) days
prior to any payment date stated therein, to each holder of Series B Preferred
Stock, at the address shown on the books of the Corporation or any transfer
agent for the Series B Preferred Stock.

Section 5. CONVERSION INTO COMMON STOCK. (A) Each holder of shares of
Series B Preferred Stock shall be entitled, at any time prior to the close of
business on any redemption date pursuant

4
<PAGE>

to Section 6 hereof to cause any or all of such shares to be converted into
(x) such number of shares of Common Stock for each share of Series B
Preferred Stock being converted equal to the Conversion Ratio, plus (y) out
of funds legally available therefor, an amount equal to all accrued and
unpaid dividends on the Series B Preferred Stock to and including the
effective date of conversion.

(B) Each holder of shares of Series B Preferred Stock desiring to
convert any or all of such shares into shares of Common Stock pursuant to
Section 5(A) shall surrender the certificate or certificates representing the
shares of Series B Preferred Stock being converted, duly assigned or endorsed
for conversion (or accompanied by duly executed stock powers relating thereto),
or if such certificates have been lost, stolen or destroyed, provide written
notice thereof to the Corporation or the transfer agent for the Series B
Preferred Stock and execute an agreement satisfactory to the Corporation
indemnifying the Corporation from any loss incurred by it with respect to such
certificates, at the principal executive office of the Corporation or the
offices of the transfer agent for the Series B Preferred Stock or such office or
offices in the continental United States of an agent for conversion as may from
time to time be designated by notice to the holders of the Series B Preferred
Stock by the Corporation or the transfer agent for the Series B Preferred Stock,
accompanied by written notice of conversion. Such notice of conversion shall
specify (i) the number of shares of Series B Preferred Stock to be converted and
the name or names in which such holder wishes the certificate or certificates
for Common Stock to be issued and (ii) the address to which such holder wishes
delivery to be made of such new certificates to be issued upon such conversion.

(C) Upon surrender of a certificate representing a share or shares of
Series B Preferred Stock for conversion, or provision of the notice of lost,
stolen or destroyed certificates and the indemnity agreement, pursuant to
Section 5(A), the Corporation shall, within five (5) Business Days of such
surrender, issue and send (with receipt to be acknowledged) to the holder
thereof or to such holder's designee, at the address designated by such holder,
a certificate or certificates for the number of validly issued, fully paid and
non-assessable shares of Common Stock to which such holder shall be entitled
upon conversion. In the event that there shall have been surrendered a
certificate or certificates representing shares of Series B Preferred Stock,
only part of which are to be converted, the Corporation shall issue and deliver
to such holder or such holder's designee a new certificate or certificates
representing the number of shares of Series B Preferred Stock which shall not
have been converted.

(D) The issuance by the Corporation of shares of Common Stock upon a
conversion of shares of Series B Preferred Stock pursuant to Section 5(A) shall
be effective as of the earlier of (i) the delivery to such holder or such
holder's designee of the certificates representing the shares of Common Stock
issued upon conversion thereof, or (ii) immediately prior to the close of
business on the day of surrender of the certificate or certificates for the
shares of Series B Preferred Stock to be converted, duly assigned or endorsed
for conversion (or accompanied by duly executed stock powers relating thereto)
as provided in this Certificate of Designation. On and after the effective day
of conversion, the Person or Persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common

5
<PAGE>

Stock, but no allowance or adjustment shall be made in respect of dividends
payable to holders of Common Stock of record on any date prior to such
effective date.

(E) In addition, if the average of the Closing Price of the Common
Stock for any consecutive ten Trading Days equals or exceeds $20, the
Corporation may require the holders of Series B Preferred Stock to convert all,
but not less than all, of their shares of Series B Preferred Stock into (i) such
number of shares of Common Stock for each share of Series B Preferred Stock
being converted equal to the Conversion Ratio plus, (ii) out of funds legally
available therefor, an amount equal to all accrued and unpaid dividends on the
Series B Preferred Stock to and including the effective date of conversion (a
"MANDATORY CONVERSION") by giving notice of the Mandatory Conversion to each
holder of Series B Preferred Stock within 45 days following the last day of any
such 10 consecutive Trading Days (the "MANDATORY CONVERSION NOTICE"), which
notice shall include the dates and Closing Prices during said 10 Trading Day
period. The effective date of the Mandatory Conversion shall be the date of the
Mandatory Conversion Notice. On the effective date of the Mandatory Conversion,
the outstanding shares of Series B Preferred Stock shall be converted
automatically into shares of Common Stock as provided in this Section 5(E)
without any further action by the holders of shares of Series B Preferred Stock
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series B Preferred Stock are either delivered to the Corporation or
its transfer agent, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
indemnity agreement, as provided in Section 5(A). Upon receipt of the Mandatory
Conversion Notice, the holders of Series B Preferred Stock shall surrender the
certificates representing such shares, or provide the notice that such
certificates have been lost, stolen or destroyed and the indemnity agreement, at
the office of the Corporation or any transfer agent for the Series B Preferred
Stock, as provided in Section 5(A). Thereupon, there shall be issued and
delivered to each such holder promptly at such office and in its name as shown
on such surrendered certificate or certificates, a certificate or certificates
for the number of shares of Common Stock into which the shares of Series B
Preferred Stock surrendered were convertible on the effective date of the
Mandatory Conversion, and the Corporation shall promptly pay in cash or, at the
option of the Corporation, Common Stock (at the Common Stock's Fair Market Value
as of the effective date of the Mandatory Conversion), or, at the option of the
Corporation, both, all declared and unpaid dividends on the shares of Series B
Preferred Stock being converted, to and including the effective date of such
conversion.

(F) The Corporation shall not be obligated to issue and deliver any
fractional share of Common Stock upon any conversion of shares of Series B
Preferred Stock, but in lieu thereof shall make an adjustment in respect
thereof, to the nearest 1/100th of a share of Common Stock, in cash at the
Current Market Price on the Business Day preceding the effective date of the
conversion.

(G) The Corporation shall at all times reserve and keep available out
of its authorized and unissued Common Stock or treasury shares, solely for
issuance upon the conversion of shares of

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<PAGE>

Series B Preferred Stock as herein provided, free from any preemptive rights,
such number of shares of Common Stock as shall be issuable upon the
conversion of all the shares of Series B Preferred Stock then outstanding.

Section 6. REDEMPTION. (A) The Series B Preferred Stock shall be
redeemable, in whole or in part, to the extent that the corporation shall have
funds legally available therefor, at the option of the Corporation at any time,
and from time to time, on or after _____________, 2002, at an amount equal to
the Original Issue Price per share of Series B Preferred Stock, plus all accrued
and unpaid dividends thereon to the date fixed for redemption (the "REDEMPTION
PRICE"). At the Corporation's option, the Redemption Price may be paid by the
Corporation in cash and/or by assigning to each holder of shares of Series B
Preferred Stock being redeemed the right to receive such holder's Pro Rata Share
of the EBITDA Portion until such holder has received an amount which, together
with any other cash payments made by the Corporation with respect to such
redemption, equals the Redemption Price multiplied by the number of such
holder's shares of Series B Preferred Stock subject to such redemption. In the
case of the redemption of less than all of the then outstanding Series B
Preferred Stock, the Corporation shall effect such redemption pro rata.

(B) Unless otherwise required by law, notice of redemption pursuant to
paragraph (A) of this Section 6 must be made in writing (which may be telexed,
telecopied or otherwise delivered) to the holder of Series B Preferred Stock not
less than 30 days prior to the redemption date. Such notice shall state:
(i) the redemption date; (ii) the number of and the shares to be redeemed;
(iii) the Redemption Price and the amount thereof representing dividends on the
Series B Preferred Stock which will be accrued and unpaid to the date fixed for
redemption; (iv) the place or places where certificates for such shares are to
be surrendered for payment of the Redemption Price; (v) that dividends on the
shares to be redeemed will cease to accrue on such redemption date; (vi) the
conversion rights of the shares to be redeemed; (vii) the period within which
conversion rights may be exercised; and (viii) the Conversion Ratio. Upon
surrender of the certificate for any shares so called for redemption and not
previously converted (properly endorsed or signed for transfer, if the Board of
Directors of the Corporation shall so require and the notice shall so state),
such shares shall be redeemed by the Corporation at the date fixed for
redemption and at the Redemption Price. From and after the date fixed for
redemption, unless the Corporation shall default in providing for the payment of
the Redemption Price, dividends on shares of Series B Preferred Stock called for
redemption will cease to accrue, such shares will no longer be deemed to be
outstanding and all rights in respect of such shares of the Corporation will
cease, except the right to receive the Redemption Price.

(C) If on the redemption date under paragraph (A) of this Section 6,
funds are not legally available to the Corporation for redemption of the shares
of Series B Preferred Stock to be redeemed on such date, the Corporation shall
redeem on such redemption date, at the applicable Redemption Price, that number
of shares of Series B Preferred Stock which it can lawfully redeem. Upon a
failure of the Corporation to redeem shares on a date fixed for redemption, the
conversion rights set forth in Section 5(A) hereof with respect to the shares of
Series B Preferred Stock which the Corporation shall have failed to so redeem
shall be reinstated.

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<PAGE>

(D) Notwithstanding any other provision of this Section 6, the rights
of each holder of shares of Series B Preferred Stock, including without
limitation the right to receive dividends and to convert such shares into Common
Stock, shall continue after the giving of notice of redemption by the
Corporation until the date of redemption of such shares pursuant to this Section
6.

Section 7. ANTI-DILUTION ADJUSTMENTS. (A) In case the Corporation shall
pay or make a dividend or other distribution on any class of capital stock of
the Corporation in Common Stock, the Conversion Price in effect at the opening
of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date fixed
for such determination. For the purpose of this paragraph (A), the number of
shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Corporation shall not pay any dividend or make any distribution on shares of
Common Stock held in the treasury of the Corporation.

(B) In case the Corporation shall issue rights or warrants to all
holders of the Common Stock entitling the holders thereof to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, the Conversion Price in effect at the opening
of business on the day following the date fixed for such determination shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the offering price of the total number of
shares of Common Stock so offered for subscription or purchase would purchase at
such Current Market Price and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (B) the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Corporation shall not issue any rights or warrants in respect of shares of
Common Stock held in the treasury of the Corporation.

(C) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
in case outstanding shares of Common Stock shall be combined into a

8
<PAGE>

smaller number of shares of Common Stock, the Conversion Price in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which
subdivision or combination becomes effective.

(D) In case the Corporation shall, by dividend or otherwise,
distribute to all holders of the Common Stock evidences of its indebtedness or
assets (including securities, but excluding any rights or warrants referred to
in paragraph (B) of this Section, excluding any dividend or distribution paid
exclusively in cash and excluding any dividend or distribution referred to in
Section 5(A), the Conversion Price shall be reduced by multiplying the
Conversion Price in effect immediately prior to the close of business on the
date fixed for the determination of stockholders entitled to such distribution
by a fraction of which the numerator shall be the Current Market Price on such
date less the Fair Market Value on such date of the portion of the evidences of
indebtedness and assets to be distributed applicable to one share of Common
Stock and the denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the day
following such date.

(E) In case the Corporation shall, by dividend or otherwise, at any
time distribute to all holders of the Common Stock cash (excluding any cash that
is distributed as part of a distribution referred to in Section (D) or in
connection with a transaction to which Section 7(J) applies) in an aggregate
amount that, (i) together with the aggregate amount of (x) any other
distributions to all holders of the Common Stock made exclusively in cash
(excluding any cash that is distributed as part of a distribution referred to in
Section (D) or in connection with a transaction to which Section 7(J) applies)
within the 12 months preceding the date fixed for the determination of
stockholders entitled to such distribution and in respect of which no Conversion
Price adjustment pursuant to Section 7(D) or this Section 7(E) has been made
previously and (y) any cash and the Fair Market Value of other consideration
payable in respect of any tender offer by the Corporation or a Subsidiary for
the Common Stock consummated within the 12 months preceding such distribution
exceeds 5% of the product of the Current Market Price on such date of
determination times the number of shares of Common Stock outstanding on such
date, or (ii) would not constitute a regular quarterly dividend, the Conversion
Price shall be reduced by multiplying the Conversion Price in effect immediately
prior to the close of business on such date of determination by a fraction of
which the numerator shall be the Current Market Price on such date less the
amount of cash to be distributed at such time applicable to one share of Common
Stock and the denominator shall be such Current Market Price, such reduction to
become effective immediately prior to the opening of business on the day after
such date.

(F) The Corporation may make such reductions in the Conversion Price,
in addition to those required by the above provisions of this Section 7, as it
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients or, if that is not possible, to diminish any income taxes that are
otherwise payable because of such event.

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<PAGE>

(G) No adjustment in the Conversion Price shall be required unless
such adjustment (plus any other adjustments not previously made by reason of
this Section 7(G)) would require an increase or decrease of at least 1% in the
Conversion Price; PROVIDED, HOWEVER, that any adjustments which by reason of
this paragraph (G) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.

(H) Whenever the Conversion Price is adjusted as herein provided;

(i) the Corporation shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at each office or agency maintained
for the purpose of conversion of shares and

(ii) a notice stating that the Conversion Price has been
adjusted and setting forth the adjusted Conversion Price shall forthwith
be prepared, and as soon as practicable after it is prepared, such notice
shall be mailed by the Corporation to all holders of Series B Preferred
Stock at their last addresses as they shall appear in the stock transfer
books of the Corporation.

Failure to give the notice required by this Section 7(H) shall not
prejudice the rights of the holders of Series B Preferred Stock contained
in this Section 7.

(I) In case:

(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock payable (x) otherwise than exclusively
in cash or (y) exclusively in cash in an amount that would require a
Conversion Price adjustment pursuant to Section 7(E); or

(ii) the Corporation shall authorize the granting to the holders
of its Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights
(excluding shares of capital stock or options for capital stock issued
pursuant to a benefit plan for employees, officers or directors of the
Corporation); or

(iii) of any reclassification of the Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock), or
of any consolidation. merger or share exchange to which the Corporation
is a party and for which approval of any stockholders of the Corporation
is required or of the sale or transfer of all or substantially all of the
assets of the Corporation; or

(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or

10
<PAGE>

(v) the Corporation or any Subsidiary shall commence a tender
offer for all or a portion of the outstanding shares of Common Stock (or
shall amend any such tender offer to change the maximum number of shares
being sought or the amount or type of consideration being offered
therefor);

then the Corporation shall cause to be filed at each office or agency
maintained for conversion of shares, and shall cause to be mailed to all holders
of Series B Preferred Stock at their last addresses as they shall appear in the
stock transfer books of the Corporation at least 21 days (or 11 days in any case
specified in clause (i), (ii) or (iii) above) prior to the applicable record,
effective or expiration date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record who will be
entitled to such dividend, distribution, rights or warrants are to be
determined, (y) the date on which such reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of any amendment thereto). Neither the failure to give
any such notice nor any defect therein shall affect the legality or validity of
any action described in clauses (i) through (v) of this Section 7(I).

(J) In case of any consolidation of the Corporation with, or merger of
the Corporation into, any other Person, any merger of another Person into the
Corporation (other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock) or
any sale or transfer of all or substantially all or the assets of the
Corporation, the holder of each share of Series B Preferred Stock then
outstanding shall have the right thereafter, during the period such share shall
be convertible as specified in Section 5, to convert such share only into the
kind and amount of securities, cash and other property if any, receivable upon
such consolidation, merger, sale or transfer by a holder of the number of shares
of Common Stock into which such share might have been converted immediately
prior to such consolidation, merger, sale or transfer, assuming such holder of
Common Stock (i) is not a person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation or to which
such sale or transfer was made, as the case may be (a "CONSTITUENT PERSON"), or
an Affiliate of a Constituent Person and (ii) failed to exercise his rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer (provided
that if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, sale or transfer is not the same for each share
of Common Stock held immediately prior to such consolidation, merger, sale or
transfer by other than a constituent Person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("NONELECTING SHARE"), then for the purpose of this Section 7(J), the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each

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<PAGE>

nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such right of conversion
shall be subject to adjustments which, for events subsequent to the effective
date of such consolidation, merger, or sale or transfer of all or
substantially all assets, shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 7(J). The above provisions
of this Section 7(J) shall similarly apply to successive consolidations,
mergers, sales or transfers.

Section 8. DEFINITIONS. For purposes of this Certificate of
Designation, the following definitions shall apply:

"AFFILIATE" means, with respect to any Person, a Person which directly or
indirectly through on or more intermediaries controls, or is controlled by, or
is under common control with, the first Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.

"BUSINESS DAY" shall mean each day that is not a Saturday, Sunday or a
day on which state or federally chartered banking institutions in Houston, Texas
or New York, New York are not required to be open.

"CLOSING PRICE" shall mean the last reported sales price regular way or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on such
National Market System, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
selected from time to time by the Corporation for that purpose, or if the Common
Stock is not traded in the over-the-counter market, the Fair Market Value as of
the date of such determination.

"COMMON STOCK" means the Corporation's Common Stock, par value $.0001 per
share, as the same exists at the date of filing of this Certificate of
Designation relating to Series B Preferred Stock or any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value.

"CONVERSION PRICE" for each share of Series B Preferred Stock shall mean
$15, subject to adjustment as provided in Section 7 hereof.

"CONVERSION RATIO" shall mean the quotient of the Original Issue Price
divided by the Conversion Price.

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<PAGE>

"CURRENT MARKET PRICE" of publicly traded shares of Common Stock or
any other class of capital stock or other security of the Corporation or any
other issuer for any day shall be deemed to be the average of the daily
Closing Prices for the 10 consecutive Trading Days selected by the
Corporation commencing not more than 20 Trading Days before, and ending not
later than, the date in question; provided, however, that (i) if the "ex"
date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to any of Sections 7(A)-(E) occurs on or after the
20th Trading Day prior to the date in question and prior to the "ex" date for
the issuance or distribution requiring such computation, the Closing Price
for each Trading Day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which the
Conversion Price is so required to be adjusted as a result of such other
event, (ii) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Conversion Price pursuant to any of Sections 7(A)-(E) occurs on or after the
"ex" date for the issuance or distribution requiring such computation and on
or prior to the date in question, the Closing Price for each Trading Day on
and after the "ex" date for such other event shall be adjusted by multiplying
such Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such other event, and
(iii) if the "ex" date for the issuance or distribution requiring such
computation is on or prior to the date in question, after taking into account
any adjustment required pursuant to clause (ii) of this proviso, the Closing
Price for each Trading Day on or after such "ex" date shall be adjusted by
adding thereto the amount of any cash and the fair market value on the date
in question (as determined by the Board of Directors in a manner consistent
with any determination of such value for purposes of Sections 7(D) or (E),
whose determination shall be conclusive and described in a board resolution)
of the evidences or indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date.

"EBITDA" means the net income of the Corporation before interest expense,
federal and state income taxes and depreciation and amortization for each
calendar quarter as determined from the books and records of the Corporation in
accordance with generally accepted accounting principles consistently applied.

"EBITDA PORTION" means 20% of EBITDA.

" 'EX' DATE" means (i) when used with respect to any issuance or
distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the Closing Prices
were obtained without the right to receive such issuance or distribution, (ii)
when used with respect to any subdivision or combination of shares of Common
Stock, means the first date on which the Common Stock trades regular way on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (iii) when used with respect to any tender
offer means the first date on which the Common Stock trades regular way on such
exchange or in such market after the last time that tenders may be made pursuant
to such tender offer (as it shall have been amended).

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<PAGE>

"FAIR MARKET VALUE" shall mean, as to shares of Common Stock or any other
class of capital stock or securities of the Corporation or any other issuer
which are publicly traded, the average of the Closing Prices of such shares or
securities for each day during the twenty (20) consecutive Trading Days before
the day in question. The "Fair Market Value" of any security which is not
publicly traded or of any other property shall mean the fair value thereof as
determined by an independent investment banking or appraisal firm experienced in
the valuation of such securities or property selected in good faith by the Board
of Directors of the Corporation or a committee thereof, or, if no such
investment banking or appraisal firm is, in the good faith judgment of the Board
of Directors or such committee, available to make such determination, as
determined in good faith by the Board of Directors of the Corporation or such
committee. Any determination of Fair Market Value by an investment banking or
appraisal firm, the Board of Directors or a committee thereof shall be
conclusive and described in a board resolution.

"PERSON" shall mean any individual, firm, corporation, partnership,
limited liability company or other entity, and shall include any successor (by
merger or otherwise) of such entity.

"ORIGINAL ISSUE PRICE" for each share of Series B Preferred Stock shall
mean $150.

"PRO RATA SHARE" shall mean for each holder of Series B Preferred Stock,
a decimal number equal to the number of shares of Series B Preferred Stock owned
by such holder divided by the total number of shares of Series B Preferred Stock
outstanding at the time of such determination (excluding any shares of Series B
Preferred Stock held in treasury by the Corporation).

"SERIES A PREFERRED STOCK" shall mean the Series A 10% Convertible
Redeemable Preferred Stock of the Corporation, par value $.001 per share.

"SUBSIDIARY", when used with respect to the Corporation, shall mean a
corporation, a majority of the outstanding voting securities of which is owned,
directly or indirectly, by the Corporation.

"TRADING DAY" means each Monday, Tuesday, Wednesday, Thursday and Friday,
other than any day on which securities are generally not traded on the
securities exchange or in the securities market applicable to the Common Stock,
or if there is no applicable securities exchange or market, on the New York
Stock Exchange.

Section 9. RANKING: RETIREMENT OF SHARES. (A) The Series B Preferred
Stock shall rank as to the payment of dividends and the distribution of assets
on liquidation, dissolution or winding up senior to the Common Stock and on a
parity with the Series A Preferred Stock and all other series of the
Corporation's Preferred Stock unless such other series by its terms ranks senior
or junior to the Series B Preferred Stock, in which case the terms or such other
series will control.

(B) Any shares of Series B Preferred Stock acquired by the Corporation
by reason of the conversion or redemption of such shares as provided by this
Certificate of Designation or otherwise so acquired, shall be retired as shares
of Series B Preferred Stock.

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<PAGE>

Section 10. MISCELLANEOUS. (A) All notices referred to herein shall be
in writing, and, unless first-class mail shall be specifically permitted for
such notice under the terms of this Certificate of Designations, all notices
hereunder shall be deemed to have been given if delivered personally or sent by
certified mail, telex or telecopy (and promptly confirmed by certified mail,
return receipt requested) on the earlier of receipt thereof or three (3)
Business Days after the mailing thereof if sent by registered mail with postage
prepaid, addressed: (i) if to the Corporation, to its office at 700 Gemini,
Suite 100, Houston, Texas 77058 (Attention: Secretary) or to the transfer agent
for the Series B Preferred Stock, or other agent of the Corporation designated
as permitted by this Certificate of Designation or (ii) if to the holder of the
Series B Preferred Stock or Common Stock, as the case may be, to such holder at
the address of such holder listed in the stock record books of the Corporation
(which may include the records of any transfer agent for the Series B Preferred
Stock or Common Stock, as the case may be) or (iii) to such other address as the
Corporation or such holder, as the case may be, shall have designated by notice
similarly given.

(B) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series B Preferred Stock or shares of Common Stock or
other securities issued on account of Series B Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax which may be payable in respect of
any transfer involved in the issuance or delivery of shares of Series B
Preferred Stock or Common Stock or other securities in a name other than that in
which the shares of Series B Preferred Stock with respect to which such shares
or other securities are issued or delivered were registered, or in respect of
any payment to any Person with respect to any such shares or securities other
than a payment to the registered holder thereof, and shall not be required to
make any such issuance, delivery or payment unless and until the Person
otherwise entitled to such issuance, delivery or payment has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid or is not payable.

(C) In the event that the holder of shares of Series B Preferred Stock
shall not by written notice designate the name in which shares of Common Stock
to be issued upon conversion of such shares should be registered or to whom
payment upon redemption of shares of Series B Preferred Stock should be made or
the address to which the certificate or certificates representing such shares,
or such payment, should be sent, the Corporation shall be entitled to register
such shares, and make such payment in the name of the holder of such Series B
Preferred Stock as shown on the records of the Corporation and to send the
certificate or certificates representing such shares, or such payment, to the
address of such holder shown on the records of the Corporation or any transfer
agent for the Series B Preferred Stock.

(D) Unless otherwise provided in the Certificate of Incorporation, and
as the same may be amended, of the Corporation, all payments in the form of
dividends, distributions on voluntary or involuntary dissolution, liquidation,
or winding up or otherwise made upon the shares of Series B Preferred Stock and
any other stock ranking on a parity with the Series B Preferred Stock with
respect to such dividend or distribution shall be pro rata, so that amounts paid
per share on the

15
<PAGE>

Series B Preferred Stock and such other stock shall in all cases bear to each
other the same ratio that the required dividends, distributions or payments,
as the case may be, then payable per share on the shares of the Series B
Preferred Stock and such other stock bear to each other.

(E) The Corporation may appoint, and from time to time discharge and
change, a transfer agent for the Series B Preferred Stock. Upon any such
appointment or discharge of a transfer agent, the Corporation shall send notice
thereof by first-class mail, postage prepaid, to each holder of record of
Series B Preferred Stock.

(F) The Corporation shall appoint, and from time to time may replace,
a conversion agent for the Series B Preferred Stock. Upon any such replacement
of the conversion agent, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to each holder of record of Series B
Preferred Stock.

(G) In the event that the Series B Preferred Stock shall be registered
under either the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, the Corporation shall establish appropriate record
dates with respect to payments and other actions to be made with respect to the
Series B Preferred Stock.

FURTHER RESOLVED, that the resolutions herein contained shall become
effective only on the execution, by each member of the Board of Directors of the
Corporation, of that Unanimous Written Consent of Directors of the Corporation
dated _____________, 1999, in accordance with Section 141(f) of the General
Corporation Law of the State of Delaware."

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<PAGE>

IN WITNESS WHEREOF, the undersigned, being the duly elected officers of
the Corporation, hereby declare and certify that the facts herein stated are
true and accordingly execute this instrument as of this ____ day of
_____________, 1999.

OMNILYNX COMMUNICATIONS CORPORATION

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

ATTEST:

- --------------------------------
Name:
---------------------------
Secretary

<PAGE>
AMENDED AND RESTATED BYLAWS
OF
OMNILYNX COMMUNICATIONS CORPORATION
(a Delaware corporation)

ARTICLE 1

OFFICES

Section 1.1 PRINCIPAL OFFICE. The principal office of OmniLynx
Communications Corporation (the "Corporation") will be in Hauppauge, New
York. The Board of Directors of the Corporation (the "Board of Directors")
may elect to relocate the principal office of the Corporation from time to
time as it shall deem necessary and proper.

Section 1.2 OTHER OFFICES. The Corporation may also have
offices at such other places within or without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
Corporation may require.

ARTICLE 2

MEETINGS OF STOCKHOLDERS

Section 2.1 PLACE OF MEETINGS. All meetings of the stockholders
will be held at the principal office of the Corporation, or at such other
place within or without the State of Delaware as may be determined by the
Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.

Section 2.2 ANNUAL MEETINGS. An annual meeting of Stockholders
shall be held for the election of directors at such date, time and place,
either within or without the State of Delaware, as may be designated by
resolution of the Board of Directors from time to time; provided that each
successive annual meeting shall be held on a date within 13 months after the
date of the preceding annual meeting. Only such business shall be conducted
as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be (a) specified in the
notice of meeting given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the meeting by a
stockholder of the Corporation. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely,
a stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, no less than 60 days nor more
than 120 days prior to the anniversary date of the mailing to stockholders of
the notice of meeting for the immediately preceding annual meeting; PROVIDED,
HOWEVER, that in the event that the date of the annual meeting is changed by
more than 30 days from the anniversary date of the immediately preceding
annual meeting, notice by the stockholder to be timely must be

<PAGE>

delivered to or mailed and received at the principal executive offices of the
Corporation not later than the close of business on the tenth day following
the earlier of the date on which a written statement setting forth the date
of such meeting was mailed to stockholders or the date on which it is first
disclosed to the public. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting: (a) a brief description of the business desired to be brought before
the annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such proposal, (c) the
class and number of shares of the Corporation that are beneficially owned by
the stockholder, and (d) any material interest of the stockholder in such
business. In addition, if the stockholder's ownership of shares of the
Corporation, as set forth in the notice, is solely beneficial, documentary
evidence of such ownership must accompany the notice. Notwithstanding
anything else in these Bylaws to the contrary, no business shall be conducted
at an annual meeting except in accordance with the procedures set forth in
this Section 2.2. The presiding officer of an annual meeting shall, if the
facts warrant, determine and declare to the meeting that any business that
was not properly brought before the meeting is out of order and shall not be
transacted at the meeting.

Section 2.3 NOTICE OF ANNUAL MEETING. Written or printed notice
of the annual meeting, stating the place, day and hour thereof, will be
served upon or mailed to each stockholder entitled to vote thereat at such
address as appears on the books of the Corporation, not less than ten days
nor more than sixty days before the date of the meeting.

Section 2.4 SPECIAL MEETING. Except as otherwise required by
law or the Certificate of Incorporation, special meetings of the stockholders
of the Corporation may be called only by the Chairman of the Board of
Directors (the "Chairman of the Board"), the Chief Executive Officer, the
President, the Board of Directors by the written order of a majority of the
entire Board of Directors or upon the written request of stockholders owning
not less than two-thirds of the shares of capital stock of the Corporation
issued, outstanding and entitled to vote at such meeting delivered to the
President or Secretary that states the purpose or purposes of the proposed
meeting.

Section 2.5 NOTICE OF SPECIAL MEETING. Written notice of a
special meeting of stockholders, stating the place, day and hour and purpose
or purposes thereof, will be served upon or mailed to each stockholder
entitled to vote thereat at such address as appears on the books of the
Corporation, not less than ten days nor more than sixty days before the date
of the meeting.

Section 2.6 BUSINESS AT SPECIAL MEETING. Business transacted at
all special meetings will be confined to the purpose or purposes stated in
the notice.

Section 2.7 STOCKHOLDER LIST. At least ten days before each
meeting of stockholders, a complete list of the stockholders entitled to vote
at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, will be prepared
by the Secretary. Such list, for a period of ten days prior to such meeting,
will be kept on file at the registered office of the Corporation and will be
subject to inspection by any stockholder at any time during usual business
hours. Such list will also be produced and kept open at the time

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and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.

Section 2.8 QUORUM. The holders of at least one-half of the
shares of capital stock issued and outstanding and entitled to vote thereat,
represented in person or by proxy, will constitute a quorum at all meetings
of the stockholders for the transaction of business except as otherwise
provided by law, the Certificate of Incorporation or these Bylaws. If,
however, such quorum is not present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, represented in
person or by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At any such adjourned meeting at which a
quorum is represented, any business may be transacted which might have been
transacted at the meeting as originally notified.

Section 2.9 VOTING. Unless otherwise provided by law, the
Certificate of Incorporation or these Bylaws, each stockholder will have one
vote for each share of stock having voting power, registered in his name on
the books of the Corporation. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares having voting power
represented in person or by proxy will decide any question brought before
such meeting, unless the question is one upon which, by express provision of
law, the Certificate of Incorporation or these Bylaws, a different vote is
required, in which case such express provision will govern and control the
decision of such question. In the case of a matter submitted for a vote of
the stockholders as to which a stockholder approval requirement is applicable
under (a) the stockholder approval policy of any stock exchange or quotation
system on which the capital stock of the Corporation is traded or quoted, (b)
the requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or (c) any provisions of the Internal Revenue Code, in each
case for which no higher voting requirement is specified by the DGCL, the
Certificate of Incorporation or these Bylaws, the vote required for approval
shall be the requisite vote specified in such (a) stockholder approval
policy, (b) the Exchange Act or (c) Internal Revenue Code provision, as the
case may be (or the highest such requirement if more than one is applicable).
Unless otherwise provided in the Certificate of Incorporation or these Bylaws
in accordance with the DGCL, directors shall be elected by a plurality of the
votes cast by the holders of outstanding shares of capital stock of the
Corporation entitled to vote in the election of directors at a meeting of
stockholders at which a quorum is present.

Section 2.10 PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action
in writing without a meeting may authorize another person or persons to act
for him by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.

ARTICLE 3

BOARD OF DIRECTORS

Section 3.1 POWERS. The business and affairs of the Corporation
will be managed by a Board of Directors. The Board of Directors may exercise
all such powers of the Corporation and

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do all such lawful acts and things as are not by law, by the Certificate of
Incorporation or these Bylaws directed or required to be exercised or done by
the stockholders.

Section 3.2 NUMBER OF DIRECTORS. The number of directors which
constitute the whole Board of Directors will be no more than twelve, as such
number shall be determined by resolution of the Board of Directors from time to
time; PROVIDED, HOWEVER, that no decrease in the number of directors shall have
the effect of shortening the term of any incumbent director; PROVIDED FURTHER,
HOWEVER, that from and after the first date as of which the Corporation has a
class or series of capital stock registered under the Exchange Act, the number
of directors which shall constitute the whole Board of Directors shall be not
less than three.

Section 3.3 NOMINATION. Only persons who are nominated in
accordance with the procedures set forth in these Bylaws shall be eligible to
serve as directors. Nominations of persons for election to the Board of
Directors of the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this Section 3.3, who shall be entitled to vote for the election
of directors at the meeting and who complies with the notice procedures set
forth in this Section 3.3.

Nominations by stockholders shall be made pursuant to timely notice
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation (a) in the case of an annual meeting, not less than
60 days nor more than 120 days prior to the anniversary date of the mailing to
stockholders of the notice of meeting for the immediately preceding annual
meeting; PROVIDED, HOWEVER, that in the event that the date of the annual
meeting is changed by more than 30 days from the anniversary date of the
immediately preceding annual meeting, notice by the stockholder to be timely
must be delivered to or mailed and received at the principal executive offices
of the Corporation no later than the close of business on the tenth day
following the earlier of the date on which a written statement setting forth the
date of such meeting was mailed to stockholders or the date on which it is first
disclosed to the public, and (b) in the case of a special meeting at which
directors are to be elected, not later than the close of business on the tenth
day following the earlier of the date on which a written statement setting forth
the date of such meeting was mailed to stockholders or the date on which it is
first disclosed to the public. Such stockholder's notice shall set forth (a) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Exchange Act (including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected); (b) as to
the stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such stockholder and
which are owned of record by such stockholder; and (c) as to the beneficial
owner, if any, on whose behalf the nomination is made, (i) the name and address
of such person and (ii) the class and number of shares of the Corporation which
are beneficially owned by such person. At the request of the Board of Directors,
any person nominated by the Board of Directors for election as

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a director shall furnish to the Secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which
pertains to the nominee.

The presiding officer of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 3.3 and he shall so
declare to the meeting, and the defective nomination shall be disregarded.

Section 3.4 ELECTION AND TERM. Subject to the requirements of the
Certificate of Incorporation, the directors of each class shall be elected at
the annual meeting of stockholders, except as provided in Section 3.5, and each
director elected shall hold office until the expiration of his term and until
his successor shall be elected and shall qualify. Directors need not be
residents of Delaware or stockholders of the Corporation.

Section 3.5 VACANCIES. If any vacancy occurs in the Board of
Directors caused by death, resignation, retirement, disqualification, or removal
from office of any director, or otherwise, or if any new directorship is created
by an increase in the authorized number of directors, a majority of the
directors then in office, though less than a quorum, or a sole remaining
director, may choose a successor or fill the newly created directorship; and a
director so chosen shall hold office until his term expires and until his
successor shall be duly elected and shall qualify, unless sooner displaced.

Section 3.6 RESIGNATION; REMOVAL. Any director may resign at any
time. Unless otherwise prescribed by law or the Certificate of Incorporation, a
director may be removed from office only for cause and then only by the
affirmative vote of the holders of at least a majority of the voting power of
all outstanding shares of capital stock of the Corporation generally entitled to
vote in the election of directors, voting together as a single class. Except as
may otherwise be provided by law, cause of removal of a director shall be deemed
to exist only if: (i) the director whose removal is proposed has been convicted,
or where a director is granted immunity to testify where another has been
convicted, of a felony by a court of competent jurisdiction and such conviction
is no longer subject to direct appeal; (ii) such director has been found by the
affirmative vote of a majority of the entire Board of Directors at any regular
or special meeting of the Board of Directors called for that purpose or by a
court of competent jurisdiction to have been grossly negligent or guilty of
misconduct in the performance of his duties to the Corporation in a matter of
substantial importance to the Corporation; or (iii) such director has been
adjudicated by a court of competent jurisdiction to be mentally incompetent,
which mental incompetency directly affects his ability as a director of the
Corporation.

ARTICLE 4

MEETINGS OF THE BOARD

Section 4.1. FIRST MEETING. The Board of Directors may hold its
first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of the stockholders, and no notice of such meeting shall
be necessary; or the Board of Directors may meet at such place and time as is
fixed by the consent in writing of all the directors.

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Section 4.2 REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held at such time and place either within or without the State
of Delaware and with such notice or without notice as is determined from time to
time by the Board of Directors.

Section 4.3. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the President or the Chairman of the Board on one
days notice to each director, either personally or by mail or telegram. Special
meetings will be called by the President or the Chairman of the Board in like
manner and on like notice upon the written request of a majority of the Board of
Directors.

Section 4.4 QUORUM AND VOTING. At all meetings of the Board of
Directors, a majority of the directors will be necessary and sufficient to
constitute a quorum for the transaction of business; and the act of a majority
of the directors present at any meeting at which there is a quorum will be the
act of the Board of Directors, except as may be otherwise specifically provided
by law, the Certificate of Incorporation or these Bylaws. If a quorum is not
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present.

Section 4.5 TELEPHONE MEETINGS. The Board of Directors may hold
meetings in any manner permitted by law. Without limitation, at any meeting of
the Board of Directors, a director may attend by telephone, radio, television,
interactive media or similar means of communication by means of which all
participants can hear each other which permits him to participate in the
meeting, and a director so attending will be deemed present at the meeting for
all purposes including the determination of whether a quorum is present.

Section 4.6 ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken by the Board of Directors or any committee of the Board of
Directors under applicable statutory provisions, the Certificate of
Incorporation, or these Bylaws, may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all the members of the
Board of Directors or such committee, as the case may be, and filed with the
minutes of the meetings of the Board of Directors or such committee, as the case
may be.

ARTICLE 5

COMMITTEES

Section 5.1 COMMITTEES OF DIRECTORS. The Board of Directors may
establish an Audit Committee and a Compensation Committee, and may establish an
Executive Committee and such other committees as may be established by
resolution of a majority of the whole Board of Directors. Each of such
committees shall consist of one or more members of the Board of Directors and
shall have a chairman that is selected by the Board of Directors. Members of
committees of the Board of Directors shall be elected annually by vote of a
majority of the Board of Directors. The Chief Executive Officer shall be an
ex-officio nonvoting member of each committee (except the Audit and Compensation
Committees) of which he is not an official voting member. With respect to any

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committee (including the Audit and Compensation Committees) of which the Chief
Executive Officer is not an official voting member, the Chief Executive Officer
shall be given notice of all committee meetings at the same time notice is given
to committee members, and the Chief Executive Officer shall be afforded the
opportunity to speak at the committee meeting. Presence of a majority of the
committee members (not counting any ex-officio nonvoting members) shall
constitute a quorum. Committees may act by majority vote of the voting members
present at a meeting. Each of such committees shall have and may exercise such
of the powers of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in these Bylaws or by resolution
of the Board of Directors. Each of such committees may authorize the seal of the
Corporation to be affixed to any document or instrument. The Board of Directors
may designate one or more directors as alternate members of any such committee,
who may replace any absent or disqualified member at any meeting of such
committee. Meetings of committees may be called by the chairman of the committee
by written, telegraphic or telephonic notice to all members of the committee and
the Chief Executive Officer and shall be at such time and place as shall be
stated in the notice of such meeting. Any member of a committee may participate
in any meeting by means of conference telephone or similar communications
equipment. In the absence or disqualification of a member of any committee the
chairman of such committee may, if deemed advisable, appoint another member of
the Board of Directors to act at the meeting in the place of the disqualified or
absent member. The chairman of the committee may fix such other rules and
procedures governing conduct of meetings as he shall deem appropriate.

Section 5.2 EXECUTIVE COMMITTEE. The Board of Directors, by
resolution adopted by a majority of the whole Board of Directors, may
designate two or more directors to constitute an Executive Committee, which
committee, to the extent provided in such resolution, will have and may
exercise all of the authority of the Board of Directors in the business and
affairs of the Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it, except where
action by the Board of Directors is specified by law. The Executive Committee
will keep regular minutes of its proceedings and report the same to the Board
of Directors when required.

Section 5.3 AUDIT COMMITTEE. The Audit Committee shall consist of
not less than two members of the Board of Directors. The Audit Committee shall
be responsible for recommending to the entire Board of Directors engagement and
discharge of independent auditors of the financial statements of the
Corporation, shall review the professional service provided by the independent
auditors, shall review the independence of independent auditors, shall review
with the auditors the plan and results of the auditing engagement, shall
consider the range of audit and non-audit fees, shall review the adequacy of the
Corporation's system of internal audit controls, shall review the results of
procedures for internal auditing and shall consult with the internal auditor of
the Corporation with respect to all aspects of the Corporation's internal
auditing program. In addition, the Audit Committee shall direct and supervise
special investigations as deemed necessary by the Audit Committee.

Section 5.4 COMPENSATION COMMITTEE. The Compensation Committee
shall consist of not less than two members of the Board of Directors. The
Compensation Committee shall

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recommend to the Board of Directors the compensation to be paid to officers
and key employees of the Corporation and the compensation of the Board of
Directors. Except as otherwise provided in any specific plan adopted by the
Board of Directors, the Compensation Committee shall be responsible for
administration of executive compensation plans, stock option plans and other
forms of direct or indirect compensation of officers and key employees, and
each member of the Compensation Committee shall have the power and authority
to execute and bind the Corporation to such documents, agreements and
instruments related to such plans and compensation as are approved by the
Compensation Committee. In the alternative, the Compensation Committee may
authorize any officer of the Corporation to execute such documents,
agreements and instruments on behalf of the Corporation. In addition, the
Compensation Committee shall review levels of pension benefits and insurance
programs for officers and key employees.

Section 5.5 OTHER COMMITTEES. The Board of Directors may similarly
create other committees for such terms and with such powers and duties as the
Board of Directors deems appropriate except as provided to the contrary by law,
the Certificate of Incorporation, or these Bylaws.

