EXHIBIT 2


                                MERGER AGREEMENT



                                 by and between



                          WAVETECH INTERNATIONAL, INC.


                                       AND


                          DCI TELECOMMUNICATIONS, INC.














                             Dated November 6, 1998




<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                              ARTICLE I THE MERGER

1.1   The Merger............................................................. 1
1.2   Effect of the Merger................................................... 1
1.3   Consummation of the Merger............................................. 2
1.4   Articles of Incorporation and Bylaws; Officers......................... 2
1.5   Other Agreements....................................................... 2
1.6   Conversion of Securities............................................... 3
1.7   Closing of Company Transfer Books...................................... 4
1.8   Exchange of Certificates............................................... 4
1.9   Dissenting Shares...................................................... 5
1.10  Tax Consequences; Accounting Treatment................................. 5
1.11  Taking of Necessary Action; Further Action............................. 5
1.12  Employee Stock Options................................................. 6
1.13  Warrants............................................................... 7

              ARTICLE II REPRESENTATIONS AND WARRANTIES OF WAVETECH

2.1   Organization and Qualification......................................... 8
2.2   Authority Relative to this Agreement................................... 8
2.3   Capitalization......................................................... 9
2.4   SEC Filings............................................................10
2.5   Financial Statements...................................................11
2.6   Subsidiaries...........................................................11
2.7   Absence of Undisclosed Liabilities.....................................11
2.8   No Material Adverse Changes............................................12
2.9   Absence of Certain Developments........................................12
2.10  Title to Properties....................................................14
2.11  Accounts Receivable....................................................15
2.12  Inventories............................................................15
2.13  Tax Matters............................................................16
2.14  Contracts and Commitments..............................................17
2.15  Proprietary Rights.....................................................18
2.16  Litigation.............................................................19
2.17  Brokerage..............................................................19
2.18  Employment Matters.....................................................19
2.19  Employee Benefit Plans.................................................19
2.20  Insurance..............................................................21
2.21  Affiliate Transactions.................................................21
2.22  Suppliers..............................................................22
2.23  Officers and Directors; Bank Accounts..................................22

                                       i
<PAGE>

2.24  Compliance with Laws; Permits; Certain Operations......................22
2.25  Disclosure.............................................................22
2.26  Non-Contravention; Consents............................................23
2.27  Stockholder Vote Required..............................................24
2.28  Board Approval.........................................................24
2.29  Opinion of Financial Advisor...........................................24

            ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

3.1   Organization and Qualification.........................................24
3.2   Authority Relative to this Agreement...................................25
3.3   Capitalization.........................................................25
3.4   SEC Filings............................................................27
3.5   Financial Statements...................................................27
3.6   Subsidiaries...........................................................28
3.7   Absence of Undisclosed Liabilities.....................................28
3.8   No Material Adverse Changes............................................28
3.9   Absence of Certain Developments........................................29
3.10  Title to Properties....................................................31
3.11  Accounts Receivable....................................................32
3.12  Inventories............................................................32
3.13  Tax Matters............................................................32
3.14  Contracts and Commitments..............................................33
3.15  Proprietary Rights.....................................................35
3.16  Litigation.............................................................35
3.17  Brokerage..............................................................36
3.18  Employment Matters.....................................................36
3.19  Employee Benefit Plans.................................................36
3.20  Insurance..............................................................37
3.21  Affiliate Transactions.................................................38
3.22  Suppliers..............................................................38
3.23  Officers and Directors; Bank Accounts..................................38
3.24  Compliance with Laws; Permits; Certain Operations......................38
3.25  Disclosure.............................................................39
3.26  Non-Contravention; Consents............................................39
3.27  Stockholder Vote Required..............................................40
3.28  Board Approval.........................................................40

                ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER

4.1   Conduct of Business Pending the Merger.................................41
4.2   Delivery of Disclosure Letters.........................................41
4.3   Notification; Updates to Disclosure Schedule...........................42
4.4   Shareholder Approval...................................................42

