Execution Copy



                                   AMNEX, INC.
           $15,000,000 8 1/2% Convertible Subordinated Notes Due 2002(1)
                               PURCHASE AGREEMENT
New York, New York
                                             September 11, 1997
HSBC Securities, Inc.
140 Broadway, 5th Floor
New York, New York  10005

    Ladies and Gentlemen:

     Amnex, Inc., a New York corporation (the "Company"),  proposes to issue and
sell to HSBC Securities,  Inc. (the "Initial Purchaser"),  $15,000,000 principal
amount  of its 8  1/2%  Convertible  Subordinated  Notes  Due  2002  (the  "Firm
Securities").  The Securities are convertible  into shares of Common Stock,  par
value $0.001 per share (the "Common  Stock"),  of the Company at the  conversion
price set forth  herein.  The  Company  also  proposes  to grant to the  Initial
Purchaser an option to purchase up to $8,000,000  additional principal amount of
such  Notes  to cover  over-allotments,  if any (the  "Option  Securities"  and,
together with the Firm Securities,  the "Securities").  The Securities are to be
issued under an indenture (the "Indenture") to be dated as of September 25, 1997
between the Company and Marine Midland Bank as trustee (the "Trustee").

     The sale of the  Securities to the Initial  Purchaser  will be made without
registration  of the  Securities or the Common Stock  issuable  upon  conversion
thereof  under the  Securities  Act of 1933,  as amended (the "Act") in reliance
upon exemptions from the registration  requirements of the Act. You have advised
the Company  that you will make an offering of the  Securities  purchased by you
hereunder in  accordance  with Section 4 hereof,  as soon as you deem  advisable
after this Agreement has been executed and delivered.

     In connection with the sale of the  Securities,  the Company has prepared a
preliminary  offering  memorandum,   dated  August  8,  1997  (the  "Preliminary
Memorandum"),  and a final offering  memorandum,  dated  September 11, 1997 (the


--------
     1 Plus an option to purchase up to $8,000,000  additional  principal amount
of such Notes to cover over-allotments.



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"Final Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum
sets forth certain  information  concerning the Company,  the Securities and the
Common Stock issuable upon conversion thereof.  The Company hereby confirms that
it has authorized the use of the Preliminary Memorandum and the Final Memorandum
in  connection  with the  offering  and resale by the Initial  Purchaser  of the
Securities.  Any references  herein to the  Preliminary  Memorandum or the Final
Memorandum  shall be deemed to include all  exhibits  thereto and all  documents
incorporated by reference therein that were filed under the Securities  Exchange
Act of 1934,  as amended (the  "Exchange  Act"),  on or before the date and time
that this  Agreement  is  executed  and  delivered  by the  parties  hereto (the
"Execution Time"); and any reference herein to the terms "amend", "amendment" or
"supplement"  with respect to the Final  Memorandum  shall be deemed to refer to
and  include  the  filing  of any  document  under  the  Exchange  Act after the
Execution Time that is incorporated by reference therein.

     The  holders  of the  Securities  or the  Common  Stock  issuable  upon the
conversion  thereof  will be entitled to the benefits of a  Registration  Rights
Agreement,  in  substantially  the  form  attached  hereto  as  Exhibit  A  (the
"Registration  Rights  Agreement"),  pursuant to which the  Company  will file a
shelf registration statement (the "Registration  Statement") with the Securities
and Exchange  Commission (the  "Commission")  registering the Securities and the
Common Stock issuable upon the conversion thereof under the Act.

     This Agreement,  the Indenture and the  Registration  Rights  Agreement are
referred to collectively as the "Operative  Documents."  Capitalized  terms used
but not  defined  herein have the  respective  meanings  specified  in the Final
Memorandum.

I.  Representations and Warranties.  The Company represents and warrants to, and
agrees with, the Initial Purchaser as set forth below in this Section 1.

          A. Each of the Preliminary  Memorandum and the Final  Memorandum as of
     its date did  not,  and the  Final  Memorandum  (as the same may have  been
     amended or  supplemented)  as of the date hereof and as of the Closing Date
     (as defined below) does not and will not, contain any untrue statement of a
     material  fact or omit to state any  material  fact  necessary  to make the
     statements therein, in the light of the circumstances under which they were
     made,  not  misleading;  provided,  however,  that  the  Company  makes  no
     representations or warranties as to the information contained in or omitted
     from the  Preliminary  Memorandum or the Final  Memorandum in reliance upon
     and in conformity with  information  furnished in writing to the Company by
     or on behalf of the Initial  Purchaser  specifically  for  inclusion in the
     Preliminary  Memorandum  or the  Final  Memorandum  (and any  amendment  or
     supplement thereof or thereto).  All documents incorporated by reference in
     the Preliminary Memorandum or the Final

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Memorandum  that were filed under the  Exchange  Act on or before the  Execution
Time  complied,  and all such  documents  that are filed under the  Exchange Act
after the Execution  Time and on or before the Closing Date will comply,  in all
material  respects with the applicable  requirements of the Exchange Act and the
rules thereunder in effect as of the date of filing.

          B. All of the information set forth in the Final  Memorandum under the
     heading  "Certain  Relationships  and Related  Transactions -- Transactions
     with  Management and Others" is true and accurate in all material  respects
     and all of the agreements described in or contemplated by such section have
     been duly authorized,  executed and delivered by the Company and constitute
     legal, valid and binding obligations of the Company.

          C. All of the information set forth in the Final  Memorandum under the
     heading "Use of Proceeds" is true and accurate in all material respects and
     the Company will not use the  proceeds of the Offering  except as set forth
     in such section.

          D.  None the  Company,  its  Subsidiaries  (as  defined  below) or any
     affiliate (an "Affiliate") (as defined in Rule 501(b) of Regulation D under
     the Act ("Regulation D")) of the Company or its Subsidiaries, or any person
     acting  in its or their  behalf  (other  than the  Initial  Purchaser)  has
     directly or indirectly, (i) sold, offered for sale, solicited offers to buy
     or otherwise negotiated in respect of, any security (as defined in the Act)
     that is currently or will be integrated  with the sale of the Securities in
     a manner  that would  require the  registration  of the  Securities  or the
     Common Stock issuable upon conversion thereof under the Act or (ii) engaged
     in any form of general  solicitation  or general  advertising  (within  the
     meaning of Regulation D) in connection with the offering of the Securities.

          E. Assuming  compliance by the Initial  Purchaser  with its agreements
     and  the  accuracy  of  its  representations  contained  herein,  it is not
     necessary in connection with the offer, sale and delivery of the Securities
     or the  Common  Stock  issuable  upon  conversion  thereof  in  the  manner
     contemplated  by this  Agreement  and the Final  Memorandum to register the
     Securities  or such Common Stock under the Act or to qualify the  Indenture
     under the Trust  Indenture  Act of 1939,  as amended (the "Trust  Indenture
     Act").

          F. Neither the Company nor its  affiliated  purchasers,  as defined in
     Article 100 of Regulation M of the Exchange Act  ("Regulation  M"),  either
     alone or with one or more other persons:  (i) has taken, either directly or
     indirectly, any

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     action which was designed to cause or result in, or which has  constituted,
     or which might reasonably be expected to cause or result in,  stabilization
     or  manipulation  of the price of any security of the Company in connection
     with the offering of the Securities (the "Subject  Securities") pursuant to
     this  Agreement or (ii) will bid for or purchase any Subject  Securities of
     the  Company  or any  other  covered  securities  (within  the  meaning  of
     Regulation M) relating to the Subject Securities (together with the Subject
     Securities,  the "Covered Securities"),  or attempt to induce any person to
     bid for or purchase any Covered Securities, in either case, for the purpose
     of creating  actual or apparent  active trading in, or raising the price of
     the  Securities,  unless  an  exemption  from Rule 102 of  Regulation  M is
     available.

          G. None of the Company,  its Affiliates or any person acting on behalf
     of the Company or its Affiliates (other than the Initial  Purchaser,  as to
     whom the  Company  makes no  representation)  has  engaged in any  directed
     selling  efforts  (as that term is  defined in  Regulation  S under the Act
     ("Regulation  S")) with respect to the  Securities,  and the  Company,  its
     Affiliates  and any person  acting on its or their  behalf  (other than the
     Initial Purchaser,  as to whom the Company makes no  representations)  have
     complied with the offering restrictions requirement of Regulation S.

          H.  The  Company  is  subject  to and in  compliance  in all  material
     respects with the reporting  requirements of Section 13 or Section 15(d) of
     the Exchange  Act and the Company has timely filed all reports  required to
     be filed thereunder within the last 12 months.

          I.  The  Securities   satisfy  the  requirements  set  forth  in  Rule
     144A(d)(3) under the Act.

          J. The Company has agreed to permit the  Securities  to be  designated
     PORTAL eligible securities and has been advised by the National Association
     of Securities Dealers, Inc. ("NASD") PORTAL Market that the Securities have
     been designated PORTAL eligible securities in accordance with the rules and
     regulations of the NASD;  application  has been made to list the Securities
     on the Luxembourg Stock Exchange and the Company has been notified that the
     Securities have been approved for such listing.

          K. The Company is not an  "investment  company"  within the meaning of
     the  Investment  Company Act of 1940, as amended (the  "Investment  Company
     Act"), without taking account of any exemption arising out of the number of
     holders of the  Company's  securities,  and,  if the Company  conducts  its
     business

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     as set  forth in the  Final  Memorandum,  will not  become  an  "investment
     company"  and will not be required to be  registered  under the  Investment
     Company Act.

          L.  The  Company  has not  paid or  agreed  to pay to any  person  any
     compensation  for  soliciting  another to  purchase  any of the  Securities
     (except as contemplated by this Agreement).

          M. The  information  provided by the Company  pursuant to Section 5(i)
     hereof will not, at the date  thereof,  contain any untrue  statement  of a
     material  fact or omit to state any  material  fact  necessary  to make the
     statements therein, in the light of the circumstances under which they were
     made, not misleading.

          N. The Company has been duly  incorporated  and is a validly  existing
     corporation in good standing under the laws of the State of New York,  with
     power and  authority  (corporate  and other) to own,  lease and operate its
     property  (real and  personal)  and to conduct its business as described in
     the Final Memorandum; and the Company is duly qualified to do business as a
     foreign  corporation in good standing in each other  jurisdiction  in which
     its ownership or lease of property or the conduct of its business  requires
     such  qualification,  except where the failure to be so qualified would not
     have a material  adverse effect on the condition  (financial or otherwise),
     business,  properties  or  results of  operations  of the  Company  and its
     consolidated subsidiaries taken as a whole (a "Material Adverse Effect").