Section 5.6 ADVISORY DIRECTORS. The Board of Directors may, by
majority vote, appoint one or more advisory directors. Advisory directors shall
serve at the Board of Directors' convenience solely to advise the Board of
Directors, and shall have no formal responsibilities. No advisory director shall
be entitled to vote at meetings of the Board of Directors, nor shall any
advisory director be counted when determining whether there is a quorum at
meetings of the Board of Directors. Advisory directors shall not be, by virtue
of their position as advisory directors, agents of the Corporation, and they
shall not have the power to bind the Corporation.

ARTICLE 6

COMPENSATION OF DIRECTORS

Directors, as such, shall receive such compensation for their
services and such reimbursement of expenses as shall be determined by the Board
of Directors.

ARTICLE 7

NOTICES

Section 7.1 METHODS OF NOTICE. Whenever any notice is required to
be given to any stockholder or director under the provisions of any law, the
Certificate of Incorporation or these Bylaws, it will not be construed to
require personal notice, but such notice may be given in writing by mail
addressed to such stockholder or director at such address as appears on the
books of the Corporation, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail with postage
thereon prepaid. Notice to directors may also be given by telegram, by
facsimile, by telephone or in person, and notice given by such means shall be
deemed given at the time it is delivered.

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Section 7.2 WAIVER OF NOTICE. Whenever any notice is required
to be given to any stockholder or director under the provisions of any law,
the Certificate of Incorporation or these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, will be deemed equivalent to the giving of
such notice. Attendance at any meeting will constitute a waiver of notice
thereof except as otherwise provided by law.

ARTICLE 8

OFFICERS

Section 8.1 EXECUTIVE OFFICERS. The officers of the Corporation
will consist of Chairman of the Board, Chief Executive Officer, President,
Vice President, Treasurer, and Secretary, each of whom shall be elected by
the Board of Directors. The Board of Directors may also elect additional vice
presidents, and one or more assistant secretaries and assistant treasurers.
Any two or more offices may be held by the same person.

Section 8.2 ELECTION AND QUALIFICATION. The Board of Directors
at its first meeting after each annual meeting of stockholders will elect the
President, one or more Vice Presidents, a Secretary and a Treasurer, none of
whom need be a member of the Board of Directors.

Section 8.3 OTHER OFFICERS AND AGENTS. The Board of Directors
may elect or appoint such other officers, assistant officers and agents as it
deems necessary, who will hold their offices for such terms and shall
exercise such powers and perform such duties as determined from time to time
by the Board of Directors.

Section 8.4 SALARIES. The salaries of all officers of the
Corporation will be fixed by the Board of Directors except as otherwise
directed by the Board of Directors.

Section 8.5 TERM, REMOVAL AND VACANCIES. The officers of the
Corporation will hold office until their resignation or their successors are
chosen and qualify. Any officer, agent or member of the Executive Committee
elected or appointed by the Board of Directors may be removed at any time by
the Board of Directors with or without cause; PROVIDED, HOWEVER, that such
removal shall be without prejudice to the contract rights, if any, of such
removed party. If any such office becomes vacant for any reason, the vacancy
will be filled by the Board of Directors.

Section 8.6 CHAIRMAN OF THE BOARD. The Chairman of the Board,
if one is elected, shall preside at meetings of the Board of Directors and
stockholders and shall have such other powers and duties as may from time to
time be prescribed by duly adopted resolutions of the Board of Directors.

Section 8.7 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer,
if one is elected, shall preside at meetings of the Board of Directors and
stockholders if there is no Chairman of the Board, and shall supervise and have
overall responsibility for the business, administration and operations of the
Corporation. In general, he shall perform all duties as from time to time may be

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assigned to him by the Board of Directors. He shall from time to time make
such reports of the affairs of the Corporation as the Board of Directors may
require.

Section 8.8 PRESIDENT. The President shall, subject to the
Board of Directors, have general executive charge, management and control of
the properties and operations of the Corporation in the ordinary course of
its business with all such powers with respect to such responsibilities
including the powers of general manager; and the president shall see that all
orders and resolutions of the Board of Directors are carried into effect. The
president shall have such other powers and duties as may from time to time be
prescribed by duly adopted resolution of the Board of Directors.

Section 8.9 VICE PRESIDENT. The Vice Presidents in the order
determined by the Board of Directors will, in the absence or disability of
the President, perform the duties and exercise the powers of the President,
and will perform such other duties as the Board of Directors and President
may prescribe.

Section 8.10 SECRETARY. The Secretary will attend all meetings
of the Board of Directors and all meetings of the stockholders and record all
votes and the minutes of all proceedings in a book to be kept for that
purpose and will perform like duties for the standing committees when
required. He will give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the Board of Directors, and will perform
such other duties as may be prescribed by the Board of Directors and
President. He will keep in safe custody the seal of the Corporation and, when
authorized by the Board of Directors, affix the same to any instrument
requiring it, and when so affixed it shall be attested by his signature or by
the signature of an assistant secretary.

Section 8.11 ASSISTANT SECRETARIES. The assistant secretaries
in the order determined by the Board of Directors will perform, in the
absence or disability of the Secretary, the duties and exercise the powers of
the Secretary and will perform such other duties as the Board of Directors
and President may prescribe.

Section 8.12 TREASURER. The Treasurer will have the custody of
the corporate funds and securities and will keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and will
deposit all monies and other valuable effects in the name and to the credit
of the Corporation in such depositories as may be designated by the Board of
Directors. He will disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
will render to the Board of Directors and President, whenever they may
require it, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation.

Section 8.13 ASSISTANT TREASURERS. The Assistant Treasurers in the
order determined by the Board of Directors, in the absence or disability of the
Treasurer, perform the duties and exercise the powers of the Treasurer and will
perform such other duties as the Board of Directors and President may prescribe.

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Section 8.14 OFFICER'S BOND. If required by the Board of
Directors, any officer will give the Corporation a bond (to be renewed as the
Board of Directors may require) in such sum and with such surety or sureties
as is satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession
or under his control belonging to the Corporation.

ARTICLE 9

SHARES AND STOCKHOLDERS

Section 9.1 CERTIFICATES REPRESENTING SHARES. The certificates
representing shares of capital stock of the Corporation will be numbered and
entered in the books of the Corporation as they are issued. They will exhibit
the holder's name and number of shares and will be signed by the Chief
Executive Officer, President or Vice-President and the Secretary or an
Assistant Secretary. The signature of any such officer may be facsimile if
the certificate is countersigned by a transfer agent or registered by a
registrar, other than the Corporation itself or an employee of the
Corporation. In case any officer who has signed or whose facsimile signature
has been placed upon such certificate has ceased to be such officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if he were such officer at the date of its issuance.

Section 9.2 TRANSFER OF SHARES. Upon surrender to the
Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, it will
be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books. Notwithstanding the foregoing, no transfer will be recognized by
the Corporation if such transfer would violate federal or state securities
laws, the Certificate of Incorporation, or any stockholders' agreements which
may be in effect at the time of the purported transfer. The Corporation may,
prior to any such transfer, require an opinion of counsel to the effect that
any such transfer does not violate applicable securities laws requiring
registration or an exemption from registration prior to any such transfer.

Section 9.3 FIXING RECORD DATE. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purpose, the
Board of Directors may provide that the stock transfer books be closed for a
stated period but not to exceed, in any case, sixty days. If the stock transfer
books are closed for the purpose of determining stockholders entitled to notice
of or to vote at a meeting of stockholders, such books must be closed for at
least ten days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of stockholders, such date, in any case, to be
not more than sixty days and, in case of a meeting of stockholders, not less
than ten days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. If the stock transfer books are
not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of

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the Board of Directors declaring such dividend is adopted, as the case may
be, will be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as herein provided, such determination will apply to any
adjournment thereof except where the determination has been made through the
closing of stock transfer books and the stated period of closing has expired.

Section 9.4 REGISTERED STOCKHOLDERS. The Corporation is
entitled to recognize the exclusive right of a person registered on its books
as the owner of the share to receive dividends, and to vote as such owner,
and for all other purposes as such owner; and the Corporation is not bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it has express or other
notice thereof, except as otherwise provided by the laws of Delaware.

Section 9.5 LOST CERTIFICATE. The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require
and/or give the Corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the Corporation with respect to
the certificate alleged to have been lost or destroyed.

ARTICLE 10

GENERAL

Section 10.1 DIVIDENDS. The Board of Directors may from time to
time declare, and the Corporation pay, dividends on its outstanding shares of
capital stock in cash, in property, or in its own shares, except when the
declaration or payment thereof would be contrary to law, the Certificate of
Incorporation or these Bylaws. Such dividends may be declared at any regular
or special meeting of the Board of Directors, and the declaration and payment
will be subject to all applicable provisions of law, the Certificate of
Incorporation and these Bylaws.

Section 10.2 RESERVES. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors may
determine to be in the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it
was created.

Section 10.3 DIRECTORS' ANNUAL STATEMENT. The Board of
Directors will present at each annual meeting and when called for by vote of
the stockholders at any special meeting of the stockholders, a full and clear
statement of the business and condition of the Corporation.

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<PAGE>

Section 10.4 CHECKS. All checks or demands for money and notes
of the Corporation will be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.

Section 10.5 LOANS. No loans and no renewals of any loans shall
be contracted on behalf of the Corporation except as authorized by the Board
of Directors. When authorized to do so, any officer or agent of the
Corporation may effect loans and advances for the Corporation from any bank,
trust company or other institution or from any firm, corporation or
individual, and for such loans and advances may make, execute and deliver
promissory notes, bonds or other evidences of indebtedness of the
Corporation. When authorized so to do, any officer or agent of the
Corporation may pledge, hypothecate or transfer, as security for the payment
of any and all loans, advances, and other personal property at any time held
by the Corporation, and to that end may endorse, assign and deliver the same.
Such authority may be general or confined to specific instances.

Section 10.6 CONTRACTS. Except as otherwise provided in these
Bylaws or by law or as otherwise directed by the Board of Directors, the
Chairman of the Board, the Chief Executive Officer, the President, or any
Vice President shall be authorized to execute and deliver, in the name and on
the behalf of the Corporation, all agreements, bonds, contracts, deeds,
mortgages, and other instruments, either for the Corporation's own account or
in a fiduciary or other capacity, and the seal of the Corporation, if
appropriate, shall be affixed thereto by any of such officers or the
Secretary or an Assistant Secretary. The Board of Directors, the Chairman of
the Board, the Chief Executive Officer, the President, or any Vice President
designated by the Board of Directors may authorize any other officer,
employee or agent to execute and deliver, in the name and on behalf of the
Corporation, agreements, bonds, contracts, deeds, mortgages, and other
instruments, either for the Corporation's own account or in a fiduciary or
other capacity, and, if appropriate, to affix the seal of the Corporation
thereto. The grant of such authority by the Board or any such officer may be
general or confined to specific instances.

Section 10.7 CORPORATE RECORDS. The Corporation will keep at
its registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders giving the names
and addresses of all stockholders and the number and class of shares held by
each. All other books and records of the Corporation may be kept at such
place or places within or without the State of Delaware as the Board of
Directors may from time to time determine.

Section 10.8 SEAL. The corporate seal will have inscribed
thereon the name of the Corporation. The seal may be used by causing it or a
facsimile thereof to be impressed, affixed or reproduced.

Section 10.9 FISCAL YEAR. The fiscal year of the Corporation
shall be such fiscal year as the Board of Directors from time to time by
resolution shall determine.

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<PAGE>

Section 10.10 AMENDMENT. The Board of Directors shall have the
power to make, alter, amend and repeal the Bylaws. Any Bylaws made by the
Board of Directors under the powers conferred hereby may be altered, amended
or repealed by the directors or by the stockholders; PROVIDED, HOWEVER, that
the Bylaws shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted by stockholder action without the
affirmative vote of at least two-thirds of the voting power of the then
outstanding shares entitled to vote generally in the election of directors,
voting together as a single class.

Section 10.11 INDEMNIFICATION. Each director, officer and former
director or officer of the Corporation, and any person who may have served or
who may hereafter serve at the request of the Corporation as a director or
officer of another corporation in which it owns shares of capital stock or of
which it is a creditor, is hereby indemnified by the Corporation against
expenses actually and necessarily incurred by him in connection with the defense
of any action, suit or proceeding in which he is made a party by reason of being
or having been such director or officer, except in relation to matters as to
which he shall be adjudged in such action, suit or proceeding to be liable for
negligence or misconduct in the performance of duty. Such indemnification will
not be deemed exclusive of any other rights to which such director, officer or
other person may be entitled under any agreement, vote of stockholders, or
otherwise. Without limitation, nothing in this section shall limit any
indemnification provisions in the Certificate of Incorporation.

Adopted by the Board of Directors
and Stockholders on June 23, 1999

/s/ Jeffrey W. Tomz
------------------------------------
Jeffrey W. Tomz, Secretary

<PAGE>
Exhibit 4.5

THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.

WARRANTS

to Purchase Common Stock of

Gemini II, Inc.

Expiring on February 17, 2004

This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, John C. Vanderhider (the "Holder") or his assigns, is entitled
to subscribe for and purchase from the Company (as hereinafter defined), in
whole or in part, 86,844 shares of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (as hereinafter defined) at an initial
Exercise Price (as hereinafter defined) per share of $5.71, subject, however, to
the provisions and upon the terms and conditions, set forth hereinafter. The
number of Warrants (as hereinafter defined), the number of shares of Common
Stock purchasable hereunder, and the Exercise Price therefor are subject to
adjustment as hereinafter set forth. These Warrants and all rights hereunder
shall expire at 5:00 p.m., Houston, Texas time, on February 17, 2004 (the
"Expiration Date").

ARTICLE I

Definitions

As used herein, the following terms shall have the meanings set forth
below:

I.1 "COMPANY" shall mean Gemini II, Inc., a Delaware corporation, and
shall also include any successor thereto with respect to the obligations
hereunder, by merger, consolidation or otherwise.

I.2 "COMMON STOCK" shall mean and include the Company's common stock,
par value $.0001 per share, authorized on the date of the original issue of
these Warrants and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets, the stock or other securities provided for herein,
and (ii) any other shares of common stock of the Company into which such shares
of Common Stock may be converted.

<PAGE>

I.3 "EXERCISE PRICE" shall mean the initial purchase price of $5.71
per share of Common Stock payable upon exercise of the Warrants, as adjusted
from time to time pursuant to the provisions hereof.

I.4 "MARKET PRICE" for any day, when used with reference to Common
Stock, shall mean the price of said Common Stock determined by reference to the
last reported sale price for the Common Stock on such day on the principal
securities exchange on which the Common Stock is listed or admitted to trading
or if no such sale takes place on such date, the average of the closing bid and
asked prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers national market system on such
date, or, if there shall have been no trading on such date or if the Common
Stock shall not be listed on such system, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any NASD member firm
selected from time to time by the Company for such purpose.

I.5 "WARRANT" shall mean the right upon exercise to purchase one
Warrant Share.

I.6 "WARRANT SHARES" shall mean the shares of Common Stock purchased
or purchasable by the holder hereof upon the exercise of the Warrants.

ARTICLE II

Exercise of Warrants

II.1 METHOD OF EXERCISE. The Warrants represented hereby may be
exercised by the holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on the
Expiration Date. To exercise the Warrants, the holder hereof shall deliver to
the Company, at the Warrant Office designated herein, (i) a written notice in
the form of the Subscription Notice attached as an exhibit hereto, stating
therein the election of such holder to exercise the Warrants in the manner
provided in the Subscription Notice; (ii) payment in full of the Exercise Price
(A) in cash or by bank check for all Warrant Shares purchased hereunder, or
(B) through a "cashless" or "net-issue" exercise of each such Warrant ("Cashless
Exercise"); the holder shall exchange each Warrant subject to a Cashless
Exercise for that number of Warrant Shares determined by multiplying the number
of Warrant Shares issuable hereunder by a fraction, the numerator of which shall
be the difference between (x) the Market Price and (y) the Exercise Price for
each such Warrant, and the denominator of which shall be the Market Price; the
Subscription Notice shall set forth the calculation upon which the Cashless
Exercise is based, or (C) a combination of (A) and (B) above; and (iii) these
Warrants. The Warrants shall be deemed to be exercised on the date of receipt
by the Company of the Subscription Notice, accompanied by payment for the
Warrant Shares and surrender of these Warrants, as aforesaid, and such date is
referred to herein as the "Exercise Date". Upon such exercise, the Company
shall, as promptly as practicable and in any event within five business days,
issue and deliver to such holder a certificate or certificates for the full
number of the Warrant Shares purchased by such holder hereunder, and shall,
unless the Warrants have

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<PAGE>

expired, deliver to the holder hereof a new Warrant representing the number
of Warrants, if any, that shall not have been exercised, in all other
respects identical to these Warrants. As permitted by applicable law, the
person in whose name the certificates for Common Stock are to be issued shall
be deemed to have become a holder of record of such Common Stock on the
Exercise Date and shall be entitled to all of the benefits of such holder on
the Exercise Date, including without limitation the right to receive
dividends and other distributions for which the record date falls on or after
the Exercise Date and to exercise voting rights.

II.2 EXPENSES AND TAXES. The Company shall pay all expenses and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.

II.3 RESERVATION OF SHARES. The Company shall reserve at all times so
long as the Warrants remain outstanding, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrants, a sufficient number of shares of Common
Stock to provide for the exercise of the Warrants.

II.4 VALID ISSUANCE. All shares of Common Stock that may be issued
upon exercise of the Warrants will, upon issuance by the Company, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof and, without limiting the
generality of the foregoing, the Company shall take no action or fail to take
any action which will cause a contrary result (including, without limitation,
any action that would cause the Exercise Price to be less than the par value, if
any, of the Common Stock).

II.5 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of the
holder hereof, the Company will acknowledge in writing its continuing obligation
to afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of these
Warrants; PROVIDED, however, that if the Holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.

II.6 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of these Warrants. If more
than one Warrant shall be presented for exercise at the same time by the same
holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.

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<PAGE>

ARTICLE III

Transfer

III.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 700 Gemini Street, Suite 100 Houston, Texas 77058
and may subsequently be such other office of the Company or of any transfer
agent of the Common Stock in the continental United States as to which written
notice has previously been given to the Holder. The Company shall maintain, at
the Warrant Office, a register for the Warrants in which the Company shall
record the name and address of the Person in whose name these Warrants has been
issued, as well as the name and address of each permitted assignee of the rights
of the registered owner hereof.

III.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person
in whose name the Warrants are registered as the holder and owner hereof until
provided with notice to the contrary.

III.3 RESTRICTIONS ON TRANSFER OF WARRANTS. These Warrants may not be
transferred, by the Holder other than by operation of law.

III.4 COMPLIANCE WITH SECURITIES LAWS. Notwithstanding any other
provisions contained in these Warrants, the Holder understands and agrees that
the following restrictions and limitations shall be applicable to all Warrant
Shares and to all resales or other transfers thereof pursuant to the Securities
Act:

III.4.1 The holder hereof agrees that the Warrant Shares may not
be sold or otherwise transferred unless the Warrant Shares are registered under
the Securities Act and applicable state securities or blue sky laws or are
exempt therefrom.

III.4.2 A legend in substantially the following form will be
placed on the certificate(s) evidencing the Warrant Shares:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS."

III.4.3 Stop transfer instructions will be imposed with respect
to the Warrant Shares so as to restrict resale or other transfer thereof.

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<PAGE>

III.5 The Holder will be required to execute a lockup
agreement with the Underwriter of the Company's IPO relating to the Warrant
Shares, and if such agreement is not executed by the Holder, then the Company
shall have the right to deny exercise of the Warrants and/or to restrict any
transfer of the Warrant Shares during the term of the lockup which would have
been imposed by such agreement.

ARTICLE IV

Anti-Dilution

IV.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as provided herein. Upon each adjustment of the
Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.

IV.2 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company
shall at any time subdivide its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common Stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced.

IV.3 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that holders of Common Stock
shall be entitled to receive capital stock, securities or assets with respect to
or in exchange for their shares, then the following provisions shall apply:

IV.3.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition,
lawful and adequate provisions shall be made whereby the Holder shall thereafter
have the right to purchase and receive upon the terms and conditions specified
in these Warrants and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger, share exchange or sale
not taken place, and in any such case appropriate provision reasonably
satisfactory to such holder shall be made with respect to the rights and
interests of

5
<PAGE>

such holder to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the
number of Warrant Shares receivable upon the exercise) shall thereafter be
applicable, as nearly as possible, in relation to any shares of capital
stock, securities or assets thereafter deliverable upon the exercise of
Warrants.

IV.3.2 In the event of a merger, share exchange or
consolidation of the Company with or into another Person as a result of which a
number of shares of common stock or its equivalent of the successor Person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Exercise Price in effect immediately prior
to such merger, share exchange or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock.

IV.3.3 The Company shall not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the holder hereof, such successor Person will issue a
new Warrant revised to reflect the modifications in this Warrant effected
pursuant to this Section.

IV.3.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.

IV.4 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a
dividend or other distribution payable to all holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, convertible securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the

6
<PAGE>

Company), in the case of any other dividend or distribution. Such reduction
shall be made whenever any such dividend or distribution is made and shall be
effective as of the date as of which a record is taken for purpose of such
dividend or distribution or, if a record is not taken, the date as of which
holders of record of Common Stock entitled to such dividend or distribution
are determined.

IV.5 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.05 in the Exercise Price; provided, however, that any
adjustments are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall be made to the
nearest full share or nearest one hundredth of a dollar, as applicable.

IV.6 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number
of Warrant Shares issuable upon the exercise of the Warrants shall be adjusted
as herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate and an independent accountants'
opinion together with a notice stating that the Exercise Price and the number of
Warrant Shares purchasable upon exercise of the Warrants have been adjusted and
setting forth the adjusted Exercise Price and the adjusted number of Warrant
Shares purchasable upon the exercise of the Warrants.

IV.7 NOTIFICATIONS TO HOLDERS. In case at any time the Company
proposes:

(i) to declare any dividend upon its Common Stock payable in
capital stock or make any special dividend or other distribution (other
than cash dividends) to the holders of its Common Stock;

(ii) to offer for subscription pro rata to all of the holders
of its Common Stock any additional shares of capital stock of any class
or other rights;

(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation,
merger or share exchange of the Company with another Person, or sale,
transfer or other disposition of all or substantially all of its assets;
or

7
<PAGE>

(iv) to effect a voluntary or involuntary dissolution,
liquidation or winding up of the Company,

then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days (but not more than 90 days) prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days
(but not more than 90 days) prior written notice of the date when the same shall
take place. Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock, as the case may be, for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
as the case may be.

IV.8 COMPANY TO PREVENT DILUTION. If any event or condition occurs as
to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article except in the event of a
combination of shares.

ARTICLE V

Miscellaneous

V.1 ENTIRE AGREEMENT. These Warrants, together with the Consulting
Agreement, contain the entire agreement between the holder hereof and the
Company with respect to the Warrant Shares purchasable upon exercise hereof and
the related transactions and supersedes all prior arrangements or understandings
with respect thereto.

V.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.

V.3 WAIVER AND AMENDMENT. Any term or provision of these Warrants may
be waived at any time by the party which is entitled to the benefits thereof and
any term or provision of

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<PAGE>

these Warrants may be amended or supplemented at any time by agreement of the
holder hereof and the Company, except that any waiver of any term or
condition, or any amendment or supplementation, of these Warrants shall be in
writing. A waiver of any breach or failure to enforce any of the terms or
conditions of these Warrants shall not in any way effect, limit or waive a
party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of these Warrants.

V.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.

V.5 COPY OF WARRANT. A copy of these Warrants shall be filed among
the records of the Company.

V.6 NOTICE. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be in writing and delivered at, or
sent by certified or registered mail to such holder at, the last address shown
on the books of the Company maintained at the Warrant Office for the
registration of these Warrants or at any more recent address of which the holder
hereof shall have notified the Company in writing. Any notice or other document
required or permitted to be given or delivered to the Company, other than such
notice or documents required to be delivered to the Warrant Office, shall be
delivered at, or sent by certified or registered mail to, the offices of the
Company at 700 Gemini Steet, Suite 100 Houston, Texas 77058 or such other
address within the continental United States of America as shall have been
furnished by the Company to the holder of this Warrant.

V.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of these
Warrants shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the
holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the purchase price of any shares of Common Stock or
as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

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<PAGE>

of any mutilated Warrants, shall constitute an original contractual
obligation on the part of the Company. These Warrants shall be promptly
canceled by the Company upon the surrender hereof in connection with any
exchange or replacement. The Company shall pay all taxes (other than
securities transfer taxes or income taxes) and all other expenses and charges
payable in connection with the preparation, execution and delivery of
Warrants pursuant to this Section.

V.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to one
piggyback registration right under the Securities Act and under applicable state
securities laws.

V.10 HEADINGS. The Article and Section and other headings herein are
for convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.

V.11 EXERCISE AND VESTING. Warrants for 7,237 Warrant Shares shall
vest monthly over a period of 12 months from February 17, 1999. Of these
Warrants, (i) 5,201 shall be exercisable immediately upon vesting, (ii) 1,018
shall be exercisable when the Common Stock has closed at a price of at least
$16.00 per share for 10 consecutive trading days, and (iii) 1,018 shall be
exercisable when the Common Stock has closed at a price of at least $21.00 per
share for 10 consecutive trading days. Termination of that certain Consulting
Agreement of even date herewith by and between the Company and the Holder shall
cause all unvested Warrants to be forfeited by Holder.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name dated February 17, 1999.

Gemini II, Inc.

/s/ Christopher H. Efird
---------------------------------------
Name: Christopher H. Efird
----------------------------------
Title: President
---------------------------------

10
<PAGE>

SUBSCRIPTION NOTICE

The undersigned, the holder of the foregoing Warrants, hereby elects
to exercise purchase rights represented thereby for, and to purchase
thereunder, _____________ shares of the Common Stock covered by such
Warrants, and herewith makes payment in full for such shares, and requests
(a) that certificates for such shares (and any other securities or other
property issuable upon such exercise) be issued in the name of, and delivered
to, _____________ and (b), if such shares shall not include all of the shares
issuable as provided in such Warrants, that new Warrants of like tenor and
date for the balance of the shares issuable thereunder be delivered to the
undersigned.

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

Date:
-----------------------------

11
<PAGE>

ASSIGNMENT

For value received, _______________________, hereby sells, assigns and
transfers unto __________________ these Warrants, together with all rights,
title and interest therein, and does irrevocably constitute and appoint
_________________________________________ attorney, to transfer such Warrants
on the books of the Company, with full power of substitution.

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

Date:
-----------------------------

<PAGE>

Exhibit 4.6

THE SECURITIES REPRESENTED BY THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAW. THE SECURITIES REPRESENTED BY THIS NOTE MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.

FORM OF
GEMINI II, INC.
Secured 13% Promissory Note

$ _______, 1999
-----------------

Gemini II, Inc., a Delaware corporation (hereinafter called the
"Company" or "Maker," which term includes any directly or indirectly
controlled subsidiaries or successor entities), for value received, hereby
promises to pay to the order of __________________________ (hereinafter
called "Holder"), or its registered assigns, the principal sum of
_________________________________ ($_________) together with accrued interest
on the amount of such principal sum, payable in accordance with the terms set
forth below.

THIS NOTE (AS HEREINAFTER DEFINED) IS SECURED BY ALL OF THE ASSETS OF
THE COMPANY, AND IS SUBJECT TO THE TERMS OF THE SECURITY AGREEMENT BY AND
BETWEEN THE COMPANY AND THE HOLDER DATED AS OF _______, 1999 (THE "SECURITY
AGREEMENT").

ARTICLE I

Definitions

For all purposes of this Note, except as otherwise expressly provided
or unless the context otherwise requires: (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular; (ii) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally accepted
accounting principles as promulgated from time to time by the Association of
Independent Certified Public Accountants; and (iii) the words "herein" and
"hereof" and other words of similar import refer to this Note as a whole and not
to any particular Article, Section or other subdivision.

I.1 "BOARD OF DIRECTORS" means the board of directors of the Company as
elected from time to time or any duly authorized committee of that board.

<PAGE>

I.2 "BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
authorized or obligated by law or executive order to be closed.

I.3 "COMMON STOCK" means shares of common stock, par value $.0001 per
share, of the Company.

I.4 "DEFAULT" means any event which is, or after notice or passage of
time would be, an Event of Default.

I.5 "EVENT OF DEFAULT" has the meaning specified in Article III,
Section III.1.

I.6 "INDEBTEDNESS" of any Person (as hereinafter defined) means all
indebtedness of such Person, whether outstanding on the date of this Note or
hereafter created, incurred, assumed or guaranteed, (i) for the principal of,
premium on and interest on all debts of the Person whether outstanding on the
date of this Note or thereafter created for money borrowed by such Person
(including capitalized lease obligations), money borrowed by others (including
capitalized lease obligations) and guaranteed, directly or indirectly, by such
Person, or purchase money indebtedness, or indebtedness secured by property
("Purchase Money Indebtedness") at the time of the acquisition of such property
by such Person, for the payment of which the Person is directly or contingently
liable; (ii) for all accrued obligations of the Person in respect of any
contract, agreement or instrument imposing an obligation upon the Person to pay
over funds; (iii) for all trade debt of the Person; and (iv) for all deferrals,
renewals, extensions and refundings of, and amendments, modifications and
supplements to, any of the indebtedness referred to in (i), (ii) or (iii) above.

I.7 "INITIAL PUBLIC OFFERING" means the Company's planned initial
public offering of its Common Stock during 1999 through an underwriter.

I.8 "MATURITY DATE", when used with respect to the Note means the
earlier to occur of _______, 2000 or the closing of an Outside Financing (as
hereinafter defined) by the Company with minimum gross proceeds of $5,000,000
(or such earlier date upon which the Note becomes due and payable hereunder).

I.9 "NOTE" means this Secured 13% Promissory Note.

I.10 "OBLIGATIONS" means all present and future debts, liabilities,
obligations, covenants, duties and indebtedness at any time owing by Company to
Holder, whether evidenced by the Security Agreement, (as hereinafter defined),
the Purchase Agreement (as hereinafter defined), this Note, any note or other
instrument or document, whether direct or indirect, absolute or contingent, due
or to become due, including without limitation, all principal, all interest,
charges, expenses, fees, attorneys fees, expert witness fees, and other sums
chargeable to Company hereunder or under any other document or agreement with
Holder.

I.11 "OUTSIDE FINANCING" shall be defined as (i) any transaction where
the Company sells or transfers its equity or debt securities for cash whether in
public or private offerings and (ii) any

<PAGE>

financing from a bank or other entity acting as a financial institution made
to the Company or any Subsidiary (as hereinafter defined) other than Purchase
Money Indebtedness incurred in the ordinary course of business.

I.12 "PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.

I.13 "SUBSIDIARY" means a corporation or other entity in which more
than 50% of the outstanding voting stock or equity interests is owned or
controlled, directly or indirectly, by the Company or any combination of the
Company and one or more other Subsidiaries. For the purposes of this definition,
"VOTING STOCK" means stock or other interests which ordinarily has voting power
for the election of directors, and equity interests means the right to receive
the profits of the entity, when disbursed, or the assets of the entity upon
liquidation or dissolution.

ARTICLE II

Payments

II.1 INTEREST. From the date of this Note through the Maturity Date,
interest shall accrue hereunder on the unpaid outstanding principal sum of this
Note at a rate equal to 13% per annum calculated on the basis of a 360-day year
("Interest Rate"). All past due amounts of principal and interest shall bear
interest at 15% per annum calculated on the basis of a 360-day year until paid
("Default Rate").

II.2 PAYMENT OF PRINCIPAL AND INTEREST. The principal and unpaid
interest of this Note shall be due and payable in full on the Maturity Date.

II.3 PREPAYMENTS. At any time before the Maturity Date, the Company may
prepay all or any part of this Note provided that such prepayment is accompanied
with all accrued but unpaid interest.

II.4 MANNER OF PAYMENT UPON MATURITY. At maturity, payment of principal
and interest on this Note will be made by delivery of certified checks to Holder
at its address as set forth in this Note or wire transfers pursuant to
instructions from Holder. If the date upon which the payment of principal and
interest is required to be made pursuant to this Note occurs other than on a
Business Day, then such payment of principal and interest shall be made on the
next occurring Business Day following said payment date and shall include
interest through said next occurring Business Day.

<PAGE>

ARTICLE III

Remedies

III.1 EVENTS OF DEFAULT. An "Event of Default" occurs if:

III.1.1. Company fails to pay when due and payable any portion
of the Obligations under this Note, Agreement of Purchase and Sale by and
between the Company and the Holder dated the date hereof (the "Purchase
Agreement"), the Warrants to Purchase Common Stock of Gemini II dated the date
hereof, by and between the Company and the Holder (the "Warrants Agreement"),
the Registration Rights Agreement dated the date hereof by and between the
Company and the Holder (the "Registration Rights Agreement"), the Security
Agreement dated the date hereof, by and between the Company and the Holder (the
"Security Agreement") at stated maturity, upon acceleration or otherwise; or

III.1.2. the Company fails to pay when due and payable any
portion of the Obligations at stated maturity, upon acceleration or otherwise;
or

III.1.3. Company defaults under, fails or neglects to perform,
keep, or observe, any Obligation including, but not limited to, any term,
provision, condition, covenant or agreement contained in the Security Agreement,
this Note, the Purchase Agreement, the Warrants Agreement, the Registration
Rights Agreement or any other document by and between Company and Holder beyond
any cure period, if any; or

III.1.4. any material adverse change occurs in Company's
business, assets, operations, prospects or condition, financial or otherwise; or

III.1.5. the Company defaults in the payment of the principal
or interest of this Note when such principal or interest becomes due and
payable; or

III.1.6. any representation or warranty made by the Company in
the Purchase Agreement, the Warrants, the Registration Rights Agreement, the
Security Agreement, this Note or in any certificate furnished by the Company in
connection with the consummation of the transaction contemplated thereby, is
untrue in any material respect as of the date of making thereof; or

III.1.7. the Company defaults in the payment when due (whether
by lapse of time, by declaration, by call for redemption or otherwise) of the
principal of or interest on any Indebtedness of the Company (other than the
Indebtedness evidenced by this Note or good-faith disputes with trade creditors)
having an aggregate principal amount in excess of $100,000; or

III.1.8. a court of competent jurisdiction enters a judgment
or judgments against the Company or any property or assets of the Company for
the payment of money aggregating $100,000 or more in excess of applicable
insurance coverage; or

<PAGE>

III.1.9. (i) any involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law is commenced or (ii) the filing against Company of a bankruptcy or
insolvency petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of the property of the Company or ordering the winding up or liquidation of the
affairs of the Company; or

III.1.10. the Company: (i) commences a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated a bankrupt or insolvent; (ii) files a petition, answer or consent
seeking reorganization or similar relief under any applicable federal or state
law; (iii) makes an assignment for the benefit of creditors; or (iv) admits in
writing its inability to pay its debts generally as they become due; or

III.1.11. any person or group (within the meaning of Section
13(d) of the Securities Exchange Act of 1934) becomes the beneficial owner of
25% or more of the total voting power of the Company and was not the beneficial
owner of 25% or more of the total voting power of the Company as of the date of
this Note;

III.1.12. the Company: (i) without the prior consent of
Holder, merges or consolidates with or into any other Person; (ii) the Company
dissolves or liquidates; or (iii) the Company sells all or any substantial
portion of its assets.

III.1.13. the Company fails to require each of InfoHighway
International, Inc., ARC Networks, Inc., AXCES, Inc. and any other subsidiary or
affiliate (the "Acquisitions") to grant a security interest in and to all of its
assets and to pledge all of its assets as additional collateral security for the
Note, and to execute and deliver UCC-1 financing statements, a security
agreement evidencing such security interest in and to all of its assets and such
pledge in and to all of its assets in substantially the same form as the
Security Agreement (except that such security interest shall be subject to
existing liens on each of the Acquisitions as of the date of the acquisition), a
secured guaranty and any and all other documents required by Holder in its sole
and absolute discretion in form and substance acceptable to Holder in its sole
discretion prior to the closing of the acquisition of each of the Acquisitions.

III.2 ACCELERATION OF MATURITY. This Note and all accrued
interest shall automatically become immediately due and payable if an Event of
Default occurs.

III.3 REMEDIES UPON AN EVENT OF DEFAULT. (a) Upon the
occurrence of any Event of Default hereunder, in addition to Holder's right to
charge interest on the Obligations at the Default Rate: (i) at the option of
Holder, the entire unpaid amount of all the Obligations shall become immediately
due and payable without demand, notice or legal process of any kind; (ii) Holder
may, at its option, without demand, notice or legal process of any kind,
exercise any and all rights and remedies granted to it by this Note, the
Security Agreement, the Purchase Agreement or by any other

<PAGE>

agreement now or hereafter existing between Company and Holder; or (iii)
Holder may exercise from time to time any other rights and remedies available
to it under the Uniform Commercial Code or other law of the State of New York.

(b) The remedies of Holder as provided herein
and in the Security Agreement, Purchase Agreement and in any other agreement now
or hereafter existing between Company and Holder shall be cumulative and
concurrent, and may be pursued singularly, successively, or together, at the
sole discretion of Holder. No act of omission or commission of Holder, including
specifically any failure to exercise any right, remedy or recourse, shall be
deemed to be a waiver or release of the same, such waiver or release to be
effected only through a written document executed by Holder and then only to the
extent specifically recited therein. A waiver or release with reference to any
one event shall not be construed as continuing, as a bar to, or as a waiver or
release of, any subsequent right, remedy or recourse as to a subsequent event.

(c) If this Note is not paid when due or upon
the occurrence of an Event of Default, Company further promises to pay all costs
of collection, foreclosure, fees, attorney's fees and expert witness fees
incurred by Holder, whether or not suit is filed hereon, and all other fees,
costs and expenses incurred by Holder pursuant to this Note, the Purchase
Agreement, the Security Agreement and any other agreement by and between Company
and Holder.

ARTICLE IV

Covenants

The Company covenants and agrees that, so long as this Note is
outstanding:

IV.1 USE OF PROCEEDS. The Company will use the proceeds of this Note
(i) to fund its expenses related to the Initial Public Offering and the
Acquisitions, including general working capital needs, salaries, travel,
entertainment and lodging. (ii) to fund certain loans to ARC Networks, Inc.
and/or AXCES, Inc. and/or InfoHighway International, Inc., and (iii) to fund the
repayment of up to $150,000 of prior bridge loans made to the Company in
connection with the Initial Public Offering.

IV.2 PAYMENT OF PRINCIPAL AND ACCRUED INTEREST. The Company will duly
and punctually pay or cause to be paid the principal sum of this Note, together
with interest accrued thereon from the date hereof to the Maturity Date, in
accordance with the terms hereof. On the Maturity Date, the entire unpaid
principal balance together with accrued interest thereon remaining unpaid shall
be paid to Holder.

IV.3 CORPORATE EXISTENCE. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or

<PAGE>

franchise if it shall reasonably determine that the preservation thereof is
no longer desirable in the conduct of its business.

IV.4 TAXES; CLAIMS; ETC. The Company will promptly pay and discharge
all lawful taxes, assessments, and governmental charges or levies imposed upon
it or upon its income or profits, or upon any of its properties, real, personal,
or mixed, before the same shall become in default, as well as all lawful claims
for labor, materials, and supplies or otherwise which, if unpaid, might become a
lien or charge upon such properties or any part thereof, and which lien or
charges will have an adverse effect on the business of the Company; PROVIDED,
however, that the Company shall not be required to pay or cause to be paid any
such tax, assessment, charge, levy, or claim prior to institution of foreclosure
proceedings if the validity thereof shall concurrently be contested in good
faith with due diligence by appropriate proceedings and if the Company shall
have established reserves adequate with respect to such tax, assessment, charge,
levy, or claim.

IV.5 MAINTENANCE OF EXISTENCE AND PROPERTIES. The Company will, and
will cause each Subsidiary to, keep its properties in good repair, working
order, and condition, ordinary wear and tear excepted, so that the business
carried on may be properly conducted at all times in accordance with prudent
business management.

IV.6 NOTICE OF DEFAULTS. The Company will promptly notify the Holder in
writing of the occurrence of (i) any Event of Default under this Note, and (ii)
any event of default (or if any event of default would result upon any payment
with respect to this Note) with respect to any Indebtedness as such event of
default is defined therein or in the instrument under which it is outstanding,
permitting holders to accelerate the maturity of such Indebtedness.

IV.7 MERGERS AND ACQUISITIONS. Without the prior written consent of the
Holder the Company or any Subsidiary will not dissolve, liquidate, consolidate
or merge with or sell or transfer all or a substantial portion of its assets to
any Person other than in connection with the Acquisitions.

IV.8 COMPLIANCE WITH LAWS. The Company will promptly comply with all
laws, ordinances and governmental rules and regulations to which it is subject.

ARTICLE V

General

V.1 Company waives presentment, demand and protest, notice of protest,
notice of presentment and all other notices and demands in connection with the
enforcement of Holder's rights hereunder, except as specifically provided and
called for by this Note and hereby consents to, and waives notice of, the
release, addition, or substitution, with or without consideration, of any
collateral or of any person liable for payment of this Note. Any failure of
Holder to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.

<PAGE>

V.2 CONSENT TO AMENDMENTS. This Note may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if and only if the Company shall obtain the
written consent to such amendment, action or omission to act from the Holder of
the Note.

V.3 BENEFITS OF NOTE; NO IMPAIRMENT OF RIGHTS OF HOLDER OF SENIOR
INDEBTEDNESS. Nothing in this Note, express or implied, shall give to any
Person, other than the Company, Holder, and his successors any benefit or any
legal or equitable right, remedy or claim under or in respect of this Note.

V.4 SUCCESSORS AND ASSIGNS. All covenants and agreements in this Note
contained by or on behalf of the Company and the Holder shall bind and inure to
the benefit of the respective successors and assigns of the Company and the
Holder.

V.5 RESTRICTIONS ON TRANSFER. Subject to the provisions of this
Article, this Note is transferable in the same manner and with the same effect
as in the case of a negotiable instrument payable to a specified person.