                                       ii
<PAGE>

                         ARTICLE V ADDITIONAL AGREEMENTS

5.1   Joint Proxy Statement; Registration Statement..........................43
5.2   Shareholders' Meetings.................................................45
5.3   Accountant Comfort Letters.............................................45
5.4   Expenses...............................................................46
5.5   Additional Agreements..................................................47
5.6   No Negotiations, etc...................................................47
5.7   Notification of Certain Matters........................................47
5.8   Access to Information; Confidentiality.................................47
5.9   Shareholder Claims.....................................................48
5.10  Consents...............................................................48
5.11  State Securities Law Compliance........................................49
5.12  Affiliate Agreements...................................................49
5.13  Commercially Reasonable Efforts........................................49
5.14  Tax Matters............................................................49
5.15  Board of Directors.....................................................49
5.16  Indemnification........................................................50
5.17  Nasdaq Listing.........................................................51
5.18  Employees..............................................................51

                              ARTICLE VI CONDITIONS

6.1   Conditions to Obligations of Each Party To Effect the Merger...........52
6.2   Additional Conditions to Obligation of the Company.....................53
6.3   Additional Conditions to Obligations of Wavetech.......................55

                  ARTICLE VII TERMINATION, AMENDMENT AND WAIVER

7.1   Termination............................................................56
7.2   Termination Procedures.................................................58
7.3   Effect of Termination..................................................58

                         ARTICLE VIII GENERAL PROVISIONS

8.1   Amendment..............................................................58
8.2   Waiver.................................................................59
8.3   Public Statements......................................................59
8.4   Notices................................................................59
8.5   Interpretation.........................................................60
8.6   Severability...........................................................60
8.7   Miscellaneous..........................................................60
8.8   Non-survival of Representations and Warranties.........................61
8.9   Entire Agreement; No Third Party Beneficiaries; Rights of Ownership....61

                                      iii
<PAGE>

Exhibit 1   Form of Amended Articles of Incorporation

Exhibit 2   Form of Amended Bylaws

Exhibit 3   Form of Wavetech Warrant

Exhibit 4   Form of Affiliate Agreement (Company)

Exhibit 5   Form of Affiliate Agreement (Wavetech)

Exhibit 6   Affiliated Persons

Exhibit 7   Form of Representation Certificate (Wavetech)

Exhibit 8   Form of Representation Certificate (Company)

Exhibit 9   Form of Shareholder's Representation Certificate

Schedule A  Wavetech Disclosure Letter

Schedule B  DCI Disclosure Letter

                                       iv
<PAGE>

                                MERGER AGREEMENT


     This MERGER AGREEMENT is dated November 6, 1998 (this "Agreement"),  by and
between Wavetech International,  Inc. a Nevada corporation ("Wavetech"), and DCI
Telecommunications, Inc., a Colorado corporation (the "Company").


                                    RECITALS

     I.  Wavetech  and  the  Company  have  agreed  to the  merger  described in
Article 1 (the "Merger").

     II. The  respective  boards of  directors  of Wavetech and the Company have
determined  that it is advisable to consummate the Merger,  as a result of which
all of the outstanding  common stock,  $.001 par value per share, of the Company
("Company  Common  Stock")  will be converted  into shares of the common  stock,
$.001 par value per share, of Wavetech ("Wavetech Common Stock") and the Company
will be merged into Wavetech; all on the terms and subject to the conditions set
forth in this Agreement.

     NOW, THEREFORE, the parties agree as follows:

                                   ARTICLE I

                                   THE MERGER

     The  respective  boards of directors of Wavetech and the Company  have,  by
resolutions duly adopted, approved the following provisions of this Article 1 as
the plan of merger  required by the laws of the states of Colorado and Nevada in
connection with the Merger:

     1.1  THE MERGER.  At the  Effective  Time (as defined in Section  1.3),  in
accordance  with this Agreement and applicable  law, the Company shall be merged
with and into Wavetech,  the separate existence of the Company (except as may be
continued by operation of law) shall cease,  and Wavetech  shall continue as the
surviving corporation under the name "DCI Telecommunications,  Inc." as provided
in the Amended Articles of Incorporation of Wavetech  pursuant to Section 1.4 of
this  Agreement.  Wavetech,  in its capacity as the  corporation  surviving  the
Merger, sometimes is referred to herein as the "Surviving Corporation."