          O. The Company has no subsidiaries  other than those listed on Exhibit
     21 to the  Company's  Annual  Report on Form 10-K for the fiscal year ended
     December 31, 1996 (the "Form 10-K")  incorporated by reference in the Final
     Memorandum    (individually   a   "Subsidiary"    and    collectively   the
     "Subsidiaries"). Each of the Subsidiaries has been duly incorporated and is
     an existing corporation in good standing under the laws of the jurisdiction
     of its incorporation, with power and authority (corporate and other) to own
     its properties (real and personal) and conduct its business as described in
     the Final Memorandum;  and each Subsidiary is duly qualified to do business
     as a foreign  corporation  in good standing in all other  jurisdictions  in
     which its  ownership  or lease of property  or the conduct of its  business
     requires  such  qualification,  except where the failure to be so qualified
     would not have a Material Adverse Effect; all of the issued and outstanding
     capital  stock of each  Subsidiary  has been duly  authorized  and  validly
     issued and is fully paid and nonassessable;  and except as described in the
     Final  Memorandum or as set forth on Schedule 1(o)  attached  hereto,  each
     Subsidiary's  capital  stock  owned by the  Company,  directly  or  through
     subsidiaries, is owned free from liens, encumbrances and defects.

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          P. Except as described in the Final Memorandum,  the Company is not in
     default in the  performance  or  observance of any  obligation,  agreement,
     covenant or condition contained in any contract, indenture,  mortgage, loan
     agreement,  note,  lease or other  instrument  to which it is a party or by
     which it may be bound or to which  any of its  properties  may be  subject,
     except for such defaults that would not have a Material Adverse Effect. The
     execution,  delivery and performance of this Agreement and the Registration
     Rights  Agreement and the  consummation  of the  transactions  contemplated
     herein and therein have been duly  authorized  by all  necessary  corporate
     action  of the  Company  and will not  result  in any  breach of any of the
     terms,  conditions or  provisions  of, or  constitute a default  under,  or
     result in the creation or  imposition  of any lien,  charge or  encumbrance
     upon any property or assets of the Company pursuant to any indenture,  loan
     agreement,  contract or other instrument to which the Company is a party or
     by which the Company may be bound or to which any of the property or assets
     of  the  Company  is  subject  which  breach,   default,  lien,  charge  or
     encumbrance,  individually  or in the  aggregate,  would  have  a  Material
     Adverse Effect, nor will any such execution, delivery or performance result
     in any violation of the provisions of the charter or by-laws of the Company
     or any statute, any rule, regulation or order of any governmental agency or
     body or any court having jurisdiction over the Company.

          Q. No consent, approval,  authorization,  or order of, or filing with,
     any  governmental  agency  or body or any court is  required  for the valid
     authorization,  execution  and  delivery  by the  Company of the  Operative
     Documents and for the consummation of the transactions  contemplated herein
     and  therein,  except such as may be required (i) under the  securities  or
     Blue Sky  laws of the  various  states,  (ii)  under  the  Act,  the  Trust
     Indenture Act or rules of the NASD in connection  with the  registration of
     the Securities and the Common Stock issuable upon conversion  thereof under
     the Act pursuant to the Registration Rights Agreement;  and (iii) under the
     Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act").

          R. This Agreement has been duly authorized,  executed and delivered by
     the Company.

          S. Assuming that each of the  Indenture  and the  Registration  Rights
     Agreement  has  been  duly  authorized,  executed  and  delivered  by,  and
     constitutes the legal, valid and binding obligation of, the Trustee and the
     Initial


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     Purchaser,  respectively, each of the Indenture and the Registration Rights
     Agreement  constitutes  the legal,  valid and  binding  obligation,  of the
     Company enforceable in accordance with its terms, except (i) as enforcement
     thereof  may be  limited  by  bankruptcy,  insolvency  (including,  without
     limitation,  all laws  relating to fraudulent  transfers),  reorganization,
     moratorium or other similar laws now or hereinafter  in effect  relating to
     creditors'  rights generally and (ii) as enforcement  thereof is subject to
     general  principles  of  equity  (regardless  of  whether   enforcement  is
     considered in a proceeding in equity or at law).

          T.  The  consolidated  financial  statements  included  in  the  Final
     Memorandum,  together with the related notes thereto, present fairly in all
     material   respects  the   financial   position  of  the  Company  and  its
     consolidated  subsidiaries  at the  dates  indicated  and the  consolidated
     results of  operations  and cash flows of the Company and its  consolidated
     subsidiaries for the periods specified. Such financial statements have been
     prepared  in  conformity  with  generally  accepted  accounting  principles
     applied on a consistent  basis throughout the periods  involved,  except as
     otherwise stated in the Final Memorandum.

          U. The  Securities  and the Common Stock  issuable upon the conversion
     thereof  have  been  duly   authorized  by  the  Company;   when  executed,
     authenticated,  issued  and  delivered  in the manner  provided  for in the
     Indenture  and  sold  and  paid  for as  provided  in this  Agreement,  the
     Securities  will  constitute  valid and binding  obligations of the Company
     entitled to the benefits of the Indenture,  enforceable against the Company
     in  accordance  with their  terms,  except as  enforcement  thereof  may be
     limited by bankruptcy,  insolvency (including, without limitation, all laws
     relating to  fraudulent  transfers),  reorganization,  moratorium  or other
     similar  laws now or  hereafter  in effect  relating to  creditors'  rights
     generally  and  except  as  enforcement   thereof  is  subject  to  general
     principles of equity (regardless of whether  enforcement is considered in a
     proceeding  in equity  or at law);  the  Securities  and the  Common  Stock
     issuable upon the conversion thereof conform and, in the case of the Common
     Stock  issuable  upon  conversion  of the  Securities,  will conform in all
     material  respects  to the  descriptions  thereof  contained  in the  Final
     Memorandum;  and the shares of Common Stock issued upon  conversion  of the
     Securities in the manner  contemplated by the Indenture and the Securities,
     will upon issue be validly issued, fully paid and non-assessable.

          V. Except as  disclosed in the Final  Memorandum,  the Company and the
     Subsidiaries  have good and marketable title to all real properties and all
     other  properties  and assets owned by them,  in each case free from liens,
     encumbrances  and defects except where the failure to have such title would
     not have a


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     Material Adverse Effect;  and except as disclosed in the Final  Memorandum,
     the Company and the Subsidiaries  hold any leased real or personal property
     under valid and  enforceable  leases with no  exceptions  that would have a
     Material Adverse Effect.

          W. Except as  disclosed in the Final  Memorandum,  there is no action,
     suit or proceeding  before or by any governmental  agency or body or court,
     domestic or  foreign,  now pending  or, to the  knowledge  of the  Company,
     threatened  against the Company or any of the  Subsidiaries or any of their
     respective  properties  that could  reasonably  be  expected to result in a
     Material  Adverse Effect or that could reasonably be expected to materially
     and adversely affect the  consummation of the transactions  contemplated by
     this Agreement,  the Indenture or the Registration  Rights  Agreement;  all
     pending legal or  governmental  proceedings to which the Company is a party
     or which affect any of its  properties  that are not described in the Final
     Memorandum,   including  ordinary  routine  litigation  incidental  to  its
     business,  in the  aggregate  could not  reasonably  be  expected to have a
     Material Adverse Effect.

          X. Except as disclosed in the Final Memorandum,  no labor dispute with
     the employees of the Company or any Subsidiary  exists, or to the knowledge
     of the Company is threatened,  that could  reasonably be expected to have a
     Material Adverse Effect.

          Y. Each of the  Company  and the  Subsidiaries  has or, in the case of
     those set forth on Schedule  1(y)  hereto,  has  applied for all  necessary
     licenses,   franchises,   consents,   authorizations,   approvals,  orders,
     certificates  and permits of and from,  and has made all  declarations  and
     filings with, all federal, state, local and other governmental authorities,
     all  self-regulatory  organizations and all courts and other tribunals,  to
     own,  lease,  license and use its  properties and assets and to conduct its
     business in the manner to be described in the Final  Memorandum,  except to
     the extent  that the failure to so obtain or file would not have a Material
     Adverse Effect.

          Z. The Registration  Rights Agreement and the Indenture conform in all
     material  respects  to the  descriptions  thereof  contained  in the  Final
     Memorandum.

          AA. Except as disclosed in the Final  Memorandum,  neither the Company
     nor  any  of  the  Subsidiaries  is in  violation  of  any  statute,  rule,
     regulation,  decision  or order of any  governmental  agency or body or any
     court,  domestic  or foreign,  relating to the use,  disposal or release of
     hazardous or toxic


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     substances (collectively,  "environmental laws"), owns or operates any real
     property   contaminated   with  any  substance   that  is  subject  to  any
     environmental   laws,   or  is  subject  to  any  claim   relating  to  any
     environmental  laws,  which  violation,  contamination,  liability or claim
     individually or in the aggregate is reasonably  expected to have a Material
     Adverse Effect;  and the Company is not aware of any pending  investigation
     which might lead to such a claim.

          BB. The  accountants  that examined and issued an auditors report with
     respect  to the  consolidated  financial  statements  of the  Company to be
     included in the Offering  Memorandum  are  independent  public  accountants
     within the meaning of the Act and the regulations thereunder.

     II.  Purchase  and Sale.  (a)  Subject to the terms and  conditions  and in
reliance upon the  representations  and warranties herein set forth, the Company
agrees to sell to the Initial  Purchaser,  and the Initial  Purchaser  agrees to
purchase from the Company, at a purchase price of 8 1/2% of the principal amount
thereof,  plus accrued interest,  if any, from September 25, 1997 to the Closing
Date,  the Firm  Securities.  Each Security will be convertible at the option of
the holder, effective 90 days from the Closing Date, into shares of Common Stock
at a  conversion  price of $2.7844  per share (the  "Conversion  Price"),  which
Conversion Price is subject to adjustment in certain events,  as provided in the
Indenture.