V.6 NOTICE; ADDRESS OF PARTIES. Except as otherwise provided, all
communications to the Company or Holder provided for herein or with reference to
this Note shall be deemed to have been sufficiently given or served for all
purposes on the third Business Day after being sent as certified or registered
mail, postage and charges prepaid, to the following addresses: if to the
Company/Maker: 700 Gemini, Suite 100, Houston, Texas 77058, Attn: Chris Efird,
or at any other address designated by the Company/Maker in writing to Holder; if
to Holder: ____________________________________________________ , or at any
other address designated by Holder to the Company in writing.

V.7 SEPARABILITY CLAUSE. In case any provision in this Note shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions of this Note shall not in any way
be affected or impaired thereby; provided, however, such construction does not
destroy the essence of the bargain provided for hereunder.

V.8 GOVERNING LAW. This Note shall be governed by, and construed in
accordance with, the internal laws of the State of New York (without regard to
principles of choice of law).

V.9 USURY. It is the intention of the parties hereto to conform
strictly to the applicable laws of the State of New York and the United States
of America, and judicial or administrative interpretations or determinations
thereof regarding the contracting for, charging and receiving of interest for
the use, forbearance, and detention of money (referred to as "Applicable Law").
The Holder shall have no right to claim, to charge or to receive any interest in
excess of the maximum rate of interest, if any, permitted to be charged on that
portion of the amount representing principal which is outstanding and unpaid
from time to time by Applicable Law. Determination of the rate of interest for
the purpose of determining whether this Note is usurious under Applicable Law
shall be made by amortizing, prorating, allocating and spreading in equal parts
during the period of the actual time of this Note, all interest or other sums
deemed to be interest (referred to in this Section

<PAGE>

as "Interest") at any time contracted for, charged or received from the Company
in connection with this Note. Any Interest contracted for, charged or received
in excess of the maximum rate allowed by Applicable Law shall be deemed a result
of a mathematical error and a mistake. If this Note is paid in part prior to the
end of the full stated term of this Note and the Interest received for the
actual period of existence of this Note exceeds the maximum rate allowed by
Applicable Law, Holder shall credit the amount of the excess against any amount
owing under this Note or, if this Note has been paid in full, or in the event
that it has been accelerated prior to maturity, Holder shall refund to the
Company the amount of such excess, and shall not be subject to any of the
penalties provided by Applicable Law for contracting for, charging or receiving
Interest in excess of the maximum rate allowed by Applicable Law. Any such
excess which is unpaid shall be canceled.

V.10. This Note is secured by the collateral described in the Security
Agreement.

V.11. COMPANY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK OR, AT THE SOLE
OPTION OF HOLDER, IN ANY OTHER COURT IN WHICH HOLDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY. COMPANY WAIVES ANY OBJECTION OF FORUM NON CONVENIENCE AND VENUE.
COMPANY AND HOLDER EACH HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS NOTE
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed on the date first above written.

COMPANY/MAKER:

GEMINI II, INC.

By:
------------------------------
PRINT NAME:
PRINT TITLE:

<PAGE>

Exhibit 4.7

FORM OF
AGREEMENT OF PURCHASE AND SALE

This Agreement of Purchase and Sale (the "Agreement"), is made and
entered into effective as of ______, 1999, by and between Gemini II, Inc., a
Delaware corporation (the "Seller"), and __________________ (the "Purchaser"),
and sets forth the terms and conditions of the sale and purchase of that
certain 13% Secured Promissory Note, in the amount of __________ substantially
in the form attached hereto as Exhibit "A" (the "Note"). For purposes of this
Agreement, the term "Seller" is defined to mean Gemini II, Inc. and each of
its subsidiaries.

WHEREAS, the Seller desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase and accept from the Seller, the Note on the terms
and subject to the conditions set forth herein, the obligations of the Seller
are secured by that certain Security Agreement dated the date hereof by and
between the Seller and the Purchaser attached as Exhibit "B" (the "Security
Agreement");

WHEREAS, the Seller and the Purchaser desire to make certain
representations, warranties and agreements in connection with the purchase and
sale of the Note contemplated hereby;

WHEREAS, the Seller desires to sell to the Purchaser______ warrants
(the "Warrants") to purchase shares of Seller's common stock, par value
$.0001 per share (the "Common Stock") on the date hereof, which shall have
the terms and be subject to the conditions set forth in the Warrants to
Purchase Common Stock of Gemini II, Inc. dated the date hereof (the "Warrants
Agreement") in the form attached hereto as Exhibit "C";

WHEREAS, the Seller desires to grant to the Purchaser certain
registration rights in respect to the shares of Seller's Common Stock that may
be acquired on the exercise of the Warrants, which registration rights shall
have the terms and be subject to the conditions set forth in the Registration
Rights Agreement dated the date hereof in the form attached hereto as Exhibit
"D" (the "Registration Rights Agreement"; this Agreement, the Note, the Security
Agreement, the Warrants Agreement, the Registration Rights Agreement and the
Intercreditor Agreement dated the date hereof are collectively referred to as
the "Transaction Documents");

NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein, the parties agree as follows:

ARTICLE I

Purchase and Sale

I.1 PURCHASE AND SALE OF THE NOTES AND THE WARRANTS. Subject to the
terms of this Agreement, the Seller agrees to and does hereby issue, sell and
deliver the Note and the Warrants to the Purchaser at the Closing (as defined
herein), and Purchaser agrees to and does hereby purchase and accept the Note
and the Warrants from the Seller on such dates.

<PAGE>

I.2 CONSIDERATION FOR PURCHASE OF THE NOTE. Subject to the terms of
this Agreement, the Purchaser hereby agrees to pay to the Seller at Closing, by
check or wire transfer to the account of the Seller, the amount set forth in the
Note, as the consideration for the purchase of the Note (the "Note
Consideration").

ARTICLE II

Representations and Warranties of Seller

Seller represents and warrants to the Purchaser as follows:

II.1 ORGANIZATION, STANDING AND QUALIFICATION. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation and has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as it is
now being conducted. Seller is licensed and qualified to do business as a
foreign corporation in each jurisdiction in which the character of Seller's
properties, owned or leased, or the nature of its activities makes such
qualification or license necessary.

II.2 AUTHORITY; NO DEFAULTS. Seller has all requisite corporate power
and authority to enter into the Transaction Documents and to carry out its
obligations thereunder. The execution and delivery of the Transaction Documents
and the consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate action on the part of Seller. The
Transaction Documents have been executed and delivered by Seller and constitute
the legal, valid and binding obligation of Seller, enforceable in accordance
with their terms, subject to bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). The individuals executing the Transaction Documents on
behalf of the Seller have the power to execute, deliver and perform the
Transaction Documents. The execution and delivery of the Transaction Documents
do not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with or result in a breach of or the acceleration of any
obligation under, or constitute a default or event of default (or event which,
with notice or lapse of time or both, would constitute a default) under, any
provision of any charter, bylaw, indenture, mortgage, lien, lease, agreement,
contract, instrument, order, judgment, decree, ordinance or regulation, or any
restriction to which any property of Seller is subject or by which Seller is
bound, the effect of which would be adverse to Seller. Seller is not, nor is it
alleged to be, in violation or default of any applicable law, statute, order,
decree, rule or regulation promulgated or judgment, writ, injunction entered by
any court, administrative agency or commission or other governmental agency or
instrumentality, domestic or foreign (a "Governmental Entity"), relating to or
affecting the operation, conduct or ownership of the property or business of
Seller.

II.3 APPROVALS. There is no legal impediment to the execution and
delivery of the Transaction Documents by Seller or to the consummation of the
transactions contemplated thereby, and no filing or registration with, or
authorization, consent or approval of, a Governmental Entity,

<PAGE>

shareholders or any other third party is necessary for the consummation by
Seller of the transactions contemplated thereby.

II.4 FINANCIAL STATEMENTS. Seller has provided to the Purchaser a true,
complete and correct copy of Seller's unaudited income statement and balance
sheet for the fiscal year ended December 31, 1998. The financial statements of
Seller comply as to form in all material respects with applicable accounting
requirements, have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited statements, for the absence of footnotes and nominal year-end audit
adjustments and fairly present (subject, in the case of the unaudited
statements, to normal recurring audit adjustments) the consolidated financial
position of Seller as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended. Since December 31, 1998,
(i) there have been no material adverse changes in the Seller's business,
operations or financial condition and (ii) Seller's operations have been
conducted in the ordinary course of business except as disclosed in writing to
the Purchaser.

II.5 LITIGATION. As of the date of this Agreement, there is no suit,
action, proceeding or investigation pending or, to the best knowledge of Seller,
threatened against or affecting Seller (or any of its respective officers or
directors in connection with the business of Seller), nor is there any
outstanding judgment, order, writ, injunction or decree against Seller, which
judgment would have a material adverse effect on Seller. Seller is not subject
to any court order, writ, injunction, decree, settlement agreement or judgment
that contains or orders any on-going obligations, whether prohibitory or
mandatory in nature, the performance of which would have a material adverse
effect on Seller.

II.6 CAPITALIZATION. Seller has authorized capital stock of (a)
25,000,000 shares of Common Stock of which, as of March 1, 1999, there are
2,112,505 shares issued and outstanding, and (b) 1,000 shares of preferred
stock, par value $.0001 per share, ("Preferred Stock"), of which, as of March 1,
1999, none are issued and outstanding. All of the issued and outstanding shares
of Common Stock were duly and validly issued and are fully paid and
non-assessable. None of the outstanding shares of Common Stock have been issued
in violation of any preemptive rights of the current or past stockholders of
Seller. As of the date hereof, the Seller has reserved for issuance (i) an
aggregate of 0 shares of Common Stock issuable on issuance of stock options to
employees, officers, directors and other persons, and (ii) an aggregate of
258,662 shares of Common Stock issuable on exercise of convertible securities
other than those listed in (i) above. Except for the shares issuable as
disclosed above and shares that (i) may be issued in connection with completed
or pending acquisitions that have been disclosed to the Purchaser, (ii) up to
1,032,205 shares issuable upon exercise of options to be issued to certain
officers and directors in connection with the Initial Public Offering (as
defined hereinafter), (iii) up to 184,000 shares issuable upon exercise of
warrants to be issued to the underwriters in connection with the Initial Public
Offering, and (iv) up to 40,000 shares issuable upon exercise of warrants to be
issued to Halcyon Investment Company in connection with a $200,000 bridge loan
to be entered into simultaneously herewith, there are no outstanding options,
warrants or rights to subscribe for, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of Seller or contracts, commitments, understandings
or arrangements by which Seller is or may be

<PAGE>

obligated to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its
capital stock. All of the Common Stock issued on the exercise of the Warrants
will be fully paid, non-assessable and free and clear of any preemptive
rights and Encumbrances. As used in this Agreement, the term "Encumbrance"
means and includes (i) any security interest, mortgage, deed of trust, lien,
charge, pledge, proxy, adverse claim, equity, power of attorney, or
restriction of any kind, including but not limited to, any restriction or
servitude on the use, transfer, receipt of income, or other exercise of any
attributes of ownership, other than restrictions imposed by the Securities
Act or any state blue sky laws, and (ii) any Uniform Commercial Code
financing statement or other public filing, notice or record that by its
terms purports to evidence or notify interested parties of any of the matters
referred to in clause (i) that has not been terminated or released by another
proper public filing, notice or record.

II.7 SUBSIDIARIES. Seller has no subsidiaries.

II.8 LIABILITIES. Seller has no liabilities or obligations, either
accrued, absolute, contingent, or otherwise that have a material adverse effect
on the value or business of Seller, and Seller has no knowledge of any potential
liability that it reasonably believes would likely result in a material adverse
effect on the value or business of the Seller, other than those (a) reflected or
reserved against in the unaudited consolidated balance sheet of Seller at
December 31, 1998 or (b) incurred in the ordinary course of business since
December 31, 1998.

II.9 LICENSES, PERMITS, AUTHORIZATIONS, ETC. Seller holds all
approvals, authorizations, consents, licenses, orders, franchises, rights,
registrations and permits of any type required to operate its business as
presently conducted. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
revocation, cancellation, suspension or modification of any such approval,
authorization, consent, license, order, franchise, right, registration or
permit.

II.10 TITLE TO ASSETS; ENCUMBRANCES.

II.10.1 Seller has good and indefeasible title to its assets,
whether real, personal or intangible, free and clear of all Encumbrances except
(i) liens for current taxes and assessments not yet due or being contested in
good faith with due diligence by appropriate proceedings and for which
appropriate reserves have been maintained, (ii) mechanic's liens arising under
the operation of law for actions contested in good faith with due diligence or
for which payment arrangements have been made, (iii) liens granted or incurred
by Seller in the ordinary course of its business or financing of equipment,
office space, furniture and computers in the ordinary course of its business,
and (iv) easements, rights of way, encroachments or other reductions or matters
affecting title which do not prevent the assets from being used for the purpose
for which they are currently being used;

II.10.2 There are no parties in possession of any of the
assets of Seller other than personal property held by third parties in the
reasonable and ordinary course of business. Seller enjoys full, free and
exclusive use and quiet enjoyment of its assets and its rights pertaining
thereto. Seller enjoys peaceful and undisturbed possession under all leases
under which it is a lessee, and

<PAGE>

each such lease is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.

II.11 TAXES AND RETURNS. Seller has filed all required tax returns and
reports. Seller has paid all taxes, assessments and governmental charges and
penalties which it has incurred, except such as are being or may be contested in
good faith with due diligence by appropriate proceedings and for which
appropriate reserves have been maintained. Seller is not delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
taxes have been proposed, asserted, or assessed against Seller, and no requests
for waivers of the time to assess any such tax are pending. For the purposes of
this Agreement, the term "tax" (including, with correlative meaning, the terms
"taxes" and "taxable") shall include all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise and other taxes, duties or assessments of any kind
or nature whatsoever, together with all interest, penalties and additions
imposed with respect to such amounts.

II.12 INSURANCE. Each policy of property, fire and casualty, product
liability, worker's compensation, professional liability and title insurance and
other forms of insurance (except group, health and life policies) and each bond
issued or posted by any person with respect to any operations or other
activities of Seller is, to the best of Seller's knowledge, the legal, valid and
binding obligation of the insurer or bond issuer, enforceable in accordance with
its terms, and is in an amount and provides for coverage as is customary in the
ordinary business practices of Seller's industry.

II.13 HAZARDOUS WASTES AND SUBSTANCES. To the best of Seller's
knowledge after reasonable investigation, neither the operations of Seller
nor the use of its assets violates any applicable federal, state or local
law, statute, ordinance, rule, regulation, memorandum of understanding, order
or notice requirement pertaining to the collection, transportation, storage,
treatment, discharge, release or disposal of hazardous or non-hazardous waste
or substances, including without limitation (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sections 9601 ET SEQ.), as amended from time to time on or before the Closing
Date ("CERCLA") (including, without limitation, as amended pursuant to the
Superfund Amendments and Reauthorization Act of 1986), and such regulations
promulgated under CERCLA on or before the Closing Date, (ii) the Resources
Conservation and Recovery Act of 1976 (42 U.S.C. Sections 6901 ET SEQ.), as
amended from time to time ("RCRA") on or before the Closing Date, and such
regulations promulgated under RCRA, (iii) any applicable federal, state or
local laws or regulations relating to the environment in effect on the
Closing Date (collectively, the "Applicable Environmental Laws"). To the best
of Seller's knowledge after reasonable investigation, none of the operations
of Seller has ever been conducted nor have any of its assets been used in
such a manner as to constitute a violation of any of the Applicable
Environmental Laws. To the best of Seller's knowledge after reasonable
investigation, no notice has been served on Seller by any person or
Governmental Entity regarding any existing, pending or threatened
investigation or inquiry related to violations under any Applicable
Environmental Law, or regarding any claims for corrective action, remedial
obligations or contribution for removal costs or damages under any Applicable
Environmental Law or regarding the designation of Seller or any of its
affiliates as a potentially responsible party for any facility under the
Applicable Environmental Laws, nor, to the best of Seller's knowledge after
reasonable investigation, does any fact or circumstance exist which, if
disclosed publicly, would be reasonably

<PAGE>

likely to result in the service on Seller of any such notice. To the best of
Seller's knowledge after reasonable investigation, there has been no action
taken, or omitted to be taken by Seller which has caused, or would be
reasonably likely to cause, a "release" of any "hazardous substance" at any
"facility", without limitation, within the meaning of such terms as defined
in the Applicable Environmental Laws.

II.14 ADDITIONAL SECURITY. As a condition precedent to and prior to the
closing of the acquisition of each of InfoHighway International, Inc., ARC
Networks Inc., AXCES, Inc. and any other subsidiary or entity acquired by Seller
(the "Acquisitions"), Seller shall require each of the Acquisitions to pledge
and grant a security interest in and to all of its assets in favor of the
Purchaser as additional collateral security for the Note, and to execute and
deliver UCC-1 financing statements, a security agreement evidencing such grant
of a security interest in and to all of its assets and pledge all of its assets
in substantially the same form as the Security Agreement attached hereto (except
that such security interest shall be subject to existing liens on each of the
Acquisitions as of the date of the acquisition), a secured guaranty and any and
all other documents required by Purchaser in form and substance acceptable to
Purchaser in its sole and absolute discretion.

ARTICLE III

Representations and Warranties of Purchaser

Purchaser represents and warrants to the Seller as follows:

III.1 ORGANIZATION, STANDING AND QUALIFICATION. To the extent the
Purchaser is not an individual, Purchaser is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its formation.

III.2 AUTHORITY; NO DEFAULTS. Purchaser has all requisite corporate
power and authority to enter into the Transaction Documents and to carry out its
obligations thereby. The execution and delivery of the Transaction Documents and
the consummation of the transactions contemplated thereby have been duly
authorized by all necessary corporate or partnership action on the part of
Purchaser.

III.3 INVESTMENT REPRESENTATIONS. The Note, Warrants and the Common
Stock issuable on exercise of the Warrants are being acquired for Purchaser's
own account and not with a view to public distribution and Purchaser
acknowledges that the purchase and sale of the Note and Warrants is intended to
be exempt from registration under the Securities Act by virtue of Section 4(2)
of the Securities Act. Purchaser is an accredited investor within the meaning of
Rule 501 under the Securities Act. Purchaser acknowledges that the Note,
Warrants and Common Stock issuable on exercise of the Warrants pursuant hereto
have not been registered under the Act and therefore cannot be sold or
transferred unless either it is subsequently registered under the Act (as well
as under any applicable state securities laws) or an exemption from such
registration is available. The Note, Warrants and Common Stock issuable on
exercise of the Warrants will be "restricted securities" under Rule 144
promulgated under the Act and, unless and until registered under the Act, the
Note,

<PAGE>

Warrants and such Common Stock may be subject to limitations on resale set
forth in Rule 144 or in administrative interpretations of the Securities Act
by the SEC or in other rules and regulations in effect at the time of the
proposed sale or other disposition of the Note, Warrants and Common Stock.

III.4 USE OF PROCEEDS. Purchaser understands and acknowledges that the
Note Consideration shall be used (i) to fund the Seller's expenses related to
the Initial Public Offering (as hereinafter defined) and the Acquisitions,
including general working capital needs, salaries, travel and lodging, (ii) to
fund certain loans to ARC Networks, Inc. and/or AXCES, Inc. and/or InfoHighway
International, Inc., and (iii) to fund the repayment of up to $150,000 of prior
bridge loans made to the Seller in connection with the Initial Public Offering.

III.5 INITIAL PUBLIC OFFERING. Purchaser understands and acknowledges
that the Seller is planning an initial public offering of its Common Stock
during 1999 through an underwriter ("Initial Public Offering"). Purchaser
recognizes that its investment in the Note and Warrants and the Common Stock
issuable upon exercise of the Warrants involves substantial risks, including the
loss of the entire amount of Purchaser's investment. Further, Purchaser has
carefully read and considered the matters set forth in the disclosure documents
provided to it by the Seller, and has taken full cognizance of and understands
all of the risks related to the purchase of the Note, Warrants and the Common
Stock issuable upon exercise of the Warrants. Purchaser understands and
acknowledges that the Seller may not be successful in completing the Initial
Public Offering, and that it is likely that Purchaser's entire investment will
likely be lost if the Seller is not successful in completing the Initial Public
Offering.

ARTICLE IV

The Closing

IV.1 TIME AND PLACE. The closing of the purchase and sale of the Note
and the Warrants (the "Closing") will take place on _______, 1999 (the "Closing
Date"), at the offices of the Seller, 700 Gemini, Houston, Texas 77058, unless
another place is agreed to by the parties.

IV.2 CONDITIONS TO THE OBLIGATION OF SELLER. The obligation of Seller
to effect the Closing is subject to the Purchaser delivering, or causing to be
delivered, to Seller at the Closing the Note Consideration.

IV.3 CONDITIONS TO THE OBLIGATION OF PURCHASER. The obligation of
Purchaser to effect the Closing is subject to Seller delivering, or causing to
be delivered, to Purchaser at the Closing the following documents:

IV.3.1 copies, certified by the Secretary of State of the
State of Delaware, of the Certificate of Incorporation of Seller and all
amendments thereto;

<PAGE>

IV.3.2 copies, certified by the Secretary of Seller as of the
Closing Date, of the bylaws of Seller and all amendments thereto;

IV.3.3 copies, certified by a certificate of the Secretary of
Seller as of the Closing Date, of resolutions duly adopted by the board of
directors of Seller, authorizing the execution and delivery by Seller of the
Transaction Documents and all other agreements or other documents contemplated
thereby, the completion of the sale of the Note and Warrants and the taking of
all such other corporate action as shall have been required as a condition to,
or in connection with, the sale of the Note and Warrants;

IV.3.4 the Note;

IV.3.5 the Security Agreement and any related financing
statements;

IV.3.6 the Warrants Agreement;

IV.3.7 the Registration Rights Agreement;

IV.3.8 this Agreement; and

IV.3.9 a certificate of an Officer of the Company to the
effect that the representations and warranties of Seller herein contained shall
be true as of and at the Closing Date with the same effect as though made at
such date, except as affected by transactions permitted or contemplated by this
Agreement; and further to the effect that Seller shall have performed and
complied with all covenants required by this Agreement to be performed or
complied with by it before the Closing Date.

ARTICLE V

General Provisions

V.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements contained in this Agreement shall
survive the Closing for a period of one year.

V.2 NOTICES. Any notice or communication required or permitted under this
Agreement must be given as prescribed in the Note.

V.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND, AS APPLICABLE, THE LAWS
OF THE UNITED STATES OF AMERICA. SELLER HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK
OR, AT THE SOLE OPTION OF THE PURCHASER, IN ANY OTHER COURT IN WHICH THE
PURCHASER SHALL INITIATE

<PAGE>

LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER
THE MATTER IN CONTROVERSY. SELLER WAIVES ANY OBJECTION OF FORUM NON
CONVENIENCE AND VENUE. SELLER AND PURCHASER HEREBY WAIVE THE RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THIS AGREEMENT WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

V.4 MISCELLANEOUS. This Agreement and the other Transaction Documents
(i) constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof, (ii) shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and is not intended to confer upon any other person any rights or remedies
hereunder, (iii) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of New York and (iv) may be
executed in counterparts which when read together shall constitute a single
agreement.

V.5 PUBLICITY. Seller and Purchaser promptly shall advise and cooperate
with the other prior to issuing, or permitting any of its directors, officers,
employees or agents to issue, any press release with respect to this Agreement
or the explicit transactions contemplated hereby. Notwithstanding the foregoing,
without the prior consent of the Purchaser, neither Seller nor any of its
directors, officers, employees or agents shall issue any press release which
includes the name of the Purchaser or any of the Purchaser's affiliates.

V.6 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by either of the parties hereto
(whether by operation of law or otherwise) without the prior written consent of
the other party.

V.7 SCHEDULES. All statements contained in any exhibit, schedule,
appendix, certificate or other instrument delivered by or on behalf of the
parties hereto, or in connection with the transactions contemplated hereby, are
an integral part of this Agreement and shall be deemed representations and
warranties hereunder.

<PAGE>

IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first written above.

SELLER:

Gemini II, Inc.

By:
--------------------------------
PRINT NAME:
PRINT TITLE:

PURCHASER:

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

<PAGE>

Exhibit 4.8

THE SECURITIES REPRESENTED BY THESE WARRANTS AND THE COMMON STOCK ISSUABLE
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW. THE SECURITIES
REPRESENTED BY THESE WARRANTS MAY NOT BE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS.

FORM OF
WARRANTS

to Purchase Common Stock of

Gemini II, Inc.

Expiring on ______, 2004

This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, ______________ (the "Holder") or its assigns, is entitled to
subscribe for and purchase from the Company (as hereinafter defined), in whole
or in part, ____________ shares of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (as hereinafter defined) at an initial
Exercise Price (as hereinafter defined) per share of $8.00, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth. The
number of Warrants (as hereinafter defined), the number of shares of Common
Stock purchasable hereunder, and the Exercise Price therefor are subject to
adjustment as hereinafter set forth. These Warrants and all rights hereunder
shall expire at 5:00 p.m., Houston, Texas time, on _______, 2004 (the
"Expiration Date").

ARTICLE I

Definitions

As used herein, the following terms shall have the meanings set forth
below:

I.1 "COMPANY" shall mean Gemini II, Inc., a Delaware corporation, and
shall also include any successor thereto with respect to the obligations
hereunder, by merger, consolidation or otherwise.

<PAGE>

I.3 "EXERCISE PRICE" shall mean the initial purchase price of $8.00 per
share of Common Stock payable upon exercise of the Warrants, as adjusted from
time to time pursuant to the provisions hereof.

I.5 "NOTE" shall mean the 13% Promissory Note of the Company originally
issued to the Holder.

I.6 "WARRANT" shall mean the right upon exercise to purchase one
Warrant Share.

I.7 "WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the Holder hereof upon the exercise of the Warrants.

ARTICLE II

Exercise of Warrants

II.1 METHOD OF EXERCISE. The Warrants represented hereby may be
exercised by the Holder hereof, in whole or in part, at any time and from time
to time on or after the date hereof until 5:00 p.m., Houston, Texas time, on the
Expiration Date. To exercise the Warrants, the Holder hereof shall deliver to
the Company, at the Warrant Office designated herein, (i) a written notice in
the form of the Subscription Notice attached as an exhibit hereto, stating
therein the election of such Holder to exercise the Warrants in the manner
provided in the Subscription Notice; (ii) payment in full of the Exercise Price
(A) in cash or by bank check for all Warrant Shares purchased hereunder, or (B)
through a "cashless" or "net-issue" exercise of each such Warrant ("Cashless
Exercise"); the Holder shall exchange each Warrant subject to a Cashless
Exercise for that number of Warrant Shares determined by multiplying the number
of Warrant Shares issuable hereunder by a fraction,

<PAGE>

the numerator of which shall be the difference between (x) the Market Price
and (y) the Exercise Price for each such Warrant, and the denominator of
which shall be the Market Price; the Subscription Notice shall set forth the
calculation upon which the Cashless Exercise is based, or (C) a combination
of (A) and (B) above; and (iii) these Warrants. The Warrants shall be deemed
to be exercised on the date of receipt by the Company of the Subscription
Notice, accompanied by payment for the Warrant Shares and surrender of these
Warrants, as aforesaid, and such date is referred to herein as the "Exercise
Date". Upon such exercise, the Company shall, as promptly as practicable and
in any event within five business days, issue and deliver to such Holder a
certificate or certificates for the full number of the Warrant Shares
purchased by such Holder hereunder, and shall, unless the Warrants have
expired, deliver to the Holder hereof a new Warrant representing the number
of Warrants, if any, that shall not have been exercised, in all other
respects identical to these Warrants. As permitted by applicable law, the
person in whose name the certificates for Common Stock are to be issued shall
be deemed to have become a Holder of record of such Common Stock on the
Exercise Date and shall be entitled to all of the benefits of such Holder on
the Exercise Date, including without limitation the right to receive
dividends and other distributions for which the record date falls on or after
the Exercise Date and to exercise voting rights.

II.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).

II.5 PURCHASE AGREEMENT. The Warrants represented hereby are part of a
duly authorized issue and sale of warrants to purchase Common Stock issued and
sold pursuant to that certain Agreement of Purchase and Sale, effective as of
_______, 1999 (the "Purchase Agreement") between the Company and the Holder. The
Holder shall be entitled to the rights to registration under the Securities Act
and any applicable state securities or blue sky laws to the extent set forth in
the Registration Rights Agreement between the Company and the Holder effective
as of _______, 1999 (the "Registration Rights Agreement"). The terms of the
Purchase Agreement and Registration Rights Agreement are hereby incorporated
herein for all purposes and shall be considered a part of this Warrant as if
they had been fully set forth herein. Notwithstanding the previous sentence, in
the

<PAGE>

event of any conflict between the provisions of the Purchase Agreement and
of this Warrant, the provisions of this Warrant shall control.

II.6 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the
Warrants in accordance with the terms hereof and upon the written request of the
Holder hereof, the Company will acknowledge in writing its continuing obligation
to afford to such Holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such Holder shall continue to be
entitled after such exercise in accordance with the provisions of these
Warrants; PROVIDED, however, that if the Holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such Holder any such rights.

II.7 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of these Warrants. If more
than one Warrant shall be presented for exercise at the same time by the same
Holder, the number of full shares of Common Stock which shall be issuable upon
such exercise shall be computed on the basis of the aggregate number of whole
shares of Common Stock purchasable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.

ARTICLE III

Transfer

III.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 700 Gemini, Suite 100, Houston, TX 77058 and may
subsequently be such other office of the Company or of any transfer agent of the
Common Stock in the continental United States as to which written notice has
previously been given to the Holder. The Company shall maintain, at the Warrant
Office, a register for the Warrants in which the Company shall record the name
and address of the person in whose name these Warrants has been issued, as well
as the name and address of each permitted assignee of the rights of the
registered owner hereof.

III.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the person
in whose name the Warrants are registered as the Holder and owner hereof until
provided with notice to the contrary. The Warrants may be exercised by an
assignee for the purchase of Warrant Shares without having new Warrants issued.

III.3 RESTRICTIONS ON TRANSFER OF WARRANTS. These Warrants may be
transferred, in whole or in part, by the Holder. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
The Company, from time to time, shall register the transfer of the Warrants in
such books upon surrender of this Warrant at the Warrant Office properly

<PAGE>

endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer. Upon any such transfer and upon payment by the Holder
or its transferee of any applicable transfer taxes, new Warrants shall be issued
to the transferee and the transferor (as their respective interests may appear)
and the surrendered Warrants shall be cancelled by the Company. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the transfer of the
Warrants pursuant to this Section.

III.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Agreement and notwithstanding any other provisions contained
in these Warrants, the Holder understands and agrees that the following
restrictions and limitations shall be applicable to all Warrant Shares and to
all resales or other transfers thereof pursuant to the Securities Act:

III.4.1 The Holder hereof agrees that the Warrant Shares may
not be sold or otherwise transferred unless the Warrant Shares are registered
under the Securities Act and applicable state securities or blue sky laws or are
exempt therefrom.

III.4.2 A legend in substantially the following form will be
placed on the certificate(s) evidencing the Warrant Shares:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS."

III.4.3 Stop transfer instructions will be imposed with
respect to the Warrant Shares so as to restrict resale or other transfer
thereof.

ARTICLE IV

Anti-Dilution

IV.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as provided herein. Upon each adjustment of the
Exercise Price, the Holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.

<PAGE>

IV.3 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another person shall be effected in such a way that Holders of Common Stock
shall be entitled to receive capital stock, securities or assets with respect to
or in exchange for their shares, then the following provisions shall apply:

IV.3.1 As a condition of such reorganization,
reclassification, consolidation, merger, share exchange, sale, transfer or other
disposition, lawful and adequate provisions shall be made whereby the Holder
shall thereafter have the right to purchase and receive upon the terms and
conditions specified in these Warrants and in lieu of the Warrant Shares
immediately theretofore receivable upon the exercise of the rights represented
hereby, such shares of capital stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of Warrant Shares immediately theretofore
so receivable had such reorganization, reclassification, consolidation, merger,
share exchange or sale not taken place, and in any such case appropriate
provision reasonably satisfactory to such Holder shall be made with respect to
the rights and interests of such Holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrant Shares receivable upon the exercise) shall
thereafter be applicable, as nearly as possible, in relation to any shares of
capital stock, securities or assets thereafter deliverable upon the exercise of
Warrants.

IV.3.2 In the event of a merger, share exchange or
consolidation of the Company with or into another person as a result of which a
number of shares of common stock or its equivalent of the successor person
greater or lesser than the number of shares of Common Stock outstanding
immediately prior to such merger, share exchange or consolidation are issuable
to holders of Common Stock, then the Exercise Price in effect immediately prior
to such merger, share exchange or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock.

<PAGE>

by written instrument executed and mailed or delivered to the Holder hereof
at the last address of such Holder appearing on the books of the Company the
obligation to deliver to such Holder such shares of capital stock, securities
or assets as, in accordance with the foregoing provisions, such Holder may be
entitled to receive, and all other liabilities and obligations of the Company
hereunder. Upon written request by the Holder hereof, such successor person
will issue a new Warrant revised to reflect the modifications in this Warrant
effected pursuant to this Section.

IV.3.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the person having made such offer or with any affiliate of such
person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the Holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous Holders of the Common Stock in accordance with
such offer.

IV.4 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a
dividend or other distribution payable to all Holders of shares of Common Stock
in evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, convertible securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made whenever any such dividend or distribution is made
and shall be effective as of the date as of which a record is taken for purpose
of such dividend or distribution or, if a record is not taken, the date as of
which Holders of record of Common Stock entitled to such dividend or
distribution are determined.

<PAGE>

provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the Holder
hereof copies of such Officer's Certificate and an independent accountants'
opinion together with a notice stating that the Exercise Price and the number of
Warrant Shares purchasable upon exercise of the Warrants have been adjusted and
setting forth the adjusted Exercise Price and the adjusted number of Warrant
Shares purchasable upon the exercise of the Warrants.

IV.7 NOTIFICATIONS TO HOLDERS. In case at any time the Company
proposes:

(i) to declare any dividend upon its Common Stock payable in
capital stock or make any special dividend or other distribution (other
than cash dividends) to the holders of its Common Stock;

(ii) to offer for subscription pro rata to all of the Holders
of its Common Stock any additional shares of capital stock of any class
or other rights;

(iii) to effect any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation,
merger or share exchange of the Company with another person, or sale,
transfer or other disposition of all or substantially all of its
assets; or

(iv) to effect a voluntary or involuntary dissolution,
liquidation or winding up of the Company,

then, in any one or more of such cases, the Company shall give the Holder hereof
(a) at least 10 days (but not more than 90 days) prior written notice of the
date on which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of any such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days
(but not more than 90 days) prior written notice of the date when the same shall
take place. Such notice in accordance with the foregoing clause (a) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the Holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (b) shall also specify the
date on which the holders of Common Stock shall be entitled to exchange their
Common Stock, as the case may be, for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer, disposition, dissolution, liquidation or winding up,
as the case may be.

IV.8 COMPANY TO PREVENT DILUTION. If any event or condition occurs as
to which other provisions of this Article are not strictly applicable or if
strictly applicable would not fairly protect

<PAGE>

the exercise or purchase rights of the Warrants evidenced hereby in
accordance with the essential intent and principles of such provisions, or
that might materially and adversely affect the exercise or purchase rights of
the Holder hereof under any provisions of this Warrant, then the Company
shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
exercise and purchase rights as aforesaid, and any adjustments necessary with
respect to the Exercise Price and the number of Warrant Shares purchasable
hereunder so as to preserve the rights of the Holder hereunder. In no event
shall any such adjustment have the effect of increasing the Exercise Price as
otherwise determined pursuant to this Article except in the event of a
combination of shares.

ARTICLE V

Miscellaneous

V.1 ENTIRE AGREEMENT. These Warrants, together with the Purchase
Agreement and the Registration Rights Agreement, contain the entire agreement
between the Holder hereof and the Company with respect to the Warrant Shares
purchasable upon exercise hereof and the related transactions and supersedes all
prior arrangements or understandings with respect thereto.

V.2 GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. COMPANY HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
STATE OF NEW YORK OR, AT THE SOLE OPTION OF HOLDER, IN ANY OTHER COURT IN WHICH
HOLDER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. COMPANY WAIVES ANY OBJECTION
OF FORUM NON CONVENIENCE AND VENUE. COMPANY AND HOLDER EACH HEREBY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO THIS WARRANT WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.

V.3 WAIVER AND AMENDMENT. Any term or provision of these Warrants may
be waived at any time by the party which is entitled to the benefits thereof and
any term or provision of these Warrants may be amended or supplemented at any
time by agreement of the Holder hereof and the Company, except that any waiver
of any term or condition, or any amendment or supplementation, of these Warrants
shall be in writing and signed by the Company and the Holder. A waiver of any
breach or failure to enforce any of the terms or conditions of these Warrants
shall not in any way effect, limit or waive a party's rights hereunder at any
time to enforce strict compliance thereafter with every term or condition of
these Warrants.

<PAGE>

provisions of these Warrants shall not, at the election of the party for whom
the benefit of the provision exists, be in any way impaired.

V.5 COPY OF WARRANT. A copy of these Warrants shall be filed among the
records of the Company.

V.6 NOTICE. Except as otherwise provided, all communications to the
Company or Holder provided for herein or with reference to this Agreement shall
be deemed to have been sufficiently given or served for all purposes on the
third Business Day after being sent as certified or registered mail, postage and
charges prepaid, to the following addresses: if to the Company: 700 Gemini,
Suite 100, Houston, Texas 77058, Attn: Chris Efird, or at any other address
designated by the Company in writing to Holder; if to Holder:
____________________________________________________ , or at any other address
designated by Holder to the Company in writing.

V.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of these
Warrants shall be construed as conferring upon the Holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the Holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

V.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, mutilation
or destruction of these Warrants, and in the case of any such loss, theft or
destruction upon delivery of an appropriate affidavit in such form as shall be
reasonably satisfactory to the Company and include reasonable indemnification of
the Company, or in the event of such mutilation upon surrender and cancellation
of these Warrants, the Company will make and deliver new Warrants of like tenor,
in lieu of such lost, stolen, destroyed or mutilated Warrants. Any Warrants
issued under the provisions of this Section in lieu of any Warrants alleged to
be lost, destroyed or stolen, or in lieu of any mutilated Warrants, shall
constitute an original contractual obligation on the part of the Company. These
Warrants shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange or replacement. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the preparation, execution and delivery
of Warrants pursuant to this Section.

V.9 UNREGISTERED WARRANTS AND WARRANT SHARES. Neither this Warrant nor
the Warrant Shares are registered under the Securities Act, and, accordingly,
may not be resold, pledged or otherwise transferred, except pursuant to an
effective registration statement under the Securities Act

<PAGE>

or in a transaction exempt from registration under the Securities Act and in
accordance with any other applicable securities laws.

V.10 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.

V.9 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.

<PAGE>

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name dated _______, 1999.

Gemini II, Inc.

By:
--------------------------------
PRINT NAME:
PRINT TITLE:

<PAGE>

SUBSCRIPTION NOTICE

The undersigned, the Holder of the foregoing Warrants, hereby
elects to exercise purchase rights represented thereby for, and to purchase
thereunder, _________ shares of the Common Stock covered by such Warrants,
and herewith makes payment in full for such shares, and requests (a) that
certificates for such shares (and any other securities or other property
issuable upon such exercise) be issued in the name of, and delivered to,
_________________________ and (b), if such shares shall not include all of
the shares issuable as provided in such Warrants, that new Warrants of like
tenor and date for the balance of the shares issuable thereunder be delivered
to the undersigned.

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

Date:
---------------------------

<PAGE>

ASSIGNMENT

For value received,_______________ , hereby sells, assigns and
transfers unto_______________ these Warrants, together with all rights, title
and interest therein, and does irrevocably constitute and appoint_______________
attorney, to transfer such Warrants on the books of the Company, with full power
of substitution.

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

Date:
---------------------------

<PAGE>

Exhibit 4.9

FORM OF
REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "Registration Rights
Agreement") is made effective as of _______, 1999 by and between Gemini II,
Inc., a Delaware corporation (the "Company") and ___________________ (the
"Purchaser").

WHEREAS, Purchaser holds a Secured 13% Promissory Note (the "Note")
payable by the Company, in the amount of ______________;

WHEREAS, the Purchaser holds Common Stock Purchase Warrants (the
"Warrants") which may be exercised to acquire a certain number of shares of the
common stock, $.0001 par value, of the Company ("Common Stock"), subject to
adjustment (the "Shares");

WHEREAS, the Company wishes to grant the Purchaser certain registration
rights in respect of the Shares, as set forth herein.

NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:

ARTICLE I

Definitions

As used in this Registration Rights Agreement, the following terms
shall have the meanings set forth below:

I.1 "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

I.2 "REGISTRABLE SECURITIES" shall mean (i) the Shares; and (ii) any
Common Stock issued or issuable at any time or from time to time in respect of
the Shares upon a stock split, stock dividend, recapitalization or other similar
event involving the Company until such Shares and Common Stock are sold pursuant
to a Registration Statement or are eligible to be sold pursuant to an exemption
from registration under the Securities Act, including Rule 144 promulgated
thereunder.

I.3 The terms "REGISTER", "REGISTERED", and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering by the
Commission of the effectiveness of such registration statement.

I.4 "REGISTRATION EXPENSES" shall mean all expenses, other than Selling
Expenses (as defined below), incurred by the Company in complying with this
Registration Rights Agreement, including, without limitation, all registration,
qualification and filing fees, exchange listing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company and for the

<PAGE>

Purchaser, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).

I.5 "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

I.6 "SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Purchaser.

I.7 "UNDERWRITTEN PUBLIC OFFERING" shall mean a public offering in
which the Common Stock is offered and sold on a firm commitment basis through
one or more underwriters, all pursuant to an underwriting agreement between the
Company and such underwriters.

ARTICLE II

Registration Rights

II.1 DEMAND REGISTRATION.

II.1.1 At any time after the first anniversary of the
Company's first Underwritten Public Offering, within 90 days of the receipt of
notice from any Purchaser, the Company shall use its commercially reasonable
best efforts to file with the Securities and Exchange Commission a shelf
registration statement covering the resale of the Shares on Form S-1, S-2, or
S-3 (the "Registration Statement") which shall remain effective until the
earlier to occur of: (i) 2 years, or (ii) until such time as the Purchaser does
not beneficially own any Registrable Securities. The Company shall use its
commercially reasonable best efforts to cause such Registration Statement to
become effective as soon as practicable and to cause the Shares to be qualified
in such state jurisdictions as the Purchaser may request.

