[MARGATE LETTERHEAD]






                              June 12, 2001



Mr. Juan Carlos Carranza
USA Teleport, Inc.
16555 N.W. 13th Avenue
Miami, FL  33169

Re:  Margate Industries, Inc. - USA Teleport, Inc.

Dear Mr. Carranza:

This letter will confirm the intent of Margate Industries, Inc. ("Margate")
to enter into negotiations with USA Teleport, Inc. ("USA Teleport") for the
purpose of effecting a merger between Margate and USA Teleport on the
following terms:

1.   USA Teleport will merge with and into a wholly owned subsidiary of
     Margate (the "Merger").  Upon the effective date of the Merger, each
     of the 3 million currently outstanding shares in USA Teleport will
     convert to 1.5 shares of Margate so that the existing USA Teleport
     shareholders will receive a total of 4.5 million shares of Margate
     common stock; also as of the effective date, the ownership of the
     current Margate shareholders will be increased from the current amount
     of approximately 1.9 million shares to 4.5 million shares so that the
     existing shareholders of Margate and USA Teleport will have equal
     ownership of Margate post-merger.

2.   The Board of Directors of Margate post-merger will consist of two
     individuals selected by the current Margate Board of Directors (these
     individuals will presumably be Bill Hopton and Dave Widlak) and two
     individuals selected by the current USA Teleport Board of Directors
     (presumably Juan Carlos Carranza and Noemi Dolinsky) plus three
     independent directors to be selected by agreement of the current
     Margate and USA Teleport Boards of Directors.

3.   As a result of the Merger, USA Teleport will become a wholly owned
     subsidiary of Margate, will retain its existing management and Board
     of Directors.  The existing management of USA Teleport will be
     retained and employment agreements will be entered into with Juan
     Carlos Carranza and Noemi Dolinsky.  The existing members of the Board
     of Directors of USA Teleport shall retain their seats.  An additional

<PAGE>
Juan Carlos Carranza
USA Teleport, Inc.
June 12, 2001
Page 2

     director or directors may be appointed to the Board of Directors of
     USA Teleport as may be agreed by the parties.

4.   The current Margate Board of Directors will serve as the Boards of
     Directors of Margate's current operating subsidiaries.  An additional
     director or directors may be appointed to the Boards of Directors of
     the Margate operating subsidiaries as may be agreed by the parties.

5.   The parties have not yet determined whether the shares in Margate to
     be issued to USA Teleport shareholders pursuant to the Merger will be
     registered or restricted shares.  This determination will be made by
     the parties in negotiating the definitive agreement based upon the
     timing impact a full registration will have upon the proposed Merger.
     Accordingly:

     A.   In the event the parties determine that an S-4 Registration
          Statement will be filed with the SEC resulting in the
          registration of the shares issued in the Merger, the currently
          existing members of the Margate Board of Directors and all USA
          Teleport shareholders shall enter into a "Lockup Agreement" by
          which each of said individuals will agree to restrictions on the
          disposition of the shares received by them in the Merger until
          the effective date of the S-4 Registration Statement with respect
          to the shares.

     B.   In the event the parties determine it advisable to proceed with
          the Merger on the basis of the filing of a proxy information
          statement which will result in restricted shares being issued in
          the Merger, then:

          i.   Margate will agree to file an S-3 Registration Statement
               three months following the effective date of the Merger in
               order to register the shares issued in the Merger; and

          ii.  The currently existing members of Margate's Board of
               Directors will agree to restrictions on all shares of
               Margate owned by them, including those received by them as
               a result of the Merger, which shall coincide with the
               restrictions on shares received by USA Teleport shareholders
               in the Merger.

6.   After execution of this Letter of Intent and while the parties are
     negotiating the definitive agreement, Margate agrees that it will
     enter into a loan agreement with USA Teleport which will provide as
     follows:

<PAGE>
Juan Carlos Carranza
USA Teleport, Inc.
June 12, 2001
Page 3

     A.   Margate will loan USA Teleport the sum of $100,000 for USA
          Teleport's working capital purposes.  The loan will bear interest
          at the rate of 6% simple interest with interest payable monthly.

     B.   The loan will be secured by 30,000 shares of USA Teleport common
          stock.

     C.   USA Teleport will agree not to issue any additional shares of
          common stock while the loan is outstanding except for an amount
          of up to 300,000 common shares which may be sold for fair market
          value.

     D.   Upon the execution of a definitive agreement for the Merger and
          USA Teleport shareholder approval of the Merger, Margate will
          loan USA Teleport an additional $450,000 for working capital
          which will be secured by an additional 135,000 shares of USA
          Teleport common stock.  Interest rate and payment terms will
          remain the same as the initial loan referenced in paragraph 6(A)
          above.

     E.   Upon the closing of the Merger, the 165,000 shares and the
          security interest in said shares will be cancelled and the
          obligations will become an intracompany receivable.

     F.   In the event this Letter of Intent or a definitive agreement, as
          applicable, terminates without a closing, the outstanding loan
          balance will be payable on such terms as made be agreed between
          Margate and USA Teleport, in the absence of such agreement, over
          a term not exceeding 24 months.

It is intended that this Letter of Intent shall be non-binding and non-
contractual in nature and merely reflects the intentions of the parties to
proceed in good faith towards negotiations of a definitive agreement with
respect to the Merger; provided, however, Margate agrees to enter into the
loan agreement described in paragraph 6 above at USA Teleport's request at
any time while this Letter of Intent remains in effect.

The parties agree to cooperate and seek concurrence with each other in
connection with any public announcements to be made with regard to the
Merger; provided, that the parties acknowledge Margate's responsibility as
a public reporting company to issue press releases and other information as
may be required under the securities laws.

<PAGE>
Juan Carlos Carranza
USA Teleport, Inc.
June 12, 2001
Page 4


Upon execution of this Letter of Intent, the parties agree to allow access
to each other's principals, attorneys, accountants and other advisors for
customary due diligence in connection with the negotiation of a definitive
Merger agreement.  Any information, documents or other materials disclosed
by either party to the other during the due diligence process shall remain
confidential and used only by the parties in connection with the proposed
Merger transaction.  All copies of such materials shall be returned to the
respective party providing the same in the event of the termination of this
Letter of Intent or the definitive agreement in the event a closing does
not occur.  Each party will bear its own expenses in connection with the
proposed Merger transaction.

Either party shall have the ability to terminate this Letter of Intent upon
written notice to the other party and, in any event, this Letter of Intent
shall terminate automatically upon the execution of a definitive agreement
or, in the event a definitive agreement has not been entered into between
the parties, as of July 31, 2001.

We look forward to working with you in an attempt to negotiate a successful
Merger transaction.  Please sign this letter below to indicate your
agreement to the terms of this Letter of Intent.

                              Very truly yours,

                              MARGATE INDUSTRIES, INC.



                              /s/ WILLIAM H. HOPTON
                              William H. Hopton

WHH/lm


Agreed to:

USA Teleport, Inc.


By:  /s/ JUAN CARLOS CARRANZA

Its: Juan Carlos Carranza