               1. Subject to the terms and  conditions  and in reliance upon the
          representations  and warranties  herein set forth,  the Company hereby
          grants an option (the  "Option") to the Initial  Purchaser to purchase
          the  Option  Securities  at a purchase  price of 95% of the  principal
          amount thereof, plus accrued interest, if any, from September 25, 1997
          to the settlement date for the Option Securities. Each Option Security
          will be  convertible  at the option of the holder,  effective  90 days
          from the Closing Date,  into shares of Common Stock at the  Conversion
          Price.  The Option may be exercised only to cover  over-allotments  in
          the sale of the Firm Securities by the Initial  Purchaser.  The Option
          may be exercised in whole or in part at any time and from time to time
          on or before the 30th day after the date of the Final  Memorandum upon
          written or telegraphic  notice by the Initial Purchaser to the Company
          setting  forth the principal  amount of Option  Securities as to which
          the Initial Purchaser is exercising the Option and the settlement date
          therefor.  Delivery of  certificates  for the Option  Securities,  and
          payment therefor,  shall be made as provided in Section 3 hereof.

     III. Delivery and Payment.  Delivery of and payment for the Firm Securities
and Option  Securities (if the Option  provided for in Section 2(b) hereof shall
have been  exercised  on or before the first  business  day prior to the Closing
Date (as defined

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below))  shall be made at 10:00 AM, New York City time, on September 25, 1997 or
such later date as the Initial Purchaser designates,  which date and time may be
postponed by agreement  between the Initial Purchaser and the Company (such date
and time of delivery  and payment for the  Securities  being  herein  called the
"Closing  Date").  Delivery of  certificates  for the  Securities in such names,
forms and  denominations as the Initial  Purchaser shall have requested shall be
made on the Closing Date to the Initial  Purchaser or as it shall direct at such
location  as the  Initial  Purchaser  shall  reasonably  designate  at least one
business  day in advance of the  Closing  Date  against  payment by the  Initial
Purchaser of the purchase  price for the  Securities to or upon the order of the
Company by wire  transfer to an account  designated by the Company or such other
manner of payment as may be agreed by the Company and the Initial Purchaser. The
certificates,  opinions and letters provided for in Section 6 shall be delivered
at a closing to be held on the Closing  Date at the office of Cleary,  Gottlieb,
Steen & Hamilton ("Counsel for the Initial  Purchaser"),  One Liberty Plaza, New
York,  New York.  Certificates  for the  Securities  shall be registered in such
names and in such  denominations  as the Initial  Purchaser may request not less
than one full business day in advance of the Closing Date. 

     The  Company  agrees  to have  the  Securities  available  for  inspection,
checking and packaging by the Initial Purchaser in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.

     If the  Option  is  exercised  after the  first  business  day prior to the
Closing  Date,  the Company  will deliver (at the expense of the Company) to the
Initial Purchaser,  at the office of Counsel for the Initial  Purchaser,  on the
date  specified by the Initial  Purchaser  (which shall be within three business
days after exercise of the Option),  certificates  for the Option  Securities in
such names and  denominations  as the  Initial  Purchaser  shall have  requested
against payment of the purchase price thereof to or upon order of the Company by
wire  transfer to an account  designated by the Company.  If settlement  for the
Option Securities occurs after the Closing Date, the Company will deliver to the
Initial  Purchaser on the  settlement  date for the Option  Securities,  and the
obligation of the Initial  Purchaser to purchase the Option  Securities shall be
conditioned  upon receipt of,  supplemental  opinions,  certificates and letters
confirming as of such date the opinions,  certificates and letters  delivered on
the Closing Date pursuant to Section 6 hereof.

          I. Offering of Securities;  Restrictions  on Transfer.

               A. The Initial  Purchaser  represents  and warrants to and agrees
          with the Company  that (i) it has not  solicited  and will not solicit
          any offer to buy or offer to sell the  Securities by means of any form
          of general  solicitation or general advertising (within the meaning of
          Regulation D) in the United States or in any manner involving a public
          offering within the meaning of Section 4(2) of the Act or,

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           with respect to Securities sold in reliance on Regulation S under the
           Act  ("Regulation  S"), by means of any directed  selling efforts and
           (ii) it has solicited and will solicit  offers to buy the  Securities
           only from,  and has  offered  and will  offer,  sell or  deliver  the
           Securities  only to, (A) persons  whom it  reasonably  believes to be
           qualified  institutional  buyers  ("QIBs")  (as  defined in Rule 144A
           under  the Act) or,  if any such  person  is  buying  for one or more
           institutional  accounts  for which such person is acting as fiduciary
           or agent,  only when such person has represented to it that each such
           account  is a QIB to whom  notice  has been  given  that such sale or
           delivery is being made in  reliance on Rule 144A,  and, in each case,
           in transactions under Rule 144A, (B) a limited number of persons whom
           it reasonably believes to be institutional "accredited investors" (as
           defined in Rule 501(a)(1),  (2), (3) or (7) of Regulation D), and who
           provide to it a letter in the form of Exhibit B hereto or (C) persons
           to whom, and under circumstances which, it reasonably believes offers
           and  sales of  Securities  may be made  without  registration  of the
           Securities or the Common Stock issuable upon conversion thereof under
           the Act in reliance  upon  Regulation S. The Initial  Purchaser  also
           represents and warrants and agrees that it has offered and will offer
           to sell the  Securities  only to, and has  solicited and will solicit
           offers to buy the  Securities  only from,  persons who in  purchasing
           such  Securities  will be deemed to have  represented  and  agreed as
           provided under "Investor  Representations and Restrictions on Resale"
           in Exhibit D hereto.

               B. The Initial Purchaser represents and agrees that:

                    a. it has not offered or sold,  and, prior to the expiration
               of the period of six months from the Closing Date, will not offer
               or sell any Securities to persons in the United  Kingdom,  except
               to persons whose ordinary  activities  involve them in acquiring,
               holding, managing or disposing of investments (as principal or as
               agent) for the  purposes  of their  businesses  or  otherwise  in
               circumstances  which have not  resulted and will not result in an
               offer to the public in the United Kingdom,  within the meaning of
               the   Public   Offers  of   Securities   Regulations   1995  (the
               "Regulations"); 

                    b. it has  complied  and will  comply  with  all  applicable
               provisions of the Financial Services Act 1986 and the Regulations
               with respect to anything done by it in relation to the Securities
               in, from or otherwise involving the United Kingdom; and

                    c. it has only  issued or  passed on and will only  issue or
               pass on to any person in the United Kingdom any document received
               by it in  connection  with the  issue of the  Securities  if that
               person is of a kind

                                       11

                                         


<PAGE>



               described  in Article  11(3) of the  Financial  Services Act 1986
               (Investment  Advertisements)  (Exemptions)  Order  1996  or  is a
               person to whom such document may otherwise  lawfully be issued or
               passed on.

     II. Agreements. The Company agrees with the Initial Purchaser that:

          A. Holders  (including  subsequent  transferees) of the Securities and
     the  Common  Stock   issuable  upon   conversion   thereof  will  have  the
     registration  rights set forth in the  Registration  Rights  Agreement,  in
     substantially the form of Exhibit A hereto,  for so long as such Securities
     constitute "restricted securities" (as defined in Rule 144(a)(3)). Pursuant
     to the Registration  Rights Agreement,  the Company agrees to file with the
     Securities and Exchange Commission (the "Commission"), a shelf registration
     statement  pursuant  to Rule 415  under  the Act (the  "Shelf  Registration
     Statement")  relating  to the resale by holders of the  Securities  and the
     Common Stock issuable upon  conversion  thereof,  and to use its reasonable
     best  efforts to cause such Shelf  Registration  Statement  to be  declared
     effective.

          B. The Company will furnish to the Initial  Purchaser  and Counsel for
     the Initial  Purchaser,  without  charge,  during the period  mentioned  in
     paragraph  (d)  below,  as many  copies  of the  Final  Memorandum  and any
     supplements  and  amendments  thereof  or  thereto  as they may  reasonably
     request.

          C. The  Company  will not amend or  supplement  the Final  Memorandum,
     other  than by the  filing of  documents  under the  Exchange  Act that are
     incorporated by reference therein, without the prior consent of the Initial
     Purchaser. Prior to the completion of the distribution of the Securities by
     the Initial  Purchaser,  the Company will not file any  document  under the
     Exchange Act that is  incorporated  by  reference  in the Final  Memorandum
     unless prior to such proposed  filing the Company has furnished the Initial
     Purchaser  with a copy of such  document  for its  review  and the  Initial
     Purchaser has not reasonably objected to the filing of such document.

          D. The Company will promptly advise the Initial  Purchaser when, prior
     to the completion of the sale of the  Securities by the Initial  Purchaser,
     any  document  filed  under  the  Exchange  Act  which is  incorporated  by
     reference  in  the  Final   Memorandum  shall  have  been  filed  with  the
     Commission.

          E.  If at  any  time  prior  to the  completion  of  the  sale  of the
     Securities by the Initial Purchaser,  any event occurs as a result of which
     the Final  Memorandum  as then amended or  supplemented  would  include any
     untrue  statement  of a material  fact or omit to state any  material  fact
     necessary to make the statements  therein in the light of the circumstances
     under which they were made not

                                       12

                                          


<PAGE>



     misleading,  or if it shall be necessary to amend or  supplement  the Final
     Memorandum  (including any document incorporated by reference therein which
     was filed under the  Exchange  Act) to comply with the  Exchange Act or the
     rules  thereunder or other applicable law, the Company promptly will notify
     the Initial  Purchaser of the same and,  subject to  paragraph  (c) of this
     Section 5, will  prepare and provide to the Initial  Purchaser  pursuant to
     paragraph  (b) of this  Section 5 an  amendment  or  supplement  which will
     correct such  statement or omission or effect such  compliance  and, in the
     case of such an  amendment  or  supplement  which is to be filed  under the
     Exchange  Act  and  which  is   incorporated  by  reference  in  the  Final
     Memorandum, will file such amendment or supplement with the Commission.

          F. The Company will arrange for the  qualification  of the  Securities
     for sale under the laws of such  jurisdictions as the Initial Purchaser may
     designate,  will maintain such qualifications in effect so long as required
     for the sale of the  Securities and will arrange for the  determination  of
     the  legality of the  Securities  for purchase by  institutional  investors
     provided  that the  Company  by reason of any such  qualification  for sale
     shall not be required to (i) qualify as a foreign  corporation or (ii) file
     a general consent to service of process in any such  jurisdiction  where it
     is not presently qualified or (iii) become subject to taxation as a foreign
     corporation.  The Company will promptly advise the Initial Purchaser of the
     receipt by the Company of any  notification  with respect to the suspension
     of the  qualification of the Securities for sale in any jurisdiction or the
     initiation or threatening of any proceeding for such purpose.