II.1.2 Except as set forth herein, the Company shall take all
commercially reasonable steps necessary to keep the Registration Statement
current and effective until all Shares have been distributed by the Purchaser
including any necessary refiling of additional registration statements.

II.1.3 The Company shall be entitled to postpone the filing of
the Registration Statement or to require that the Purchaser refrain from
effecting any public sales or distributions of the Registrable Securities
pursuant to a Registration Statement that has been declared effective by the
Commission or otherwise, if the board of directors of the Company reasonably
determines that such public sales or distributions pursuant to the Registration
Statement would interfere in any material respect with any transaction involving
the Company that the board of directors reasonably determines to be material to
the Company. The board of directors shall, as promptly as practicable, give the
Purchaser written notice of any such development. In the event of a request by
the board of directors of the Company that the Purchaser refrain from effecting
any public sales or distributions

<PAGE>

of the Registrable Securities, the Company shall be required to file the
Registration Statement or to lift such restrictions regarding effecting
public sales or distributions of the Registrable Securities as soon as
reasonably practicable after the board of directors shall reasonably
determine public sales or distributions by the Purchaser of the Registrable
Securities shall not interfere with such transaction, PROVIDED, that in no
event shall the postponement of the filing of the Registration Statement or
any requirement that the Purchaser refrain from effecting public sales or
distributions in the Registrable Securities extend for more than 120 days.

II.2 PIGGYBACK REGISTRATION.

II.2.1 At any time after the first anniversary of the
Company's first Underwritten Public Offering, and subject to the terms hereof,
if: (i) the Company or any shareholder of the Company shall determine to
register any of its securities (except for registration statements relating to
employee benefit plans, acquisitions or exchange offers) either for its own
account or the account of a security holder; and (ii) any Purchaser is the
beneficial owner of any Registrable Securities, the Company will promptly give
to the Purchaser written notice thereof no less than ten (10) days prior to the
filing of any registration statement, and include in such registration (and any
related qualification under blue sky laws or other compliance), and in the
underwriting involved therein, if any, such Registrable Securities as Purchaser
may request in a writing delivered to the Company within twenty (20) days after
the Purchaser's receipt of Company's written notice.

II.2.2 The Purchaser may participate in any number of
registrations until all of the Shares held by Purchaser have been distributed
pursuant to a registration.

II.2.3 If any registration statement is an Underwritten Public
Offering, the right of the Purchaser to registration pursuant to this Section
shall be conditioned upon such Purchaser's participation in such reasonable
underwriting arrangements as the Company shall make regarding the offering, and
the inclusion of Registrable Securities in the underwriting shall be limited to
the extent provided herein. The Purchaser and all other shareholders proposing
to distribute their securities through such underwriting shall (together with
the Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section, if the managing underwriter
concludes in its reasonable judgment that the number of shares to be registered
for selling shareholders (including the Purchaser) would materially adversely
effect such offering, the number of Shares to be registered, together with the
number of shares of Common Stock or other securities held by other shareholders
proposed to be registered in such offering, shall be reduced on a pro rata basis
based on the number of Shares proposed to be sold by the Purchaser as compared
to the number of shares proposed to be sold by all shareholders. If the
Purchaser disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter, delivered not less than ten days before the effective date. The
Registrable Securities excluded by the managing underwriter or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 120 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.

<PAGE>

II.2.4 The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section prior to the
effectiveness of such registration whether or not any of the Purchaser has
elected to include securities in such registration.

II.3 EXPENSES OF REGISTRATION. All Registration Expenses shall be borne
by the Company. Unless otherwise stated herein, all Selling Expenses relating to
securities registered on behalf of any Purchaser shall be borne by the Purchaser
selling the Registrable Securities.

II.4 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Registration Rights Agreement, the Company will keep the Purchaser advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense, the Company will:

II.4.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its commercially reasonable
efforts to cause such registration statement to become and remain effective
until the distribution described in such registration statement has been
completed;

II.4.2 Furnish to each underwriter such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such underwriter
may reasonably request in order to facilitate the public sale of the shares by
such underwriter, and promptly furnish to each underwriter and the Purchaser
notice of any stop-order or similar notice issued by the Commission or any state
agency charged with the regulation of securities, and notice of any Nasdaq or
securities exchange listing.

II.4.3 Cause the Shares to be listed on the securities
exchange on which the Common Stock is approved for listing.

II.5 INDEMNIFICATION.

II.5.1 To the extent permitted by law, the Company will
indemnify the Purchaser, each of its officers and directors and partners, if
any, and each person controlling the Purchaser within the meaning of Section 15
of the Securities Act, with respect to which registration, qualification or
compliance has been effected pursuant to this Registration Rights Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
to the extent such expenses, claims, losses, damages or liabilities arise out of
or are based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other similar document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regu-

<PAGE>

lation promulgated under the Securities Act applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse Purchaser, its officers and directors and partners,
and each person controlling the Purchaser, each such underwriter and each
person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action; provided,
however, that the indemnity contained herein shall not apply to amounts paid
in settlement of any claim, loss, damage, liability or expense if settlement
is effected without the consent of the Company (which consent shall not
unreasonably be withheld); provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and
in conformity with written information furnished to the Company by Purchaser,
such controlling person or such underwriter specifically for use therein.
Notwithstanding the foregoing, insofar as the foregoing indemnity relates to
any such untrue statement (or alleged untrue statement) or omission (or
alleged omission) made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time
the registration statement becomes effective or in the final prospectus filed
with the Commission pursuant to the applicable rules of the Commission or in
any supplement or addendum thereto, the indemnity agreement herein shall not
inure to the benefit of any underwriter if a copy of the final prospectus
filed pursuant to such rules, together with all supplements and addenda
thereto, was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act.

II.5.2 To the extent permitted by law, the Purchaser will, if
securities held by the Purchaser are included in the securities as to which such
registration, qualification or compliance is being effected pursuant to terms
hereof, indemnify the Company, each of its directors and officers, each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other person selling the
Company's securities covered by such registration statement, each of such
person's officers and directors and each person controlling such persons within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by Purchaser of any rule or regulation
promulgated under the Securities Act applicable to Purchaser and relating to
action or inaction required of Purchaser in connection with any such
registration, qualification or compliance, and will reimburse the Company, such
other persons, such directors, officers, persons, underwriters or control
persons for any legal or other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser specifically for use therein; provided, however, that
the indemnity contained herein shall not apply to amounts paid in settlement of
any claim, loss, damage, liability or expense if settlement is effected without
the consent of such

<PAGE>

Purchaser (which consent shall not be unreasonably withheld). Notwithstanding
the foregoing, the liability of such Purchaser under this subsection shall be
limited in an amount equal to the net proceeds from the sale of the shares
sold by Purchaser, unless such liability arises out of or is based on willful
conduct by Purchaser. In addition, insofar as the foregoing indemnity relates
to any such untrue statement (or alleged untrue statement) or omission (or
alleged omission) made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time
the registration statement becomes effective or in the final prospectus filed
pursuant to applicable rules of the Commission or in any supplement or
addendum thereto, the indemnity agreement herein shall not inure to the
benefit of the Company or any underwriter if a copy of the final prospectus
filed pursuant to such rules, together with all supplements and addenda
thereto, was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such furnishing is
required by the Securities Act.

II.5.3 Notwithstanding the foregoing, each party entitled to
indemnification under this Section (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Registration Rights Agreement
unless the failure to give such notice is materially prejudicial to an
Indemnifying Party's ability to defend such action and provided further, that
the Indemnifying Party shall not assume the defense for matters as to which
there is a conflict of interest or as to which the Indemnifying Party is
asserting separate or different defenses, which defenses are inconsistent with
the defenses of the Indemnified Party. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. No Indemnified Party shall consent to entry of any
judgment or enter into any settlement without the consent of each Indemnifying
Party.

II.5.4 If the indemnification provided for in this Section is
unavailable to an Indemnified Party in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and all shareholders offering
securities in the offering (the "Selling Security Holders") on the other from
the offering of the Company's securities, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the Selling
Security Holders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, as well as any

<PAGE>

other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Selling Security Holders on the other shall be
the net proceeds from the offering (before deducting expenses) received by the
Company on the one hand and the Selling Security Holders on the other. The
relative fault of the Company on the one hand and the Selling Security Holders
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Selling Security Holders and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Selling Security Holders agree that
it would not be just and equitable if contribution pursuant to this Section were
based solely upon the number of entities from whom contribution was requested or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section. The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages and liabilities
referred to above in this Section shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim, subject to the provisions
hereof. Notwithstanding the provisions of this Section, no Selling Shareholder
shall be required to contribute any amount or make any other payments under this
Registration Rights Agreement which in the aggregate exceed the proceeds
received by such Selling Shareholder. No person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.

II.6 CERTAIN INFORMATION.

II.6.1 The Purchaser agrees, with respect to any Registrable
Securities included in any registration, to furnish to the Company such
information regarding Purchaser, the Registrable Securities and the distribution
proposed by the Purchaser as the Company may reasonably request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to herein.

II.6.2 The failure of the Purchaser to furnish the information
requested pursuant to this Section shall not affect the obligation of the
Company to the other Selling Security Holders who furnish such information
unless, in the reasonable opinion of counsel to the Company or the underwriters,
such failure impairs or may impair the legality of the Registration Statement or
the underlying offering.

II.7 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of Restricted Securities (used herein as defined in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to use
its best lawful efforts to:

II.7.1 Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times during which the Company is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");

<PAGE>

II.7.2 File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such reporting
requirements); and

II.7.3 So long as any Purchaser owns any Restricted Securities
(as defined in Rule 144 promulgated under the Securities Act), to furnish to
Purchaser forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as the Purchaser may reasonably request in availing itself of any
rule or regulation of the Commission allowing the Purchaser to sell any such
securities without registration.

II.8 TRANSFERABILITY. The rights conferred by this Registration Rights
Agreement shall not be transferable to a recipient of Registrable Securities.

II.9 LOCKUP AGREEMENT. The Purchaser hereby agrees to enter into a
lockup agreement regarding sales of the Registrable Securities if so requested
by the underwriter(s) in any Underwritten Public Offering, which lockup
agreement shall have the same terms and conditions as the lockup agreement
entered into by officers and directors of the Company.

II.10 GOVERNING LAW. THIS REGISTRATION RIGHTS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF NEW YORK. COMPANY HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK OR, AT THE SOLE OPTION OF PURCHASER, IN ANY OTHER
COURT IN WHICH PURCHASER SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. COMPANY WAIVES
ANY OBJECTION OF FORUM NON CONVENIENCE AND VENUE. COMPANY AND PURCHASER EACH
HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO THIS REGISTRATION RIGHTS AGREEMENT
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

II.11 ENTIRE AGREEMENT; AMENDMENT. This Registration Rights Agreement,
together with that certain Agreement of Purchase and Sale by and between the
Company and the Purchaser, dated the date hereof, and that certain Warrants
Agreement by and between the Purchaser and the Company, dated the date hereof,
constitute the full and entire understanding and agreement between the parties
with regard to the subject hereof. This Registration Rights Agreement, or any
provision hereof, may not be amended, waived, discharged or terminated without
the prior written consent of the Company and the Purchaser.

II.12 NOTICES, ETC. Except as otherwise provided, all communications to
the Company or the Purchaser provided for herein or with reference to this
Agreement shall be deemed to have been

<PAGE>

sufficiently given or served for all purposes on the third Business Day after
being sent as certified or registered mail, postage and charges prepaid, to
the following addresses: if to the Company: 700 Gemini, Suite 100, Houston,
Texas 77058, Attn: Chris Efird, or at any other address designated by the
Company in writing to Purchaser; if to Purchaser: _____________________________
____________________________________________________ , or at any other
address designated by Purchaser to the Company in writing.

II.13 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
to this Registration Rights Agreement shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Registration Rights Agreement, or any waiver on the part of any party of any
provisions or conditions of this Registration Rights Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Registration Rights Agreement or by law
or otherwise afforded to any party to this Registration Rights Agreement, shall
be cumulative and not alternative.

II.14 COUNTERPARTS. This Registration Rights Agreement may be executed
in any number of counterparts, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one instrument.

II.15 SEVERABILITY. In the event that any provision of this
Registration Rights Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Registration Rights
Agreement shall continue in full force and effect without said provision.

II.16 TITLES AND SUBTITLES. The titles and subtitles used in this
Registration Rights Agreement are used for convenience only and are not
considered in construing or interpreting this Registration Rights Agreement.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement effective upon the date first set forth above.

COMPANY:

Gemini II, Inc.

By:
----------------------------------------
PRINT NAME:
PRINT TITLE:

PURCHASER:

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

<PAGE>
Exhibit 4.10

FORM OF
REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of __________________, 1999, among OmniLynx Communications
Corporation, a Delaware corporation (the "COMPANY"), and each person listed on
the signature pages of this Agreement under the caption "STOCKHOLDERS" (each a
"STOCKHOLDER" and, collectively, the "STOCKHOLDERS").

WHEREAS, pursuant to various acquisition agreements entered into with the
Company (collectively, the "ACQUISITION AGREEMENTS"), each of the Stockholders
has received on the date hereof shares of common stock, par value $.0001 per
share, of the Company ("COMMON STOCK"); and

WHEREAS, in order to induce the Stockholders to enter into their
respective Acquisition Agreements, the Company has agreed to provide
registration rights on the terms set forth in this Agreement for the benefit of
the Stockholders;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:

1. DEFINITIONS. The following capitalized terms shall have the
meanings assigned to them in this Section 1 or in the parts of this Agreement
referred to below:

CODE: the Internal Revenue Code of 1986, as amended, and any
successor thereto.

COMMISSION: the Securities and Exchange Commission, and any
successor thereto.

EXCHANGE ACT: the Securities Exchange Act of 1934, as amended,
and any successor thereto, and the rules and regulations thereunder.

EXEMPT OFFERING: as defined in Section 2.

LOCK-UP AGREEMENT: the provisions in the respective Acquisition
Agreements that restrict the transfers of certain percentages of
Registrable Common for up to two years following the IPO Closing Date (as
defined in the respective Acquisition Agreements).

REGISTRABLE COMMON: shares of Common Stock that were issued to
the Stockholders pursuant to the Acquisition Agreements, and any shares
of Common Stock that may be issued on conversion of the Company's
Contingent Stock Issue Rights or Series B Preferred Stock pursuant to the
Acquisition Agreements and any additional

<PAGE>

shares of Common Stock issued or distributed in respect of any other
shares of Registrable Common by way of a stock dividend or
distribution or stock split or in connection with a combination of
shares, recapitalization, reorganization, merger, consolidation or
otherwise. For purposes of this Agreement, shares of Registrable
Common will cease to be Registrable Common when and to the extent that
(i) a registration statement covering such shares has been declared
effective under the Securities Act and such shares have been disposed
of pursuant to such effective registration statement, (ii) such shares
are sold pursuant to Rule 144 or become saleable under Rule 144(k), or
(iii) such shares have been otherwise transferred to a person or
entity that is not a Stockholder, other than pursuant to Section 10.

REGISTRATION NOTICE: as defined in Section 2.

RULE 144: Securities Act Rule 144 (or any similar or successor
provision under the Securities Act).

SECURITIES ACT: the Securities Act of 1933, as amended, and any
successor thereto, and the rules and regulations thereunder.

SELLING STOCKHOLDER: as defined in Section 11.

2. PIGGYBACK REGISTRATION RIGHTS. At any time after the first
anniversary of the date of this Agreement and before the third anniversary of
the date of this Agreement; PROVIDED, HOWEVER, that the Registrable Common is
not subject to the Lock-up Agreement, whenever the Company proposes to register
any Common Stock for its own account under the Securities Act for a public
offering for cash, other than a registration relating to the offering or
issuance of shares in connection with (i) employee compensation or benefit plans
or (ii) one or more acquisition transactions under a Registration Statement on
Form S-4 or Form S-1 under the Securities Act (or a successor to Form S-4 or
Form S-1) (any such offering or issuance being an "EXEMPT OFFERING"), the
Company will give each Stockholder written notice of its intent to do so (a
"REGISTRATION NOTICE") at least 15 days prior to the filing of the related
registration statement with the Commission. Such notice shall specify the
approximate date on which the Company proposes to file such registration
statement and shall contain a statement that the Stockholders are entitled to
participate in such offering and shall set forth the number of shares of
Registrable Common that represents the best estimate of the lead managing
underwriter (or if not known or applicable, the Company) that will be available
for sale by the holders of Registrable Common in the proposed offering. If the
Company shall have delivered a Registration Notice, each Stockholder shall be
entitled to participate on the same terms and conditions as the Company in the
public offering to which the Registration Notice relates and to offer and sell
shares of Registrable Common therein only to the extent provided in this
Section 2. Each Stockholder desiring to participate in such offering shall
notify the Company no later than ten days following receipt of the Registration
Notice of the aggregate number of shares of Registrable Common that such
Stockholder then desires to sell in the offering. Each Stockholder desiring to
participate in such public offering may include shares of Registrable Common in
the registration statement relating to the offering, to the extent that the
inclusion of

2
<PAGE>

such shares shall not reduce the number of shares of Common Stock to be
offered and sold by the Company to be included therein. If the lead managing
underwriter selected by the Company for a public offering (or, if the
offering is not underwritten, a financial advisor to the Company) determines
that marketing factors require a limitation on the number of shares of
Registrable Common to be offered and sold in such offering, there shall be
included in the offering only that number of shares of Registrable Common, if
any, requested to be included in the offering that such lead managing
underwriter or financial advisor, as the case may be, reasonably and in good
faith believes will not jeopardize the success of the offering, PROVIDED,
HOWEVER, that if the lead managing underwriter or financial advisor, as the
case may be, determines that marketing factors require a limitation on the
number of shares of Registrable Common to be offered and sold as aforesaid
and so notifies the Company in writing, the number of shares of Registrable
Common to be offered and sold by holders desiring to participate in the
offering, shall be allocated among such holders on a PRO RATA basis based on
their holdings of Registrable Common. The Company shall have the right at
any time to reduce the number of shares requested by any Stockholder to be
included in such registration to the extent that the Company reasonably
concludes that inclusion of such shares is likely to jeopardize the
non-recognition status under the Code of any acquisition transaction
consummated pursuant to any of the Acquisition Agreements; PROVIDED, HOWEVER,
that any determination to exclude shares from any such registration pursuant
to this provision shall be based on advice of tax counsel to the Company or
its independent accountants.

3
<PAGE>

registration statement under applicable securities or "Blue Sky" laws of such
jurisdictions as the holders shall reasonably request for the distribution of
the Registrable Common; (e) take such other actions as are reasonable and
necessary to comply with the requirements of the Securities Act; (f) furnish
such number of prospectuses (including preliminary prospectuses) and
documents incident thereto as a Stockholder from time to time may reasonably
request; (g) provide to any Stockholder requesting to include Registrable
Common in such registration statement and any managing underwriter
participating in any distribution thereof, and to any attorney, accountant or
other agent retained by such Stockholder or managing underwriter, reasonable
access to appropriate officers and directors of the Company to ask questions
and to obtain information reasonably requested by any such Stockholder,
managing underwriter, attorney, accountant or other agent in connection with
such registration statement or any amendment thereto; PROVIDED, HOWEVER, that
(i) in connection with any such access or request, any such requesting
persons shall cooperate to the extent reasonably practicable to minimize any
disruption to the operation by the Company of its business and (ii) any
records, information or documents shall be kept confidential by such
requesting persons, unless (A) such records, information or documents are in
the public domain or otherwise publicly available or (B) disclosure of such
records, information or documents is required by court or administrative
order or by applicable law (including, without limitation, the Securities
Act); (h) notify each Stockholder and the managing underwriters participating
in the distribution pursuant to such registration statement promptly (i) when
the Company is informed that such registration statement or any
post-effective amendment to such registration statement becomes effective,
(ii) of any request by the Commission for an amendment or any supplement to
such registration statement or any related prospectus, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any related prospectus or the initiation or threat of any proceeding for that
purpose, (iv) of the suspension of the qualification of any shares of
Registrable Common included in such registration statement for sale in any
jurisdiction or the initiation or threat of a proceeding for that purpose,
(v) of any determination by the Company that any event has occurred which
makes untrue any statement of a material fact made in such registration
statement or any related prospectus or which requires the making of a change
in such registration statement or any, related prospectus in order that the
same will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (vi) of the completion of the
distribution contemplated by such registration statement if it relates to an
offering by the Company; (i) in the event of the issuance of any stop order
suspending the effectiveness of such registration statement or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any shares of Registrable Common included in such
registration statement for sale in any jurisdiction, use reasonable efforts
to obtain its withdrawal; (j) otherwise use reasonable efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but not later than
fifteen months after the effective date of such registration statement, an
earnings statement covering the period of at least twelve months beginning
with the first full fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act; (k) use reasonable diligence to cause
all shares of Registrable Common included in such registration statement to
be listed on

4
<PAGE>

any securities exchange on which the Common Stock is then listed at the
initiation of the Company; (l) use reasonable diligence to obtain an opinion
from legal counsel (which may include the General Counsel of the Company) in
customary form and covering such matters of the type customarily covered by
opinions as the underwriters, if any, may reasonably request; (m) provide a
transfer agent and registrar for all such Registrable Common not later than
the effective date of such registration statement; (n) enter into such
customary agreements (including an underwriting agreement in customary form)
as the underwriters, if any, may reasonably request in order to expedite or
facilitate the disposition of such shares of Registrable Common; and (o) use
reasonable diligence to obtain a "comfort letter" from the Company's
independent public accountants in customary form and covering such matters of
the type customarily covered by comfort letters as the underwriters, if any,
may reasonably request. As used in this Section 3 and elsewhere herein, the
term "underwriters" does not include any Stockholder.

4. UNDERWRITING AGREEMENT. In connection with each registration
pursuant to Section 2 covering an underwritten registered public offering, the
Company and each participating Stockholder agree to enter into a written
agreement with the managing underwriter in such form and containing such
provisions as are customary in the securities business for such an arrangement
between such underwriter and companies of the Company's size and
investment stature, including provisions for indemnification by the Company and
each Selling Stockholder as more fully described in Section 10.

5. AVAILABILITY OF RULE 144. Notwithstanding anything contained
herein to the contrary, the Company shall not be obligated to register shares of
Registrable Common held by any Stockholder when the resale provisions of Rule
144(k) are available to such Stockholder or such Stockholder is otherwise
entitled to sell the shares of Registrable Common held by him or her in a
brokerage transaction without registration under the Securities Act and without
limitation as to volume or manner of sale or both.

6. RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the shares of Registrable Common held by the Stockholders to the public without
registration, the Company agrees to:

(a) make and keep public information available (as those terms
are understood and defined in Rule 144) at all times from and after 90
days following the effective date of the registration statement;

(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act at any time that it is
subject to such reporting requirements;

(c) so long as a Stockholder owns any shares of Registrable
Common, furnish to the Stockholder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144, the Securities Act and the

5
<PAGE>

Exchange Act (at any time that it is subject to such reporting
requirements), a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents filed in accordance
with such reporting requirements as a Stockholder may reasonably
request in availing itself of any rule or regulation of the Commission
allowing a Stockholder to sell any such securities without
registration; and

(d) if required by the transfer agent and registrar for the
Common Stock, use reasonable diligence to obtain an opinion from legal
counsel (which may include the General Counsel of the Company) addressed
to such transfer agent and registrar, with respect to any sale of shares
of Registerable Common pursuant to Rule 144 (or, at the option of the
Company, pay the reasonable fees and expenses of legal counsel retained
by a Stockholder to provide such an opinion).

7. REGISTRATION EXPENSES. All expenses incurred in connection with
any registration, qualification and compliance under this Agreement (including,
without limitation, all registration, filing, qualification, legal, printing and
accounting fees, and including all reasonable fees of one counsel acting on
behalf of all holders of the securities being registered in such registration)
shall be borne by the Company. All underwriting commissions and discounts
applicable to shares of Registrable Common included in the registrations under
this Agreement shall be borne by the holders of the securities so registered PRO
RATA on the basis of the number of shares so registered. Subject to the
foregoing, all expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all filing fees, fees and
expenses of compliance with securities or Blue Sky laws (including, without
limitation, fees and disbursements of counsel in connection with Blue Sky
qualifications of the Registrable Common), printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), the fees and expenses applicable to shares of Registrable
Common included in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed at the initiation of the Company, registrar and transfer
agents' fees and fees and disbursements of counsel for the Company and its
independent certified public accountants, securities act liability insurance of
the Company and its officers and directors (if the Company elects to obtain such
insurance), the fees and expenses of any special experts retained by the Company
in connection with such registration and fees and expenses of other persons
retained by the Company and incurred in connection with each registration
hereunder (but not including, without limitation, any underwriting fees,
discounts or commissions attributable to the sale of Registrable Common, and
transfer taxes, if any), will be borne by the Company.

8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No holder of
Registrable Common may participate in any underwritten registration hereunder
unless such holder (a) agrees to sell such holder's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

6
<PAGE>

9. TRANSFER OF REGISTRATION RIGHTS; ADDITIONAL GRANTS OF REGISTRATION
RIGHTS. The registration rights provided to the holders of Registrable Common
under Section 2 hereof may not be transferred to any other person or entity,
except to another Stockholder or pursuant to the laws of descent and
distribution; PROVIDED, HOWEVER, that such transferees are bound by and subject
to the terms and conditions contained herein. The Company may, without the
prior consent of the Stockholders, extend the registration rights provided for
in this Agreement to additional persons or entities who become holders of Common
Stock subsequent to the date of this Agreement by entering into one or more
addenda to this Agreement with any such stockholders, and, upon execution of any
such addenda, any stockholder that is a party thereto shall thereafter be a
"Stockholder" for purposes of this Agreement and any shares of Common Stock
referred to therein as such shall be shares of "Registrable Common" for purposes
of this Agreement. Nothing herein shall limit the ability of the Company to
grant to any person or entity any registration or similar rights in the future
with respect to Common Stock or other securities of the Company (whether
pursuant to the foregoing provision or otherwise).

10. INDEMNIFICATION AND CONTRIBUTION.

(a) INDEMNIFICATION BY THE COMPANY. To the extent permitted by
law, the Company agrees to indemnify and hold harmless each Stockholder
who sells shares of Registrable Common in a registered offering pursuant
to either Section 2 (a "SELLING STOCKHOLDER"), from and against any and
all losses, claims, damages, liabilities and expenses (including
reasonable legal expenses) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Common
or in any amendment or supplement thereto or in any related preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise
out of, or are based upon, any such untrue statement or omission or
allegation thereof based upon information furnished in writing to the
Company by such Selling Stockholder or on such Selling Stockholder's
behalf expressly for use therein. In connection with an underwritten
offering of shares of Registrable Common, the Company will indemnify any
underwriters of the Registrable Common, their partners, officers and
directors and each person who controls such underwriters (within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) on substantially the same basis as that of the
indemnification of the Selling Stockholders provided in this Section
10(a). Notwithstanding the foregoing, the Company's indemnification
obligations with respect to any preliminary prospectus shall not inure to
the benefit of any Selling Stockholder or underwriter with respect to any
loss, claim, damage, liability (or actions in respect thereof) or expense
arising out of or based on any untrue statement or alleged untrue
statement or omission or alleged omission to state a material fact in
such preliminary prospectus, in any case where (i) a copy of the
prospectus used to confirm sales of shares of Registrable Common was not
sent or given to the person asserting such loss, claim, damage or
liability at or prior to the written confirmation of the sale to such
person and

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<PAGE>

(ii) such untrue statement or alleged untrue statement or omission or
alleged omission was corrected in such prospectus.

(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by a Selling Stockholder of notice of any claim or the
commencement of any action or proceeding brought or asserted against such
Selling Stockholder in respect of which indemnity may be sought from the
Company, such Selling Stockholder shall notify the Company in writing of
the claim or the commencement of that action or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Company shall not relieve the
Company from any liability that it may have to the Selling Stockholder
otherwise than pursuant to the indemnification provisions of this
Agreement. If any such claim or action or proceeding shall be brought
against a Selling Stockholder and such Selling Stockholder shall have
duly notified the Company thereof, the Company shall have the right to
assume the defense thereof, including the employment of counsel. Such
Selling Stockholder shall have the right to employ separate counsel in
any such action and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Selling
Stockholder unless (i) the Company has agreed to pay such fees and
expenses or (ii) the named parties to any such action or proceeding
include both such Selling Stockholder and the Company, and such Selling
Stockholder shall have been advised by counsel that there may be one or
more legal defenses available to such Selling Stockholder which are
different from or additional to those available to the Company, in which
case, if such Selling Stockholder notifies the Company in writing that it
elects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such action or
proceeding on behalf of such Selling Stockholder; it being understood,
however, that the Company shall not, in connection with any one such
action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses
of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for all Selling Stockholders. The Company
shall not be liable for any settlement of any such action or proceeding
effected without the Company's written consent.

(c) INDEMNIFICATION BY HOLDERS OF REGISTRABLE COMMON. In
connection with any registration in which a Selling Stockholder is
participating, such Selling Stockholder will furnish to the Company in
writing such information and affidavits as the Company reasonably
requests for use in connection with any related registration statement or
prospectus. To the extent permitted by law, each Selling Stockholder
agrees to indemnify and hold harmless the Company, its directors and
officers who sign the registration statement relating to shares of
Registrable Common offered by such Selling Stockholder and each person,
if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Selling
Stockholder, but only with respect to information concerning such Selling
Stockholder furnished in writing by such Selling Stockholder or on such
Selling Stockholder's behalf expressly for use in any registration

8
<PAGE>

statement or prospectus relating to shares of Registrable Common offered
by such Selling Stockholder, or any amendment or supplement thereto, or
any related preliminary prospectus. In case any action or proceeding
shall be brought against the Company or its directors or officers, or any
such controlling person, in respect of which indemnity may be sought
against such Selling Stockholder, such Selling Stockholder shall have the
rights and duties given to the Company, and the Company or its directors
or officers or such controlling persons shall have the rights and duties
given to such Selling Stockholder, by the preceding paragraph. Each
Selling Stockholder also agrees to indemnify and hold harmless any
underwriters of the Registrable Common, their partners, officers and
directors and each person who controls such underwriters (within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act) on substantially the same basis as that of the
indemnification of the Company provided in this Section 10(c).
Notwithstanding anything to the contrary herein, in no event shall the
amount paid or payable by any Selling Stockholder under this Section
10(c) exceed the amount of proceeds received by such Selling Stockholder
from the offering of the Registrable Common.

(d) CONTRIBUTION. If the indemnification provided for in this
Section 10 is unavailable to any indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities and expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the
actions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnified party or indemnified parties and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The Company and the
Selling Stockholders agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this
Section 10(d). No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. If indemnification is available under this Section
10, the indemnifying parties shall indemnify each indemnified party to
the full extent provided in Sections 10(a) and (c) without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 10(d).

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<PAGE>

11. MISCELLANEOUS

(a) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of holders of at least 51% of the shares of Registrable Common
then outstanding.

(b) NOTICES. All notices and other communications provided for
or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by telex or telecopy, or
registered or certified mail (return receipt requested), postage prepaid,
or courier to the parties at the following addresses (or at such other
address for any party as shall be specified by like notice), PROVIDED
that notices of a change of address shall be effective only upon receipt
thereof. Notices sent by mail shall be effective when delivered, notices
sent by telecopier shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective
on the next business day after timely delivery by the courier. Notices
shall be sent to the following addresses:

(i) if to a Stockholder, at the most current address
given by such Stockholder to the Company in a writing making
specific reference to this Agreement;

(ii) if to the Company, at the following address:

700 Gemini, Suite 100
Houston, Texas 77058
Attn.: Christopher H. Efird, President
Telecopy No.: (281) 488-5353

with copies to:

Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002-2764
Attn: Robert G. Reedy
Telecopy: (713) 228-4935

(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the heirs, executors, administrators,
successors and assigns of each of the parties.

(d) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each
of which when so

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<PAGE>

executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

(e) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

(f) SECTION REFERENCES. Unless the context requires otherwise,
references in this Agreement to "Sections" are to Sections of this
Agreement.

(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.

(h) SEVERABILITY. If any one or more of the provisions
contained herein, or the application thereof in any circumstances, 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 contained herein shall not
be in any way impaired thereby, it being intended that all the rights and
privileges of the Stockholders shall be enforceable to the fullest extent
permitted by law.

(i) ENTIRE AGREEMENT; TERMINATION. This Agreement 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.
This Agreement supersedes all prior agreements and understandings between
the parties with respect to such subject matter. This Agreement, except
the provisions of Section 10 (which shall survive until the expiration
of the applicable statutes of limitations) and this Section 11, shall
terminate and be of no further force or effect on the third anniversary
of the date of this Agreement.

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<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

OMNILYNX COMMUNICATIONS CORPORATION

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

STOCKHOLDERS:

<PAGE>
Exhibit 4.12

AGREEMENT

AGREEMENT dated this 23rd day of March, 1999, by and among Trans Global
Services, Inc., a Delaware corporation ("Trans Global"), Arc Networks, Inc., a
Delaware corporation ("Arc"), Consolidated Technology Group Ltd., a New York
corporation ("Consolidated"), Technology Acquisitions Ltd., a Bermuda
corporation ("TA"), and Gemini II, Inc., a Delaware corporation ("Gemini"),
Trans Global, Arc, Consolidated, TA and Gemini being referred to collectively as
the "Parties" and each, individually, as a "Party."

W I T N E S S E T H:

WHEREAS, Trans Global is the holder of Arc's 10% installment promissory
note due August 31, 2003 in the principal amount of $1,216,673 (the "Arc Note"),
which is payable to the order of Trans Global; and

WHEREAS, the Arc Note is guaranteed by Consolidated pursuant to a
guarantee dated September 18, 1998 (the "Consolidated Guarantee"); and

WHEREAS, Trans Global and Consolidated are parties to a Subordination
Agreement dated September 18, 1998 (the "Subordination Agreement"); and

WHEREAS, pursuant to a certain stock purchase agreement dated the date of
this Agreement by and among Arc, Consolidated, SIS Capital Corp., a Delaware
corporation and wholly-owned subsidiary of Consolidated ("SISC"), and TA (the
"Purchase Agreement"), SISC is selling to TA approximately 67% of the
outstanding common stock of Arc, which represents all of the shares of the
common stock of Arc which are owned by SISC, such sale being referred to as the
"Arc Stock Sale" and

WHEREAS, following or contemporaneously with the completion of the Arc
Stock Sale, a wholly-owned subsidiary of Gemini is to merge with and into Arc,
which merger is referred to as the "Arc Merger"; and

WHEREAS, following the completion of the Arc Merger, Gemini intends to
file a registration statement with respect to a proposed public offering of its
common stock, par value $.0001 per share ("Gemini Common Stock"); and

WHEREAS, by the terms of the Arc Note, the full principal amount of the
Arc Note, together with accrued interest, becomes immediately due and payable
upon the occurrence of certain events, which include the Arc Stock Sale and the
Arc Merger; and

<PAGE>

WHEREAS, Arc, Consolidated, TA and Gemini have requested that Trans
Global agree that the Arc Note not become immediately due and payable upon
either the Arc Stock Sale or the Arc Merger; and

WHEREAS, Trans Global is willing to agree that neither the consummation
of the Arc Stock Sale nor the Arc Merger will result in the Arc Note becoming
immediately due and payable, on and subject to the terms of this Agreement; and

WHEREAS, each of the Parties believes that the execution of this
Agreement and the performance of its terms is in the best interest of such
Party;

WHEREFORE, the Parties do hereby agree as follows.

1. (a) Trans Global hereby waives the provision of the Arc Note
that provides that the Arc Note becomes payable in full upon the occurrence of
either the Arc Stock Sale or the Arc Merger.

(b) The waiver granted by Trans Global pursuant to Paragraph
1(a):

(i) is subject to the execution of this Agreement by
Arc, Consolidated, TA and Gemini and the performance by TA and Gemini of all of
their obligations to be performed contemporaneously with or prior to the
execution of this Agreement;

(ii) is subject to the execution by TA and Gemini of the
Purchaser Guarantee, as hereinafter defined; and

(iii) relates only to the Arc Stock Sale and the Arc
Merger and shall not be deemed to relate in any manner to any other Sale
Transaction, as defined in the Arc Note, or any other transaction set forth in
Paragraph 6(b) of this Agreement.

2. Consolidated hereby confirms that (a) the Consolidated Guarantee
is in full force and effect on the date of this Agreement, and (b) none of the
obligations of Consolidated pursuant to the Consolidated Guarantee will be
affected in any manner by the execution of this Agreement or the performance of
any of the terms of this Agreement, including, but not limited to, the waiver by
Trans Global pursuant to Paragraph 1 of this Agreement.

3. The Subordination Agreement is hereby terminated and of no force
and effect.

4. (a) Trans Global hereby agrees that it will accept shares of
Gemini's Series A Preferred Stock in exchange for the cancellation of the Arc
Note and the Consolidated Guarantee at the time Gemini receives the proceeds
from its initial public offering, as hereinafter defined, if the closing with
respect to Gemini's initial public offering shall have occurred by December 31,
1999, and, if, on the closing date of such initial public offering:

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(i) Arc shall not be in default of its obligations
pursuant to the Note, including its obligations to pay the principal and
interest and to comply with all of its other obligations pursuant to the Note
and this Agreement, and there shall have occurred no event which, with the
passage of time of the giving of notice by Trans Global or any other person,
would result in an event of default as set forth in Paragraph 4 of the Arc Note.

(ii) Gemini shall have issued the Series A Preferred
Stock to Trans Global in exchange for the cancellation of the Arc Note and the
Consolidated Guarantee, as provided in Paragraph 7 of this Agreement.

(iii) The consolidated net tangible book value of Gemini,
determined in accordance with generally accepted accounting principals, shall be
not less than six million dollars ($6,000,000).

(b) An "initial public offering" shall mean a firm commitment
underwritten initial public offering pursuant to a effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act").
The date on which the registration statement relating to Gemini's initial public
offering is declared effective by the Securities and Exchange Commission (the
"Commission") is referred to as the "IPO Date."

(c) Upon the cancellation of the Arc Note, whether pursuant to
Paragraph 4(a) of this Agreement or otherwise, the Consolidated Guarantee will
automatically terminate and be of no further force and effect, and Trans Global
shall return the Consolidated Guarantee to Consolidated.

(d) Trans Global shall give Consolidated prompt notice of any
event which results in the cancellation of the Arc Note.

5. TA and Gemini will, contemporaneously with the execution of this
Agreement:

(a) Execute their joint and several guarantee (the "Purchaser
Guarantee") of the obligation of Arc pursuant to the Arc Note in the form of
Exhibit A to this Agreement.

(b) File or cause to be filed a certificate of designation (the
"Certificate of Designation") setting forth the rights, preferences and
privileges of the holders of the Series A 10% Convertible Redeemable Preferred
Stock, par value $.0001 per share ("Series A Preferred Stock"), in the form of
Exhibit B to this Agreement.

6. The terms of the Arc Note are hereby modified as follows:

(a) Arc shall continue to make payments of principal and
interest on the Arc Note at the times set forth in the Arc Note, subject to the
further provisions of this Paragraph 6.

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<PAGE>

(b) The principal and interest on the Arc Note shall become
immediately due and payable as follows:

(i) The sale by TA or Gemini of all or substantially all
of its business and assets in one transaction or in a series of related
transactions, regardless of whether the transaction is structured as a merger,
consolidation, sale of assets, sale of stock or assets of its subsidiary, sale
and leaseback or other transaction whereby substantially all of the business and
assets of TA or Gemini is conveyed to another person or entity, except that this
Paragraph 6(b)(i) shall not apply to the Arc Merger.

(ii) The merger of TA or Gemini with another entity where
TA or Gemini is the surviving entity if, as a result of the merger, the
stockholders of TA or Gemini, as the case may be, prior to the merger (other
than persons who became stockholders in anticipation of or in connection with
the merger) own less than fifty percent (50%) of the outstanding capital stock,
either in terms of number of shares or value of shares, upon the effectiveness
of the merger.

(iii) The sale by stockholders of their capital stock in
TA or Gemini in a transaction or a series of related transactions which results
in the transfer of at least fifty percent (50%) of the outstanding capital
stock; provided, however, that following a public offering by Arc or Gemini of
its securities, sales by the public stockholders shall not be an event described
in this Paragraph 6(b)(iii) unless such transfers are made in response to a
tender offer or similar transaction.

(iv) The failure by Gemini to complete an initial public
offering by 5:30 P.M., New York City time, on December 31, 1999.

(v) Any breach by TA or Gemini of its obligations
pursuant to this Agreement if such breach is not cured within thirty (30) days
after notice of such breach is given to TA or Gemini, as the case may be, and
Consolidated.

(vi) The occurrence of any event (other than the Arc
Stock Sale and the Arc Merger) which, pursuant to the terms of the Arc Note,
gives the holder of the Arc Note the right to demand that the principal of and
interest on the Arc Note become immediately due and payable.

7. At the closing of Gemini's initial public offering, Gemini shall
issue to Trans Global one share of Series A Preferred Stock for each one dollar
($1.00) of principal on the Arc Note which is outstanding on the date of such
closing and pay to Trans Global the accrued interest on the Arc Note to the date
the Series A Preferred Stock is issued, and Trans Global shall deliver the

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<PAGE>

Arc Note to Arc for cancellation. The holders of the Series A Preferred
Stock will have the rights, preferences and privileges set forth in the
Certificate of Designation. Except for the issuance of Series A Preferred
Stock pursuant to this Agreement, Gemini shall not issue any additional
shares of Series A Preferred Stock except for transfers of the shares of
Series A Preferred Stock issued to Trans Global pursuant to this Agreement.

8. Consolidated and Arc, severally and not jointly, represent and
warrant to Trans Global that:

(a) Such Party is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.

(b) Such Party has full power and authority to enter into this
Agreement and the Escrow Agreement, as hereinafter defined, and to carry out the
transactions provided for in this Agreement and the Escrow Agreement, and this
Agreement and the Escrow Agreement constitute the legal, valid and binding
obligations of such Party, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies, and that no representation is made as to
the enforceability of the indemnification provisions contained in Paragraph 11
of this Agreement. All necessary corporate action required to be taken by such
Party for the consummation of the transactions contemplated by this Agreement
has been duly and validly taken.