     1.2  EFFECT OF THE MERGER. The Surviving  Corporation shall possess all the
rights,  privileges,  immunities  and  franchises,  of a public  as well as of a
private  nature,  of  each  of  Wavetech  and  the  Company  (collectively,  the
"Constituent Corporations"); and all property, real, personal and mixed, and all
debts due on whatever account,  including subscriptions to shares, and all other
choses in action,  and all and every other interest of or belonging to or due to
each  of  the  Constituent  Corporations,  shall  be  taken  and  deemed  to  be
transferred to and vested in the Surviving  Corporation  without  further act or
deed;  and the Surviving  Corporation  shall be  responsible  and liable for all
liabilities and obligations of each of the Constituent Corporations.

<PAGE>

     1.3  CONSUMMATION  OF THE  MERGER.  The  consummation  of the  transactions
contemplated  by this Agreement (the  "Closing")  shall take place at such time,
place and date as mutually  agreed upon by Wavetech and the Company,  which date
shall be no later than the third  business  day after the later of the  Wavetech
Shareholders'  Meeting and the Company Shareholders Meeting (each as hereinafter
defined),  unless  extended  by mutual  agreement  of the  parties  hereto  (the
"Scheduled Closing Time"). The date on which the Closing actually takes place is
referred to in this  Agreement as the "Closing  Date." On the Closing Date,  the
parties  hereto  will  cause  articles  of merger  relating  to the Merger to be
delivered  to the  Secretaries  of State of the states of Colorado and Nevada in
such form as  required  by,  and  executed  in  accordance  with,  the  relevant
provisions of applicable law. The Merger shall be effective at such time as such
articles of merger are duly filed with and accepted by the  Secretaries of State
of the states of Colorado and Nevada in accordance with applicable law, unless a
later time is expressly provided for in such articles (the "Effective Time").

     1.4  ARTICLES OF INCORPORATION AND BYLAWS; OFFICERS.

          (a) The Articles of Incorporation and Bylaws of Wavetech, as in effect
immediately  prior to the Effective Time, shall be the Articles of Incorporation
(except  that such  Articles of  Incorporation  shall be amended as set forth in
Exhibit 1 attached  hereto) and Bylaws (except that such Bylaws shall be amended
as set  forth  in  Exhibit  2  attached  hereto)  of the  Surviving  Corporation
immediately  after the Effective  Time and shall  thereafter  continue to be its
Articles of Incorporation and Bylaws until amended as provided therein and under
the applicable law.

          (b) The  officers  of the  Surviving  Corporation  from and  after the
Effective  Time  shall be as  follows:  Joseph J.  Murphy,  President  and Chief
Executive  Officer;  Larry  Shatsoff,  Vice  President,   Secretary,  and  Chief
Operating  Officer;  John J. Adams, Vice President and Chief Marketing  Officer;
Russell B. Hintz, Vice President,  Treasurer and Chief Financial Officer; Daniel
J. Murphy, Vice President of Strategic Planning;  Gerald Quinn,  Chairman of the
Board of Directors.

     1.5  OTHER AGREEMENTS. At or prior to the Effective Time:

          (a)  Wavetech shall take such actions as are  reasonably  necessary to
effect a one (1) for six (6) reverse  stock split of its issued and  outstanding
common stock (the "Reverse Stock Split").

          (b)  The number of directors to serve on the Board of Directors of the
Surviving Corporation shall be increased to seven (7), five (5) of whom shall be
designated  by the Company and the  remaining two (2) shall be designated by the
present  management  of  Wavetech,  PROVIDED,  HOWEVER,  that  at  least  one of
Wavetech's designees and one of the Company's designees shall not be a member of
management of the Surviving Corporation or own in excess of five percent (5%) of
the outstanding capital stock of the Surviving Corporation.