          G.  Neither the Company nor any  Affiliate of the Company will solicit
     any  offer to buy or offer or sell the  Securities  by means of any form of
     general   solicitation  or  general  advertising  (within  the  meaning  of
     Regulation D) in the United States.

          H. None of the Company, its Affiliates nor any person acting on behalf
     of the  Company  or its  Affiliates  will  engage in any  directed  selling
     efforts with respect to the Securities  within the meaning of Regulation S,
     and the Company, its Affiliates and each such person acting on its or their
     behalf will comply with the offering restrictions requirement of Regulation
     S.

          I. So long as any of the  Securities or the Common Stock issuable upon
     the conversion  thereof are "restricted  securities"  within the meaning of
     Rule  144(a)(3),  at any time when the Company is not subject to Section 13
     or 15(d) of the  Exchange  Act),  the Company will provide to any holder of
     such  restricted  securities,  or to  any  prospective  purchaser  of  such
     restricted securities designated by a holder,

                                       13

                                         



<PAGE>



     upon the request of such holder or prospective  purchaser,  any information
     required to be  delivered  to holders  and  prospective  purchasers  of the
     Securities  pursuant to Rule  144A(d)(4)  under the  Securities  Act.  This
     covenant is intended to be for the benefit of the holders,  and prospective
     purchasers designated by such holders, from time to time of such restricted
     securities.

          J. The Company will not, and will not permit any of its Affiliates to,
     resell any  Securities  or Common Stock  issuable upon  conversion  thereof
     which  constitute  "restricted  securities"  under  Rule 144 that have been
     reacquired  by any of them,  except  pursuant to an effective  registration
     statement.

          K. Neither the Company nor any Affiliate will sell,  offer for sale or
     solicit offers to buy or otherwise negotiate in respect of any security (as
     defined in the Act) the offering of which security will be integrated  with
     the sale of the Securities in a manner that would require the  registration
     of the  Securities or Common Stock issuable upon  conversion  thereof under
     the Act.

          L. The Company shall use its  reasonable  best efforts in  cooperation
     with the Initial  Purchaser  to permit the  Securities  to be eligible  for
     clearance and settlement  through The Depository  Trust Company,  New York,
     New York.

          M. The Company shall include information substantially in the form set
     forth in Exhibit D in each Final Memorandum.

          N. For a period of 180 days  following  the  Closing  Date the Company
     will not,  without prior written  consent of the Initial  Purchaser,  which
     consent will not be unreasonably  withheld,  offer, sell, contract to sell,
     grant any other  option to purchase or  otherwise  dispose of,  directly or
     indirectly,  or announce  the offering  of, any debt  securities  issued or
     guaranteed  by the  Company,  any  preferred  stock or Common  Stock of the
     Company or any security  (other than the  Securities)  convertible  into or
     exchangeable  for  preferred  stock  or  Common  Stock  or  enter  into any
     agreement to do any of the foregoing;  provided,  however, that the Company
     may issue or sell preferred stock or Common Stock or securities (other than
     the Securities)  convertible  into or  exchangeable  for preferred stock or
     Common Stock, or options,  warrants or similar rights to purchase preferred
     stock or Common Stock or securities (other than the Securities) convertible
     into or  exchangeable  for preferred  stock or Common Stock pursuant to (i)
     any employee and/or non-employee  director stock option,  grant or purchase
     plan, stock ownership plan or dividend  reinvestment plan of the Company in
     effect at the Execution Time and (ii) outstanding  options or warrants,  or
     other rights and written  agreements for the purchase or delivery of Common
     Stock in effect at the Execution Time.

                                       14

                                       



<PAGE>



          

          O. During the period of five years after the date hereof,  the Company
     will promptly furnish to the Initial Purchaser upon request,  a copy of its
     Annual  Report  on Form  10-K and any  definitive  proxy  statement  of the
     Company  filed  with the  Commission  under the  Exchange  Act or mailed to
     stockholders.

          P. The Company will pay all expenses  incident to the  performance  of
     its  obligations  under  this  Agreement,  including  (i) the  preparation,
     printing and distribution of the Preliminary  Memorandum,  Final Memorandum
     and any amendments  thereof or supplements  thereto,  (ii) the preparation,
     printing  and  distribution  of this  Agreement,  the  Registration  Rights
     Agreement,  the  Indenture,  the  Securities and any Blue Sky Memorandum or
     Legal Investment Survey by the Counsel for the Initial Purchaser, (iii) the
     delivery of the Securities,  (iv) the reasonable fees and  disbursements of
     the  accountants  for the  Company,  (v) the  expenses  of  qualifying  the
     Securities under state securities laws in accordance with the provisions of
     paragraph (f) of this  Section,  including  filing fees and the  reasonable
     fees and  disbursements of Counsel for the Initial  Purchaser in connection
     therewith,  (vi) the fees and  expenses of the  Trustee and the  reasonable
     fees and  disbursements  of its  counsel,  (vii)  any fees of the NASD with
     respect to admitting  the  Securities  for trading in the PORTAL Market and
     any fees with  respect  to  admitting  the  Securities  for  trading on the
     Luxembourg Stock Exchange,  (viii) all reasonable travel, lodging and other
     out-of-pocket  expenses of the Initial Purchaser and the Company's officers
     and  employees  and any other  out-of-pocket  expenses in  connection  with
     attending or hosting meetings with prospective purchasers of Securities and
     (ix) all other out-of-pocket  expenses incurred by the Initial Purchaser in
     connection with the transactions contemplated by this Agreement, including,
     without  limitation,  the reasonable fees and  disbursements of Counsel for
     the Initial Purchaser,  provided, however, that the Company's obligation to
     pay  directly or reimburse  the Initial  Purchaser  for its legal  expenses
     (including  without  limitation,  those  payable to Counsel for the Initial
     Purchaser  for legal  services  described  in  clauses  (ii),  (v) and (ix)
     hereof) and other  out-of-pocket  costs and  expenses  under this Section 5
     shall not exceed $375,000.

          Q. In connection with the offering, neither the Company nor any of its
     Affiliates has bid for or purchased,  or until the Initial  Purchaser shall
     have  notified  the  Company  of  the  completion  of  the  resale  of  the
     Securities,  will  bid for or  purchase,  either  alone or with one or more
     other  persons,  for any account in which it or any of its Affiliates has a
     beneficial  interest,  any  Securities;  and  neither  it  nor  any  of its
     Affiliates will make bids or purchases for the purpose of creating  actual,
     or apparent, active trading in, or of raising the price of, the Securities.
           

                                       15

                                          


<PAGE>




     III.   Conditions  to  the  Obligations  of  the  Initial  Purchaser.   The
obligations  of the Initial  Purchaser to purchase the Firm  Securities  and the
Option  Securities,  as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3  hereof,  to  the  accuracy  of the  statements  of the  Company  made  in any
certificates  pursuant  to the  provisions  hereof,  to the  performance  by the
Company of its obligations hereunder and to the following additional conditions:

          A. The Company shall have furnished to the Initial Purchaser:

     (X) the  opinion of  Certilman  Balin  Adler & Hyman LLP,  counsel  for the
Company, dated the Closing Date, to the effect that:

               a.   each of the  Company  and  Crescent  Public  Communications,
                    Inc.,  Sun  Tel  North  America,   Inc.,   National  Billing
                    Exchange,  Inc., American Network Exchange, Inc. and Capital
                    Network   System,   Inc.   (collectively,    the   "Material
                    Subsidiaries")  (A) is validly  existing as a corporation in
                    good standing under the laws of the jurisdiction in which it
                    is chartered or  organized,  with full  corporate  power and
                    authority to own its  properties and conduct its business as
                    described in the Final Memorandum,  (B) is duly qualified to
                    do business as a foreign corporation and is in good standing
                    under  the laws of each  jurisdiction  which  requires  such
                    qualification  wherein the failure to be so qualified  would
                    have a Material Adverse Effect and (C) holds or, in the case
                    of those set forth on Schedule 1(y) hereto,  has applied for
                    all material approvals,  authorizations,  offers,  licenses,
                    certificates  and  permits  from  federal and New York State
                    government  authorities  necessary  for the  conduct  of its
                    business as  prescribed in the Final  Memorandum,  excluding
                    approvals,  authorizations,  offers, licenses,  certificates
                    and  permits  from  the  Federal  Communications  Commission
                    ("FCC"),  the Public Utility  Commissions  ("PUC") and other
                    similar    regulatory    authorities    related    to    the
                    telecommunications   industry  collectively,   the  "FCC/PUC
                    Regulatory  Approvals")  as to which such  counsel  need not
                    express any  opinion; 

               b.   the Company's  authorized  equity  capitalization  is as set
                    forth in the Final Memorandum;  the Common Stock conforms in
                    all material  respects to the description  thereof contained
                    under the  heading  "Description  of  Capital  Stock" in the
                    Final Memorandum; the holders of

                                       16

                                          


<PAGE>



                    the  outstanding  shares of capital stock of the Company are
                    not  entitled  to  any  statutory   preemptive  or,  to  the
                    knowledge of such counsel after due inquiry, other rights to
                    subscribe  for the  Securities or the shares of Common Stock
                    issuable upon conversion  thereof;  and the shares of Common
                    Stock  initially  issuable upon conversion of the Securities
                    have been duly and validly  authorized and, when issued upon
                    conversion,   will  be  validly   issued,   fully  paid  and
                    nonassessable  and the  Board  of  Directors  has  duly  and
                    validly adopted a resolution reserving such shares of Common
                    Stock for issuance upon  conversion;  as of the date hereof,
                    to the  knowledge  of such counsel  after due  inquiry,  (A)
                    except for the preferred  stock  described under the heading
                    "Description  of Capital  Stock --  Preferred  Stock" in the
                    Offering  Memorandum,  there are no other outstanding shares
                    of capital  stock of the Company and, (B) except for (I) the
                    Warrants (as defined  below),  (II) the  warrants  issued to
                    Francesco  Galesi  and  the  Francesco  Galesi   Irrevocable
                    Grantor Trust dated October 18, 1991, on January 7, 1997 and
                    June  3,  1997,  respectively  which  entitle  him and it to
                    purchase  1,500,000  shares of Common  Stock at an  exercise
                    price of $3.03 per share  (subject to  reduction  in certain
                    circumstances)  and  500,000  shares of  Common  Stock at an
                    exercise price of $2.3125 per share (plus 100,000 additional
                    shares  of  Common  Stock  in case of  certain  defaults  as
                    described  in  such  warrant),   respectively  (the  "Galesi
                    Warrants")  (III)  other  warrants  for the  purchase  of an
                    aggregate of approximately 2,260,000 shares of Common Stock,
                    (IV) options to purchase  approximately  3,500,000 shares of
                    Common Stock issued  under the  Company's  1992 Stock Option
                    Plan  (V)  written  agreements  to  issue  an  aggregate  of
                    approximately  950,000  shares of Common  Stock in effect on
                    the date hereof,  (VI) promissory notes  convertible into an
                    aggregate of approximately  3,100,000 shares of Common Stock
                    and (VII) the Securities, no outstanding options or warrants
                    to acquire,  or any securities  convertible into, any shares
                    of capital stock of the Company;

               c.   the  Indenture  has  been  duly  authorized,   executed  and
                    delivered,  and,  assuming  that the Indenture has been duly
                    authorized,  executed and  delivered  by, and is a valid and
                    binding  agreement  of, the  Trustee,  constitutes  a legal,
                    valid and binding instrument enforceable against the Company
                    in accordance with its terms (subject,  as to enforcement of
                    remedies,  to  (A)  applicable  bankruptcy,  reorganization,
                    insolvency (including without limitation,  all laws relating
                    to fraudulent transfers), moratorium or other laws affecting
                    creditors'  rights generally from time to time in effect and
                    (B)  general  principles  of equity  regardless  of  whether
                    enforcement is considered in a proceeding of equity or law);
                    and