(c) No consent, approval or agreement of any person, party,
court, governmental authority or entity is required to be obtained by such Party
in connection with the execution and performance by Consolidated or Arc of this
Agreement or the Escrow Agreement.

9. (a) TA and Gemini hereby jointly and severally represent and
warrant to Trans Global that:

(i) TA and Gemini are corporations duly organized,
validly existing and in good standing under the laws of Bermuda and the State of
Delaware, respectively.

(ii) TA and Gemini have full power and authority to enter
into this Agreement, the Escrow Agreement and the Purchaser Guarantee, and to
carry out the transactions provided for in this Agreement, the Escrow Agreement
and the Purchaser Guarantee, and this Agreement, the Escrow Agreement and the
Purchaser Guarantee constitute the legal, valid and binding obligations of TA
and Gemini, enforceable in accordance with their respective

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<PAGE>

terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which
affect creditors' rights generally, and by legal and equitable limitations on
the enforceability of specific remedies, and that no representation is made
as to the enforceability of the indemnification provisions contained in
Paragraph 11 of this Agreement. All necessary corporate action required to be
taken by TA and Gemini for the consummation of the transactions contemplated
by this Agreement has been duly and validly taken.

(iii) No consent, approval or agreement of any person,
party, court, governmental authority or entity is required to be obtained by TA
or Gemini in connection with the execution and performance by TA or Gemini of
this Agreement, the Escrow Agreement or the Purchaser Guarantee.

(iv) The execution and filing of the Certificate of
Designation has been approved by all necessary corporate action.

(v) The Series A Preferred Stock to be issued
pursuant to this Agreement has been duly and validly authorized and, when
issued pursuant to this Agreement, will be validly issued, fully paid and
non-assessable and subject to no rights or claims of any third party. The
shares of Gemini Common Stock issuable upon conversion of the Series A
Preferred Stock (the "Conversion Shares") are duly and validly authorized
and, when issued upon conversion of the Series A Preferred Stock, will be
validly issued, fully paid and non-assessable and subject to no rights or
claims of any third party.

(b) TA and Gemini jointly and severally covenant and agree
that, without the prior written consent of Consolidated, they will not take or
permit to be taken any action described in Paragraphs 6(b)(i), (ii) or (iii) of
this Agreement.

10. (a) Trans Global represents and warrants to Consolidated, Arc,
TA and Gemini that:

(i) Trans Global is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.

(ii) Trans Global owns the Arc Note.

(iii) Trans Global has full power and authority to
enter into this Agreement and the Escrow Agreement and to carry out the
transactions provided for in this Agreement, and this Agreement and the
Escrow Agreement constitute, the legal, valid and binding obligations of
Trans Global, enforceable in accordance with their respective terms, except
as enforceability may

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<PAGE>

be limited by applicable bankruptcy, insolvency, moratorium, or similar laws
from time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific remedies, and
that no representation is made as to the enforceability of the indemnification
provisions contained in Paragraph 11 of this Agreement. All necessary corporate
action required to be taken by Trans Global for the consummation of the
transactions contemplated by this Agreement has been duly and validly taken.

(iv) No consent, approval or agreement of any person,
party, court, governmental authority or entity is required to be obtained by
Trans Global in connection with the execution and performance by Trans Global of
this Agreement or the Escrow Agreement.

(b) Trans Global agrees that, as long as the Consolidated
Guarantee shall remain in effect, it will not, without the written consent of
Consolidated, amend the terms of the Arc Note in a manner which would (i)
increase the interest rate, (ii) accelerate the payment schedule, (iii) reduce
the time for any notice or cure, (iv) create any other event of default or other
event which, by its terms, would result in the acceleration of the principal
amount of the Arc Note; provided, however, that this Paragraph 10(b) shall not
apply to any accelerated payment terms resulting from or following a default
under the Arc Note or an event which, with the passage of time of the giving of
notice, would result in a default under the Arc Note. In the event that Trans
Global fails to comply with its obligations pursuant to this Paragraph 10(b),
the Consolidated Guarantee shall become void, and Trans Global shall have no
rights thereunder, except to the extent of any obligations which may have
accrued under the Consolidated Guarantee prior to the date of such failure.

(d) Trans Global confirms that, as of the date of this
Agreement, Arc is not in default under the Arc Note.

11. (a) At any time during the period commencing on the IPO Date
ending on the Registration Termination Date, as hereinafter defined, Gemini
shall advise Trans Global or any Transferees, as hereinafter defined (Trans
Global and its Transferees being referred to herein collectively as the
"holders" and each as a "holder"), by written notice at least two (2) weeks
prior to the filing of any registration statement (other than a registration
statement on a Form S-8 or S-4 or any subsequent form relating to employee
benefit plans and mergers or acquisitions) under the Securities Act covering
securities of Gemini and will, upon the request of any holder, include in

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<PAGE>

any such registration statement such information as may be required to permit
a public offering of any or all of such holder's Registrable Securities, as
hereinafter defined; provided, however, that Gemini shall not be required to
include any Registrable Securities in a registration statement relating
solely to an offering by Gemini of securities for its own account if the
managing underwriter requests in writing that Gemini exclude the Registrable
Securities, provided that all other proposed selling stockholders, if any,
are treated in the same manner as the holder. In the event that the managing
underwriter shall permit the inclusion in any such registration statement of
a limited number of securities for sale by selling stockholders, to the
extent that the managing underwriter permits any such shares to be included
in the registration statement, Gemini shall include securities to be sold by
all persons (other than officers and directors of Gemini or its affiliates)
exercising piggyback or similar registration rights, on a proportional basis,
based on the number of shares of Gemini Common Stock which each such person
proposes to include in the registration statement. If requested by the
managing underwriter in writing, the holder will agree not to sell any of the
Registrable Securities included in such registration statement without the
consent of such managing underwriter during such period, not to exceed six
months, following the effective date of the registration statement, as the
managing underwriter may request (the "lock-up period"), and Gemini shall not
be required to include Registrable Securities in such registration statement
unless the holder agrees to such lock-up. Notwithstanding the foregoing, in
no event shall the holder be required to agree to a lock-up period longer
than any other selling stockholder whose shares are included in such
registration statement or any other underwritten registration statement being
filed at or about the same time as such registration statement. Gemini shall
keep such registration statement current until the earlier of the date the
Registrable Securities included in the registration statement shall have been
sold or the Registration Termination Date. It shall be a condition to
Gemini's obligation to include any holder's Registrable Securities in a
registration statement pursuant to this Paragraph 11(a) or to file a
registration statement pursuant to Paragraph 11(b) of this Agreement that the
holder provide Gemini in writing with such information as Gemini may
reasonably request concerning the holder and the holder's proposed plan of
distribution and any other information requested by the Commission, the
National Association of Securities Dealers, Inc., NASD Regulation, Inc., any
stock exchange or market on which the Gemini Common Stock is traded and any
state securities commission. Gemini shall advise the holder in writing of the
extent to which a managing underwriter will permit the inclusion of shares of
Gemini Common Stock in a registration statement and shall provide the holder
with a copy of

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<PAGE>

any requests by the managing underwriter relating to the inclusion of any
Registrable Securities in a registration statement.

(b) If the Registrable Securities shall not have been
registered pursuant to Paragraph 11(a) of this Agreement during the twelve month
period commencing on the IPO Date, then, if Trans Global or any other holder(s)
who own 25% of the Series A Preferred Stock issued pursuant to this Agreement
shall give notice (the "Registration Notice") to Gemini at any time during the
period commencing twelve months after the IPO Date and ending on the
Registration Termination Date, that such holders contemplate the sale of all or
any portion of the Registrable Securities under such circumstances that a public
distribution (within the meaning of the Securities Act) of such Registrable
Securities will be involved, then Gemini shall, within forty five (45) days
after receipt of the Registration Notice, time being of the essence, file a
registration statement pursuant to the Securities Act, to the end that all
Registrable Securities may be sold publicly under the Securities Act, and Gemini
will use its best efforts to cause such registration statement to become
effective. If the Registration Notice is not signed by all holders of the
Registrable Securities, Gemini shall, within five days of its receipt of the
Registration Notice, give notice to the other holders and, if they so request,
include their Registrable Securities in the registration statement. Gemini
shall keep such registration statement current and effective until the all of
the Conversion Shares shall have been sold pursuant to the registration
statement or until the Registration Termination Date. The holders shall be
entitled to only one (1) demand registration right pursuant to this Paragraph
11(b), except that, in the event that such registration statement is filed and
is either withdrawn or does not become effective (other than upon the written
request of all of the holders whose Registrable Securities are to be included in
such registration statement), then the holders shall not be deemed to have
exercised the demand registration right pursuant to this Paragraph 11(b).

(i) As used in this Paragraph 11, the following terms
shall have the meanings set forth below:

(A) "Registration Termination Date" shall mean
the date on which Trans Global or its Transferees may sell all of the Conversion
Shares that they then own or would own on conversion of the Series A Preferred
Stock pursuant to Paragraph (k) of Rule 144 ("Rule 144") of the Commission
pursuant to the Securities Act.

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<PAGE>

(B) "Registrable Securities" shall mean (I) the
shares of Series A Preferred Stock issued to Trans Global pursuant to this
Agreement and held by Trans Global and its Transferees and (II) the Conversion
Shares issued or issuable upon conversion of such shares of Series A Preferred
Stock. Trans Global understands that there will not be a public market in the
Series A Preferred Stock.

(C) "Transferees" shall mean (I) the persons or
entities to whom or to which Trans Global or its transferees shall have
transferred any Registrable Securities in a transaction exempt from the
registration requirements of the Securities Act, other than Rule 144 or any
subsequent similar rule.

(ii) Gemini shall bear the entire cost and expense of any
registration of securities pursuant to Paragraphs 11(a) and (b) of this
Agreement. Any holder whose Registrable Securities are included in any
registration statement pursuant to this Paragraph 11 shall, however, bear the
fees of his or its own counsel and accountants and any transfer taxes or
underwriting or brokers' discounts or commissions applicable to the Registrable
Securities sold by him or it pursuant thereto.

(iii) Following the effective date of a registration
statement which includes Registrable Securities pursuant to Paragraph 11(a) or
(b) of this Agreement, Gemini shall, upon the request of any holder, forthwith
supply the holder with such number of prospectuses meeting the requirements of
the Securities Act as shall be reasonably requested by the holder to permit the
holder to make a public distribution of all the registered Registrable
Securities from time to time offered or sold by the holder, provided that the
holder shall from time to time furnish Gemini with such appropriate information
(relating to the intentions of the holder) in connection therewith as Gemini
shall request in writing as provided in said Paragraphs 11(a) and (b). Gemini
shall also use its best efforts to qualify the registered shares for sale in
such states as the securities being sold by Gemini and other selling
stockholders, if any, are otherwise being registered or qualified and, in such
other states as the holder shall reasonably request; provided, however, that
Gemini shall not, for any such purpose, be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not, but
for the requirements of this Paragraph 11(c)(iii), be obligated to be so
qualified, to subject itself to taxation in such jurisdiction or to consent to
general service of process in any such jurisdiction.

(iv) Gemini shall prepare and file with the Commission
such amendments and supplements to such registration statement and any
prospectus used pursuant this Paragraph

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<PAGE>

11 as may be necessary to keep such registration statement current and
effective during the period when the holder may sell Registrable Securities
pursuant to the registration statement. Gemini will notify each holder whose
Registrable Securities are subject to the registration statement at such time
as, for any reason, the prospectus relating to the sale of the Registrable
Securities is no longer current and effective, and the holder shall not sell
any Registrable Securities pursuant to such registration statement until such
time as the holder is advised by Gemini that the registration statement is
current and effective. In no event shall Gemini be required to keep any
registration statement which includes the Registrable Securities current and
effective subsequent to the Registration Termination Date.

(v) Gemini shall indemnify and hold harmless each
holder, its officers and directors, partners and members and each underwriter,
within the meaning of the Securities Act, who may purchase from or sell any
Registrable Securities for the holders and each person who controls any holder
and such underwriter within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities (collectively, "Losses")
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement under the Securities Act or any
prospectus included therein required to be filed or furnished by reason of this
Paragraph 11 or any application or other filing under any state securities law
or by any omission or alleged omissions to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to which the holder or any such underwriter or control person or
other indemnified party may become subject under the Securities Act, the
Securities Exchange Act of 1934, as amended, or other Federal or state law, rule
or regulation, at common law or otherwise, except insofar as such Losses are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission which is based upon information furnished or required to be
furnished to Gemini by the holder or any such underwriter or other indemnified
party expressly for use therein, which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the
Securities Act; provided, however, that each holder and such underwriter shall
at the same time indemnify Gemini, its officers and directors, each underwriter
and each person, if any, who controls Gemini or such underwriter within the
meaning of the Securities Act and each other person whose securities are being
offered or sold pursuant to such registration statement (the "other holders")
and each person who controls the other holders within the meaning of the
Securities Act, from and against any and all Losses caused by any untrue
statement or alleged

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<PAGE>

untrue statement of a material fact contained in any registration statement
or any prospectus filed or furnished by reason of this Paragraph 11 or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, insofar as such Losses are caused by any untrue statement or
alleged untrue statement or omission based upon information furnished to
Gemini in writing by the holder or such underwriter expressly for use
therein; provided, however, that the holder's liability to Gemini and such
underwriter or other indemnified party pursuant to this Paragraph 11(c)(v)
shall not exceed the gross sales price of all Registrable Securities sold by
the holder pursuant to such registration statement.

(vi) If any action or claim shall be brought or asserted
by a person or entity entitled to indemnification pursuant to Paragraph 11(c)(v)
of this Agreement (an "indemnified party") against Gemini or any underwriter
engaged by Gemini or any person controlling Gemini or such underwriter within
the meaning of the Securities Act or against the holder or any underwriter
engaged by the holder or any person controlling the holder or such underwriter,
within the meaning of the Securities Act in respect of which indemnity may be
sought pursuant to Paragraph 11(c)(v) of this Agreement (an "indemnifying
party"), the indemnified party shall promptly notify the indemnifying party in
writing of the basis for the claim of indemnification and provide the
indemnifying party with a copy of all legal papers or other notices or
communications served on it in connection therewith, and the indemnifying party
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to the indemnified party and the payment of all legal and other
expenses in connection therewith. The failure of the indemnified party to
notify the indemnifying party as provided in this Paragraph 11(c)(vi) will not
relieve the indemnifying party of any liability for indemnification which it may
have to the indemnified party pursuant to Paragraph 11(c)(v) of this Agreement
unless the failure to so notify the indemnifying party materially prejudices the
rights of the indemnifying party. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (A) the employment thereof has been specifically
authorized by the indemnifying party in writing and the indemnifying party shall
have agreed in writing to pay such fees and expenses, or (B) the indemnifying
party has failed, either (I) with reasonable promptness, to assume the defense
and employ counsel as provided in this Paragraph 11(c)(vi), or (II) to appoint
counsel to act or otherwise respond to any claim or action prior to the date a
response is due, after giving effect to

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<PAGE>

any extensions obtained by or on behalf of the indemnifying party, or (C) the
named parties to any such action (including any impleaded parties) include
both an indemnified party and an indemnifying party, and in the judgment of
the counsel for the indemnified party, it is advisable for the indemnified
party or controlling person to be represented by separate counsel because of
actual or potential conflicting interests between them (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party or such controlling person, it
being understood, however, that the indemnifying party shall, in connection
with any one such action or separate but substantially similar or related
actions arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys at any time in each jurisdiction for all indemnified parties
(whether pursuant to this Agreement or any other agreements granting
registration rights), which firm shall be designated in writing by all the
indemnified parties, except that if Trans Global is an indemnified party,
such counsel shall be designated by Trans Global). The indemnifying party
shall not be liable for any settlement of any such action effected by an
indemnified party without the written consent of the indemnifying party
(which shall not be withheld unreasonably in light of all factors of
importance to such indemnifying party and such indemnified party), but if
settled with such written consent, or if there be a final judgment or decree
for the plaintiff in any such action by a court of competent jurisdiction and
the time to appeal shall have expired or the last appeal shall have been
denied, the indemnifying party agrees to indemnify and hold harmless the
indemnified party from and against any Loss by reason of such settlement or
judgment.

(vii) The making of any request for prospectuses hereunder
shall not impose on the holder any obligation to sell any Registrable
Securities.

(viii) Gemini's obligations pursuant to this Paragraph 11
shall be applicable to Trans Global and its Transferees.

(d) If either (i) any holders shall have exercised the demand
registration rights pursuant to Paragraph 11(b) of this Agreement and such
registration statement shall not have been declared effective within six months
after the date of the Registration Notice, or (ii) the Registrable Securities
shall have been registered pursuant to the Securities Act, but, for any reason,
the registration statement shall cease to be current and effective for a period
of more than thirty (30) days, then in either of such cases, any holder shall
have the right to require Gemini to redeem the Preferred Stock held by such
holder as set forth in the Certificate of Designation.

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<PAGE>

12. Pursuant to the Purchase Agreement, this Agreement and the
Purchaser Guarantee will be held in escrow and will be delivered to Trans Global
and an executed copy of this Agreement shall be delivered to Consolidated, Arc
and TA at such times as the documents are released from escrow pursuant to a
Distribution Notice, as defined in the Escrow Agreement, all as provided in the
escrow agreement dated the date of this Agreement among Consolidated, SISC, Arc,
TA, Trans Global and Parker Chapin Flattau & Klimpl, LLP, as escrow agent (the
"Escrow Agreement"). In the event that the Escrow Property, as defined in the
Escrow Agreement, is distributed pursuant to Paragraph 5 of the Escrow Agreement
as a result of a Termination Notice, as defined in the Escrow Agreement, or the
failure of Arc to obtain the New York Regulatory Consent, as defined in and
pursuant to the Purchase Agreement, this Agreement shall, automatically and
without any action on the part of any Party, terminate and be of no force and
effect and no party shall have any right or obligation pursuant to this
Agreement or the Purchaser Guarantee. Nothing in this Paragraph 12 shall be
construed to modify or affect in any manner the rights and obligations of Trans
Global and Arc under the Arc Note and the rights and obligations of Trans Global
and Consolidated under the Consolidated Guarantee during the period when this
Agreement is held in escrow.

13. Gemini agrees that prior to the issuance of the Series A Preferred
Stock pursuant to this Agreement, it will not modify or amend the Certificate of
Designation.

14. Contemporaneously with the execution of this Agreement, each Party
will deliver to the other Parties the certificate of the secretary of such Party
certifying as to (a) the incumbency of the officers of such Party and (b) the
adoption by the Board of Directors of resolutions approving the execution of
this Agreement and the performance of its terms.

15. (a) Except for the waiver granted in Paragraph 1 of this
Agreement and the provisions of Paragraph 6 of this Agreement, the Arc Note
shall remain in full force and effect.

(b) Nothing in this Agreement shall be construed to modify or
affect the rights of Consolidated, SISC and Trans Global pursuant to a certain
agreement dated February 25, 1999, by and among Consolidated, SISC and Trans
Global.

16. (a) This Agreement, including the Exhibits, which constitute
integral parts of this Agreement, constitutes the entire agreement of the
parties with respect to the subject matter thereof, superseding and terminating
any and all prior or contemporaneous oral and prior written agreements,
understandings or letters of intent between or among the parties with respect to
the subject matter of this Agreement. No part of this Agreement may be modified
or amended, nor

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<PAGE>

may any right be waived, except by a written instrument which expressly
refers to this Agreement, states that it is a modification or amendment of
this Agreement or a waiver under this Agreement and is signed by the parties
to this Agreement, or, in the case of waiver, by the party granting the
waiver. No course of conduct or dealing or trade usage or custom and no
course of performance shall be relied on or referred to by any party to
contradict, explain or supplement any provision of this Agreement, it being
acknowledged by the parties to this Agreement that this Agreement is intended
to be, and is, the complete and exclusive statement of the agreement with
respect to its subject matter. Any waiver shall be limited to the express
terms thereof and shall not be construed as a waiver of any other provisions
or the same provisions at any other time or under any other circumstances.

(b) If any section, term or provision of this Agreement shall
to any extent be held or determined to be invalid or unenforceable, the
remaining sections, terms and provisions shall nevertheless continue in full
force and effect.

(c) All notices or other communications required or permitted
by this Agreement shall be in writing signed by the party giving such notice,
and delivered personally against receipt thereof or sent by overnight courier,
mail or messenger against receipt thereof or sent by registered or certified
mail, return receipt requested, or by facsimile transmission or similar means of
communication if receipt is confirmed or if transmission of such notice is
confirmed by mail as provided in this Paragraph 16. Notices shall be deemed to
have been received on the date of personal delivery or telecopy or, if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the fifth (5th) business day after the date of mailing, except that
notice of change in the person, address or facsimile number shall be effective
on actual receipt. Notices shall be addressed to the party for whom intended at
his or its address set forth below or to the attention of such other person or
such other address or facsimile number as a party shall have designated by
notice in writing to the other parties given in the manner provided by this
Paragraph 16(c):

if to Trans Global to:

Trans Global Services, Inc.
1393 Veterans Memorial Highway
Hauppauge, New York 11788
Facsimile: (516) 724-0039
Attn: Joseph G. Sicinski, President and CEO

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<PAGE>

with a copy to:

Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10159
Facsimile: (212) 953-6899
Attn: Asher S. Levitsky P.C.

if to Arc, to:

Arc Networks, Inc.
1770 Motor Parkway
Hauppauge, New York 11788
Facsimile: (516) 582-1240
Attn: Peter F. Parrinello, President

with a copy to:

Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Facsimile: (212) 704-6288
Attention: Michael J. Shef, Esq.

if to Consolidated, to:

Consolidated Technology Group Ltd.
160 Broadway, Suite 901
New York, New York 10038
Facsimile: (212) 233-5023
Attn: Mr. Seymour Richter, President

and

Consolidated Technology Group Ltd.
2424 North Federal Highway, Suite 110
Boca Raton, Florida 33431
Facsimile: (561) 347-5352
Attn: George W. Mahoney, Chief Financial Officer

with a copy to:

Robert L. Blessey, Esq.
51 Lyon Ridge Road
Katonah, NY 10536
Facsimile: (914) 232-0647

-16-
<PAGE>

If to TA or Gemini, to:

Technology Acquisitions, Ltd.
c/o Benchmark Equity Group, Inc.
700 Gemini Street
Houston, TX 77058
Facsimile: (281) 488-5353
Attn: Mr. Christopher H. Efird

with a copy to:

De Martino Finkelstein Rosen & Virga
1818 N Street, N.W., Suite 400
Washington, D.C. 20036
Facsimile: (202) 659-1290
Attn: Ralph V. De Martino, Esq.

(d) This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to any
principles of conflicts of law. Each of the Parties hereby (i) irrevocably
consents and agrees that any legal or equitable action or proceeding arising
under or in connection with this Agreement shall be brought in the Federal or
state courts located in the County of New York or Suffolk in the State of New
York, (ii) by execution and delivery of this Agreement, irrevocably submits to
and accepts the jurisdiction of said courts, (iii) waives any defense that such
court is not a convenient forum, and (iv) consents to any service of process
made in the manner set forth in Paragraph 16(c) of this Agreement (other than by
telecopier), in addition to any other method of service permitted by law. In
any action brought pursuant to this Agreement based on an alleged breach of this
Agreement, the prevailing Party shall be entitled to reimbursement of all costs
incurred by it in connection therewith to the extent, if at all, awarded or
allowed by the court or other tribunal in which the action or proceeding has
been commenced; provided, however, that nothing in this Paragraph 16(d) shall be
construed to affect in any manner the provisions of Paragraphs 11(c)(v) and (vi)
of this Agreement.

(e) Each of the Parties to this Agreement shall be responsible
and liable for its own expenses incurred in connection with the preparation of
this Agreement and the consummation of the transactions contemplated by this
Agreement and related expenses, except as expressly provided in this Agreement.

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<PAGE>

(f) Each Party to this Agreement is relying on his or its own
tax advisors as to the tax consequences of this Agreement and the transactions
contemplated by this Agreement, and no party is making any representations or
warranties of any kind as to such tax consequences to any other Party.

(g) No Party shall make a public announcement concerning this
Agreement without the consent of the other Parties except to the extent that
disclosure is required under applicable laws.

(h) This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective successors and permitted assigns;
provided, however, that, except as expressly provided in this Agreement, no
Party may assign this Agreement or any of its rights under this Agreement
without the prior written consent of the other Parties.

(i) Each Party agrees, without cost or expense to any other
Party, to deliver or cause to be delivered such other documents and instruments
and to take such other action as may be reasonably requested by any other party
to this Agreement in order to carry out more fully the provisions of, and to
consummate the transaction contemplated by, this Agreement.

(j) This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

[Signatures on Next Page]

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<PAGE>

IN WITNESS WHEREOF, the Parties have executed this Agreement on the date
first written above.

TRANS GLOBAL SERVICES, INC.

By: /s/ Joseph G. Sicinski
----------------------------------------
Joseph G. Sicinski, President and CEO

CONSOLIDATED TECHNOLOGY GROUP LTD.

By: /s/ Seymour Richter
----------------------------------------
Seymour Richter, President

ARC NETWORKS, INC.

By: /s/ Peter F. Parrinello
----------------------------------------
Peter F. Parrinello, President and CEO

TECHNOLOGY ACQUISITIONS LTD.

By: /s/ Frank DeLape
----------------------------------------
Name: Frank DeLape
Title: Director

GEMINI II, INC.

By: /s/ Christopher H. Efird
----------------------------------------
Name: Christopher H. Efird
Title: President

-19-

<PAGE>

Exhibit 4.13

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of May 19, 1999, among Gemini II, Inc., a Delaware
corporation (the "COMPANY"), and Consolidated Technology Group Ltd., a New York
corporation ("COTG").

WHEREAS, pursuant to Amendment No. 3 to a Loan Agreement among COTG and
certain subsidiaries of the Company (the "AGREEMENT"), COTG has received as of
the date hereof a warrant (the "WARRANT") to purchase 90,000 shares of common
stock, par value $.0001 per share, of the Company ("COMMON STOCK") and the right
to convert (the "CONVERSION RIGHT") up to $1,650,000 of the principal amount of
the loan into 206,250 shares of Common Stock; and

WHEREAS, in order to induce COTG to enter into the Agreement, the Company
has agreed to provide registration rights on the terms set forth in this
Agreement for the benefit of COTG;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, the parties hereto agree as follows:

1. DEFINITIONS. The following capitalized terms shall have the meanings
assigned to them in this Section 1 or in the parts of this Agreement referred to
below:

COMMISSION: the Securities and Exchange Commission, and any
successor thereto.

EXCHANGE ACT: the Securities Exchange Act of 1934, as amended, and
any successor thereto, and the rules and regulations thereunder.

EXEMPT OFFERING: as defined in Section 2.

REGISTRABLE COMMON: shares of Common Stock that may be issued on
exercise of the Warrant or the Conversion Right. For purposes of this
Agreement, shares of Registrable Common will cease to be Registrable Common
when and to the extent that (i) a registration statement covering such
shares has been declared effective under the Securities Act and such shares
have been disposed of pursuant to such effective registration statement,
(ii) such shares are sold pursuant to Rule 144 or become saleable under
Rule 144(k), or (iii) such shares have been transferred other than to an
affiliate or successor of COTG pursuant to Section 9.

REGISTRATION NOTICE: as defined in Section 2.

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<PAGE>

RULE 144: Securities Act Rule 144 (or any similar or successor
provision under the Securities Act).

SECURITIES ACT: the Securities Act of 1933, as amended, and any
successor thereto, and the rules and regulations thereunder.

SELLING STOCKHOLDERS: as defined in Section 2.

2. PIGGYBACK REGISTRATION RIGHTS. At any time before the third
anniversary of the date of this Agreement, whenever the Company proposes to
register any Common Stock for its own account under the Securities Act for a
public offering for cash, other than a registration relating to the offering or
issuance of shares in connection with (i) employee compensation or benefit plans
or (ii) one or more acquisition transactions under a Registration Statement on
Form S-4 or Form S-1 under the Securities Act (or a successor to Form S-4 or
Form S-1) (any such offering or issuance being an "EXEMPT OFFERING"), the
Company will give COTG written notice of its intent to do so (a "REGISTRATION
NOTICE") at least 15 days prior to the filing of the related registration
statement with the Commission. Such notice shall specify the approximate date
on which the Company proposes to file such registration statement and shall
contain a statement that COTG is entitled to participate in such offering and
shall set forth the number of shares of Common Stock that represents the best
estimate of the lead managing underwriter (or if not known or applicable, the
Company) that will be available for sale in the proposed offering by COTG and
all other stockholders of the Company who have entered into an agreement with
the Company affording them registration rights (collectively with COTG, the
"SELLING STOCKHOLDERS"). If the Company shall have delivered a
Registration Notice, COTG shall be entitled to participate on the same terms and
conditions as the Company and each other Selling Stockholder in the public
offering to which the Registration Notice relates and to offer and sell shares
of Registrable Common therein only to the extent provided in this
Section 2. COTG shall notify the Company no later than ten days following
receipt of the Registration Notice of the aggregate number of shares of
Registrable Common that it then desires to sell in the offering. COTG may
include shares of Registrable Common in the registration statement relating to
the offering to the extent that the inclusion of such shares shall not reduce
the number of shares of Common Stock to be offered and sold by the Company to be
included therein. If the lead managing underwriter selected by the Company for
a public offering (or, if the offering is not underwritten, a financial advisor
to the Company) determines that marketing factors require a limitation on the
number of shares of Registrable Common to be offered and sold in such offering,
there shall be included in the offering only that number of shares of
Registrable Common, if any, requested to be included in the offering that
such lead managing underwriter or financial advisor, as the case may be,
reasonably and in good faith believes will not jeopardize the success of the
offering, PROVIDED, HOWEVER, that if the lead managing underwriter or financial
advisor, as the case may be, determines that marketing factors require a
limitation on the number of shares of Registrable Common to be offered and
sold as aforesaid and so notifies the Company in writing, the number of shares
of Common Stock to be offered and sold by COTG and all other Selling
Stockholders desiring to participate in the offering, shall be allocated among
such holders on a PRO RATA basis based on

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<PAGE>

number of shares of Common Stock as to which each has given the Company
notice of its intention to include in such offering.

3. REGISTRATION PROCEDURES. In connection with registrations under
Section 2, and subject to the terms and conditions contained therein, the
Company shall (a) use its best efforts to prepare and file with the Commission
as soon as reasonably practicable, a registration statement with respect to the
Registrable Common and use its best efforts to cause such registration to
promptly become and remain effective for so long as is necessary to complete the
offering contemplated in such registration statement; (b) prepare and file with
the Commission such amendments (including post-effective amendments) to such
registration statement and supplements to the related prospectus to reflect
appropriately the plan of distribution of the securities registered thereunder
until the completion of the distribution contemplated by such registration
statement or for so long thereafter as a dealer is required by law to deliver a
prospectus in connection with the offer and sale of the shares of Registrable
Common covered by such registration statement and/or as shall be necessary so
that neither such registration statement nor the related prospectus shall
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and so that such registration statement and the related prospectus
will otherwise comply with applicable legal requirements; (c) provide to COTG
and a single counsel for all Selling Stockholders requesting to include
shares of Common Stock in such registration statement, which counsel shall be
selected by the holders of a majority of the shares of Common Stock requested to
be included in such registration statement and shall be reasonably satisfactory
to the Company, an opportunity to review and provide comments with respect to
such registration statement (and any post-effective amendment thereto) prior to
such registration statement (or post-effective amendment) becoming effective;
(d) use its best efforts to register and qualify the Registrable Common covered
by such registration statement under applicable securities or "Blue Sky" laws of
such jurisdictions as COTG shall reasonably request for the distribution of the
Registrable Common; (e) take such other actions as are reasonable and necessary
to comply with the requirements of the Securities Act; (f) furnish such number
of prospectuses (including preliminary prospectuses) and documents incident
thereto as a COTG from time to time may reasonably request; (g) provide to COTG
and any managing underwriter participating in any distribution pursuant to such
registration statement, and to any attorney, accountant or other agent retained
by COTG or such managing underwriter, reasonable access to appropriate officers
and directors of the Company to ask questions and to obtain information
reasonably requested by COTG, such managing underwriter, attorney, accountant or
other agent in connection with such registration statement or any amendment
thereto; PROVIDED, HOWEVER, that (i) in connection with any such access or
request, any such requesting persons shall cooperate to the extent reasonably
practicable to minimize any disruption to the operation by the Company of its
business and (ii) any records, information or documents shall be kept
confidential by such requesting persons, unless (A) such records, information or
documents are in the public domain or otherwise publicly available or (B)
disclosure of such records, information or documents is required by court or
administrative order or by applicable law (including, without limitation, the
Securities Act); (h) notify COTG and the managing underwriters participating in
the distribution pursuant to such registration statement promptly (i) when the

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<PAGE>

Company is informed that such registration statement or any post-effective
amendment to such registration statement becomes effective, (ii) of any
request by the Commission for an amendment or any supplement to such
registration statement or any related prospectus, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of such
registration statement or of any order preventing or suspending the use of
any related prospectus or the initiation or threat of any proceeding for that
purpose, (iv) of the suspension of the qualification of any shares of Common
Stock included in such registration statement for sale in any jurisdiction or
the initiation or threat of a proceeding for that purpose, (v) of any
determination by the Company that any event has occurred which makes untrue
any statement of a material fact made in such registration statement or any
related prospectus or which requires the making of a change in such
registration statement or any related prospectus in order that the same will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (vi) of the completion of the
distribution contemplated by such registration statement if it relates to an
offering by the Company; (i) in the event of the issuance of any stop order
suspending the effectiveness of such registration statement or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any shares of Common Stock included in such registration
statement for sale in any jurisdiction, use reasonable efforts to obtain its
withdrawal; (j) otherwise use reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but not later than
fifteen months after the effective date of such registration statement, an
earnings statement covering the period of at least twelve months beginning
with the first full fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act; (k) use reasonable diligence to cause
all shares of Registrable Common included in such registration statement to
be listed on any securities exchange on which the Common Stock is then listed
at the initiation of the Company; (l) use reasonable diligence to obtain an
opinion from legal counsel (which may include the General Counsel of the
Company) in customary form and covering such matters of the type customarily
covered by opinions as the underwriters, if any, may reasonably request; (m)
provide a transfer agent and registrar for all such Registrable Common not
later than the effective date of such registration statement; (n) enter into
such customary agreements (including an underwriting agreement in customary
form) as the underwriters, if any, may reasonably request in order to
expedite or facilitate the disposition of such shares of Registrable Common;
and (o) use reasonable diligence to obtain a "comfort letter" from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by comfort letters as the
underwriters, if any, may reasonably request. As used in this Section 3 and
elsewhere herein, the term "underwriters" does not include any Selling
Stockholder.

4. UNDERWRITING AGREEMENT. In connection with each registration pursuant
to Section 2 covering an underwritten registered public offering, the Company
and COTG agree to enter into a written agreement with the managing underwriter
in such form and containing such provisions as are customary in the securities
business for such an arrangement between such underwriter and companies of the
Company's size and investment stature, including provisions for indemnification
by the Company and COTG as more fully described in Section 10.

4
<PAGE>

5. AVAILABILITY OF RULE 144. Notwithstanding anything contained herein
to the contrary, the Company shall not be obligated to register shares of
Registrable Common held by COTG when the resale provisions of Rule 144(k) are
available to COTG or COTG is otherwise entitled to sell the shares of
Registrable Common held by it in a brokerage transaction without registration
under the Securities Act and without limitation as to volume or manner of sale
or both.

6. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
shares of Registrable Common held by COTG to the public without registration,
the Company agrees to:

(a) make and keep public information available (as those terms are
understood and defined in Rule 144) at all times from and after 90 days
following the effective date of the registration statement;

(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time that it is subject to such
reporting requirements;

(c) so long as COTG owns any shares of Registrable Common, furnish to
COTG forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act (at any time that it is subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents filed in accordance with such
reporting requirements as COTG may reasonably request in availing itself of
any rule or regulation of the Commission allowing COTG to sell any such
securities without registration; and

(d) if required by the transfer agent and registrar for the Common
Stock, use reasonable diligence to obtain an opinion from legal counsel
(which may include the General Counsel of the Company) addressed to such
transfer agent and registrar, with respect to any sale of shares of
Registrable Common pursuant to Rule 144 (or, at the option of the Company,
pay the reasonable fees and expenses of legal counsel retained by COTG to
provide such an opinion).

5
<PAGE>

securities or Blue Sky laws (including, without limitation, fees and
disbursements of counsel in connection with Blue Sky qualifications of Common
Stock), printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), the fees and
expenses applicable to shares of Registrable Common included in connection
with the listing of the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed at
the initiation of the Company, registrar and transfer agents' fees and fees
and disbursements of counsel for the Company and its independent certified
public accountants, securities act liability insurance of the Company and its
officers and directors (if the Company elects to obtain such insurance), the
fees and expenses of any special experts retained by the Company in
connection with such registration and fees and expenses of other persons
retained by the Company and incurred in connection with each registration
hereunder (but not including, without limitation, any underwriting fees,
discounts or commissions attributable to the sale of Registrable Common, and
transfer taxes, if any), will be borne by the Company.

8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. COTG may not
participate in any underwritten registration hereunder unless COTG (a) agrees to
sell its securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

9. TRANSFER OF REGISTRATION RIGHTS; ADDITIONAL GRANTS OF REGISTRATION
RIGHTS. The registration rights provided to COTG under Section 2 hereof may not
be transferred to any other person or entity, except to an affiliate of COTG or
a successor (by merger, sale of assets, sale of stock or otherwise) to all or
substantially all of the business of COTG who agrees to be bound by all of the
provisions of this Agreement. Nothing herein shall limit the ability of the
Company to grant to any person or entity any registration or similar rights in
the future with respect to Common Stock or other securities of the Company.

10. INDEMNIFICATION AND CONTRIBUTION.

(a) INDEMNIFICATION BY THE COMPANY. To the extent permitted by law,
the Company agrees to indemnify and hold harmless COTG from and against any
and all losses, claims, damages, liabilities and expenses (including
reasonable legal expenses) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Registrable Common or
in any amendment or supplement thereto or in any related preliminary
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of, or are
based upon, any such untrue statement or omission or allegation thereof
based upon information furnished in writing to the Company by COTG or on
COTG's behalf expressly

6
<PAGE>

for use therein. In connection with an underwritten offering of shares
of Registrable Common, the Company will indemnify any underwriters of
the Registrable Common, their partners, officers and directors and each
person who controls such underwriters (within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act) on
substantially the same basis as that of the indemnification of COTG
provided in this Section 10(a). Notwithstanding the foregoing, the
Company's indemnification obligations with respect to any preliminary
prospectus shall not inure to the benefit of COTG or any underwriter
with respect to any loss, claim, damage, liability (or actions in
respect thereof) or expense arising out of or based on any untrue
statement or alleged untrue statement or omission or alleged omission
to state a material fact in such preliminary prospectus, in any case
where (i) a copy of the prospectus used to confirm sales of shares of
Registrable Common was not sent or given to the person asserting such
loss, claim, damage or liability at or prior to the written
confirmation of the sale to such person and (ii) such untrue statement
or alleged untrue statement or omission or alleged omission was
corrected in such prospectus.

(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by COTG of notice of any claim or the commencement of any action or
proceeding brought or asserted against COTG in respect of which indemnity
may be sought from the Company, COTG shall notify the Company in writing of
the claim or the commencement of that action or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Company shall not relieve the
Company from any liability that it may have to COTG otherwise than pursuant
to the indemnification provisions of this Agreement. If any such claim or
action or proceeding shall be brought against COTG and COTG shall have duly
notified the Company thereof, the Company shall have the right to assume
the defense thereof, including the employment of counsel. COTG shall have
the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be
at the expense of COTG unless (i) the Company has agreed to pay such fees
and expenses or (ii) the named parties to any such action or proceeding
include both COTG and the Company, and COTG shall have been advised by
counsel that there may be one or more legal defenses available to COTG
which are different from or additional to those available to the Company,
in which case, if COTG notifies the Company in writing that it elects to
employ separate counsel at the expense of the Company, the Company shall
not have the right to assume the defense of such action or proceeding on
behalf of COTG; it being understood, however, that the Company shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any time for all
Selling Stockholders. The Company shall not be liable for any settlement
of any such action or proceeding effected without the Company's written
consent.

(c) INDEMNIFICATION BY COTG. In connection with any registration in
which COTG is participating, COTG will furnish to the Company in writing
such information and

7
<PAGE>

affidavits as the Company reasonably requests for use in connection
with any related registration statement or prospectus. To the extent
permitted by law, COTG agrees to indemnify and hold harmless the
Company, its directors and officers who sign the registration statement
relating to shares of Registrable Common offered by COTG and each
person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to COTG,
but only with respect to information concerning COTG furnished in
writing by COTG or on COTG's behalf expressly for use in any
registration statement or prospectus relating to shares of Registrable
Common offered by COTG, or any amendment or supplement thereto, or any
related preliminary prospectus. In case any action or proceeding shall
be brought against the Company or its directors or officers, or any
such controlling person, in respect of which indemnity may be sought
against COTG, COTG shall have the rights and duties given to the
Company, and the Company or its directors or officers or such
controlling persons shall have the rights and duties given to COTG, by
the preceding paragraph. COTG also agrees to indemnify and hold
harmless any underwriters of the Registrable Common, their partners,
officers and directors and each person who controls such underwriters
(within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) on substantially the same basis as that
of the indemnification of the Company provided in this Section 10(c).
Notwithstanding anything to the contrary herein, in no event shall the
amount paid or payable by COTG under this Section 10(c) exceed the
amount of proceeds received by COTG from the offering of the
Registrable Common.

(d) CONTRIBUTION. If the indemnification provided for in this
Section 10 is unavailable to any indemnified party in respect of any
losses, claims, damages, liabilities or expenses referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities and expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified parties in connection with the
actions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnified party or indemnified parties and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The Company and COTG agree
that it would not be just and equitable if contribution pursuant to this
Section 10(d) were determined by PRO RATA allocation or by any other method
of allocation that does not take account of the equitable considerations
referred to in this Section 10(d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. If indemnification is available
under this Section 10, the indemnifying parties shall indemnify each
indemnified

8
<PAGE>

party to the full extent provided in Sections 10(a) and (c) without regard
to the relative fault of said indemnifying party or indemnified party or
any other equitable consideration provided for in this Section 10(d).