                                       2
<PAGE>

     1.6  CONVERSION OF SECURITIES.  Subject to Sections  1.8(b) and 1.9, at the
Effective  Time,  by virtue of the Merger and  without any action on the part of
Wavetech, the Company or the holder of any of the following securities:

          (a)  Each share of Company  Common  Stock,  and each option,  warrant,
convertible preferred share and other right to receive a share of Company Common
Stock, issued or granted and outstanding immediately prior to the Effective Time
(and  other  than  shares to be  canceled  pursuant  to  Section  1.6(b))  shall
automatically  be canceled and  extinguished  and be converted into and become a
right to receive one (1) share (the "Exchange  Ratio") of Wavetech  Common Stock
(after giving effect to the Reverse Stock Split), provided, however, that in the
event  Wavetech's  unaudited  balance  sheet dated as of the  Closing  Date (the
"Closing  Balance  Sheet")  reflects  aggregate cash and cash  equivalents in an
amount less than One Million Eight Hundred Dollars  ($1,800,000) but equal to or
greater than One Million Six Hundred Thousand Dollars ($1,600,000), the Exchange
Ratio shall be adjusted  pursuant to the following  formula:  For each dollar or
fraction  thereof  that  the  Closing  Balance  Sheet  reflects  cash  and  cash
equivalents  in an amount less than One Million Eight Hundred  Thousand  Dollars
($1,800,000),  Wavetech shall issue an aggregate of 1.5888  additional shares of
Wavetech  Common Stock (the  "Closing  Adjustment  Shares").  All of the Closing
Adjustment  Shares to be issued pursuant to this Section 1.6(a) shall be equally
allocated on a per share basis among all of the issued and outstanding shares of
Company  Common  Stock  and  then  outstanding  options,  warrants,  convertible
preferred  stock and other  rights to receive  shares of Company  Common  Stock.
Notwithstanding anything in this Agreement to the contrary, the expenses payable
by Wavetech pursuant to Section 5.4 hereof shall not be treated as paid prior to
the Closing Date solely for purposes of determining the aggregate amount of cash
and cash  receivables  reflected on the Closing Balance Sheet to be delivered as
contemplated by this Section 1.6(a).

          (b)  Each  share  of  Company  Common  Stock  issued  and  outstanding
immediately  prior to the Effective Time and held in the treasury of the Company
or owned by Wavetech shall  automatically  be canceled and  extinguished  and no
payment shall be made with respect thereto.

          (c)  Each  share of  Wavetech  Common  Stock  issued  and  outstanding
immediately  prior to the  Effective  Time (after  giving  effect to the Reverse
Stock Split) shall  automatically be entitled to receive one Warrant to purchase
 .2099 of a share of Wavetech Common Stock at a per share exercise price of $2.50
in the form attached hereto as Exhibit 3 (the "Wavetech Warrants"). The terms of
such  form  of  Wavetech  Warrant  shall  include,   specifically,  but  without
limitation,  a three (3) year term, exercisable only upon registration under the
Securities  Act of 1933,  as  amended  (the  "Securities  Act"),  of the  shares
underlying the Wavetech  Warrants (the Wavetech  Shares"),  demand  registration
rights  exercisable by the holders of a specified  percentage of Warrants (i.e.,
not less than 51%)  commencing on or after the first  anniversary of the date of
issuance of the  Wavetech  Warrant,  and  piggy-back  registration  rights (such
piggy-back   rights   being   subject  to   standard   underwriter   cut-backs).
Notwithstanding  anything in this  Agreement  to the  contrary,  nothing in this
Agreement  shall be  construed  so as to  require  that the  Warrant  Shares  be
included as part of the  securities to be registered in the Form S-4 (as defined
herein).

                                       3
<PAGE>

          (d)  If any shares of Company  Common  Stock  outstanding  immediately
prior to the Effective Time are unvested or are subject to a repurchase  option,
risk of forfeiture or other  condition  under any  applicable  restricted  stock
purchase  agreement  or other  agreement  with the  Company,  then the shares of
Wavetech Common Stock issued in exchange for such shares of Company Common Stock
will  also be  unvested  and  subject  to the same  repurchase  option,  risk of
forfeiture or other condition, and the certificates  representing such shares of
Wavetech Common Stock may accordingly be marked with appropriate legends.