                                       17

                                          



<PAGE>



                    the Securities  have been duly authorized and, when executed
                    and  authenticated  in accordance with the provisions of the
                    Indenture  and  delivered  to and  paid  for by the  Initial
                    Purchaser  pursuant  to this  Agreement,  assuming  that the
                    Indenture has been duly  authorized,  executed and delivered
                    by, and is a valid and binding  agreement  of, the  Trustee,
                    will constitute legal, valid and binding  obligations of the
                    Company entitled to the benefits of the Indenture  (subject,
                    as to enforcement of remedies, to (A) applicable bankruptcy,
                    reorganization,  insolvency  (including without  limitation,
                    all laws  relating to fraudulent  transfers),  moratorium or
                    other laws affecting  creditors'  rights generally from time
                    to time in effect and assuming  that the  Indenture has been
                    duly  authorized,  executed and delivered by, and is a valid
                    and  binding  agreement  of,  the  Trustee  and (B)  general
                    principles of equity  regardless of whether  enforcement  is
                    considered  in a  proceeding  of  equity  or  law);  and the
                    statement set forth under the heading "Description of Notes"
                    in the Final Memorandum,  insofar as such statements purport
                    to summarize  certain  provisions of the  Securities and the
                    Indenture, provide a fair summary of such provisions;

               d.   this  Agreement  has  been  duly  authorized,  executed  and
                    delivered by the Company;

               e.   the Registration  Rights Agreement has been duly authorized,
                    executed and delivered,  and, assuming that the Registration
                    Rights  Agreement  has been duly  authorized,  executed  and
                    delivered  by and is a valid and binding  agreement  of, the
                    Initial  Purchaser,  constitutes a legal,  valid and binding
                    instrument  enforceable  against the  Company in  accordance
                    with its terms (subject,  as to enforcement of remedies,  to
                    (A)  applicable   bankruptcy,   reorganization,   insolvency
                    (including,   without  limitation,   all  laws  relating  to
                    fraudulent  transfers),  moratorium or other laws  affecting
                    creditors'  rights generally from time to time in effect and
                    (B)  general  principles  of equity  regardless  of  whether
                    enforcement is considered in a proceeding of equity or law);
                    

               f.   no consent, approval, authorization or order of any court or
                    governmental   agency   or  body,   is   required   for  the
                    consummation of the transactions contemplated herein, except
                    (A) as may be required under any particular proceeding as to
                    which such counsel's  opinion may be based on its knowledge,
                    (B) such as may be required under the securities laws of any
                    jurisdiction,  domestic or foreign,  in connection  with the
                    purchase and  distribution  of the Securities by the Initial
                    Purchaser  (as to which such  counsel  need not  express any
                    opinion),  (C) in connection with the registration under the
                    Act of the Securities and the Common Stock

                                       18

                                     


<PAGE>



                    issuable upon conversion  thereof and  qualification  of the
                    Indenture  under the Trust Indenture Act, (D) such as may be
                    required in connection with the listing of the Securities on
                    any  stock  exchange,  including,  without  limitation,  the
                    Luxembourg   Stock  Exchange  or  the   designation  of  the
                    Securities as PORTAL-  eligible  securities  (E) any FCC/PUC
                    Regulatory  Approvals  (as to which  such  counsel  need not
                    express any opinion),  (F) such as may be required under the
                    HSR Act in connection  with the conversion of the Securities
                    and (G) such other approvals  (specified in such opinion) as
                    have been obtained;

               g.   assuming the accuracy of the  representations and warranties
                    of the  Initial  Purchaser  and  compliance  by the  Initial
                    Purchaser with the agreements  contained in this  Agreement,
                    none of the issue and sale of the Securities,  the execution
                    and  delivery  of  the  Indenture  or  this  Agreement,  the
                    consummation  of any  other of the  transactions  herein  or
                    therein contemplated and the fulfillment of the terms hereof
                    or  thereof  will  conflict  with,  result  in a  breach  or
                    violation  of, or  constitute a default under any law or the
                    Certificate  of  Incorporation  or By-Laws of the Company or
                    the terms of any indenture or other  agreement or instrument
                    known to such counsel and to which the Company or any of its
                    Subsidiaries  is a party or bound or any judgment,  order or
                    decree known to such counsel to be applicable to the Company
                    or any of the  Subsidiaries of any court,  regulatory  body,
                    administrative  agency,   governmental  body  or  arbitrator
                    having   jurisdiction   over  the  Company  or  any  of  the
                    Subsidiaries; 

               h.   the  Company  has  all  necessary  power  and  authority  to
                    execute,  deliver  and  perform  its  obligations  under the
                    Warrant Agreement by and between the Company and the Initial
                    Purchaser to be dated as of or about even date herewith (the
                    "Warrant Agreement") and the Warrants to be issued under the
                    Warrant  Agreement (the "Warrants") and to issue and deliver
                    the Warrants  and Warrant  Shares (as defined in the Warrant
                    Agreement),  the execution,  delivery and performance by the
                    Company of the Warrant  Agreement and the Warrants have been
                    duly authorized by all necessary action; each of the Warrant
                    Agreement  and the  Warrants  has  been  duly  executed  and
                    delivered  by the  Company  and  assuming  that the  Warrant
                    Agreement has been duly  authorized,  executed and delivered
                    by and is a  valid  and  binding  agreement  of the  Initial
                    Purchaser   constitutes   the  legal,   valid  and   binding
                    obligation of the Company enforceable in accordance with its
                    terms,  subject,  as to  enforceability,  to (A)  applicable
                    bankruptcy,  reorganization,  insolvency (including, without
                    limitation,  all laws  relating  to  fraudulent  transfers),
                    moratorium  or  other  laws  affecting   creditors'   rights
                    generally from time to time in effect and (B)

                                       19

                                          


<PAGE>



                    general   principles   of  equity   regardless   of  whether
                    enforcement is considered in a proceeding of equity or law);

                         i. the Board of Directors has duly and validly  adopted
                    a resolution  reserving the shares of Common Stock  issuable
                    upon   exercise  of  the  Warrants  for  issuance  upon  the
                    exercise;  the Warrants,  when issued and delivered pursuant
                    hereto,  and the Warrant  Shares  when issued and  delivered
                    pursuant to the Warrants, will be validly issued, fully paid
                    and  non-assessable,  with no  liability  on the part of the
                    holders  thereof  and  are  not  subject  to  any  statutory
                    preemptive  rights,  rights  of first  refusal  or rights of
                    first offer under any  applicable  law or any contract known
                    to such counsel;
                           
                         j. none of the execution and delivery by the Company of
                    the Registration Rights Agreement,  the Warrant Agreement or
                    the Warrants,  the consummation of the transactions  therein
                    contemplated,  including  the  issuance  and delivery of the
                    Warrants and, upon the exercise of the Warrants, the Warrant
                    Shares, or compliance with the terms and provisions  thereof
                    will  conflict with or result in a breach of, or require any
                    consent under,  the Certificate of  Incorporation or By-Laws
                    of the Company, or any applicable law or regulation,  or any
                    order,   writ,   injunction   or  decree  of  any  court  or
                    governmental  authority  or agency,  (except with respect to
                    any particular proceeding as to which such counsel's opinion
                    may be based on its knowledge) (excluding FCC/PUC Regulatory
                    Approvals,  as to which such  counsel  need not  express any
                    opinion) (provided,  however,  that the Company will need to
                    comply with the applicable provisions of the Securities Act,
                    the  Exchange  Act and state and foreign  securities  law in
                    connection with the exercise by the warrant holders of their
                    rights  under   Sections   5.01  and  5.02  of  the  Warrant
                    Agreement),  or any agreement or  instrument,  known to such
                    counsel  after due inquiry,  to which the Company is a party
                    or by which it is bound or to which any of its properties or
                    assets is subject,  or  constitute a default  under any such
                    agreement  or  instrument  or  result  in  the  creation  or
                    imposition of any lien upon any of the revenues or assets of
                    the Company  pursuant to the terms of any such  agreement or
                    instrument;

                         k.  assuming  the accuracy of the  representations  and
                    warranties of the Initial  Purchaser  and  compliance by the
                    Initial  Purchaser with its agreements  contained herein, it
                    is not  necessary  in  connection  with the offer,  sale and
                    delivery of the  Securities  in the manner  contemplated  by
                    this  Agreement to register  the issuance of the  Securities
                    under the Act or to qualify  the  Indenture  under the Trust
                    Indenture Act;

                         l. to the knowledge of such counsel after due

                                       20

                                          



<PAGE>



                    inquiry,  there  is  no  litigation,   arbitration,   claim,
                    governmental or other  proceeding  (formal or informal),  or
                    investigation  pending  or  threatened  with  respect to the
                    Company,   any  Subsidiary,   or  any  of  their  respective
                    operations,  businesses,  properties,  or  assets  except as
                    properly  described  in the  Final  Memorandum  or  such  as
                    individually  or in the aggregate do not now have and in the
                    future could not  reasonably  be expected to have a Material
                    Adverse  Effect; 

                         m.  insofar  as  statements  in  the  Final  Memorandum
                    purport  to  summarize  the  status  of  litigation  or  the
                    provisions of laws, rules,  regulations,  orders, judgments,
                    decrees,  contracts,  agreements,  instruments,  leases,  or
                    licenses,  such statements have been prepared or reviewed by
                    such counsel and accurately reflect in all material respects
                    the status of such litigation and provisions purported to be
                    summarized and are correct in all material  respects (except
                    for the information  contained in the Final Memorandum under
                    the heading "Business -- Government Regulation" or otherwise
                    relating to  regulatory  matters  discussed  therein,  as to
                    which such counsel need not express any opinion); and

                         n.  the  Company  is not  an  "investment  company"  as
                    defined in Section 3(a) of the  Investment  Company Act and,
                    if the  Company  conducts  its  business as set forth in the
                    Final  Memorandum,  will not become an "investment  company"
                    and  will  not  be  required  to  be  registered  under  the
                    Investment  Company Act.