11. MISCELLANEOUS

(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, except by an instrument in
writing signed by both the Company and COTG.

(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by telex or telecopy, or
registered or certified mail (return receipt requested), postage prepaid,
or courier to the parties at the following addresses (or at such other
address for any party as shall be specified by like notice), PROVIDED that
notices of a change of address shall be effective only upon receipt
thereof. Notices sent by mail shall be effective when delivered, notices
sent by telecopier shall be effective when receipt is acknowledged, and
notices sent by courier guaranteeing next day delivery shall be effective
on the next business day after timely delivery by the courier. Notices
shall be sent to the following addresses:

(i) if to COTG, at the most current address given by COTG to the
Company in a writing making specific reference to this Agreement;

(ii) if to the Company, at the following address:

700 Gemini, Suite 100
Houston, Texas 77058
Attn.: Christopher H. Efird, President
Telecopy No.: (281) 488-5353

with copies to:

Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002-2764
Attn: Robert G. Reedy
Telecopy: (713) 228-4935

9
<PAGE>

(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the heirs, executors, administrators,
successors and assigns of each of the parties.

(d) 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.

(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

(f) SECTION REFERENCES. Unless the context requires otherwise,
references in this Agreement to "Sections" are to Sections of this
Agreement.

(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT STATE.

(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstances, 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 contained herein shall not be in any way
impaired thereby, it being intended that all the rights and privileges of
COTG shall be enforceable to the fullest extent permitted by law.

(i) ENTIRE AGREEMENT; TERMINATION. This Agreement 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. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter. This Agreement, except the
provisions of Section 10 (which shall survive until the expiration of the
applicable statutes of limitations) and this Section 11, shall terminate
and be of no further force or effect on the third anniversary of the date
of this Agreement.

10
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

GEMINI II, INC.

By: /s/ Christopher H. Efird
-------------------------------------
Name: Christopher H. Efird
-----------------------------------
Title: President
----------------------------------

CONSOLIDATED TECHNOLOGY GROUP LTD.

By: /s/ Richard Young
-------------------------------------
Name: Richard Young
-----------------------------------
Title: President and Chief
Operating Officer
-----------------------------------

<PAGE>

NO.___
FORM OF
CERTIFICATE OF CONTINGENT INTEREST
IN COMMON STOCK $0.0001 PAR VALUE OF

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

ISSUED PURSUANT TO AN AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF
JUNE ___, 1999
BY AND AMONG

OMNILYNX COMMUNICATIONS CORPORATION,

ACQUISITION, INC.
-------------
AND
------------------
AND
ITS STOCKHOLDERS

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY ONLY BE SOLD OR OTHERWISE TRANSFERRED IF THE HOLDER
HEREOF COMPLIES WITH THAT ACT AND OTHER APPLICABLE SECURITIES LAWS.

EXCEPT PURSUANT TO THE TERMS OF THE AGREEMENT AND PLAN OF REORGANIZATION AMONG
THE ISSUER, THE HOLDER OF THIS CERTIFICATE AND THE OTHER PARTIES THERETO, THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE VOLUNTARILY SOLD, ASSIGNED,
EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED OR OTHERWISE
DISPOSED OF, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED VOLUNTARY SALE, ASSIGNMENT, EXCHANGE, TRANSFER, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT OR OTHER DISPOSITION OF ANY OF THOSE SHARES, DURING
THE TWO-YEAR PERIOD ENDING ON THE SECOND ANNIVERSARY OF THE CLOSING DATE OF THE
INITIAL PUBLIC OFFERING (THE "RESTRICTED PERIOD"). ON THE WRITTEN REQUEST OF
THE HOLDER OF THIS CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE
LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE EXPIRATION
OF THE RESTRICTED PERIOD.

THE CORPORATION IS AUTHORIZED TO ISSUE SHARES OF MORE THAN ONE CLASS OF STOCK OR
MORE THAN ONE SERIES OF A CLASS. THE CORPORATION WILL FURNISH A STATEMENT OF
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS,
WITHOUT CHARGE, TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE OF A WRITTEN
REQUEST FROM THE HOLDER REQUESTING SUCH COPY.

READ THIS CERTIFICATE CAREFULLY

THIS CERTIFICATE IS NOT
TRANSFERABLE OR ASSIGNABLE EXCEPT AS HEREIN PROVIDED

<PAGE>

This is to certify that __________ is the registered holder of _______
Units of Contingent Interest with respect to shares of Common Stock, $0.0001 par
value, of OmniLynx Communications Corporation, a Delaware corporation
("Purchaser Common Stock"), issued pursuant to the provisions of the Agreement
and Plan of Reorganization dated as of June ___, 1999. Each Unit of
Contingent Interest represents the right to receive the number of shares of
Purchaser Common Stock, if any, that may be distributable upon the terms and
subject to the conditions hereinafter set forth.

OMNILYNX COMMUNICATIONS CORP.

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

Dated: June ___, 1999

<PAGE>

This Certificate is one of the Contingent Interest Certificates for an aggregate
of _______ Units of Contingent Interest ("Contingent Stock Issue Rights") issued
pursuant to the Agreement and Plan of Reorganization (the "Merger Agreement")
dated as of June ___, 1999, among OmniLynx Communications Corporation, a
Delaware corporation ("Purchaser"), _______ Acquisition, Inc., a ____________
corporation and wholly-owned subsidiary of Purchaser ("Acquisition Subsidiary"),
______________ , a _________ corporation (the "Operating Company"), and the
stockholders of the Operating Company pursuant to which the Acquisition
Subsidiary was merged (the "Merger") with and into the Operating Company. The
terms and conditions upon which the registered holder of this Certificate may
become entitled to shares of common stock, $0.0001 par value, of Purchaser
("Purchaser Common Stock") are set forth below. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Merger
Agreement.

SECTION 1. RIGHTS TO PURCHASER COMMON STOCK

Subject to the terms hereof, and subject to the satisfaction of the
conditions provided herein, each Unit of Contingent Stock Issue Rights shall
entitle the holder thereof to receive, and shall automatically be converted into
that number of shares of Purchaser Common Stock, if any, determined as follows:

(i) upon the occurrence of the First Purchaser Triggering Event
(as hereinafter defined) at any time after ninety days of the date of the
Merger and on or before the third anniversary of the date of the Merger
(the "Anniversary"), each Unit of Contingent Stock Issue Right shall
entitle the holder thereof to receive one-half of a share of Purchaser
Common Stock on the date the First Purchaser Triggering Event
occurs; and

(ii) upon the occurrence of the Second Purchaser Triggering Event
(as hereinafter defined) at any time after ninety days of the date of the
Merger and on or before the Anniversary, each Unit of Contingent Stock
Issue Right shall entitle the holder thereof to receive one-half of a share
of Purchaser Common Stock on the date of the Second Purchaser Triggering
Event; provided, that if the First Purchaser Triggering Event has not
previously occurred, the holder shall receive one share of Purchaser
Common Stock on the date of the Second Purchaser Triggering Event.

(iii) if a First Purchaser Triggering Event or a Second Purchaser
Triggering Event does not occur on or before the Anniversary, then this
Contingent Stock Issue Right shall not entitle the holder to receive any
shares of Purchaser Common Stock and these Contingent Stock Issue Rights
shall terminate and be of no further force or effect.

For the purposes of this Section 1:

(i) the First Purchaser Triggering Event shall have occurred if
the average of the Fair Market Values for the Purchaser Common Stock
over a period of 10 consecutive trading

<PAGE>

days is greater than or equal to $16.00 per share but less than $21.00 per
share (as adjusted for stock splits, combinations and other similar
corporate events).

(ii) the Second Purchaser Triggering Event shall have occurred if
the average of the Fair Market Values for the Purchaser Common Stock over a
period of 10 consecutive trading days is greater than or equal to $21.00
per share (as adjusted for stock splits, combinations and other similar
corporate events).

(iii) the "Fair Market Value" of one share of Purchaser Common Stock
shall mean, for any trading day, (y) the closing sale price for a share of
Purchaser Common Stock on such trading day on the American Stock Exchange
("AMEX"), or (z) if not quoted on AMEX on such day, the average of the
closing bid and asked prices for a share of Purchaser Common Stock as
quoted on any other recognized stock exchange on which such shares are then
listed.

Upon satisfaction of the conditions specified in Section 1, the
registered holder of this Certificate shall be considered a record holder
of the number of shares of Purchaser Common Stock specified in this Section
1. Upon satisfaction of the conditions specified in Section 1, Purchaser
shall issue to the holder of this Certificate, upon surrender of this
Certificate to Purchaser or an agent designated by Purchaser, that number
of shares of Purchaser Common Stock issuable upon conversion of the number
of Contingent Stock Issue Rights represented by this Certificate.

SECTION 2. DIVIDENDS

No dividends shall be payable with respect to the Purchaser Common Stock
represented by this Certificate until a record date has occurred after the
issuance thereof.

SECTION 3. REPLACEMENT OF CERTIFICATES

Upon receipt of evidence satisfactory to Purchaser or its agent of the
loss, theft, destruction, or mutilation of any Certificate and upon receipt of
indemnity reasonable satisfactory to Purchaser or its agent, Purchaser shall
deliver a new Certificate for the number of Contingent Stock Issue
Rights represented by the Certificate so lost, stolen, destroyed, or mutilated.

SECTION 4. HOLDER NOT STOCKHOLDER

This Certificate does not entitle the holder thereof to any voting or other
rights as a stockholder of Purchaser.

<PAGE>

SECTION 5. ADJUSTMENT OF PURCHASER COMMON STOCK

5.1 STOCK DIVIDENDS, ETC. In case Purchaser shall (1) pay a dividend in
shares of Purchaser Common Stock; (2) subdivide outstanding shares of Purchaser
Common Stock; (3) combine outstanding shares of Purchaser Common Stock into a
smaller number of shares; or (4) issue by reclassification any shares of Common
Stock, the number of shares of Purchaser Common Stock issuable upon conversion
of the Contingent Stock Issue Rights represented by this Certificate shall be
proportionately adjusted.

5.2 MERGER, ETC. In case of (1) any consolidation or merger of Purchaser
or any of its affiliates with or into another corporation or (2) any sale,
transfer, or other disposition of all or substantially all of the property,
assets, or business of Purchaser or its affiliates, as a result of
which property (cash or otherwise) shall be payable or distributable to the
holders of Purchaser Common Stock, the Certificate shall thereafter represent
the number and class of shares or other securities or property of Purchaser, or
of the corporation or other entity resulting from such consolidation or merger
or to which such sale, transfer, or other disposition shall have been made for
or into which the Purchaser Common Stock underlying this Certificate would have
been exchanged or converted upon such event if outstanding at the time thereof,
with appropriate adjustments to the First Purchaser Triggering Event and Second
Purchaser Triggering Event conditions so as to maintain as nearly as reasonably
practicable the intent of the parties hereunder and which adjustments shall be
determined in good faith by the Purchaser Board of Directors. The terms of any
such consolidation, merger, sale, transfer, or other disposition shall include
appropriate provisions in accordance with the provisions of this Section 5.2.
The provisions of this Section 5.2 shall similarly apply to successive
consolidations, mergers, sales, transfers, or other dispositions as aforesaid.

5.3 NOTICE. Whenever an adjustment is made as provided in this Section 5,
Purchaser shall promptly mail to the holder of this Certificate, at the address
appearing below unless changed by written notice by the holder, a statement
setting forth the adjustment and the facts giving rise thereto.

SECTION 6. TRANSFER OF CERTIFICATES

This Certificate is not transferable or assignable except by the laws of
descent and distribution, by will or by operation of law.

SECTION 7. INITIAL ADDRESS FOR NOTICE

Notice may be given at the following address:

700 Gemini, Suite 100
Houston, Texas 77058

<PAGE>

SECTION 8. GOVERNING LAW

This Certificate shall be governed by and construed in accordance with the
laws of the State of Delaware.

<PAGE>

Exhibit 10.1

OMNILYNX COMMUNICATIONS CORPORATION
1999 STOCK INCENTIVE PLAN

(AS EFFECTIVE MARCH 17, 1999)

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. GENERAL PROVISIONS RELATING TOPLAN GOVERNANCE, COVERAGE AND BENEFITS . .1
1.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
(a) Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . .1
(b) Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(c) Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(d) Change in Control. . . . . . . . . . . . . . . . . . . . . . . . .2
(e) Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(f) Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
(g) Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(h) Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(i) Consultant . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(j) Covered Employee . . . . . . . . . . . . . . . . . . . . . . . . .3
(k) Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(l) Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(m) Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
(n) Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(o) Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . . .4
(p) Grantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
(q) Immediate Family . . . . . . . . . . . . . . . . . . . . . . . . .4
(r) Incentive Agreement. . . . . . . . . . . . . . . . . . . . . . . .5
(s) Incentive Award. . . . . . . . . . . . . . . . . . . . . . . . . .5
(t) Incentive Stock Option . . . . . . . . . . . . . . . . . . . . . .5
(u) Insider. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
(v) Nonstatutory Stock Option. . . . . . . . . . . . . . . . . . . . .5
(w) Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . .5
(x) Other Stock-Based Award. . . . . . . . . . . . . . . . . . . . . .5
(y) Outside Director . . . . . . . . . . . . . . . . . . . . . . . . .5
(z) Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
(aa) Performance-Based Exception. . . . . . . . . . . . . . . . . . . .5
(bb) Performance Period . . . . . . . . . . . . . . . . . . . . . . . .5
(cc) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(dd) Publicly Held Corporation. . . . . . . . . . . . . . . . . . . . .6
(ee) Restricted Stock . . . . . . . . . . . . . . . . . . . . . . . . .6
(ff) Restricted Stock Award . . . . . . . . . . . . . . . . . . . . . .6
(gg) Restriction Period . . . . . . . . . . . . . . . . . . . . . . . .6
(hh) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(ii) Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(jj) Share Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
(kk) Stock Option or Option . . . . . . . . . . . . . . . . . . . . . .6

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<PAGE>

(ll) Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.3 Plan Administration. . . . . . . . . . . . . . . . . . . . . . . . . . .6
(a) Authority of the Committee . . . . . . . . . . . . . . . . . . . .6
(b) Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
(c) Decisions Binding. . . . . . . . . . . . . . . . . . . . . . . . .7
(d) Modification of Outstanding Incentive Awards . . . . . . . . . . .7
(e) Delegation of Authority. . . . . . . . . . . . . . . . . . . . . .7
(f) Expenses of Committee. . . . . . . . . . . . . . . . . . . . . . .8
(g) Surrender of Previous Incentive Awards . . . . . . . . . . . . . .8
(h) Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . .8
1.4 Shares of Common Stock Available for Incentive Awards. . . . . . . . . .8
1.5 Share Pool Adjustments for Awards and Payouts. . . . . . . . . . . . . .9
1.6 Common Stock Available. . . . . . . . . . . . . . . . . . . . . . . . 10
1.7 Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Incentive Stock Option Eligibility . . . . . . . . . . . . . . . 10
1.8 Types of Incentive Awards. . . . . . . . . . . . . . . . . . . . . . . 11

SECTION 2. STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Grant of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Stock Option Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Written Agreement. . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(f) $100,000 Annual Limit on Incentive Stock Options . . . . . . . . 12
2.3 Stock Option Exercises . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Method of Exercise and Payment . . . . . . . . . . . . . . . . . 12
(b) Restrictions on Share Transferability. . . . . . . . . . . . . . 13
(c) Notification of Disqualifying Disposition of Shares from
Incentive Stock Options. . . . . . . . . . . . . . . . . . . . . 13
(d) Proceeds of Option Exercise. . . . . . . . . . . . . . . . . . . 14
2.4 Reload Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

SECTION 3. RESTRICTED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Award of Restricted Stock. . . . . . . . . . . . . . . . . . . . . . . 14
(a) Grant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Immediate Transfer Without Immediate Delivery of Restricted
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Forfeiture of Restricted Stock . . . . . . . . . . . . . . . . . 15
(b) Issuance of Certificates . . . . . . . . . . . . . . . . . . . . 15
(c) Removal of Restrictions. . . . . . . . . . . . . . . . . . . . . 16
3.3 Delivery of Shares of Common Stock . . . . . . . . . . . . . . . . . . 16

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<PAGE>

SECTION 4. OTHER STOCK-BASED AWARDS . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Grant of Other Stock-Based Awards. . . . . . . . . . . . . . . . . . . 16
4.2 Other Stock-Based Award Terms. . . . . . . . . . . . . . . . . . . . . 16
(a) Written Agreement. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) Performance Criteria and Other Terms . . . . . . . . . . . . . . 17
(d) Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

SECTION 5. PROVISIONS RELATING TO PLAN PARTICIPATION. . . . . . . . . . . . . . . 17
5.1 Plan Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Incentive Agreement. . . . . . . . . . . . . . . . . . . . . . . 17
(b) No Right to Employment . . . . . . . . . . . . . . . . . . . . . 18
(c) Securities Requirements. . . . . . . . . . . . . . . . . . . . . 18
5.2 Transferability and Exercisability . . . . . . . . . . . . . . . . . . 19
5.3 Rights as a Stockholder. . . . . . . . . . . . . . . . . . . . . . . . 20
(a) No Stockholder Rights. . . . . . . . . . . . . . . . . . . . . . 20
(b) Representation of Ownership. . . . . . . . . . . . . . . . . . . 20
5.4 Listing and Registration of Shares of Common Stock . . . . . . . . . . 20
5.5 Change in Stock and Adjustments. . . . . . . . . . . . . . . . . . . . 20
(a) Changes in Law or Circumstances. . . . . . . . . . . . . . . . . 20
(b) Exercise of Corporate Powers . . . . . . . . . . . . . . . . . . 21
(c) Recapitalization of the Company. . . . . . . . . . . . . . . . . 21
(d) Reorganization of the Company. . . . . . . . . . . . . . . . . . 21
(e) Issue of Common Stock by the Company . . . . . . . . . . . . . . 22
(f) Acquisition of the Company . . . . . . . . . . . . . . . . . . . 22
(g) Assumption under the Plan of Outstanding Stock Options . . . . . 22
(h) Assumption of Incentive Awards by a Successor. . . . . . . . . . 23
5.6 Termination of Employment, Death, Disability and Retirement. . . . . . 23
(a) Termination of Employment. . . . . . . . . . . . . . . . . . . . 23
(b) Termination of Employment for Cause. . . . . . . . . . . . . . . 24
(c) Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Disability or Death. . . . . . . . . . . . . . . . . . . . . . . 24
(e) Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Change in Control. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.8 Exchange of Incentive Awards . . . . . . . . . . . . . . . . . . . . . 27
5.9 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

SECTION 6. GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.1 Effective Date and Grant Period. . . . . . . . . . . . . . . . . . . . 27
6.2 Funding and Liability of Company . . . . . . . . . . . . . . . . . . . 28
6.3 Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Tax Withholding. . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Share Withholding. . . . . . . . . . . . . . . . . . . . . . . . 28

iii
<PAGE>

(c) Incentive Stock Options. . . . . . . . . . . . . . . . . . . . . 28
(d) Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 No Guarantee of Tax Consequences . . . . . . . . . . . . . . . . . . . 29
6.5 Designation of Beneficiary by Participant. . . . . . . . . . . . . . . 29
6.6 Deferrals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Amendment and Termination. . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Requirements of Law. . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Rule 16b-3 Securities Law Compliance . . . . . . . . . . . . . . . . . 30
6.10 Compliance with Code Section 162(m). . . . . . . . . . . . . . . . . . 30
6.11 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.12 Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . 31
6.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.14 Gender, Tense and Headings . . . . . . . . . . . . . . . . . . . . . . 31
6.15 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>

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<PAGE>

OMNILYNX COMMUNICATIONS CORPORATION
1999 STOCK INCENTIVE PLAN

SECTION 1.

GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS

1.1 PURPOSE

The purpose of the Plan is to foster and promote the long-term
financial success of OmniLynx Communications Corporation (the "Company") and
its Subsidiaries and to increase stockholder value by: (a) encouraging the
commitment of selected key Employees, Consultants and Outside Directors, (b)
motivating superior performance of key Employees, Consultants and Outside
Directors by means of long-term performance related incentives, (c)
encouraging and providing key Employees, Consultants and Outside Directors
with a program for obtaining ownership interests in the Company which link
and align their personal interests to those of the Company's stockholders,
(d) attracting and retaining key Employees, Consultants and Outside Directors
by providing competitive incentive compensation opportunities, and (e)
enabling key Employees, Consultants and Outside Directors to share in the
long-term growth and success of the Company.
The Plan provides for payment of various forms of incentive compensation
and it is not intended to be a plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended (ERISA). The Plan shall be interpreted,
construed and administered consistent with its status as a plan that is not
subject to ERISA.

Subject to approval by the Company's stockholders pursuant to SECTION
6.1, the Plan shall become effective as of March 17, 1999 (the "EFFECTIVE
DATE"). The Plan shall commence on the Effective Date, and shall remain in
effect, subject to the right of the Board to amend or terminate the Plan at any
time pursuant to SECTION 6.7, until all Shares subject to the Plan have
been purchased or acquired according to its provisions. However, in no event
may an Incentive Award be granted under the Plan after the expiration of ten
(10) years from the Effective Date.

1.2 DEFINITIONS

The following terms shall have the meanings set forth below:

(a) AUTHORIZED OFFICER. The Chairman of the Board or the Chief
Executive Officer of the Company or any other senior officer of the
Company to whom either of them delegate the authority to execute any
Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive
Agreement for himself.

<PAGE>

(b) BOARD. The Board of Directors of the Company.

(c) CAUSE. When used in connection with the termination of a
Grantee's Employment, shall mean the termination of the Grantee's
Employment by the Company by reason of (i) the conviction of the Grantee
by a court of competent jurisdiction as to which no further appeal can be
taken of a crime involving moral turpitude or a felony; (ii) the proven
commission by the Grantee of an act of fraud upon the Company; (iii) the
willful and proven misappropriation of any funds or property of the
Company by the Grantee; (iv) the willful, continued and unreasonable
failure by the Grantee to perform the material duties assigned to him;
(v) the knowing engagement by the Grantee in any direct, material
conflict of interest with the Company without compliance with the
Company's conflict of interest policy, if any, then in effect; or (vi)
the knowing engagement by the Grantee, without the written approval of
the Board, in any activity which competes with the business of the
Company or which would result in a material injury to the business,
reputation or goodwill of the Company.

(d) CHANGE IN CONTROL. Any of the events described in and
subject to SECTION 5.7.

(e) CODE. The Internal Revenue Code of 1986, as amended, and
the regulations and other authority promulgated thereunder by the
appropriate governmental authority. References herein to any provision
of the Code shall refer to any successor provision thereto.

(f) COMMITTEE. A committee appointed by the Board consisting
of not less than two directors as appointed by the Board to administer
the Plan. During such period that the Company is a Publicly Held
Corporation, the Plan shall be administered by a committee appointed by
the Board consisting of not less than two directors who fulfill the
"non-employee director" requirements of Rule 16b-3 under the Exchange Act
and the "outside director" requirements of Section 162(m) of the Code.
In either case, the Committee may be the Compensation Committee of the
Board, or any subcommittee of the Compensation Committee, provided that
the members of the Committee satisfy the requirements of the previous
provisions of this paragraph. The Board shall have the power to fill
vacancies on the Committee arising by resignation, death, removal or
otherwise. The Board, in its sole discretion, may bifurcate the powers
and duties of the Committee among one or more separate committees, or
retain all powers and duties of the Committee in a single Committee. The
members of the Committee shall serve at the discretion of the Board.

Notwithstanding the preceding paragraph, the term "Committee" as
used in the Plan with respect to any Incentive Award for an Outside
Director shall refer to the entire Board. In the case of an Incentive
Award for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award,
and any actions as to such Incentive Award may be acted upon only by the
Board (unless it otherwise designates in its discretion). When the Board
exercises its authority to act

2
<PAGE>

in the capacity as the Committee hereunder with respect to an Incentive
Award for an Outside Director, it shall so designate with respect to any
action that it undertakes in its capacity as the Committee.

(g) COMMON STOCK. The common stock of the Company, $.0001 par
value per share, and any class of common stock into which such common
shares may hereafter be converted, reclassified or recapitalized.

(h) COMPANY. OmniLynx Communications Corp., a corporation
organized under the laws of the State of Delaware, and any successor in
interest thereto.

(i) CONSULTANT. An independent agent, consultant, attorney, an
individual who has agreed to become an Employee, or any other individual
who is not an Outside Director or employee of the Company (or any Parent
or Subsidiary) and who, in the opinion of the Committee, is in a position
to contribute materially to the growth or financial success of the
Company (or any Parent or Subsidiary).

(j) COVERED EMPLOYEE. A named executive officer who is one of
the group of covered employees, as defined in Section 162(m) of the Code
and Treasury Regulation Section 1.162-27(c) (or its successor), during
such period that the Company is a Publicly Held Corporation.

(k) DISABILITY. As determined by the Committee in its
discretion exercised in good faith, a physical or mental condition of the
Employee that would entitle him to payment of disability income payments
under the Company's long term disability insurance policy or plan for
employees, as then effective, if any; or in the event that the Grantee is
not covered, for whatever reason, under the Company's long-term
disability insurance policy or plan, "Disability" means a permanent and
total disability as defined in Section 22(e)(3) of the Code. A
determination of Disability may be made by a physician selected or
approved by the Committee and, in this respect, the Grantee shall submit
to an examination by such physician upon request.

(l) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code who, in the
opinion of the Committee, is in a position to contribute to the growth,
development and financial success of the Company (or any Parent or
Subsidiary), including, without limitation, officers who are members of
the Board.

(m) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Incentive Award
in any transaction described in Section 424(a) of the Code, or by a
parent corporation or a subsidiary corporation of such corporation
issuing or assuming such Incentive Award, as the parent-subsidiary
relationship shall be determined at the time of the corporate action
described in Section 424(a) of the Code. In this regard, neither the
transfer of a Grantee from Employment by the Company to Employment by
any Parent or Subsidiary, nor the transfer of a Grantee

3
<PAGE>

from Employment by any Parent or Subsidiary to Employment by the
Company, shall be deemed to be a termination of Employment of the
Grantee. Moreover, the Employment of a Grantee shall not be
deemed to have been terminated because of an approved leave of
absence from active Employment on account of temporary illness,
authorized vacation or granted for reasons of professional advancement,
education, health, or government service, or during military leave for
any period (if the Grantee returns to active Employment within 90 days
after the termination of military leave), or during any period required
to be treated as a leave of absence by virtue of any applicable statute,
Company personnel policy or agreement. Whether an authorized
leave of absence shall constitute termination of Employment hereunder
shall be determined by the Committee in its discretion.

Unless otherwise provided in the Incentive Agreement, the term
"Employment" for purposes of the Plan is also defined to include (i)
compensatory services performed by a Consultant for the Company (or any
Parent or Subsidiary) and (ii) membership on the Board by an Outside
Director.

(n) EXCHANGE ACT. The Securities Exchange Act of 1934, as
amended.

(o) FAIR MARKET VALUE. The Fair Market Value of one share of
Common Stock on the date in question is deemed to be (i) the closing
sales price on the immediately preceding business day of a share of
Common Stock as reported on the consolidated reporting system for the
securities exchange(s) on which Shares are then listed or admitted to
trading (as reported in the WALL STREET JOURNAL or other reputable
source), or (ii) if not so reported, the average of the closing bid and
asked prices for a Share on the immediately preceding business day as
quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or (iii) if not quoted on NASDAQ, the
average of the closing bid and asked prices for a Share as quoted by the
National Quotation Bureau's "Pink Sheets" or the National Association of
Securities Dealers' OTC Bulletin Board System. If there was no public
trade of Common Stock on the date in question, Fair Market Value shall be
determined by reference to the last preceding date on which such a trade
was so reported.

If the Company is not a Publicly Held Corporation at the time a
determination of the Fair Market Value of the Common Stock is required to
be made hereunder, the determination of Fair Market Value for purposes of
the Plan shall be made by the Committee in its discretion exercised in
good faith. In this respect, the Committee may rely on such financial
data, valuations, experts, and other sources, in its discretion, as it
deems advisable under the circumstances.

(p) GRANTEE. Any Employee, Consultant or Outside Director who
is granted an Incentive Award under the Plan.

(q) IMMEDIATE FAMILY. With respect to a Grantee, the Grantee's
spouse, children or grandchildren (including legally adopted and step
children and grandchildren)

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<PAGE>

(r) INCENTIVE AGREEMENT. The written agreement entered into
between the Company and the Grantee setting forth the terms and
conditions pursuant to which an Incentive Award is granted under the
Plan, as such agreement is further defined in SECTION 6.1(a).

(s) INCENTIVE AWARD. A grant of an award under the Plan to a
Grantee, including any Nonstatutory Stock Option, Incentive Stock Option,
Reload Option, Restricted Stock Award, or Other Stock-Based Award.

(t) INCENTIVE STOCK OPTION OR ISO. A Stock Option granted by
the Committee to an Employee under SECTION 2 which is designated by the
Committee as an Incentive Stock Option and intended to qualify as an
Incentive Stock Option under Section 422 of the Code.

(u) INSIDER. An individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of
the Company's equity securities that is registered pursuant to Section 12
of the Exchange Act, all as defined under Section 16 of the Exchange Act.

(v) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
Committee to a Grantee under SECTION 2 that is not designated by the
Committee as an Incentive Stock Option.

(w) OPTION PRICE. The exercise price at which a Share may be
purchased by the Grantee of a Stock Option.

(x) OTHER STOCK-BASED AWARD. An award granted by the Committee
to a Grantee under SECTION 4.1 that is valued in whole or in part by
reference to, or is otherwise based upon, Common Stock.

(y) OUTSIDE DIRECTOR. A member of the Board who is not, at the
time of grant of an Incentive Award, an employee of the Company or any
Parent or Subsidiary.

(z) PARENT. Any corporation (whether now or hereafter
existing) which constitutes a "parent" of the Company, as defined in
Section 424(e) of the Code.

(aa) PERFORMANCE-BASED EXCEPTION. The performance-based
exception from the tax deductibility limitations of Section 162(m) of the
Code, as prescribed in Code Section 162(m) and Treasury Regulation
Section 1.162-27(e) (or its successor), which is applicable during such
period that the Company is a Publicly Held Corporation.

(bb) PERFORMANCE PERIOD. A period of time, as may be determined
in the discretion of the Committee and set out in the Incentive
Agreement, over which performance is measured for the purpose of
determining a Grantee's right to and the payment value of an Incentive
Award.

5
<PAGE>

(cc) PLAN. The OmniLynx Communications Corp. 1999 Stock
Incentive Plan as set forth herein and as it may be amended from time to
time.

(dd) PUBLICLY HELD CORPORATION. A corporation issuing any class
of common equity securities required to be registered under Section 12 of
the Exchange Act.

(ee) RESTRICTED STOCK. Shares of Common Stock issued or
transferred to a Grantee pursuant to SECTION 3.

(ff) RESTRICTED STOCK AWARD. An authorization by the Committee
to issue or transfer Restricted Stock to a Grantee.

(gg) RESTRICTION PERIOD. The period of time determined by the
Committee and set forth in the Incentive Agreement during which the
transfer of Restricted Stock by the Grantee is restricted.

(hh) RETIREMENT. The voluntary termination of Employment from
the Company or any Parent or Subsidiary constituting retirement for age
on any date after the Employee attains the normal retirement age of 65
years, or such other age as may be designated by the Committee in the
Employee's Incentive Agreement.

(ii) SHARE. A share of the Common Stock of the Company.

(jj) SHARE POOL. The number of shares authorized for issuance
under SECTION 1.4, as adjusted for awards and payouts under SECTION 1.5
and as adjusted for changes in corporate capitalization under SECTION
5.5.

(kk) STOCK OPTION OR OPTION. Pursuant to SECTION 2, (i) an
Incentive Stock Option granted to an Employee or (ii) a Nonstatutory
Stock Option granted to an Employee, Consultant or Outside Director,
whereunder such stock option the Grantee has the right to purchase Shares
of Common Stock. In accordance with Section 422 of the Code, only an
Employee may be granted an Incentive Stock Option.

(ll) SUBSIDIARY. Any corporation (whether now or hereafter
existing) which constitutes a "subsidiary" of the Company, as defined in
Section 424(f) of the Code.

1.3 PLAN ADMINISTRATION

(a) AUTHORITY OF THE COMMITTEE. Except as may be limited by
law and subject to the provisions herein, the Committee shall have full
power to (i) select Grantees who shall participate in the Plan; (ii)
determine the sizes, duration and types of Incentive Awards;
(iii) determine the terms and conditions of Incentive Awards and
Incentive Agreements; (iv) determine whether any Shares subject to
Incentive Awards will be subject to any restrictions on transfer; (v)
construe and interpret the Plan and any Incentive Agreement or other
agreement entered into under the Plan; and (vi) establish, amend, or
waive rules for the

6
<PAGE>

Plan's administration. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration
of the Plan including, without limitation, correcting any defect,
supplying any omission or reconciling any inconsistency in the Plan or
any Incentive Agreement. The determinations of the Committee shall be
final and binding.

The Committee may grant an Incentive Award to an individual who it
expects to become an Employee within the next six months, with such
Incentive Award being subject to such individual actually becoming an
Employee within such time period, and subject to such other terms and
conditions as may be established by the Committee in its discretion.

(b) MEETINGS. The Committee shall designate a chairman from
among its members who shall preside at all of its meetings, and shall
designate a secretary, without regard to whether that person is a member
of the Committee, who shall keep the minutes of the proceedings and all
records, documents, and data pertaining to its administration of the
Plan. Meetings shall be held at such times and places as shall be
determined by the Committee and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the
Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more of
their members or any officer of the Company to execute and deliver
documents on behalf of the Committee.

(c) DECISIONS BINDING. All determinations and decisions made
by the Committee shall be made in its discretion pursuant to the
provisions of the Plan, and shall be final, conclusive and binding on all
persons including the Company, its shareholders, Employees, Grantees, and
their estates and beneficiaries. The Committee's decisions and
determinations with respect to any Incentive Award need not be uniform
and may be made selectively among Incentive Awards and Grantees, whether
or not such Incentive Awards are similar or such Grantees are similarly
situated.

(d) MODIFICATION OF OUTSTANDING INCENTIVE AWARDS. Subject to
the stockholder approval requirements of SECTION 6.7 if applicable, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Incentive Award, accelerate the vesting or
exercisability of an Incentive Award, eliminate or make less restrictive
any restrictions contained in an Incentive Award, waive any restriction
or other provisions of an Incentive Award, or otherwise amend or modify
an Incentive Award in any manner that is either (i) not adverse to the
Grantee to whom such Incentive Award was granted or (ii) consented to by
such Grantee. With respect to an Incentive Award that is an incentive
stock option (as described in Section 422 of the Code), no adjustment to
such option shall be made to the extent constituting a "modification"
within the meaning of Section 424(h)(3) of the Code unless otherwise
agreed to by the optionee in writing.

(e) DELEGATION OF AUTHORITY. The Committee may delegate to
designated officers or other employees of the Company any of its duties
under this Plan pursuant to such conditions or limitations as the
Committee may establish from time to time; provided,

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<PAGE>

however, while the Company is a Publicly Held Corporation, the Committee
may not delegate to any person the authority to (i) grant Incentive
Awards, or (ii) take any action which would contravene the requirements
of Rule 16b-3 under the Exchange Act or the Performance-Based Exception
under Section 162(m) of the Code.

(f) EXPENSES OF COMMITTEE. The Committee may employ legal
counsel, including, without limitation, independent legal counsel and
counsel regularly employed by the Company, and other agents as the
Committee may deem appropriate for the administration of the Plan. The
Committee may rely upon any opinion or computation received from any such
counsel or agent. All expenses incurred by the Committee in interpreting
and administering the Plan, including, without limitation, meeting
expenses and professional fees, shall be paid by the Company.

(g) SURRENDER OF PREVIOUS INCENTIVE AWARDS. The Committee may,
in its absolute discretion, grant Incentive Awards to Grantees on the
condition that such Grantees surrender to the Committee for cancellation
such other Incentive Awards (including, without limitation, Incentive
Awards with higher exercise prices) as the Committee directs. Incentive
Awards granted on the condition precedent of surrender of outstanding
Incentive Awards shall not count against the limits set forth in SECTION
1.4 until such time as such previous Incentive Awards are surrendered and
canceled.

(h) INDEMNIFICATION. Each person who is or was a member of the
Committee, or of the Board, shall be indemnified by the Company against
and from any damage, loss, liability, cost and expense that may be
imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be
a party or in which he may be involved by reason of any action taken or
failure to act under the Plan, EXCEPT FOR ANY SUCH ACT OR OMISSION
CONSTITUTING WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. Such person shall
be indemnified by the Company for all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of
any judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense, to
handle and defend the same before he undertakes to handle and defend it
on his own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation or Bylaws,
as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

1.4 SHARES OF COMMON STOCK AVAILABLE FOR INCENTIVE AWARDS

Subject to adjustment under SECTION 5.5, there shall be available for
Incentive Awards under the Plan granted wholly or partly in Common Stock
(including rights or Stock Options that may be exercised for or settled in
Common Stock) One million five hundred thousand (1,500,000) Shares of Common
Stock. one million five hundred thousand (1,500,000) of the Shares reserved
under the Plan shall be available for grants of Incentive Stock Options. The
number of Shares of Common Stock that are the subject of Incentive Awards under
this Plan, that are forfeited or terminated, expire

8
<PAGE>

unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the Shares covered by an Incentive Award are not issued
to a Grantee or are exchanged for Incentive Awards that do not involve Common
Stock, shall again immediately become available for Incentive Awards
hereunder. The Committee may from time to time adopt and observe such
procedures concerning the counting of Shares against the Plan maximum as it
may deem appropriate. The Board and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to file any
required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that Shares are available for
issuance pursuant to Incentive Awards.

During such period that the Company is a Publicly Held Corporation,
then unless and until the Committee determines that a particular Incentive
Award granted to a Covered Employee is not intended to comply with the
Performance-Based Exception, the following rules shall apply to grants of
Incentive Awards to Covered Employees:

(a) Subject to adjustment as provided in SECTION 5.5, the
maximum aggregate number of Shares of Common Stock (including Stock
Options, Restricted Stock, or Other Stock-Based Awards paid out in
Shares) that may be granted or that may vest, as applicable, in any
calendar year pursuant to any Incentive Award held by any individual
Covered Employee shall be 1,000,000 Shares.

(b) The maximum aggregate cash payout (including Other
Stock-Based Awards paid out in cash) with respect to Incentive Awards
granted in any calendar year which may be made to any Covered Employee
shall be Ten Million dollars ($10,000,000).

(c) With respect to any Stock Option granted to a Covered
Employee that is canceled or repriced, the number of Shares subject to
such Stock Option shall continue to count against the maximum number of
Shares that may be the subject of Stock Options granted to such Covered
Employee hereunder and, in this regard, such maximum number shall be
determined in accordance with Section 162(m) of the Code.

(d) The limitations of subsections (a), (b) and (c) above shall
be construed and administered so as to comply with the Performance-Based
Exception.

1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.

The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:

(a) Stock Option;

(b) Restricted Stock; and

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<PAGE>

The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:

(a) A payout of an Other Stock-Based Award in the form of cash;

(b) A cancellation, termination, expiration, forfeiture, or
lapse for any reason of any Shares subject to an Incentive Award; and

(c) Payment of an Option Price with previously acquired Shares
or by withholding Shares that otherwise would be acquired on exercise
(i.e., the Share Pool shall be increased by the number of Shares turned
in or withheld as payment of the Option Price).

1.6 COMMON STOCK AVAILABLE.

The Common Stock available for issuance or transfer under the Plan shall
be made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.

1.7 PARTICIPATION

(a) ELIGIBILITY. The Committee shall from time to time
designate those Employees, Consultants and/or Outside Directors, if any,
to be granted Incentive Awards under the Plan, the type of Incentive
Awards granted, the number of Shares or Stock Options, as the case may
be, which shall be granted to each such person, and any other terms or
conditions relating to the Incentive Awards as it may deem appropriate to
the extent not inconsistent with the provisions of the Plan. A Grantee
who has been granted an Incentive Award may, if otherwise eligible, be
granted additional Incentive Awards at any time.

(b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant or
Outside Director shall be eligible for the grant of any Incentive Stock
Option. In addition, no Employee shall be eligible for the grant of any
Incentive Stock Option who owns or would own immediately before the grant
of such Incentive Stock Option, directly or indirectly, stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or any Parent or Subsidiary. This
restriction does not apply if, at the time such Incentive Stock Option is
granted, the Incentive Stock Option exercise price is at least one
hundred and ten percent (110%) of the Fair Market Value on the date of
grant and the Incentive Stock Option by its terms is not exercisable
after the expiration of five (5) years from the date of grant. For the
purpose of the immediately preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply for the purpose of determining an
Employee's percentage ownership in the Company or any Parent or
Subsidiary. This paragraph shall be construed consistent with the
requirements of Section 422 of the Code.

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<PAGE>

1.8 TYPES OF INCENTIVE AWARDS

The types of Incentive Awards under the Plan are Stock Options as
described in SECTION 2, Restricted Stock as described in SECTION 3, Other
Stock-Based Awards as described in SECTION 4, or any combination of the
foregoing.

SECTION 2.

STOCK OPTIONS

2.1 GRANT OF STOCK OPTIONS

The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.

2.2 STOCK OPTION TERMS

(a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
evidenced by a written Incentive Agreement. Among its other provisions,
each Incentive Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Stock Option following termination
of the Grantee's Employment. Such provisions shall be determined in the
discretion of the Committee, shall be included in the Grantee's Incentive
Agreement, need not be uniform among all Stock Options issued pursuant to
the Plan.

(b) NUMBER OF SHARES. Each Stock Option shall specify the
number of Shares of Common Stock to which it pertains.

(c) EXERCISE PRICE. The exercise price per Share of Common
Stock under each Stock Option shall be determined by the Committee;
provided, however, that in the case of an Incentive Stock Option, such
exercise price shall not be less than 100% of the Fair Market Value per
Share on the date the Incentive Stock Option is granted. To the extent
that the Company is a Publicly Held Corporation and the Stock Option is
intended to qualify for the Performance-Based Exception, the exercise
price shall not be less than 100% of the Fair Market Value per Share on
the date the Stock Option is granted. Each Stock Option shall specify
the method of exercise which shall be consistent with the requirements of
SECTION 2.3(a).