     Such  counsel  shall also state  that in the course of  preparation  by the
Company of the Final  Memorandum,  such counsel has  participated in conferences
with officers and other  representatives  of the Company and  representatives of
the independent  accountants of the Company and  representatives  of the Initial
Purchaser  and its  counsel  at which  conferences  the  contents  of the  Final
Memorandum  and  related  matters  were  discussed  and,  on  the  basis  of the
foregoing,  no fact has come to the  attention  of such counsel that causes such
counsel to believe  that the Final  Memorandum  when issued or at the  Execution
Time the Final  Memorandum  contained or on the date of such opinion contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under which they were made, not misleading  provided such counsel
need express no comment or belief with respect to the  financial  statements  or
other  financial  data or  information  with  respect to the  Initial  Purchaser
contained in the Final Memorandum.

     In  addition,  such  counsel  shall  furnish to the  Initial  Purchaser  an
opinion,  dated the Closing Date to the effect that the  statements  made in the
Final  Memorandum  under the caption  "Certain  United States Federal Income Tax
Considerations" insofar as they purport

                                       21

                                       



<PAGE>



to describe the material  United States Federal income tax  consequences  of the
purchase,  ownership  and  disposition  of the  Securities  and the Common Stock
issuable  upon the  conversion  thereof  fairly  summarize  the matters  therein
described.

     In  rendering  such  opinions,  such  counsel  may rely  (A) as to  matters
involving the  application of laws of any  jurisdiction  other than the State of
New York or the United  States,  to the extent they deem proper and specified in
such  opinion,  upon the  opinion of other  counsel of good  standing  whom they
believe to be  reliable  and who are  satisfactory  to Counsel  for the  Initial
Purchaser  and (B) as to matters of fact,  to the extent  they deem  proper,  on
certificates  of  responsible  officers  of the  Company  and public  officials.
References to the Final  Memorandum in this paragraph (a) include any amendments
or supplements thereof or thereto at the Closing Date.

     (Y) the  opinion of Amy Gross,  Vice  President  -- General  Counsel of the
Company, dated the Closing Date, to the effect that:

                         1. a. each of the Company and the Material Subsidiaries
                    (A) is validly  existing as a  corporation  in good standing
                    under the laws of the  jurisdiction in which it is chartered
                    or organized, with full corporate power and authority to own
                    its  properties and conduct its business as described in the
                    Final Memorandum,  (B) is duly qualified to do business as a
                    foreign  corporation  and is in good standing under the laws
                    of  each  jurisdiction  which  requires  such  qualification
                    wherein the failure to be so qualified would have a Material
                    Adverse  Effect and (C)  holds,  or in the case of those set
                    forth on Schedule 1(y) hereto,  has applied for all material
                    approvals,  authorizations,  offers, licenses,  certificates
                    and permits from  government  authorities  necessary for the
                    conduct  of  its  business  as   prescribed   in  the  Final
                    Memorandum;
                     
                         b. all the outstanding  shares of capital stock of each
                    Subsidiary  (A) have been duly and  validly  authorized  and
                    issued and are fully paid and  nonassessable  and (B) except
                    as set forth on Exhibit  21 to the Form  10-K,  are owned by
                    the  Company   either   directly  or  through  wholly  owned
                    subsidiaries,  free  and  clear  of any  perfected  security
                    interest and any other security interests,  claims, liens or
                    encumbrances  (except as set forth in this  Agreement or the
                    Schedules hereto); 

                         c. no consent, approval,  authorization or order of any
                    court or  governmental  agency or body is  required  for the
                    consummation of the transactions contemplated herein, except
                    (A) such as

                                       22

                                         



<PAGE>



                    may  be   required   under  the   securities   laws  of  any
                    jurisdiction  domestic  or  foreign in  connection  with the
                    purchase and  distribution  of the Securities by the Initial
                    Purchaser  (as to which such  counsel  need not  express any
                    opinion),  (B) in connection with the registration under the
                    Act of the  Securities  and the Common Stock  issuable  upon
                    conversion  thereof and under the Trust  Indenture  Act, (C)
                    such as may be  required in  connection  with the listing of
                    the  Securities on any stock  exchange,  including,  without
                    limitation, the Luxembourg Stock Exchange or the designation
                    of the Securities as PORTAL-eligible securities, (D) such as
                    may be  required  under the HSR Act in  connection  with the
                    conversion of the  Securities  and (E) such other  approvals
                    (specified in such opinion) as have been obtained;

                         d.  assuming  the accuracy of the  representations  and
                    warranties of the Initial  Purchaser  and  compliance by the
                    Initial  Purchaser  with the  agreements  contained  in this
                    Agreement, none of the issue and sale of the Securities, the
                    execution and delivery of the  Indenture or this  Agreement,
                    the  consummation  of any other of the  transactions  herein
                    contemplated  and the  fulfillment  of the terms hereof will
                    conflict  with,  result  in a breach  or  violation  of,  or
                    constitute  a default  under any law or the  Certificate  of
                    Incorporation  or By-Laws of the Company or the terms of any
                    indenture  or other  agreement  or  instrument  to which the
                    Company  or any of its  subsidiaries  is a party or bound or
                    any  judgment,  order  or  decree  to be  applicable  to the
                    Company or any of the Subsidiaries of any court,  regulatory
                    body, administrative agency, governmental body or arbitrator
                    having   jurisdiction   over  the  Company  or  any  of  the
                    Subsidiaries;

                         e. none of the execution and delivery by the Company of
                    this  Agreement,   the  Indenture,   the   Securities,   the
                    Registration Rights Agreement,  the Warrant Agreement or the
                    Warrants,  the  consummation of the  transactions  herein or
                    therein  contemplated,   including  the  conversion  of  the
                    Securities,  the issuance and delivery of the Warrants  and,
                    upon the exercise of the Warrants,  the Warrant  Shares,  or
                    compliance  with the terms and provisions  hereof or thereof
                    will  conflict with or result in a breach of, or require any
                    consent under,  the Certificate of  Incorporation or By-Laws
                    of the Company, or any applicable law or regulation,  or any
                    order,   writ,   injunction   or  decree  of  any  court  or
                    governmental  authority or agency (although the Company will
                    need  to  comply  with  the  applicable  provisions  of  the
                    Securities Act, the Exchange Act and state securities law in
                    connection with the  Registration  Rights  Agreement and the
                    exercise  by the  warrant  holders  of  their  rights  under
                    Sections  5.01 and 5.02 of the  Warrant  Agreement),  or any
                    agreement or  instrument  to which the Company is a party or
                    by which it is bound or to

                                       23

                                          


<PAGE>



                    which  any  of its  properties  or  assets  is  subject,  or
                    constitute a default under any such  agreement or instrument
                    or result in the creation or imposition of any lien upon any
                    of the  revenues  or assets of the  Company  pursuant to the
                    terms of any such agreement or instrument;

                         f.  there  is  no   litigation,   arbitration,   claim,
                    governmental or other  proceeding  (formal or informal),  or
                    investigation  pending  or,  to the best  knowledge  of such
                    counsel  after due inquiry,  threatened  with respect to the
                    Company,   any  Subsidiary,   or  any  of  their  respective
                    operations,  businesses,  properties,  or  assets  except as
                    properly  described  in the  Final  Memorandum  or  such  as
                    individually  or in the aggregate do not now have and in the
                    future could not  reasonably  be expected to have a Material
                    Adverse  Effect;

                         g.  insofar  as  statements  in  the  Final  Memorandum
                    purport  to  summarize  the  status  of  litigation  or  the
                    provisions of laws, rules,  regulations,  orders, judgments,
                    decrees,  contracts,  agreements,  instruments,  leases,  or
                    licenses,  such statements have been prepared or reviewed by
                    such counsel and accurately reflect in all material respects
                    the status of such litigation and provisions purported to be
                    summarized and are correct in all material respects;

                         h. the information contained in the Form 10-K under the
                    heading  "Government  Regulation" in Item 1 - "Business" and
                    in  Item  3  -  "Legal   Proceedings"  and  the  information
                    contained  in  the  Final   Memorandum   under  the  caption
                    "Business -- Government  Regulation,"  fairly summarizes the
                    matters therein described.

     Such  counsel  shall also state  that in the course of  preparation  by the
Company of the Final  Memorandum,  such counsel has  participated in conferences
with other officers and  representatives  of the Company and  representatives of
the independent  accountants of the Company and  representatives  of the Initial
Purchaser  and its  counsel  at which  conferences  the  contents  of the  Final
Memorandum  and  related  matters  were  discussed  and,  on  the  basis  of the
foregoing,  no fact has come to the  attention  of such counsel that causes such
counsel to believe  that the Final  Memorandum  when issued or at the  Execution
Time the Final  Memorandum  contained or on the date of such opinion contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  under which they were made, not misleading  provided such counsel
need express no comment or belief with respect to the  financial  statements  or
other  financial  data or  information  with  respect to the  Initial  Purchaser
contained in the Final Memorandum.

     In  rendering  such  opinions,  such  counsel  may rely  (A) as to  matters
involving the application of laws of any jurisdiction other than the District of
Columbia or the United States,

                                       24

                                          



<PAGE>



to the extent she deems proper and specified in such  opinion,  upon the opinion
of other  counsel of good  standing whom she believes to be reliable and who are
satisfactory to Counsel for the Initial Purchaser and (B) as to matters of fact,
to the extent she deems proper,  on certificates of responsible  officers of the
Company and public officials.

     References  to the Final  Memorandum  in this  paragraph  (a)  include  any
amendments or supplements thereof or thereto at the Closing Date.

          A. The Initial  Purchaser  shall have  received  from  Counsel for the
     Initial  Purchaser such opinion or opinions,  dated the Closing Date,  with
     respect to the  issuance and sale of the  Securities,  the  Indenture,  the
     Registration Rights Agreement,  the Warrant Agreement, the Final Memorandum
     (together  with any amendment or  supplement  thereof or thereto) and other
     related matters as the Initial  Purchaser may reasonably  require,  and the
     Company shall have furnished to such counsel such documents as they request
     for the purpose of enabling them to pass upon such  matters.  References to
     the Final  Memorandum  in this  paragraph  (b)  include any  amendments  or
     supplements thereto at the Closing Date.

          B. The  Company  shall  have  furnished  to the  Initial  Purchaser  a
     certificate  of the  Company,  signed by the  Chairman  of the Board or the
     President and the principal financial or accounting officer of the Company,
     dated the Closing Date, to the effect that the signers of such  certificate
     have carefully  examined the Final Memorandum,  any amendment or supplement
     to the Final Memorandum and this Agreement and that:

               a. the  representations  and  warranties  of the  Company in this
          Agreement  are true and correct on and as of the Closing Date with the
          same  effect  as if made on the  Closing  Date  and  the  Company  has
          complied with all the  agreements  and satisfied all the conditions on
          its part to be performed or satisfied at or prior to the Closing Date;
          and 

               b.  since  the  date  of the  most  recent  financial  statements
          included  in the  Final  Memorandum  (exclusive  of any  amendment  or
          supplement  thereof or  thereto),  there has been no material  adverse
          change in the condition  (financial or other),  earnings,  business or
          properties of the Company and its subsidiaries, whether or not arising
          from  transactions in the ordinary  course of business,  except as set
          forth in or  contemplated  in the Final  Memorandum  (exclusive of any
          amendment or supplement thereof or thereto).

          C. At the Execution  Time and at the Closing  Date,  Ernst & Young LLP
     shall have furnished to the Initial Purchaser a letter or letters, dated

                                       25



<PAGE>



     respectively  as of the Execution  Time and as of the Closing Date, in form
     and  substance  satisfactory  to and  previously  approved  by the  Initial
     Purchaser and counsel to the Initial  Purchaser,  confirming  that they are
     independent certified public accountants with respect to the Company within
     the  meaning of the Act,  the  Exchange  Act and the  applicable  rules and
     regulations  thereunder and Rule 101 of the American Institute of Certified
     Public  Accountants  (the  "AICPA")  Code of  Professional  Conduct and its
     interpretations  and rulings,  and containing such other  information  with
     respect to the financial statements and certain other financial information
     of the  Company  included  in the Final  Memorandum,  as  requested  by the
     Initial Purchaser and Counsel to the Initial Purchaser.

     References  to the Final  Memorandum  in this  paragraph  (d)  include  any
amendment or supplement thereof or thereto at the date of the letter.

          A.  Subsequent to the Execution  Time or, if earlier,  the dates as of
     which  information  is  given in the  Final  Memorandum  (exclusive  of any
     amendment or supplement thereof or thereto),  there shall not have been (i)
     any change or decrease  specified  in the letter or letters  referred to in
     paragraph  (d) of this  Section 6 or (ii) any  change,  or any  development
     involving a prospective  change, in or affecting the business or properties
     of the  Company  and the  Subsidiaries  the  effect of  which,  in any case
     referred to in clause (i) or (ii) above, is, in the judgment of the Initial
     Purchaser, so material and adverse as to make it impractical or inadvisable
     to market the Securities as contemplated by the Final Memorandum (exclusive
     of any amendment or supplement thereof or thereto).

          B. At the Closing Date, the  Registration  Rights Agreement shall have
     been duly executed, delivered and be in full force and effect.

          C. Prior to the Closing Date,  the Company shall have furnished to the
     Initial Purchaser such further  information,  certificates and documents as
     the Initial Purchaser may reasonably request.

          D. At the  Execution  Time,  the Company  shall have  furnished to the
     Initial  Purchaser a letter  substantially  in the form of Exhibit C hereto
     from each of the Company's executive officers and directors and each of the
     individuals  and  entities  listed on Schedule II hereto  addressed  to the
     Initial Purchaser.

     If any of the  conditions  specified  in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the  opinions  and  certificates  mentioned  above or  elsewhere  in this
Agreement shall not be in all material

                                       26




<PAGE>



respects reasonably  satisfactory in form and substance to the Initial Purchaser
and Counsel for the Initial Purchaser, this Agreement and all obligations of the
Initial  Purchaser  hereunder  may be canceled  at, or at any time prior to, the
Closing  Date by the Initial  Purchaser.  Notice of such  cancellation  shall be
given to the Company in writing or by telephone or telefax confirmed in writing.

     The documents required to be delivered by this Section 6 shall be
delivered  at the office of Counsel  for the Initial  Purchaser,  at One Liberty
Plaza, New York, New York, on the Closing Date.

          I. Payment of Fees and Reimbursement of Initial Purchaser's  Expenses.
     (a) On the Closing Date,  the Company  shall allow the Initial  Purchaser a
     management,  sales and underwriting  commission discount equal to 5% of the
     principal  amount of the  Securities  and as  additional  compensation  the
     Company  shall  issue to the Initial  Purchaser  Warrants  exercisable  (in
     accordance with the Warrant  Agreement which shall be in substantially  the
     form attached hereto as Exhibit E) for the purchase of an aggregate  number
     of shares of Common Stock (subject to adjustment)  equal to 3% of the total
     number of  shares  of  Common  Stock  into  which  the  Securities  will be
     convertible.

               1. If the  sale of the  Securities  provided  for  herein  is not
          consummated  because any condition to the  obligations  of the Initial
          Purchaser set forth in Section 6 hereof is not  satisfied,  because of
          any  termination  pursuant  to  Section  9 hereof  or  because  of any
          refusal,  inability  or failure on the part of the  Company to perform
          any agreement herein or comply with any provision  hereof,  other than
          as a result of the  failure of the  Initial  Purchaser  to perform its
          obligations   hereunder,   the  Company  will  reimburse  the  Initial
          Purchaser  upon  demand  an  amount  not to  exceed  $375,000  for its
          out-of-pocket  expenses  (including fees and expenses of counsel) that
          shall  have  been  incurred  by it in  connection  with  the  proposed
          purchase  and  sale  of  the  Securities;   provided,   however,  that
          notwithstanding  the  provisions  of  Section  5(p),  in such  case of
          failure to perform by the Initial Purchaser,  the fees and expenses of
          the Counsel of the Initial  Purchaser  shall not be  reimbursed by the
          Company.

          II.  Indemnification  and  Contribution.  (a) The  Company  agrees  to
     indemnify and hold harmless the Initial Purchaser, the directors, officers,
     employees and agents of the Initial  Purchaser and each person who controls
     the Initial  Purchaser within the meaning of either the Act or the Exchange
     Act against any and all losses,  claims,  damages or liabilities,  joint or
     several, to which they or any of them may become subject under the Act, the
     Exchange Act or other  Federal or state  statutory  law or  regulation,  at
     common  law or  otherwise,  insofar  as such  losses,  claims,  damages  or
     liabilities (or actions in respect  thereof) arise out of or are based upon
     any untrue statement or

                                       27

                                          



<PAGE>



      alleged untrue  statement of a material fact contained in the  Preliminary
      Memorandum,  the  Final  Memorandum  or any  information  provided  by the
      Company to any holder or prospective  purchaser of Securities  pursuant to
      Section 5(i), or in any amendment thereof or supplement  thereto, or arise
      out of or are based upon the 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,  and agrees to reimburse each such  indemnified  party, as
      incurred,  for any legal or other expenses  reasonably incurred by them in
      connection with  investigating or defending any such loss, claim,  damage,
      liability  or action;  provided,  however,  that the  Company  will not be
      liable in any such case to the extent that any such loss, claim, damage or
      liability  arises out of or is based  upon any such  untrue  statement  or
      alleged  untrue  statement  or  omission or alleged  omission  made in the
      Preliminary  Memorandum  or the  Final  Memorandum,  or in  any  amendment
      thereof or supplement  thereto,  in reliance  upon and in conformity  with
      written  information  furnished  to the  Company  by or on  behalf  of the
      Initial  Purchaser  specifically  for inclusion  therein.  This  indemnity
      agreement  will be in  addition  to any  liability  which the  Company may
      otherwise have.

               1. The Initial  Purchaser  agrees to indemnify  and hold harmless
          the Company, its directors, its officers, and each person who controls
          the Company  within the meaning of either the Act or the Exchange Act,
          to the same extent as the foregoing  indemnity from the Company to the
          Initial  Purchaser,  but only with  reference  to written  information
          relating to the Initial  Purchaser  furnished  to the Company by or on
          behalf of the Initial  Purchaser  specifically  for  inclusion  in the
          Preliminary  Memorandum or the Final  Memorandum,  or in any amendment
          thereof or supplement  thereto.  This  indemnity  agreement will be in
          addition to any  liability  which the Initial  Purchaser may otherwise
          have.  The Company  acknowledges  that the statements set forth in the
          last paragraph of the cover page, the sixth, eighth,  ninth,  eleventh
          and fifteenth  paragraphs under the heading "Plan of Distribution" and
          the statements under the heading "Notice to Investors-Offers and Sales
          by the Initial Purchaser" in the Preliminary  Memorandum and the Final
          Memorandum  constitute the only information furnished in writing by or
          on behalf of the Initial  Purchaser for  inclusion in the  Preliminary
          Memorandum or the Final Memorandum.