(d) TERM. In the Incentive Agreement, the Committee shall fix
the term of each Stock Option which shall be not more than ten (10) years
from the date of grant. In the event no term is fixed, such term shall
be ten (10) years from the date of grant.

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<PAGE>

(e) EXERCISE. The Committee shall determine the time or times
at which a Stock Option may be exercised in whole or in part. Each Stock
Option may specify the required period of continuous Employment and/or
the performance objectives to be achieved before the Stock Option or
portion thereof will become exercisable. Each Stock Option, the exercise
of which, or the timing of the exercise of which, is dependent, in whole
or in part, on the achievement of designated performance objectives, may
specify a minimum level of achievement in respect of the specified
performance objectives below which no Stock Options will be exercisable
and a method for determining the number of Stock Options that will be
exercisable if performance is at or above such minimum but short of full
achievement of the performance objectives. All such terms and conditions
shall be set forth in the Incentive Agreement.

(f) $100,000 ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that
the aggregate Fair Market Value (determined as of the time the Incentive
Stock Option is granted) of the Shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Grantee during any single calendar year (under the Plan and any other
stock option plans of the Company and its Subsidiaries or Parent) exceeds
the sum of $100,000, such Incentive Stock Option shall be treated as a
Nonstatutory Stock Option to the extent in excess of the $100,000 limit,
and not an Incentive Stock Option, but all other terms and provisions of
such Stock Option shall remain unchanged. This paragraph shall be
applied by taking Incentive Stock Options into account in the order in
which they are granted and shall be construed in accordance with Section
422(d) of the Code. In the absence of such regulations or other
authority, or if such regulations or other authority require or permit a
designation of the Options which shall cease to constitute Incentive
Stock Options, then such Incentive Stock Options, only to the extent of
such excess and in the order in which they were granted, shall
automatically be deemed to be Nonstatutory Stock Options but all other
terms and conditions of such Incentive Stock Options, and the
corresponding Incentive Agreement, shall remain unchanged.

2.3 STOCK OPTION EXERCISES

(a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective date
of the proposed exercise. The notice shall set forth the number of
Shares with respect to which the Option is to be exercised, accompanied
by full payment for the Shares.

The Option Price upon exercise of any Stock Option shall be
payable to the Company in full either: (i) in cash or its equivalent, or
(ii) subject to prior approval by the Committee in its discretion, by
tendering previously acquired Shares having an aggregate Fair Market
Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Grantee for
at least six (6) months prior to their tender to satisfy the Option
Price), or (iii) subject to prior approval by the Committee in its
discretion, by withholding Shares which otherwise would be acquired on
exercise having an

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<PAGE>

aggregate Fair Market Value at the time of exercise equal to the total
Option Price, or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above. Any payment
in Shares of Common Stock shall be effected by the delivery of such
Shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any
other documents as the Secretary shall require from time to time.

The Committee, in its discretion, also may allow (i) "cashless
exercise" as permitted under Federal Reserve Board's Regulation T, 12 CFR
Part 220 (or its successor), and subject to applicable securities law
restrictions and tax withholdings, or (ii) by any other means which the
Committee, in its discretion, determines to be consistent with the Plan's
purpose and applicable law.

As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to or on behalf of
the Grantee, in the name of the Grantee or other appropriate recipient,
Share certificates for the number of Shares purchased under the Stock
Option. Such delivery shall be effected for all purposes when a stock
transfer agent of the Company shall have deposited such certificates in
the United States mail, addressed to Grantee or other appropriate
recipient.

(b) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
impose such restrictions on any Shares acquired pursuant to the exercise
of a Stock Option as it may deem advisable, including, without
limitation, restrictions under (i) any buy/sell agreement or right of
first refusal, (ii) any applicable federal securities laws, (iii) the
requirements of any stock exchange or market upon which such Shares are
then listed and/or traded, or (iv) any blue sky or state securities law
applicable to such Shares. Any certificate issued to evidence Shares
issued upon the exercise of an Incentive Award may bear such legends and
statements as the Committee shall deem advisable to assure compliance
with federal and state laws and regulations.

Any Grantee or other person exercising an Incentive Award may be
required by the Committee to give a written representation that the
Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution;
provided, however, that the Committee, in its sole discretion, may
release any person receiving an Incentive Award from any such
representations either prior to or subsequent to the exercise of the
Incentive Award.

(c) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the
Plan, a Grantee who disposes of Shares of Common Stock acquired upon the
exercise of an Incentive Stock Option by a sale or exchange either (i)
within two (2) years after the date of the grant of the Incentive Stock
Option under which the Shares were acquired or (ii) within one (1) year
after the transfer of such Shares to him pursuant to exercise, shall
promptly notify the Company of such disposition, the amount realized and
his adjusted basis in such Shares.

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<PAGE>

(d) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
Company from the sale of Shares pursuant to Stock Options exercised under
the Plan shall be used for general corporate purposes.

2.4 RELOAD OPTIONS

At the discretion of the Committee, the Grantee may be granted under an
Incentive Agreement, replacement Stock Options under the Plan that permit the
Grantee to purchase an additional number of Shares equal to the number of
previously owned Shares surrendered by the Grantee to pay all or a portion of
the Option Price upon exercise of his Stock Options. The terms and conditions
of such replacement Stock Options shall be set forth in the Incentive Agreement.

SECTION 3.

RESTRICTED STOCK

3.1 AWARD OF RESTRICTED STOCK

(a) GRANT. In consideration of the performance of Employment
by any Grantee who is an Employee, Consultant or Outside Director, Shares
of Restricted Stock may be awarded under the Plan by the Committee with
such restrictions during the Restriction Period as the Committee may
designate in its discretion, any of which restrictions may differ with
respect to each particular Grantee. Restricted Stock shall be awarded
for no additional consideration or such additional consideration as the
Committee may determine, which consideration may be less than, equal to
or more than the Fair Market Value of the shares of Restricted Stock on
the grant date. The terms and conditions of each grant of Restricted
Stock shall be evidenced by an Incentive Agreement.

(b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED
STOCK. Unless otherwise specified in the Grantee's Incentive Agreement,
each Restricted Stock Award shall constitute an immediate transfer of the
record and beneficial ownership of the Shares of Restricted Stock to the
Grantee in consideration of the performance of services as an Employee,
Consultant or Outside Director, as applicable, entitling such Grantee to
all voting and other ownership rights in such Shares.

As specified in the Incentive Agreement, a Restricted Stock Award
may limit the Grantee's dividend rights during the Restriction Period in
which the shares of Restricted Stock are subject to a "substantial risk
of forfeiture" (within the meaning given to such term under Code Section
83) and restrictions on transfer. In the Incentive Agreement, the
Committee may apply any restrictions to the dividends that the Committee
deems appropriate. Without limiting the generality of the preceding
sentence, if the grant or vesting of Shares of Restricted Stock granted
to a Covered Employee, if applicable, is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply
any restrictions it deems appropriate to the payment of dividends
declared with respect

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<PAGE>

to such Shares of Restricted Stock, such that the dividends and/or the
Shares of Restricted Stock maintain eligibility for the Performance-Based
Exception. In the event that any dividend constitutes a derivative
security or an equity security pursuant to the rules under Section 16 of
the Exchange Act, if applicable, such dividend shall be subject to a
vesting period equal to the remaining vesting period of the Shares of
Restricted Stock with respect to which the dividend is paid.

Shares awarded pursuant to a grant of Restricted Stock may be
issued in the name of the Grantee and held, together with a stock power
endorsed in blank, by the Committee or Company (or their delegates) or in
trust or in escrow pursuant to an agreement satisfactory to the
Committee, as determined by the Committee, until such time as the
restrictions on transfer have expired. All such terms and conditions
shall be set forth in the particular Grantee's Incentive Agreement. The
Company or Committee (or their delegates) shall issue to the Grantee a
receipt evidencing the certificates held by it which are registered in
the name of the Grantee.

3.2 RESTRICTIONS

(a) FORFEITURE OF RESTRICTED STOCK. Restricted Stock awarded
to a Grantee may be subject to the following restrictions until the
expiration of the Restriction Period: (i) a restriction that constitutes
a "substantial risk of forfeiture" (as defined in Code Section 83), or a
restriction on transferability; (ii) unless otherwise specified by the
Committee in the Incentive Agreement, the Restricted Stock that is
subject to restrictions which are not satisfied shall be forfeited and
all rights of the Grantee to such Shares shall terminate; and (iii) any
other restrictions that the Committee determines in advance are
appropriate, including, without limitation, rights of repurchase or first
refusal in the Company or provisions subjecting the Restricted Stock to a
continuing substantial risk of forfeiture in the hands of any transferee.
Any such restrictions shall be set forth in the particular Grantee's
Incentive Agreement.

(b) ISSUANCE OF CERTIFICATES. Reasonably promptly after the
date of grant with respect to Shares of Restricted Stock, the Company
shall cause to be issued a stock certificate, registered in the name of
the Grantee to whom such Shares of Restricted Stock were granted,
evidencing such Shares; provided, however, that the Company shall not
cause to be issued such a stock certificate unless it has received a
stock power duly endorsed in blank with respect to such Shares. Each
such stock certificate shall bear the following legend or any other
legend approved by the Company:

THE TRANSFERABILITY OF THIS CERTIFICATE AND THE
SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO
THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING
FORFEITURE AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE OMNILYNX COMMUNICATIONS CORP. 1999
STOCK INCENTIVE PLAN AND AN INCENTIVE AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH
SHARES AND OMNILYNX COMMUNICATIONS

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<PAGE>

CORP. A COPY OF THE PLAN AND INCENTIVE AGREEMENT
ARE ON FILE IN THE CORPORATE OFFICES OF OMNILYNX
COMMUNICATIONS CORP.

Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock until such Shares vest pursuant to the terms
of the Incentive Agreement.

(c) REMOVAL OF RESTRICTIONS. The Committee, in its discretion,
shall have the authority to remove any or all of the restrictions on the
Restricted Stock if it determines that, by reason of a change in
applicable law or another change in circumstance arising after the grant
date of the Restricted Stock, such action is appropriate.

3.3 DELIVERY OF SHARES OF COMMON STOCK

Subject to withholding taxes under SECTION 6.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions. Such delivery shall be effected for all purposes when the
Company shall have deposited such certificate in the United States mail,
addressed to the Grantee or other appropriate recipient.

SECTION 4.

OTHER STOCK-BASED AWARDS

4.1 GRANT OF OTHER STOCK-BASED AWARDS

Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation,
Deferred Stock, purchase rights, Shares of Common Stock awarded which are not
subject to any restrictions or conditions, convertible or exchangeable
debentures, other rights convertible into Shares, Incentive Awards valued by
reference to the value of securities of or the performance of a specified
Subsidiary, division or department, and settlement in cancellation of rights of
any person with a vested interest in any other plan, fund, program or
arrangement that is or was sponsored, maintained or participated in by the
Company or any Parent or Subsidiary. As is the case with other Incentive
Awards, Other Stock-Based Awards may be awarded either alone or in addition to
or in tandem with any other Incentive Awards.

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<PAGE>

4.2 OTHER STOCK-BASED AWARD TERMS

(a) WRITTEN AGREEMENT. The terms and conditions of each grant
of an Other Stock-Based Award shall be evidenced by an Incentive
Agreement.

(b) PURCHASE PRICE. Except to the extent that an Other
Stock-Based Award is granted in substitution for an outstanding
Incentive Award or is delivered upon exercise of a Stock Option, the
amount of consideration required to be received by the Company shall be
either (i) no consideration other than services actually rendered (in the
case of authorized and unissued shares) or to be rendered, or (ii) in the
case of an Other Stock-Based Award in the nature of a purchase right,
consideration (other than services rendered or to be rendered) at least
equal to 50% of the Fair Market Value of the Shares covered by such grant
on the date of grant (or such percentage higher than 50% that is required
by any applicable tax or securities law).

(c) PERFORMANCE CRITERIA AND OTHER TERMS. In its discretion,
the Committee may specify such criteria, periods or goals for vesting in
Other Stock-Based Awards and payment thereof to the Grantee as it shall
determine; and the extent to which such criteria, periods or goals have
been met shall be determined by the Committee. All terms and conditions
of Other Stock-Based Awards shall be determined by the Committee and set
forth in the Incentive Agreement.

(d) PAYMENT. Other Stock-Based Awards may be paid in Shares of
Common Stock or other consideration related to such Shares, in a single
payment or in installments on such dates as determined by the Committee,
all as specified in the Incentive Agreement.

(e) DIVIDENDS. The Grantee of an Other Stock-Based Award shall
be entitled to receive, currently or on a deferred basis, dividends or
dividend equivalents with respect to the number of Shares covered by the
Other Stock-Based Award, as determined by the Committee and set forth in
the Incentive Agreement. The Committee may also provide in the Incentive
Agreement that such amounts (if any) shall be deemed to have been
reinvested in additional Shares of Common Stock.

SECTION 5.

PROVISIONS RELATING TO PLAN PARTICIPATION

5.1 PLAN CONDITIONS

(a) INCENTIVE AGREEMENT. Each Grantee to whom an Incentive
Award is granted shall be required to enter into an Incentive Agreement
with the Company, in such a form as is provided by the Committee. The
Incentive Agreement shall contain specific terms as determined by the
Committee, in its discretion, with respect to the Grantee's particular
Incentive Award. Such terms need not be uniform among all Grantees or
any similarly-

<PAGE>

situated Grantees. The Incentive Agreement may include, without
limitation, vesting, forfeiture and other provisions particular to the
particular Grantee's Incentive Award, as well as, for example,
provisions to the effect that the Grantee (i) shall not disclose any
confidential information acquired during Employment with the Company,
(ii) shall abide by all the terms and conditions of the Plan and such
other terms and conditions as may be imposed by the Committee, (iii)
shall not interfere with the employment or other service of any
employee, (iv) shall not compete with the Company or become involved
in a conflict of interest with the interests of the Company, (v) shall
forfeit an Incentive Award if terminated for Cause, (vi) shall not be
permitted to make an election under Section 83(b) of the Code when
applicable, and (vii) shall be subject to any other agreement between
the Grantee and the Company regarding Shares that may be acquired
under an Incentive Award including, without limitation, an agreement
restricting the transferability of Shares by Grantee. An Incentive
Agreement shall include such terms and conditions as are determined by
the Committee, in its discretion, to be appropriate with respect to
any individual Grantee. The Incentive Agreement shall be signed by the
Grantee to whom the Incentive Award is made and by an Authorized
Officer.

(b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
instrument executed pursuant to the Plan shall create any Employment
rights (including without limitation, rights to continued Employment) in
any Grantee or affect the right of the Company to terminate the
Employment of any Grantee at any time without regard to the existence of
the Plan.

(c) SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act of
1933 of any Shares of Common Stock to be issued hereunder or to effect
similar compliance under any state laws. Notwithstanding anything herein
to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing Shares pursuant to the Plan
unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authorities, and the requirements of
any securities exchange on which Shares are traded. The Committee may
require, as a condition of the issuance and delivery of certificates
evidencing Shares of Common Stock pursuant to the terms hereof, that the
recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the
Committee, in its discretion, deems necessary or desirable.

If the Shares issuable on exercise of an Incentive Award are not
registered under the Securities Act of 1933, the Company may imprint on
the certificate for such Shares the following legend or any other legend
which counsel for the Company considers necessary or advisable to comply
with the Securities Act of 1933:

THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
UNDER THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON
RECEIPT BY THE CORPORATION OF AN

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<PAGE>

OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS
NOT REQUIRED FOR SUCH SALE OR TRANSFER.

5.2 TRANSFERABILITY AND EXERCISABILITY

Incentive Awards granted under the Plan shall not be transferable
or assignable other than: (a) by will or the laws of descent and
distribution or (b) pursuant to a qualified domestic relations order (as
defined by Section 414(p) of the Code); provided, however, only with
respect to Incentive Awards of Nonstatutory Stock Options, the Committee
may, in its discretion, authorize all or a portion of the Nonstatutory
Stock Options to be granted on terms which permit transfer by the Grantee
to (i) the members of the Grantee's Immediate Family, (ii) a trust or
trusts for the exclusive benefit of such Immediate Family, or (iii) a
partnership in which such members of such Immediate Family are the only
partners, provided that (A) there may be no consideration for any such
transfer, (B) the Incentive Agreement pursuant to which such Nonstatutory
Stock Options are granted must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this
SECTION 5.2, and (C) subsequent transfers of transferred Options shall be
prohibited except in accordance with clauses (a) and (b) (above) of this
sentence. Following any permitted transfer, any Incentive Award shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that the term
"Grantee" shall be deemed to refer to the transferee. The events of
termination of employment of SECTION 5.6 hereof and in the Incentive
Agreement shall continue to be applied with respect to the original
Grantee, and the Incentive Award shall be exercisable by the transferee
only to the extent, and for the periods, specified in the Incentive
Agreement.

Except as may otherwise be permitted under the Code, in the event
of a permitted transfer of a Nonstatutory Stock Option hereunder, the
original Grantee shall remain subject to withholding taxes upon exercise.
In addition, the Company shall have no obligation to provide any notices
to a transferee including, for example, of the termination of an
Incentive Award following the original Grantee's termination of
employment.

In the event that a Grantee terminates employment with the Company
to assume a position with a governmental, charitable, educational or
other nonprofit institution, the Committee may, in its discretion,
subsequently authorize a third party, including but not limited to a
"blind" trust, to act on behalf of and for the benefit of such Grantee
regarding any outstanding Incentive Awards held by the Grantee subsequent
to such termination of employment. If so permitted by the Committee, a
Grantee may designate a beneficiary or beneficiaries to exercise the
rights of the Grantee and receive any distribution under the Plan upon
the death of the Grantee.

No transfer by will or by the laws of descent and distribution
shall be effective to bind the Company unless the Committee has been
furnished with a copy of the deceased Grantee's enforceable will or such
other evidence as the Committee deems necessary to

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<PAGE>

establish the validity of the transfer. Any attempted transfer in
violation of this SECTION 5.2 shall be void and ineffective.

5.3 RIGHTS AS A STOCKHOLDER

(a) NO STOCKHOLDER RIGHTS. Except as otherwise provided in
SECTION 3.1(b) for grants of Restricted Stock, a Grantee of an Incentive
Award (or a permitted transferee of such Grantee) shall have no rights as
a stockholder with respect to any Shares of Common Stock until the
issuance of a stock certificate for such Shares.

(b) REPRESENTATION OF OWNERSHIP. In the case of the exercise
of an Incentive Award by a person or estate acquiring the right to
exercise such Incentive Award by reason of the death or Disability of a
Grantee, the Committee may require reasonable evidence as to the
ownership of such Incentive Award or the authority of such person and may
require such consents and releases of taxing authorities as the Committee
may deem advisable.

5.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK

The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which Shares of Common Stock are
traded. The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Incentive Award.
During the period that the effectiveness of the exercise of an Incentive Award
has been deferred, the Grantee may, by written notice to the Committee, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

5.5 CHANGE IN STOCK AND ADJUSTMENTS

(a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to SECTION 5.7
(which only applies in the event of a Change in Control), in the event of
any change in applicable laws or any change in circumstances which
results in or would result in any dilution of the rights granted under
the Plan, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan, then, if the
Committee should determine, in its discretion, that such change equitably
requires an adjustment in the number or kind of shares of stock or other
securities or property theretofore subject, or which may become subject,
to issuance or transfer under the Plan or in the terms and conditions of
outstanding Incentive Awards, such adjustment shall be made in accordance
with such determination. Such adjustments may include changes with
respect to (i) the aggregate number of Shares that may be issued under
the Plan, (ii) the number of Shares subject to Incentive Awards, and
(iii) the price per Share for outstanding Incentive Awards. Any
adjustment under this

20
<PAGE>

paragraph of an outstanding Incentive Stock Option shall be made only
to the extent not constituting a "modification" within the meaning of
Section 424(h)(3) of the Code unless otherwise agreed to by the
Grantee in writing. The Committee shall give notice to each
applicable Grantee of such adjustment which shall be effective and
binding.

(b) EXERCISE OF CORPORATE POWERS. The existence of the Plan or
outstanding Incentive Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalization, reorganization or other changes
in the Company's capital structure or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding whether of a similar
character or otherwise.

(c) RECAPITALIZATION OF THE COMPANY. Subject to SECTION 5.7,
if while there are Incentive Awards outstanding, the Company shall effect
any subdivision or consolidation of Shares of Common Stock or other
capital readjustment, the payment of a stock dividend, stock split,
combination of Shares, recapitalization or other increase or reduction in
the number of Shares outstanding, without receiving compensation therefor
in money, services or property, then the number of Shares available under
the Plan and the number of Incentive Awards which may thereafter be
exercised shall (i) in the event of an increase in the number of Shares
outstanding, be proportionately increased and the Fair Market Value of
the Incentive Awards awarded shall be proportionately reduced; and (ii)
in the event of a reduction in the number of Shares outstanding, be
proportionately reduced, and the Fair Market Value of the Incentive
Awards awarded shall be proportionately increased. The Committee shall
take such action and whatever other action it deems appropriate, in its
discretion, so that the value of each outstanding Incentive Award to the
Grantee shall not be adversely affected by a corporate event described in
this SUBSECTION (c).

(d) REORGANIZATION OF THE COMPANY. Subject to SECTION 5.7, if
the Company is reorganized, merged or consolidated, or is a party to a
plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or exchange, stockholders of the
Company receive any Shares of Common Stock or other securities or
property, or if the Company should distribute securities of another
corporation to its stockholders, each Grantee shall be entitled to
receive, in lieu of the number of unexercised Incentive Awards previously
awarded, the number of Stock Options, Restricted Stock shares, or Other
Stock-Based Awards, with a corresponding adjustment to the Fair Market
Value of said Incentive Awards, to which he would have been entitled if,
immediately prior to such corporate action, such Grantee had been the
holder of record of a number of Shares equal to the number of the
outstanding Incentive Awards payable in Shares that were previously
awarded to him. For this purpose, Shares of Restricted Stock shall be
treated the same as unrestricted outstanding Shares of Common Stock. In
this regard, the Committee shall take whatever other action it deems
appropriate to preserve the rights of Grantees holding outstanding
Incentive Awards.

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<PAGE>

(e) ISSUE OF COMMON STOCK BY THE COMPANY. Except as
hereinabove expressly provided in this SECTION 5.5 and subject to SECTION
5.7, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon any
conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of, or Fair Market
Value of, any Incentive Awards then outstanding under previously granted
Incentive Awards; provided, however, in such event, outstanding Shares of
Restricted Stock shall be treated the same as outstanding unrestricted
Shares of Common Stock.

(f) ACQUISITION OF THE COMPANY. Subject to SECTION 5.7, in the
case of any sale of assets, merger, consolidation or combination of the
Company with or into another corporation other than a transaction in
which the Company is the continuing or surviving corporation and which
does not result in the outstanding Shares being converted into or
exchanged for different securities, cash or other property, or any
combination thereof (an "Acquisition"), in the discretion of the
Committee, any Grantee who holds an outstanding Incentive Award shall
have the right (subject to any limitation applicable to the particular
Incentive Award under the Plan) to receive upon exercise thereof the
Acquisition Consideration (as defined below) receivable upon the
Acquisition by a holder of the number of Shares which would have been
obtained upon exercise of the Incentive Award immediately prior to the
Acquisition. The term "Acquisition Consideration" shall mean the kind
and amount of shares of the surviving or new corporation, cash,
securities, evidence of indebtedness, other property or any combination
thereof receivable in respect of one Share upon consummation of an
Acquisition. The Committee, in its discretion, shall have the authority
to take whatever action it deems appropriate to effectuate the provisions
of this SUBSECTION (f).

(g) ASSUMPTION UNDER THE PLAN OF OUTSTANDING STOCK OPTIONS.
Notwithstanding any other provision of the Plan, the Committee, in
its discretion, may authorize the assumption and continuation under
the Plan of outstanding and unexercised stock options or other types
of stock-based incentive awards that were granted under a stock option
plan (or other type of stock incentive plan or agreement) that is or
was maintained by a corporation or other entity that was merged into,
consolidated with, or whose stock or assets were acquired by, the
Company as the surviving corporation. Any such action shall be upon
such terms and conditions as the Committee, in its discretion, may
deem appropriate, including provisions to preserve the holder's rights
under the previously granted and unexercised stock option or other
stock-based incentive award, such as, for example, retaining an
existing exercise price under an outstanding stock option. Any such
assumption and continuation of any such previously granted and
unexercised incentive award shall be treated as an outstanding
Incentive Award under the Plan and shall thus count against the number
of Shares reserved for issuance pursuant to SECTION 1.4. With respect
to an incentive stock option (as described in Section 422 of the Code)
subject to this subsection (g), no adjustment to such option shall be
made to the extent constituting a "modification" within

22
<PAGE>

the meaning of Section 424(h)(3) of the Code unless otherwise agreed to
by the optionee in writing.

(h) ASSUMPTION OF INCENTIVE AWARDS BY A SUCCESSOR. Subject to
SECTION 5.7, notwithstanding any other provision hereof, in the event of
a dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation, or a merger or consolidation involving the Company in which
the Company is the surviving corporation but the holders of Shares of
Common Stock receive securities of another corporation and/or other
property, including cash, the Committee shall, in its discretion, have
the right and power to:

(i) cancel, effective immediately prior to the
occurrence of such corporate event, each outstanding Incentive
Award (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Grantee to whom
such Incentive Award was granted an amount in cash equal to the
excess of (A) the highest value, as determined by the Committee,
in its discretion, of the property (including cash) received by
the holder of a Share of Common Stock as a result of such event
over (B) the exercise price of such Incentive Award, if any; or

(ii) (A) provide for the exchange of each Incentive Award
outstanding immediately prior to such corporate event (whether or
not then exercisable) for an award on some or all of the property
for which such Incentive Award is exchanged and, incident thereto,
make an equitable adjustment as determined by the Committee, in
its discretion, in the exercise price of the award, if any, or the
number of shares or amount of property (including cash) subject to
the Incentive Award or (B) provide for a cash settlement payment
to the Grantee in consideration for the exchange or cancellation
of the Incentive Award hereunder.

The Committee, in its discretion, shall have the authority to take
whatever action it deems appropriate to effectuate the provisions of this
subsection (h).

5.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT

(a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly
provided in the Grantee's Incentive Agreement, if the Grantee's
Employment is terminated for any reason other than due to his death,
Disability, Retirement or for Cause, any non-vested portion of any Stock
Option or other applicable Incentive Award at the time of such
termination shall automatically expire and terminate and no further
vesting shall occur after the termination date. In such event, except as
otherwise expressly provided in his Incentive Agreement, the Grantee
shall be entitled to exercise his rights only with respect to the portion
of the Incentive Award that was vested as of the termination date for a
period that shall end on the earlier of (i) the expiration date set forth
in the Incentive Agreement with respect to the vested portion of such
Incentive Award or (ii) the date that occurs ninety (90) calendar days
after his termination date (not to exceed three months in the case of an
ISO). Unless

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<PAGE>

otherwise expressly provided in his Incentive Agreement, a Grantee's
Employment shall not be deemed to have been terminated if a
Grantee/Employee becomes a Consultant or Outside Director immediately
upon his termination of employment with the Company, or if a Grantee's
status otherwise changes between or among Employee, Consultant or
Outside Director without a gap in service for the Company in any such
capacity. All determinations regarding whether and when there has been
a termination of Employment shall be made by the Committee.

(b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise
expressly provided in the Grantee's Incentive Agreement, in the event
of the termination of a Grantee's Employment for Cause, all vested and
non-vested Stock Options and other Incentive Awards granted to such
Grantee shall immediately expire, and shall not be exercisable to any
extent, as of 12:01 a.m. (CST) on the date of such termination of
Employment.

(c) RETIREMENT. Unless otherwise expressly provided in the
Grantee's Incentive Agreement, upon the Retirement of any Employee who is
a Grantee:

(i) any non-vested portion of any outstanding Option or
other Incentive Award shall immediately terminate and no further
vesting shall occur; and

(ii) any vested Option or other Incentive Award shall
expire on the earlier of (A) the expiration date set forth in the
Incentive Agreement for such Incentive Award; or (B) the
expiration of (1) six months after the date of Retirement in the
case of any Incentive Award other than an Incentive Stock Option,
or (2) three (3) months after termination of employment in the
case of an Incentive Stock Option.

(d) DISABILITY OR DEATH. Unless otherwise expressly provided
in the Grantee's Incentive Agreement, upon termination of Employment as a
result of the Grantee's Disability or death:

(i) any nonvested portion of any outstanding Option or
other applicable Incentive Award shall immediately terminate upon
termination of Employment and no further vesting shall occur; and

(ii) any vested Incentive Award shall expire on the
earlier of either (A) the expiration date set forth in the
Incentive Agreement or (B) the one year anniversary date of the
Grantee's termination of Employment date.

In the case of any vested Incentive Stock Option held by an
Employee following termination of Employment, notwithstanding the
definition of "Disability" in SECTION 1.2, whether the Employee has
incurred a "Disability" for purposes of determining the length of the
Option exercise period following termination of Employment under this
paragraph (d) shall be determined by reference to Section 22(e)(3) of the
Code to the extent required by Section 422(c)(6) of the Code. The
Committee shall determine whether a Disability for purposes of this
subsection (d) has occurred.

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<PAGE>

(e) CONTINUATION. Subject to the conditions and limitations of
the Plan and applicable law and regulation in the event that a Grantee
ceases to be an Employee, Outside Director or Consultant, as applicable,
for whatever reason, the Committee and Grantee may mutually agree with
respect to any outstanding Option or other Incentive Award then held by
the Grantee (i) for an acceleration or other adjustment in any vesting
schedule applicable to the Incentive Award, (ii) for a continuation of
the exercise period following termination for a longer period than is
otherwise provided under such Incentive Award, or (iii) to any other
change in the terms and conditions of the Incentive Award. In the event
of any such change to an outstanding Inventive Award, a written amendment
to the Grantee's Incentive Agreement shall be required.

5.7 CHANGE IN CONTROL

Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below) the following actions shall automatically
occur as of the day immediately preceding the Change in Control date unless
expressly provided otherwise in the Grantee's Incentive Agreement:

(a) all of the Stock Options then outstanding shall become 100%
vested and immediately and fully exercisable;

(b) all of the restrictions and conditions of any Restricted
Stock and any Other Stock-Based Awards then outstanding shall be deemed
satisfied, and the Restriction Period with respect thereto shall be
deemed to have expired; and

(c) all of the Other Stock-Based Awards shall become fully
vested, deemed earned in full, and promptly paid within thirty (30) days
to the affected Grantees without regard to payment schedules and
notwithstanding that the applicable performance cycle, retention cycle or
other restrictions and conditions have not been completed or satisfied.

Notwithstanding any other provision of the Plan, unless otherwise
expressly provided in the Grantee's Incentive Agreement, the provisions of this
SECTION 5.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards subject,
however, to the last paragraph of this SECTION 5.7.

25
<PAGE>

For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company shall
be deemed to occur if:

(a) There is an acquisition by a "person" as such term is used
in Sections 13(d) and 14(d) of the Exchange Act (a "PERSON") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of twenty percent (20%) or more of the total voting
power of all the Company's then outstanding securities entitled to vote
generally in the election of directors to the Board; provided, however,
that for purposes of this subsection (a), the following acquisitions
shall not constitute a Change in Control: (i) any acquisition by the
Company or its Parent or Subsidiaries, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or its Parent or Subsidiaries, or (iii) any acquisition
consummated with the prior approval of the Board; or

(b) During a period of two consecutive calendar years,
individuals who at the beginning of such period constitute the Board, and
any new director(s) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at least
two-thirds of the directors then still in office, who either were
directors at the beginning of the two-year period or whose election or
nomination for election was previously so approved, cease for any reason
to constitute a majority of the Board; or

(c) The Company becomes a party to a merger, plan of
reorganization, consolidation or share exchange in which either (i) the
Company will not be the surviving corporation or (ii) the Company will
be the surviving corporation and any outstanding shares of the Company's
common stock will be converted into shares of any other company (other
than a reincorporation or the establishment of a holding company
involving no change of ownership of the Company) or other securities,
cash or other property (excluding payments made solely for fractional
shares); or

(d) The shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other
corporation, and immediately following such merger, plan of
reorganization, consolidation or share exchange the holders of the voting
securities of the Company outstanding immediately prior thereto hold
securities representing fifty percent (50%) or less of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger, plan of reorganization,
consolidation or share exchange; PROVIDED, HOWEVER, that notwithstanding
the foregoing, no Change in Control shall be deemed to have occurred if
one-half (1/2) or more of the members of the Board of the Company or such
surviving entity immediately after such merger, plan of reorganization,
consolidation or share exchange is comprised of persons who served as
directors of the Company immediately prior to such merger, plan of
reorganization, consolidation or share exchange or who are otherwise
designees of the Company; or

26
<PAGE>

(e) Upon approval by the Company's stockholders of a complete
liquidation and dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company
other than to a Parent or Subsidiary; or

(f) Any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a Change in Control hereunder.

Notwithstanding the occurrence of any of the foregoing events of this
SECTION 5.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be deemed a Change in Control hereunder. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be a Change in Control, or after such event if made by the
Board a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably would lead
to a Change in Control.

5.8 EXCHANGE OF INCENTIVE AWARDS

The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.

5.9 FINANCING

The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Incentive Award upon such terms as are approved by
the Committee in its discretion.

SECTION 6.

GENERAL

6.1 EFFECTIVE DATE AND GRANT PERIOD

This Plan is adopted by the Board of the Company effective as of
March 17, 1999 (the "EFFECTIVE DATE"), subject to stockholder approval within
six months of the Effective Date. Unless sooner terminated by the Board
pursuant to SECTION 6.7, no Incentive Award shall be granted under the Plan
after ten (10) years from the Effective Date.

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<PAGE>

6.2 FUNDING AND LIABILITY OF COMPANY

No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the
Company, the Board nor the Committee shall be required to give any security or
bond for the performance of any obligation that may be created by the Plan.

6.3 WITHHOLDING TAXES

(a) TAX WITHHOLDING. The Company shall have the power and the
right to deduct or withhold, or require a Grantee to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes,
domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of the Plan or an
Incentive Award hereunder.

(b) SHARE WITHHOLDING. With respect to tax withholding
required upon the exercise of Stock Options, upon the lapse of
restrictions on Restricted Stock, or upon any other taxable event arising
as a result of any Incentive Awards, Grantees may elect, subject to the
approval of the Committee in its discretion, to satisfy the withholding
requirement, in whole or in part, by having the Company withhold Shares
having a Fair Market Value on the date the tax is to be determined equal
to the minimum statutory total tax which could be imposed on the
transaction. All such elections shall be made in writing, signed by the
Grantee, and shall be subject to any restrictions or limitations that the
Committee, in its discretion, deems appropriate. Any fraction of a Share
required to satisfy such obligation shall be disregarded and the amount
due shall instead be paid in cash by the Grantee.

(c) INCENTIVE STOCK OPTIONS. With respect to Shares received
by a Grantee pursuant to the exercise of an Incentive Stock Option, if
such Grantee disposes of any such Shares within (i) two years from the
date of grant of such Option or (ii) one year after the transfer of such
shares to the Grantee, the Company shall have the right to withhold from
any salary, wages or other compensation payable by the Company to the
Grantee an amount

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<PAGE>

sufficient to satisfy federal, state and local tax withholding
requirements attributable to such disqualifying disposition.

(d) LOANS. The Committee may provide for loans, on either a
short term or demand basis, from the Company to a Grantee who is an
Employee or Consultant to permit the payment of taxes required by law.

6.4 NO GUARANTEE OF TAX CONSEQUENCES

Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.

6.5 DESIGNATION OF BENEFICIARY BY PARTICIPANT

Each Grantee may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his death before he receives any
or all of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Grantee in writing with
the Committee during the Grantee's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.

6.6 DEFERRALS

The Committee may permit a Grantee to defer such Grantee's receipt of the
payment of cash or the delivery of Shares that would, otherwise be due to such
Grantee by virtue of the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or goals with respect
to Other Stock-Based Awards. If any such deferral election is permitted, the
Committee shall, in its discretion, establish rules and procedures for such
payment deferrals to the extent consistent with the Code.

6.7 AMENDMENT AND TERMINATION

The Board shall have complete power and authority to terminate or amend
the Plan at any time; provided, however, if the Company is a Publicly Held
Corporation, the Board shall not, without the approval of the stockholders of
the Company within the time period required by applicable law, (a) except as
provided in SECTION 5.5, increase the maximum number of Shares which may be
issued under the Plan pursuant to SECTION 1.4, (b) amend the requirements as to
the class of Employees eligible to purchase Common Stock under the Plan, (c) to
the extent applicable, increase the maximum limits on Incentive Awards to
Covered Employees as set for compliance with the Performance-Based Exception,
(d) extend the term of the Plan, or (e) to the extent applicable, decrease the
authority granted to the Committee under the Plan in contravention of Rule 16b-3
under the Exchange Act.

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<PAGE>

No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award.

In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company's
stockholders.

6.8 REQUIREMENTS OF LAW

The granting of Incentive Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Certificates evidencing shares of Common Stock delivered under
this Plan (to the extent that such shares are so evidenced) may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules and regulations of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation, and
any applicable federal or state securities law, if applicable. The Committee
may cause a legend or legends to be placed upon such certificates (if any) to
make appropriate reference to such restrictions.

6.9 RULE 16b-3 SECURITIES LAW COMPLIANCE

With respect to Insiders to the extent applicable, transactions under the
Plan are intended to comply with all applicable conditions of Rule 16b-3 under
the Exchange Act. Any ambiguities or inconsistencies in the construction of an
Incentive Award or the Plan shall be interpreted to give effect to such
intention. However, to the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void to the extent
permitted by law and deemed advisable by the Committee in its discretion.

6.10 COMPLIANCE WITH CODE SECTION 162(m)

While the Company is a Publicly Held Corporation, unless otherwise
determined by the Committee with respect to any particular Incentive Award,
it is intended that the Plan shall comply fully with the applicable
requirements so that any Incentive Awards subject to Section 162(m) that are
granted to Covered Employees shall qualify for the Performance-Based
Exception. If any provision of the Plan or an Incentive Agreement would
disqualify the Plan or would not otherwise permit the Plan or Incentive Award
to comply with the Performance-Based Exception as so intended, such provision
shall be construed or deemed to be amended to conform to the requirements of
the Performance-Based Exception to the extent permitted by applicable law and
deemed advisable by the Committee; provided, however, no such construction or
amendment shall

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<PAGE>

have any adverse effect on the prior grant of an Incentive Award, or the
economic value to a Grantee of any outstanding Incentive Award, unless
consented to in writing by the Grantee.

6.11 SUCCESSORS

All obligations of the Company under the Plan with respect to
Incentive Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.

6.12 MISCELLANEOUS PROVISIONS

(a) No Employee, Consultant, Outside Director, or other person
shall have any claim or right to be granted an Incentive Award under the
Plan. Neither the Plan, nor any action taken hereunder, shall be
construed as giving any Employee, Consultant, or Outside Director any
right to be retained in the Employment or other service of the Company or
any Parent or Subsidiary.

(b) No Shares of Common Stock shall be issued hereunder unless
counsel for the Company is then reasonably satisfied that such issuance
will be in compliance with federal and state securities laws, if
applicable.

(d) By accepting any Incentive Award, each Grantee and each
person claiming by or through him shall be deemed to have indicated his
acceptance of the Plan.

6.13 SEVERABILITY

In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.

6.14 GENDER, TENSE AND HEADINGS

Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.

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6.15 GOVERNING LAW

The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United
States.

IN WITNESS WHEREOF,OmniLynx Communications Corp. has caused this Plan
to be duly executed in its name and on its behalf by its duly authorized
officer.

OMNILYNX COMMUNICATIONS CORP.

By: /s/ Christopher H. Efird
---------------------------------
Name: Christopher H. Efird
-------------------------------
Title: President
------------------------------

<PAGE>

Exhibit 10.3

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into this 30 day of June, 1999 by and between OmniLynx
Communications Corporation, a Delaware corporation having its principal
executive office at 700 Gemini, Suite 100, Houston, Texas 77058 (hereinafter
referred to as the "Company"), and Joseph Gregori (hereinafter referred to as
the "Employee").

W I T N E S S E T H:

WHEREAS, Employee desires to serve the Company as its Chief Executive
Officer; and

WHEREAS, the parties desire to provide that the Employee be employed
by the Company under the terms of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Company and the Employee hereby agree as follows:

1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
have the meanings prescribed below:

ANNUAL BONUS shall have the meaning assigned thereto in Section 4.2
hereof.

BASE SALARY shall have the meaning assigned thereto in Section 4.1
hereof.

CAUSE shall have the meaning assigned thereto in Section 5.3 hereof.

CODE means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated by the Internal Revenue Service thereunder,
all as in effect from time to time during the Employment Period.

COMMON STOCK means the Company's common stock, par value $.0001 per
share.

COMPANY means OmniLynx Communications Corporation, a Delaware
corporation, the principal executive office of which is located at 700
Gemini, Suite 100, Houston, Texas 77058.

CONFIDENTIAL INFORMATION shall have the meaning assigned thereto in
Section 8.2 hereof.

DATE OF TERMINATION means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this
Agreement for any reason or (iii) the date of

<PAGE>

receipt of the Notice of Termination, or such later date as may be prescribed
in the Notice of Termination in accordance with Section 5.6 hereof.

DISABILITY means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a
period of 180 consecutive calendar days, or an aggregate of 180 calendar days
in any calendar year, during the Employment Period, all as determined in good
faith by the Board of Directors of the Company.

EFFECTIVE DATE means the date upon which the stock of the Company is
issued and sold pursuant to a registration statement filed under the
Securities Act of 1933, as amended.

EMPLOYEE means Joseph Gregori, an individual who resides at 67 Timber
Ridge Drive, Commack, New York 11725.

EMPLOYMENT PERIOD shall have the meaning assigned thereto in Section 3
hereof.

EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Securities and Exchange
Commission thereunder, all as in effect from time to time during the
Employment Period.

NOTICE OF TERMINATION shall have the meaning assigned thereto in
Section 5.6 hereof.