               2.  Promptly  after  receipt by an  indemnified  party under this
          Section  8  of  notice  of  the  commencement  of  any  action,   such
          indemnified  party will,  if a claim in respect  thereof is to be made
          against  the  indemnifying  party  under this  Section  8,  notify the
          indemnifying  party in writing of the  commencement  thereof;  but the
          failure so to notify the  indemnifying  party (i) will not  relieve it
          from  liability  under  paragraph  (a) or (b) above  unless and to the
          extent it did not  otherwise  learn of such  action  and such  failure
          results in

                                       28




<PAGE>



          the forfeiture by the  indemnifying  party of  substantial  rights and
          defenses  and (ii) will not, in any event,  relieve  the  indemnifying
          party from any  obligations  to any  indemnified  party other than the
          indemnification obligation provided in paragraph (a) or (b) above. The
          indemnifying  party  shall  be  entitled  to  appoint  counsel  of the
          indemnifying  party's choice at the  indemnifying  party's  expense to
          represent   the   indemnified   party   in  any   action   for   which
          indemnification  is sought (in which case the indemnifying party shall
          not  thereafter  be  responsible  for the  fees  and  expenses  of any
          separate counsel  retained by the indemnified  party or parties except
          as set forth  below);  provided,  however,  that such counsel shall be
          reasonably satisfactory to the indemnified party.  Notwithstanding the
          indemnifying  party's  election to appoint  counsel to  represent  the
          indemnified  party in an action,  the indemnified party shall have the
          right to employ separate counsel  (including  local counsel),  and the
          indemnifying  party shall bear the reasonable fees, costs and expenses
          of such  separate  counsel  if (i) the use of  counsel  chosen  by the
          indemnifying  party to represent the  indemnified  party would present
          such counsel with a conflict of interest, (ii) the actual or potential
          defendants  in,  or  targets  of,  any such  action  include  both the
          indemnified party and the indemnifying party and the indemnified party
          shall  have  reasonably  concluded  that  there may be legal  defenses
          available to it and/or other  indemnified  parties which are different
          from or additional to those available to the indemnifying party, (iii)
          the  indemnifying  party shall not have  employed  counsel  reasonably
          satisfactory  to the  indemnified  party to represent the  indemnified
          party within a reasonable time after notice of the institution of such
          action or (iv) the indemnifying  party shall authorize the indemnified
          party to employ  separate  counsel at the expense of the  indemnifying
          party;  provided  further,  that the  indemnifying  party shall not be
          responsible  for the  fees and  expenses  of more  than  one  separate
          counsel (together with appropriate local counsel) representing all the
          indemnified  parties under paragraph (a) or (b) above. An indemnifying
          party will not,  without the prior written  consent of the indemnified
          parties,  settle or compromise or consent to the entry of any judgment
          with  respect to any  pending or  threatened  claim,  action,  suit or
          proceeding in respect of which  indemnification or contribution may be
          sought hereunder (whether or not the indemnified parties are actual or
          potential  parties to such claim or action)  unless  such  settlement,
          compromise  or  consent  includes  an  unconditional  release  of each
          indemnified  party  from  all  liability  arising  out of such  claim,
          action, suit or proceeding.

               3. In the event that the  indemnity  provided in paragraph (a) or
          (b) of  this  Section  8 is  unavailable  to or  insufficient  to hold
          harmless  an  indemnified  party for any  reason,  the Company and the
          Initial Purchaser agree to contribute to the aggregate losses, claims,
          damages and liabilities (including

                                       29

                                         



<PAGE>



          legal  or  other  expenses  reasonably  incurred  in  connection  with
          investigating or defending same) (collectively  "Losses") to which the
          Company or the Initial  Purchaser may be subject in such proportion as
          is  appropriate  to reflect  the  relative  benefits  received  by the
          Company  or  by  the  Initial  Purchaser  from  the  offering  of  the
          Securities;  provided,  however,  that in no case  shall  the  Initial
          Purchaser  be  responsible  for any  amount in excess of the  purchase
          discount or commission  applicable to the Securities  purchased by the
          Initial  Purchaser  hereunder.  If  the  allocation  provided  by  the
          immediately  preceding  sentence is  unavailable  for any reason,  the
          Company or the Initial Purchaser, as the case may be, shall contribute
          in such proportion as is appropriate to reflect not only such relative
          benefits but also the relative  fault of the Company or of the Initial
          Purchaser in connection with the statements or omissions that resulted
          in such Losses as well as any other relevant equitable considerations.
          Benefits  received by the  Company  shall be deemed to be equal to the
          total net proceeds from the offering (before deducting expenses),  and
          benefits received by the Initial Purchaser shall be deemed to be equal
          to the total purchase  discounts and commissions,  in each case as set
          forth on the cover page of the Final Memorandum.  Relative fault shall
          be determined by reference to whether any alleged untrue  statement or
          omission relates to information provided by the Company or the Initial
          Purchaser.  The Company and the Initial  Purchaser agree that it would
          not be just and equitable if contribution  were determined by pro rata
          allocation  or any  other  method  of  allocation  that  does not take
          account   of  the   equitable   considerations   referred   to  above.
          Notwithstanding the provisions of this paragraph (d), no person guilty
          of fraudulent  misrepresentation  (within the meaning of Section 11(f)
          of the Act) shall be entitled to contribution  from any person who was
          not guilty of such fraudulent misrepresentation.  For purposes of this
          Section 8, each person who controls the Initial  Purchaser  within the
          meaning  of  either  the Act or the  Exchange  Act and each  director,
          officer,  employee and agent of the Initial  Purchaser  shall have the
          same rights to contribution as the Initial Purchaser,  and each person
          who controls  the Company  within the meaning of either the Act or the
          Exchange Act and each  officer and director of the Company  shall have
          the same rights to contribution  as the Company,  subject in each case
          to the applicable terms and conditions of this paragraph (d).
      
          III.  Termination.  This Agreement  shall be subject to termination in
     the absolute  discretion of the Initial  Purchaser,  by notice given to the
     Company  prior to delivery of and payment for the  Securities,  if prior to
     such time (i) trading in or quotation of the  Company's  Common Stock shall
     have been  suspended  by the  Commission  or  Nasdaq's  Small Cap Market or
     trading in securities  generally on the New York Stock Exchange or Nasdaq's
     Small Cap Market shall have been suspended or

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<PAGE>



     limited or minimum  prices  shall have been  established  on either of such
     Exchange  or  Market  System;  (ii)  subsequent  to the  date  as of  which
     information  is given in the  Final  Memorandum  there  shall  have  been a
     material  adverse change (or  prospective  material  adverse  change) in or
     affecting the  financial  condition of the Company,  otherwise  than as set
     forth in the Final  Memorandum the effect of which, in any such case, is in
     the Initial  Purchaser's  judgment  so  material  and adverse as to make it
     impracticable  or  inadvisable  to proceed with the public  offering or the
     delivery of the Securities on the terms and in the manner  contemplated  by
     the Preliminary Memorandum and Final Memorandum;  (iii) if, on or after the
     date hereof,  a downgrading  shall have occurred in the rating accorded the
     Company's  debt  securities  by  Standard & Poor's  Corporation  or Moody's
     Investors  Service,  Inc. or either of them shall have  publicly  announced
     that  it  has  under   surveillance  or  review,   with  possible  negative
     implications,  its rating of any of the Company's debt  securities;  (iv) a
     banking  moratorium  shall have been declared either by Federal or New York
     State  authorities  or (v)  there  shall  have  occurred  any  outbreak  or
     escalation of  hostilities,  declaration by the United States of a national
     emergency  or war or  other  calamity  or  crisis  the  effect  of which on
     financial  markets is such as to make it, in the  judgment  of the  Initial
     Purchaser,  impracticable  or  inadvisable  to proceed with the offering or
     delivery  of  the  Securities  as  contemplated  by  the  Final  Memorandum
     (exclusive  of  any  amendment  or  supplement  thereof  or  thereto). 

          IV.   Representations  and  Indemnities  to  Survive.  The  respective
     agreements,  representations,  warranties, indemnities and other statements
     of the Company or its officers and of the Initial Purchaser set forth in or
     made  pursuant  to this  Agreement  will  remain in full force and  effect,
     regardless  of any  investigation  made  by or on  behalf  of  the  Initial
     Purchaser or the Company or any of the officers,  directors or  controlling
     persons  referred to in Section 8 hereof,  and will survive delivery of and
     payment for the Securities. The provisions of Sections 7 and 8 hereof shall
     survive the termination or cancellation of this Agreement.

          V.  Notices.  All  communications  hereunder  will be in  writing  and
     effective only on receipt,  and, if sent to the Initial Purchaser,  will be
     mailed,  delivered  or  telefaxed  and  confirmed  to it in writing to HSBC
     Securities,  Inc.,  140  Broadway  5th Floor,  New York,  New York,  10005,
     Telephone  (212) 658-5100,  Telefax (212) 658-4859,  with a copy to Cleary,
     Gottlieb,  Steen & Hamilton,  One Liberty Plaza,  New York, New York 10006,
     Telephone  (212)  225-2000,  Telefax (212)  225-3999,  Attention:  James F.
     Munsell,  Esq.;  or, if sent to the Company,  will be mailed,  delivered or
     telefaxed and  confirmed to it in writing at 6 Nevada Drive,  Lake Success,
     New  York  11042,   Telephone  (516)  326-2540,   Telefax  (516)  437-0807,
     Attention:  President,  with copies to Amy Gross,  Esq.,  100 West  Lucerne
     Circle, Orlando,  Florida, 32801, Telephone (407) 246- 1234, Telefax, (407)
     481-2560 and Certilman Balin Adler & Hyman,  LLP, 90 Merrick  Avenue,  East
     Meadow, New York 11554, Telephone (516) 296-7000, Telefax, (516) 296- 7111,
     Attention:  Fred  Skolnik,  Esq., or such other address as either party may
     provide from time to time.

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<PAGE>



      
          VI.  Successors.  This  Agreement  will inure to the benefit of and be
     binding upon the parties  hereto and their  respective  successors  and the
     officers and directors  and  controlling  persons  referred to in Section 8
     hereof, and, except as expressly set forth in Section 5(i) hereof, no other
     person will have any right or obligation hereunder.
   
          VII.  APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
     IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
     CHOICE OF LAW RULES THEREOF.

          VIII.  Business Day. For purposes of this  Agreement,  "business  day"
     means each Monday,  Tuesday,  Wednesday,  Thursday and Friday that is not a
     day on which  banking  institutions  in The City of New York,  New York are
     authorized or obligated by law, executive order or regulation to close.

          IX.  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts,  each of which will be deemed to be an original, but all such
     counterparts will together constitute one and the same instrument. * * *


                                       32

                                         



<PAGE>



     If the foregoing is in accordance with your understanding of our agreement,
please  sign and return to us the  enclosed  duplicate  hereof,  whereupon  this
letter and your  acceptance  shall  represent  a binding  agreement  between the
Company and the Initial Purchaser.

                                         Very truly yours,

                                         AMNEX, INC.

                                         By
                                         Name:
                                         Title:

The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.

HSBC SECURITIES, INC.


By
Name:
Title:


                                       33