SUBSIDIARY, when used with respect to any such entity, shall mean any
corporation or other business entity a majority of whose outstanding voting
stock or the equivalent entitled to vote for the election of directors is at
the time owned by such entity and/or one or more of its subsidiaries.

WITHOUT CAUSE shall have the meaning assigned thereto in Section 5.4
hereof.

2. GENERAL DUTIES OF COMPANY AND EMPLOYEE.

2.1 The Company agrees to employ the Employee, and the Employee
agrees to accept employment by the Company and to serve the Company as its
Chief Executive Officer. The authority, duties and responsibilities of the
Employee shall include those duties of Chief Executive Officer as specified
in the Bylaws of the Company as in effect on the date hereof, and such other
or additional duties as may from time to time be assigned to the Employee by
the Board of Directors. While employed hereunder, the Employee shall devote
his full time and attention during normal business hours to the affairs of
the Company and use his best efforts to perform faithfully and efficiently
his duties and responsibilities. The Employee may (i) serve on corporate,
civic or charitable boards or committees provided that (A) such boards or
committees do not control or advise business entities that compete with the
Company and (B) all such services are promptly disclosed in writing to the
Board of Directors, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so
long as such activities do not materially interfere with the performance of
the Employee's duties and responsibilities.

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<PAGE>

2.2 The Employee agrees and acknowledges that he owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and to do no act and to make no statement, oral or
written, which would injure the Company's business, its interests or its
reputation.

2.3 The Employee agrees to comply at all times with all applicable
policies, rules and regulations of the Company, including, without
limitation, the Company's Code of Ethics and the Company's policy regarding
trading in the Common Stock, as each is in effect from time to time during
the Employment Period.

3. TERM. Unless sooner terminated pursuant to other provisions hereof,
the Employee's period of employment under this Agreement shall be the period
beginning on the Effective Date and ending on the third anniversary thereof.
The period of time beginning on the Effective Date and ending on the third
anniversary thereof (notwithstanding termination of this Agreement prior to
the end of such period pursuant to other provisions hereof) is referred to
elsewhere herein as the "Employment Period."

4. COMPENSATION AND BENEFITS.

4.1 BASE SALARY. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual
base salary of $150,000 (the "Base Salary"). The Base Salary shall be
payable in equal semi-monthly installments or in accordance with the
Company's established policy, subject only to such payroll and withholding
deductions as may be required by law and other deductions applied generally
to employees of the Company for insurance and other employee benefit plans.

4.2 ANNUAL BONUS. The Company will pay Employee an annual bonus
("Annual Bonus") to be determined by the Board of Directors in its sole
discretion. The Annual Bonus shall be payable at a time to be determined by
the Board of Directors in its sole discretion.

4.3 VACATION. Until the Date of Termination, the Employee shall be
entitled to vacation as determined by the Company's vacation policy for its
executive officers as in effect from time to time.

4.4 INCENTIVE, SAVINGS AND RETIREMENT PLANS. Until the Date of
Termination, the Employee shall be eligible to participate in and shall
receive all benefits under all executive incentive, savings and retirement
plans (including 401(k) plans) and programs currently maintained or
hereinafter established by the Company for the benefit of its executive
officers and/or employees.

4.5 WELFARE BENEFIT PLANS. Until the Date of Termination, the
Employee and/or the Employee's family, as the case may be, shall be eligible
to participate in and shall receive all benefits under each welfare benefit
plan of the Company currently maintained or hereinafter established by the
Company for the benefit of its employees. Such welfare benefit plans may
include, without limitation, medical, dental, disability, group life,
accidental death and travel accident insurance plans and programs.

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<PAGE>

4.6 REIMBURSEMENT OF EXPENSES. The Employee may from time to time
until the Date of Termination incur various business expenses customarily
incurred by persons holding positions of like responsibility, including,
without limitation, travel, entertainment and similar expenses incurred for
the benefit of the Company. Subject to the Company's policy regarding the
reimbursement of such expenses as in effect from time to time during the
Employment Period, the Company shall reimburse the Employee for such expenses
from time to time, at the Employee's request, and the Employee shall account
to the Company for all such expenses.

4.7 STOCK OPTIONS. The Board of Directors, in its sole discretion,
may grant to the Employee options to acquire shares of Common Stock with such
terms and conditions as determined by the Board of Directors in its sole
discretion.

5. TERMINATION.

5.1 DEATH. This Agreement shall terminate automatically upon the
death of the Employee.

5.2 DISABILITY. The Company may terminate this Agreement, upon
written notice to the Employee delivered in accordance with Sections 5.6 and
12.1 hereof, upon the Disability of the Employee.

5.3 CAUSE. The Company may terminate the Employee's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment under upon (A) breach of this
Agreement by the Employee, (B) the willful failure by the Employee to
substantially perform his duties hereunder (other than any such failure
resulting from the Employee's incapacity due to physical or mental illness)
or failure to follow the specific reasonable directives of the Board of
Directors, after demand for substantial performance that specifically
identifies the manner in which the Company believes the Employee has not
substantially performed his duties is delivered to the Employee by the
Company, or (C) the willful engaging by the Employee in misconduct which is
materially injurious to the Company, monetarily or otherwise. For purposes
of this paragraph, no act, or failure to act, on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, the Employee
shall not be deemed to have been terminated for Cause without (i) 15 days
notice to the Employee setting forth the reasons for the Company's intention
to terminate for Cause and (ii) delivery to the Employee of a Notice of
Termination as defined in Section 5.6 hereof, from the Board of Directors
finding that, in the good faith opinion of the Board of Directors, the
Employee was guilty of conduct set forth above in clause (B) of this Section
5.3 and specifying the particulars thereof in detail.

5.4 WITHOUT CAUSE. The Company may terminate this Agreement
Without Cause, upon written notice to the Employee delivered in accordance
with Sections 5.6 and 12.1 hereof. For purposes of this Agreement, the
Employee will be deemed to have been terminated "Without Cause" if the
Employee is terminated by the Company for any reason other than Cause,
Disability of the Employee or death of the Employee.

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<PAGE>

5.5 BY THE EMPLOYEE. The Employee may terminate this Agreement for
any reason, upon written notice to the Company delivered in accordance with
Sections 5.6 and 12.1 hereof.

5.6 NOTICE OF TERMINATION. Any termination of this Agreement by
the Company for Cause, Without Cause or as a result of the Disability of the
Employee, or by the Employee for any reason, shall be communicated by Notice
of Termination to the other party hereto given in accordance with this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) specifies the
termination date, if such date is other than the date of receipt of such
notice (which termination date shall not be more than 15 days after the
giving of such notice).

6. OBLIGATIONS OF COMPANY UPON TERMINATION.

6.1 CAUSE; BY EMPLOYEE; DISABILITY. If this Agreement shall be
terminated (i) by the Company for Cause or Death or Disability of the
Employee or (ii) by the Employee for any reason:

6.1.1 the Company shall pay to the Employee or his estate, in a
lump sum in cash within 30 days after the Date of Termination, the
aggregate of the following amounts:

(i) if not theretofore paid, the Base Salary through the
Date of Termination; and

(ii) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously deferred
and not yet paid by the Company; and

6.1.2 the Company shall, promptly upon submission by the Employee
of supporting documentation, pay or reimburse to the Employee any costs
and expenses paid or incurred by the Employee prior to the Date of
Termination which would have been payable under Section 4.6 hereof if the
Employee's employment had not terminated.

6.2 WITHOUT CAUSE. If this Agreement shall be terminated by the
Company Without Cause:

6.2.1 the Company shall pay to the Employee, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of the
following amounts:

(i) if not theretofore paid, the Base Salary through the
Date of Termination; and

(ii) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously deferred
and not yet paid by the Company;

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<PAGE>

6.2.2 the Company shall, promptly upon submission by the Employee
of supporting documentation, pay or reimburse to the Employee any costs
and expenses paid or incurred by the Employee prior to the Date of
Termination which would have been payable under Section 4.6 hereof if the
Employee's employment had not terminated;

6.2.3 for a period of 6 months after the Date of Termination, the
Company shall continue benefits to the Employee and/or the Employee's
family at least equal to those which would have been provided to them
under Section 4.5 hereof if the Employee's employment had not been
terminated; and

6.2.4 the Company shall pay to the Employee, in equal
semi-monthly installments, the Base Salary for a period of 6 months after
the Date of Termination.

7. EMPLOYEE'S OBLIGATION TO AVOID CONFLICTS OF INTEREST. The Employee
hereby acknowledges that the Company will adopt a Code of Ethics and a
conflicts of interest policy which will apply to all of the Company's
executive officers and the Employee agrees to abide by the same. Failure of
the Employee to abide by such policy shall constitute Cause as defined in
Section 5.3 of this Agreement.

8. EMPLOYEE'S CONFIDENTIALITY OBLIGATION.

8.1 The Employee hereby acknowledges, understands and agrees that
all Confidential Information is the exclusive and confidential property of
the Company and its Subsidiaries which shall at all times be regarded,
treated and protected as such in accordance with this Section 8. The
Employee acknowledges that all such Confidential Information is in the nature
of a trade secret.

8.2 For purposes of this Agreement, "Confidential Information"
means information which is used in the business of the Company or its
Subsidiaries and (i) is proprietary to or created by the Company or its
Subsidiaries, (ii) gives the Company or its Subsidiaries some competitive
business advantage or the opportunity of obtaining such advantage or the
disclosure of which could be detrimental to the interests of the Company or
its Subsidiaries, (iii) is designated as Confidential Information by the
Company or its Subsidiaries, is known by the Employee to be considered
confidential by the Company or its Subsidiaries, or from all the relevant
circumstances should reasonably be assumed by the Employee to be confidential
and proprietary to the Company or its Subsidiaries, or (iv) is not generally
known by non-Company personnel; PROVIDED, HOWEVER, that the term
"Confidential Information" shall not include information which is in the
public domain through no fault of the Employee or any person acting on his
behalf. Such Confidential Information includes, without limitation, the
following types of information and other information of a similar nature
(whether or not reduced to writing or designated as confidential):

8.2.1 Internal personnel and financial information of the
Company or its Subsidiaries, vendor information (including vendor
characteristics, services, prices, lists and agreements), purchasing and
internal cost information, internal service and operational manuals, and the
manner and methods of conducting the business of the Company or its
Subsidiaries;

6
<PAGE>

8.2.2 Marketing and development plans, price and cost data,
price and fee amounts, pricing and billing policies, quoting procedures,
marketing techniques, forecasts and forecast assumptions and volumes, and
future plans and potential strategies (including, without limitation, all
information relating to any acquisition prospect and the identity of any key
contact within the organization of any acquisition prospect) of the Company
or its Subsidiaries which have been or are being discussed;

8.2.3 Names of customers and their representatives, contracts
(including their contents and parties), customer services, and the type,
quantity, specifications and content of products and services purchased,
leased, licensed or received by customers of the Company or its Subsidiaries;
and

8.2.4 Confidential and proprietary information provided to the
Company or its Subsidiaries by any actual or potential customer, government
agency or other third party (including businesses, consultants and other
entities and individuals).

8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position
of trust and confidence with respect to the affairs and business of the
Company and its Subsidiaries. In view of the foregoing and of the
consideration to be provided to the Employee, the Employee agrees that it is
reasonable and necessary that the Employee make each of the following
covenants:

8.3.1 Until the Date of Termination and for a period of three
years thereafter, the Employee shall not disclose Confidential Information to
any person or entity, either inside or outside of the Company, other than as
necessary in carrying out his duties and responsibilities as set forth in
Section 2 hereof, without first obtaining the Company's prior written consent
(unless such disclosure is compelled pursuant to court orders or subpoena,
and at which time the Employee shall give notice of such proceedings to the
Company).

8.3.2 Until the Date of Termination and for a period of three
years thereafter, the Employee shall not use, copy or transfer Confidential
Information other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first obtaining
the Company's prior written consent.

8.3.3 On the Date of Termination, the Employee shall promptly
deliver to the Company (or its designee) or destroy all written materials,
records and documents made by the Employee or which came into his possession
on or before the Date of Termination (even if prior to the date hereof)
concerning the business or affairs of the Company or its Subsidiaries,
including, without limitation, all materials containing Confidential
Information.

7
<PAGE>

9. DISCLOSURE OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES
AND INVENTIONS. As part of the Employee's fiduciary duties to the Company,
the Employee agrees that during his employment by the Company and for a
period of three years following the Date of Termination, the Employee shall
promptly disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and
whether or not reduced to practice, which are conceived, developed, made or
acquired by the Employee, either individually or jointly with others, and
which relate to the business, products or services of the Company or its
Subsidiaries, irrespective of whether the Employee used the Company's time or
facilities and irrespective of whether such information, idea, concept,
improvement, discovery or invention was conceived, developed, discovered or
acquired by the Employee on the job, at home, or elsewhere. This obligation
extends to all types of information, ideas and concepts, including
information, ideas and concepts relating to new types of services, corporate
opportunities, acquisition prospects, the identity of key representatives
within acquisition prospect organizations, prospective names or service marks
for the Company's business activities, and the like.

10. OWNERSHIP OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES AND
INVENTIONS, AND ALL ORIGINAL WORKS OF AUTHORSHIP.

10.1 All information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, which are conceived, made, developed
or acquired by the Employee or which are disclosed or made known to the
Employee, individually or in conjunction with others, during the Employee's
employment by the Company and which relate to the business, products or
services of the Company or its Subsidiaries (including, without limitation,
all such information relating to corporate opportunities, research, financial
and sales data, pricing and trading terms, evaluations, opinions,
interpretations, acquisition prospects, the identity of customers or their
requirements, the identity of key contacts within the customers'
organizations or within the organization of acquisition prospects, marketing
and merchandising techniques, and prospective names and service marks) are
and shall be the sole and exclusive property of the Company. Furthermore,
all drawings, memoranda, notes, records, files, correspondence, manuals,
models, specifications, computer programs, maps and all other writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries and inventions are and shall be the sole and
exclusive property of the Company.

10.2 In particular, the Employee hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be
filed in respect thereof, including divisions, continuations,
continuations-in-part, reissues and/or extensions thereof, and applications
for registration of such names and service marks. The Employee shall assist
the Company and its nominee at all times, until the Date of Termination and
at all times thereafter, in the protection of such information, ideas,
concepts, improvements, discoveries or inventions, both in the United States
and all foreign countries, which assistance shall include, but shall not be
limited to, the execution of all lawful oaths and all assignment documents
requested by the Company or its nominee in connection with the preparation,
prosecution, issuance or enforcement of any applications for United States or
foreign letters patent, including divisions, continuations,

8
<PAGE>

continuations-in-part, reissues and/or extensions thereof, and any
application for the registration of such names and service marks.

10.3 In the event the Employee creates, during the Employee's
employment by the Company, any original work of authorship fixed in any
tangible medium of expression which is the subject matter of copyright (such
as, videotapes, written presentations on acquisitions, computer programs,
drawings, maps, architectural renditions, models, manuals, brochures or the
like) relating to the Company's business, products or services, whether such
work is created solely by the Employee or jointly with others, the Company
shall be deemed the author of such work if the work is prepared by the
Employee within the scope of his employment; or, if the work is not prepared
by the Employee within the scope of his employment but is specially ordered
by the Company as a contribution to a collective work, as a part of a motion
picture or other audiovisual work, as a translation, as a supplementary work,
as a compilation or as an instructional text, then the work shall be
considered to be a work made for hire, and the Company shall be the author of
such work. The Employee agrees to assist the Company and its Subsidiaries,
at all times, until the Date of Termination and at all times thereafter, in
the protection of the Company's worldwide right, title and interest in and to
such work and all rights of copyright therein, which assistance shall
include, but shall not be limited to, the execution of all documents
requested by the Company or its nominee and the execution of all lawful oaths
and applications for registration of copyright in the United States and
foreign countries.

11. EMPLOYEE'S NON-COMPETITION OBLIGATION.

11.1 Until the Date of Termination, and for a period of one year
thereafter, the Employee shall not, acting alone or in conjunction with
others, directly or indirectly, in any of the business territories in which
the Company or any of its Subsidiaries is as of the Date of Termination
conducting business, invest or engage, directly or indirectly, in any
business which is competitive with that of the Company as of the Date of
Termination or accept employment with or render services to such a competitor
as a director, officer, agent, employee or consultant, or take any action
inconsistent with the fiduciary relationship of an employee to his employer;
provided, however, that the beneficial ownership by the Employee of up to
three percent of the voting stock of any corporation subject to the periodic
reporting requirements of the Exchange Act shall not violate this Section
11.1.

11.2 In addition to the other obligations agreed to by the Employee
in this Agreement, the Employee agrees that until the Date of Termination,
and for a period of one year thereafter, he shall not at any time, directly
or indirectly, (i) induce, entice or solicit any employee of the Company to
leave his employment, (ii) contact, communicate or solicit any customer or
acquisition prospect of the Company derived from any customer list, customer
lead, mail, printed matter or other information secured from the Company or
its present or past employees or (iii) in any other manner use any customer
lists or customer leads, mail, telephone numbers, printed material or other
information of the Company relating thereto.

11.3 The parties hereto acknowledge and agree that (i) the
agreements and covenants set forth in this Section 11 are being made for good
and valuable consideration, the receipt and

9
<PAGE>

sufficiency of which is acknowledged; (ii) the covenants contained in this
Section 11 are an important aspect of this Agreement, and the Company would
not have entered into this Agreement absent the inclusion of this Section 11;
and (iii) the restrictions imposed in this Section 11, including the
geographic area and duration of the covenants made herein, are reasonable and
necessary to protect the Company. If the Employee breaches or indicates an
intention to breach any term or provision of this Section 11, the parties
hereto agree that the Company shall be entitled to the right of both
temporary and permanent injunctive relief and/or specific performance. The
right of the Company to such relief shall not be construed to prevent the
Company from pursuing, either consecutively or concurrently, any and all
other legal or equitable remedies available to it for such breach or
threatened breach, specifically including, without limitation, the recovery
of monetary damages. If any court determines that any provision of this
Section 11, or any part thereof, is unenforceable because of the duration or
geographic scope of such provision, the parties hereto agree that such court
shall have the power to reduce the duration or geographic scope of such
provision, as the case may be, and the parties hereto agree to request the
court to exercise such power, and, in its amended form, such provision shall
then be enforceable and shall be enforced.

12.. MISCELLANEOUS.

12.1 NOTICES. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall
be in writing and shall be deemed to have been given when delivered by hand
or mailed by registered or certified mail, return receipt requested, as
follows (provided that notice of change of address shall be deemed given only
when received):

If to the Company to:

OmniLynx Communications Corporation
700 Gemini, Suite 100
Houston, Texas 77058
Attention: Christopher H. Efird

If to the Employee to:

ARC Networks, Inc.
1770 Motor Parkway, Suite 300
Hauppage, New York 11788
Attention: Joseph Gregori

or to such other names or addresses as the Company or the Employee, as the
case may be, shall designate by notice to the other party hereto in the
manner specified in this Section 12.1.

12.2 WAIVER OF BREACH. The waiver by any party hereto of a breach
of any provision of this Agreement shall neither operate nor be construed as
a waiver of any subsequent breach by any party.

10
<PAGE>

12.3 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors, legal representatives and
assigns, and upon the Employee, his heirs, executors, administrators,
representatives and assigns; provided, however, the Employee agrees that his
rights and obligations hereunder are personal to him and may not be assigned
without the express written consent of the Company.

12.4 ENTIRE AGREEMENT; NO ORAL AMENDMENTS. This Agreement, together
with any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces and merges all previous agreements and
discussions relating to the same or similar subject matter between the
Employee and the Company and constitutes the entire agreement between the
Employee and the Company with respect to the subject matter of this
Agreement. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by any employee, officer, or
representative of the Company or by any written agreement unless signed by an
officer of the Company who is expressly authorized by the Company to execute
such document.

12.5 ENFORCEABILITY. If any provision of this Agreement or
application thereof to anyone or under any circumstances shall be determined
to be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be
given effect without the invalid or unenforceable provision or application.

12.6 JURISDICTION; ARBITRATION. The laws of the State of Texas
shall govern the interpretation, validity and effect of this Agreement
without regard to the place of execution or the place for performance
thereof. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration located in
Houston, Texas administered by the American Arbitration Association in
accordance with its applicable arbitration rules, and the judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof, which judgment shall be binding upon the parties hereto.

12.7 INJUNCTIVE RELIEF. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company
shall have, in addition to any and all remedies of law, the right to any
injunction, specific performance and other equitable relief to prevent or to
redress the violation of the Employee's duties or responsibilities hereunder.

IN WITNESS WHEREOF, the undersigned, intending to be legally bound,
have executed this Agreement as of the date first written above.

OMNILYNX COMMUNICATIONS CORPORATION

By: /s/ Christopher H. Efird
-----------------------------------
Christopher H. Efird, President

11
<PAGE>

EMPLOYEE

/s/ Joseph Gregori
-----------------------------------
Joseph Gregori

<PAGE>

Exhibit 10.4

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into this 30 day of June, 1999 by and between OmniLynx Communications
Corporation, a Delaware corporation having its principal executive office at 700
Gemini, Suite 100, Houston, Texas 77058 (hereinafter referred to as the
"Company"), and Peter Parrinello (hereinafter referred to as the "Employee").

W I T N E S S E T H:

WHEREAS, Employee desires to serve the Company as its President; and

WHEREAS, the parties desire to provide that the Employee be employed by
the Company under the terms of this Agreement.

NOW, THEREFORE, for and in consideration of the mutual promises,
covenants and obligations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Company and the Employee hereby agree as follows:

1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms have
the meanings prescribed below:

ANNUAL BONUS shall have the meaning assigned thereto in Section 4.2
hereof.

BASE SALARY shall have the meaning assigned thereto in Section 4.1
hereof.

CAUSE shall have the meaning assigned thereto in Section 5.3 hereof.

CODE means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated by the Internal Revenue Service thereunder, all as
in effect from time to time during the Employment Period.

COMMON STOCK means the Company's common stock, par value $.0001 per
share.

COMPANY means OmniLynx Communications Corporation, a Delaware
corporation, the principal executive office of which is located at 700 Gemini,
Suite 100, Houston, Texas 77058.

CONFIDENTIAL INFORMATION shall have the meaning assigned thereto in
Section 8.2 hereof.

DATE OF TERMINATION means the earliest to occur of (i) the date of the
Employee's death, (ii) the date on which the Employee terminates this Agreement
for any reason or (iii) the date of

<PAGE>

receipt of the Notice of Termination, or such later date as may be prescribed
in the Notice of Termination in accordance with Section 5.6 hereof.

DISABILITY means an illness or other disability which prevents the
Employee from discharging his responsibilities under this Agreement for a period
of 180 consecutive calendar days, or an aggregate of 180 calendar days in any
calendar year, during the Employment Period, all as determined in good faith by
the Board of Directors of the Company.

EFFECTIVE DATE means the date upon which the stock of the Company is
issued and sold pursuant to a registration statement filed under the Securities
Act of 1933, as amended.

EMPLOYEE means Peter Parrinello, an individual who resides at 9 Paul
Court, Tappan, New York 10983.

EMPLOYMENT PERIOD shall have the meaning assigned thereto in Section 3
hereof.

EXCHANGE ACT means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.

NOTICE OF TERMINATION shall have the meaning assigned thereto in
Section 5.6 hereof.

SUBSIDIARY, when used with respect to any such entity, shall mean any
corporation or other business entity a majority of whose outstanding voting
stock or the equivalent entitled to vote for the election of directors is at the
time owned by such entity and/or one or more of its subsidiaries.

WITHOUT CAUSE shall have the meaning assigned thereto in Section 5.4
hereof.

2. GENERAL DUTIES OF COMPANY AND EMPLOYEE.

2.1 The Company agrees to employ the Employee, and the Employee agrees
to accept employment by the Company and to serve the Company as its President.
The authority, duties and responsibilities of the Employee shall include those
duties of President as specified in the Bylaws of the Company as in effect on
the date hereof, and such other or additional duties as may from time to time be
assigned to the Employee by the Board of Directors. While employed hereunder,
the Employee shall devote his full time and attention during normal business
hours to the affairs of the Company and use his best efforts to perform
faithfully and efficiently his duties and responsibilities. The Employee may
(i) serve on corporate, civic or charitable boards or committees provided that
(A) such boards or committees do not control or advise business entities that
compete with the Company and (B) all such services are promptly disclosed in
writing to the Board of Directors, (ii) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (iii) manage personal
investments, so long as such activities do not materially interfere with the
performance of the Employee's duties and responsibilities.

<PAGE>

2.2 The Employee agrees and acknowledges that he owes a fiduciary duty
of loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and to do no act and to make no statement, oral or written, which
would injure the Company's business, its interests or its reputation.

2.3 The Employee agrees to comply at all times with all applicable
policies, rules and regulations of the Company, including, without limitation,
the Company's Code of Ethics and the Company's policy regarding trading in the
Common Stock, as each is in effect from time to time during the Employment
Period.

3. TERM. Unless sooner terminated pursuant to other provisions hereof, the
Employee's period of employment under this Agreement shall be the period
beginning on the Effective Date and ending on the third anniversary thereof.
The period of time beginning on the Effective Date and ending on the third
anniversary thereof (notwithstanding termination of this Agreement prior to the
end of such period pursuant to other provisions hereof) is referred to elsewhere
herein as the "Employment Period."

4. COMPENSATION AND BENEFITS.

4.1 BASE SALARY. As compensation for services to the Company, the
Company shall pay to the Employee until the Date of Termination an annual base
salary of $160,000 (the "Base Salary"). The Base Salary shall be payable in
equal semi-monthly installments or in accordance with the Company's established
policy, subject only to such payroll and withholding deductions as may be
required by law and other deductions applied generally to employees of the
Company for insurance and other employee benefit plans.

4.3 VACATION. Until the Date of Termination, the Employee shall be
entitled to vacation as determined by the Company's vacation policy for its
executive officers as in effect from time to time.

4.4 INCENTIVE, SAVINGS AND RETIREMENT PLANS. Until the Date of
Termination, the Employee shall be eligible to participate in and shall receive
all benefits under all executive incentive, savings and retirement plans
(including 401(k) plans) and programs currently maintained or hereinafter
established by the Company for the benefit of its executive officers and/or
employees.

4.5 WELFARE BENEFIT PLANS. Until the Date of Termination, the
Employee and/or the Employee's family, as the case may be, shall be eligible to
participate in and shall receive all benefits under each welfare benefit plan of
the Company currently maintained or hereinafter established by the Company for
the benefit of its employees. Such welfare benefit plans may include, without
limitation, medical, dental, disability, group life, accidental death and travel
accident insurance plans and programs.

<PAGE>

4.6 REIMBURSEMENT OF EXPENSES. The Employee may from time to time
until the Date of Termination incur various business expenses customarily
incurred by persons holding positions of like responsibility, including, without
limitation, travel, entertainment and similar expenses incurred for the benefit
of the Company. Subject to the Company's policy regarding the reimbursement of
such expenses as in effect from time to time during the Employment Period, the
Company shall reimburse the Employee for such expenses from time to time, at the
Employee's request, and the Employee shall account to the Company for all such
expenses.

5. TERMINATION.

5.1 DEATH. This Agreement shall terminate automatically upon the
death of the Employee.

5.2 DISABILITY. The Company may terminate this Agreement, upon
written notice to the Employee delivered in accordance with Sections 5.6
and 12.1 hereof, upon the Disability of the Employee.

5.3 CAUSE. The Company may terminate the Employee's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Employee's employment under upon (A) breach of this
Agreement by the Employee, (B) the willful failure by the Employee to
substantially perform his duties hereunder (other than any such failure
resulting from the Employee's incapacity due to physical or mental illness) or
failure to follow the specific reasonable directives of the Board of Directors,
after demand for substantial performance that specifically identifies the manner
in which the Company believes the Employee has not substantially performed his
duties is delivered to the Employee by the Company, or (C) the willful engaging
by the Employee in misconduct which is materially injurious to the Company,
monetarily or otherwise. For purposes of this paragraph, no act, or failure to
act, on the Employee's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company. Notwithstanding
the foregoing, the Employee shall not be deemed to have been terminated for
Cause without (i) 15 days notice to the Employee setting forth the reasons for
the Company's intention to terminate for Cause and (ii) delivery to the Employee
of a Notice of Termination as defined in Section 5.6 hereof, from the Board of
Directors finding that, in the good faith opinion of the Board of Directors, the
Employee was guilty of conduct set forth above in clause (B) of this Section 5.3
and specifying the particulars thereof in detail.

5.4 WITHOUT CAUSE. The Company may terminate this Agreement Without
Cause, upon written notice to the Employee delivered in accordance with
Sections 5.6 and 12.1 hereof. For purposes of this Agreement, the Employee will
be deemed to have been terminated "Without Cause" if the Employee is terminated
by the Company for any reason other than Cause, Disability of the Employee or
death of the Employee.

<PAGE>

5.5 BY THE EMPLOYEE. The Employee may terminate this Agreement for
any reason, upon written notice to the Company delivered in accordance with
Sections 5.6 and 12.1 hereof.

5.6 NOTICE OF TERMINATION. Any termination of this Agreement by the
Company for Cause, Without Cause or as a result of the Disability of the
Employee, or by the Employee for any reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated and (iii) specifies the termination date, if such date is
other than the date of receipt of such notice (which termination date shall not
be more than 15 days after the giving of such notice).

6. OBLIGATIONS OF COMPANY UPON TERMINATION.

6.1 CAUSE; BY EMPLOYEE; DISABILITY. If this Agreement shall be
terminated (i) by the Company for Cause or Death or Disability of the Employee
or (ii) by the Employee for any reason:

6.1.1 the Company shall pay to the Employee or his estate, in a
lump sum in cash within 30 days after the Date of Termination, the
aggregate of the following amounts:

(i) if not theretofore paid, the Base Salary through the
Date of Termination; and

(ii) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously deferred
and not yet paid by the Company; and

6.2 WITHOUT CAUSE. If this Agreement shall be terminated by the
Company Without Cause:

6.2.1 the Company shall pay to the Employee, in a lump sum in
cash within 30 days after the Date of Termination, the aggregate of the
following amounts:

(i) if not theretofore paid, the Base Salary through the
Date of Termination; and

(ii) in the case of compensation previously deferred by
the Employee, all amounts of such compensation previously deferred
and not yet paid by the Company;

<PAGE>

6.2.4 the Company shall pay to the Employee, in equal
semi-monthly installments, the Base Salary for a period of 6 months after
the Date of Termination.

7. EMPLOYEE'S OBLIGATION TO AVOID CONFLICTS OF INTEREST. The Employee
hereby acknowledges that the Company will adopt a Code of Ethics and a conflicts
of interest policy which will apply to all of the Company's executive officers
and the Employee agrees to abide by the same. Failure of the Employee to abide
by such policy shall constitute Cause as defined in Section 5.3 of this
Agreement.

8. EMPLOYEE'S CONFIDENTIALITY OBLIGATION.

8.1 The Employee hereby acknowledges, understands and agrees that all
Confidential Information is the exclusive and confidential property of the
Company and its Subsidiaries which shall at all times be regarded, treated and
protected as such in accordance with this Section 8. The Employee acknowledges
that all such Confidential Information is in the nature of a trade secret.

8.2 For purposes of this Agreement, "Confidential Information" means
information which is used in the business of the Company or its Subsidiaries and
(i) is proprietary to or created by the Company or its Subsidiaries, (ii) gives
the Company or its Subsidiaries some competitive business advantage or the
opportunity of obtaining such advantage or the disclosure of which could be
detrimental to the interests of the Company or its Subsidiaries, (iii) is
designated as Confidential Information by the Company or its Subsidiaries, is
known by the Employee to be considered confidential by the Company or its
Subsidiaries, or from all the relevant circumstances should reasonably be
assumed by the Employee to be confidential and proprietary to the Company or its
Subsidiaries, or (iv) is not generally known by non-Company personnel; PROVIDED,
HOWEVER, that the term "Confidential Information" shall not include information
which is in the public domain through no fault of the Employee or any person
acting on his behalf. Such Confidential Information includes, without
limitation, the following types of information and other information of a
similar nature (whether or not reduced to writing or designated as
confidential):

8.2.1 Internal personnel and financial information of the Company
or its Subsidiaries, vendor information (including vendor characteristics,
services, prices, lists and agreements), purchasing and internal cost
information, internal service and operational manuals, and the manner and
methods of conducting the business of the Company or its Subsidiaries;

<PAGE>

8.2.2 Marketing and development plans, price and cost data, price
and fee amounts, pricing and billing policies, quoting procedures, marketing
techniques, forecasts and forecast assumptions and volumes, and future plans and
potential strategies (including, without limitation, all information relating to
any acquisition prospect and the identity of any key contact within the
organization of any acquisition prospect) of the Company or its Subsidiaries
which have been or are being discussed;

8.2.3 Names of customers and their representatives, contracts
(including their contents and parties), customer services, and the type,
quantity, specifications and content of products and services purchased, leased,
licensed or received by customers of the Company or its Subsidiaries; and

8.3 As a consequence of the Employee's acquisition or anticipated
acquisition of Confidential Information, the Employee shall occupy a position of
trust and confidence with respect to the affairs and business of the Company and
its Subsidiaries. In view of the foregoing and of the consideration to be
provided to the Employee, the Employee agrees that it is reasonable and
necessary that the Employee make each of the following covenants:

8.3.1 Until the Date of Termination and for a period of three
years thereafter, the Employee shall not disclose Confidential Information to
any person or entity, either inside or outside of the Company, other than as
necessary in carrying out his duties and responsibilities as set forth in
Section 2 hereof, without first obtaining the Company's prior written consent
(unless such disclosure is compelled pursuant to court orders or subpoena, and
at which time the Employee shall give notice of such proceedings to the
Company).

8.3.3 On the Date of Termination, the Employee shall promptly
deliver to the Company (or its designee) or destroy all written materials,
records and documents made by the Employee or which came into his possession on
or before the Date of Termination (even if prior to the date hereof) concerning
the business or affairs of the Company or its Subsidiaries, including, without
limitation, all materials containing Confidential Information.

<PAGE>

9. DISCLOSURE OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES AND
INVENTIONS. As part of the Employee's fiduciary duties to the Company, the
Employee agrees that during his employment by the Company and for a period of
three years following the Date of Termination, the Employee shall promptly
disclose in writing to the Company all information, ideas, concepts,
improvements, discoveries and inventions, whether patentable or not, and whether
or not reduced to practice, which are conceived, developed, made or acquired by
the Employee, either individually or jointly with others, and which relate to
the business, products or services of the Company or its Subsidiaries,
irrespective of whether the Employee used the Company's time or facilities and
irrespective of whether such information, idea, concept, improvement, discovery
or invention was conceived, developed, discovered or acquired by the Employee on
the job, at home, or elsewhere. This obligation extends to all types of
information, ideas and concepts, including information, ideas and concepts
relating to new types of services, corporate opportunities, acquisition
prospects, the identity of key representatives within acquisition prospect
organizations, prospective names or service marks for the Company's business
activities, and the like.

10. OWNERSHIP OF INFORMATION, IDEAS, CONCEPTS, IMPROVEMENTS, DISCOVERIES AND
INVENTIONS, AND ALL ORIGINAL WORKS OF AUTHORSHIP.

10.1 All information, ideas, concepts, improvements, discoveries and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by the Employee or which are disclosed or made known to the Employee,
individually or in conjunction with others, during the Employee's employment by
the Company and which relate to the business, products or services of the
Company or its Subsidiaries (including, without limitation, all such information
relating to corporate opportunities, research, financial and sales data, pricing
and trading terms, evaluations, opinions, interpretations, acquisition
prospects, the identity of customers or their requirements, the identity of key
contacts within the customers' organizations or within the organization of
acquisition prospects, marketing and merchandising techniques, and prospective
names and service marks) are and shall be the sole and exclusive property of the
Company. Furthermore, all drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, maps and all
other writings or materials of any type embodying any of such information,
ideas, concepts, improvements, discoveries and inventions are and shall be the
sole and exclusive property of the Company.

10.2 In particular, the Employee hereby specifically sells, assigns,
transfers and conveys to the Company all of his worldwide right, title and
interest in and to all such information, ideas, concepts, improvements,
discoveries or inventions, and any United States or foreign applications for
patents, inventor's certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, until the Date of Termination and at all times thereafter, in the
protection of such information, ideas, concepts, improvements, discoveries or
inventions, both in the United States and all foreign countries, which
assistance shall include, but shall not be limited to, the execution of all
lawful oaths and all assignment documents requested by the Company or its
nominee in connection with the preparation, prosecution, issuance or enforcement
of any applications for United States or foreign letters patent, including
divisions, continuations,

<PAGE>

continuations-in-part, reissues and/or extensions thereof, and any
application for the registration of such names and service marks.

10.3 In the event the Employee creates, during the Employee's
employment by the Company, any original work of authorship fixed in any tangible
medium of expression which is the subject matter of copyright (such as,
videotapes, written presentations on acquisitions, computer programs, drawings,
maps, architectural renditions, models, manuals, brochures or the like) relating
to the Company's business, products or services, whether such work is created
solely by the Employee or jointly with others, the Company shall be deemed the
author of such work if the work is prepared by the Employee within the scope of
his employment; or, if the work is not prepared by the Employee within the scope
of his employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation or as an instructional
text, then the work shall be considered to be a work made for hire, and the
Company shall be the author of such work. The Employee agrees to assist the
Company and its Subsidiaries, at all times, until the Date of Termination and at
all times thereafter, in the protection of the Company's worldwide right, title
and interest in and to such work and all rights of copyright therein, which
assistance shall include, but shall not be limited to, the execution of all
documents requested by the Company or its nominee and the execution of all
lawful oaths and applications for registration of copyright in the United States
and foreign countries.

11. EMPLOYEE'S NON-COMPETITION OBLIGATION.

11.1 Until the Date of Termination, and for a period of one year
thereafter, the Employee shall not, acting alone or in conjunction with others,
directly or indirectly, in any of the business territories in which the Company
or any of its Subsidiaries is as of the Date of Termination conducting business,
invest or engage, directly or indirectly, in any business which is competitive
with that of the Company as of the Date of Termination or accept employment with
or render services to such a competitor as a director, officer, agent, employee
or consultant, or take any action inconsistent with the fiduciary relationship
of an employee to his employer; provided, however, that the beneficial ownership
by the Employee of up to three percent of the voting stock of any corporation
subject to the periodic reporting requirements of the Exchange Act shall not
violate this Section 11.1.

11.2 In addition to the other obligations agreed to by the Employee in
this Agreement, the Employee agrees that until the Date of Termination, and for
a period of one year thereafter, he shall not at any time, directly or
indirectly, (i) induce, entice or solicit any employee of the Company to leave
his employment, (ii) contact, communicate or solicit any customer or acquisition
prospect of the Company derived from any customer list, customer lead, mail,
printed matter or other information secured from the Company or its present or
past employees or (iii) in any other manner use any customer lists or customer
leads, mail, telephone numbers, printed material or other information of the
Company relating thereto.

11.3 The parties hereto acknowledge and agree that (i) the agreements
and covenants set forth in this Section 11 are being made for good and valuable
consideration, the receipt and

<PAGE>

12.. MISCELLANEOUS.

12.1 NOTICES. All notices and other communications required or
permitted hereunder or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when delivered by hand or
mailed by registered or certified mail, return receipt requested, as follows
(provided that notice of change of address shall be deemed given only when
received):

If to the Company to:

OmniLynx Communications Corporation
700 Gemini, Suite 100
Houston, Texas 77058
Attention: Christopher H. Efird

If to the Employee to:

ARC Networks, Inc.
1770 Motor Parkway, Suite 300
Hauppage, New York 11788
Attention: Peter Parrinello

or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 12.1.

12.2 WAIVER OF BREACH. The waiver by any party hereto of a breach of
any provision of this Agreement shall neither operate nor be construed as a
waiver of any subsequent breach by any party.

<PAGE>

12.3 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Company, its successors, legal representatives and assigns, and
upon the Employee, his heirs, executors, administrators, representatives and
assigns; provided, however, the Employee agrees that his rights and obligations
hereunder are personal to him and may not be assigned without the express
written consent of the Company.

12.4 ENTIRE AGREEMENT; NO ORAL AMENDMENTS. This Agreement, together
with any exhibit attached hereto and any document, policy, rule or regulation
referred to herein, replaces and merges all previous agreements and discussions
relating to the same or similar subject matter between the Employee and the
Company and constitutes the entire agreement between the Employee and the
Company with respect to the subject matter of this Agreement. This Agreement
may not be modified in any respect by any verbal statement, representation or
agreement made by any employee, officer, or representative of the Company or by
any written agreement unless signed by an officer of the Company who is
expressly authorized by the Company to execute such document.

12.5 ENFORCEABILITY. If any provision of this Agreement or application
thereof to anyone or under any circumstances shall be determined to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.

12.6 JURISDICTION; ARBITRATION. The laws of the State of Texas shall
govern the interpretation, validity and effect of this Agreement without regard
to the place of execution or the place for performance thereof. Any controversy
or claim arising out of or relating to this Agreement, or the breach thereof,
shall be settled by arbitration located in Houston, Texas administered by the
American Arbitration Association in accordance with its applicable arbitration
rules, and the judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof, which judgment shall be
binding upon the parties hereto.

12.7 INJUNCTIVE RELIEF. The Company and the Employee agree that a
breach of any term of this Agreement by the Employee would cause irreparable
damage to the Company and that, in the event of such breach, the Company shall
have, in addition to any and all remedies of law, the right to any injunction,
specific performance and other equitable relief to prevent or to redress the
violation of the Employee's duties or responsibilities hereunder.

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.

OMNILYNX COMMUNICATIONS CORPORATION

By: /s/ Christopher H. Efird
---------------------------------
Christopher H. Efird, President

<PAGE>

EMPLOYEE

/s/ Peter Parrinello
------------------------------------
Peter Parrinello

<PAGE>

Exhibit 10.5

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into this 30 day of June, 1999 by and between OmniLynx Communications
Corporation, a Delaware corporation having its principal executive office at 700
Gemini, Suite 100, Houston, Texas 77058 (hereinafter referred to as the
"Company"), and Tony Howlett (hereinafter referred to as the "Employee").

W I T N E S S E T H:

WHEREAS, Employee desires to serve the Company as its Chief Technical
Officer; and