     1.7  CLOSING OF COMPANY  TRANSFER BOOKS. At the Effective Time,  holders of
certificates  representing  shares of Company Common Stock that were outstanding
immediately  prior to the  Effective  Time  shall  cease to have any  rights  as
shareholders  of the Company,  and the stock transfer books of the Company shall
be  closed  and no  transfer  of shares  of  Company  Common  Stock  issued  and
outstanding  immediately  prior to the Effective Time shall  thereafter be made.
If, after the Effective Time, valid  certificates  previously  representing such
shares are presented to the Surviving  Corporation or the  Disbursing  Agent (as
defined in Section 1.8), they shall be exchanged as provided in Section 1.8.

     1.8  EXCHANGE OF CERTIFICATES.

          (a)  After the Effective Time, American Stock Transfer & Trust Company
shall act as disbursing agent (the "Disbursing Agent") in effecting the exchange
of  Wavetech  Common  Stock for  certificates  which,  immediately  prior to the
Effective  Time,  represented  shares  of  Company  Common  Stock.  As  soon  as
practicable  after  the  Effective  Time,  the  Disbursing  Agent  shall  mail a
transmittal form to each holder of certificates  theretofore  representing  such
shares advising such holder of the procedure for surrendering  such certificates
to the  Disbursing  Agent.  If a  certificate  for Wavetech  Common Stock issued
pursuant  to Section  1.6(a) is to be issued in the name of a person  other than
the person in whose name the  certificates  for shares  surrendered for exchange
are  registered,  it shall  be a  condition  of the  exchange  that  the  person
requesting such exchange shall pay to the Disbursing Agent any transfer or other
taxes  required by reason of the issuance of such  certificate  in the name of a
person other than the registered owner of the certificates surrendered, or shall
establish to the  satisfaction  of the  Disbursing  Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the Disbursing
Agent  nor any  party  hereto  shall  be  liable  to a  holder  of  certificates
theretofore representing shares of Company Common Stock for any amount paid to a
public  official  pursuant  to any  applicable  abandoned  property,  escheat or
similar  law.  Upon the  surrender  and  exchange of a  certificate  theretofore
representing  shares of  Company  Common  Stock,  the  holder  shall be issued a
certificate  representing the number of shares of Wavetech Common Stock to which
such  person  is  entitled  pursuant  to  Section  1.6(a)  and  the  certificate
theretofore  representing  shares of Company  Common  Stock shall  forthwith  be
canceled.  Until so surrendered  and  exchanged,  each  Certificate  theretofore
representing  shares of Company Common Stock shall represent solely the right to
receive  the  Wavetech  Common  Stock  into  which  the  shares  it  theretofore
represented  shall  have been  converted  pursuant  to Section  1.6(a),  and the
Surviving  Corporation  shall not be  required  to pay the  holder  thereof  the
Wavetech Common Stock to which such holder otherwise would be entitled; provided

                                       4
<PAGE>

that  procedures  allowing for payment  against  lost or destroyed  certificates
against  receipt of customary and  appropriate  certifications  and  indemnities
shall be provided.

          (b)  No fractional  shares of Wavetech Common Stock shall be issued in
connection with the Merger,  and no certificates for any such fractional  shares
shall  be  issued.  In lieu of such  fractional  shares,  any  fractional  share
interest in Wavetech  Common Stock which a holder of Company  Common Stock would
otherwise be entitled to receive in the Merger (after aggregating all fractional
shares of Wavetech Common Stock that would otherwise be issuable to such holder)
shall be  rounded  up to the  nearest  whole  share if such  fraction  is 0.5 or
greater and shall be rounded down to the nearest whole share if such fraction is
less than 0.5.

     1.9  DISSENTING SHARES.

          (a)  Notwithstanding  anything  to  the  contrary  contained  in  this
Agreement,  any shares of Company  Common Stock that, as of the Effective  Time,
are or may become  "dissenter"  shares  within the meaning of Article 113 of the
Colorado  Business  Corporation  Act (the "Colorado Law") shall not be converted
into or represent the right to receive  Wavetech Common Stock in accordance with
Section 1.6, and the holder or holders of such shares shall be entitled  only to
such  rights as may be  granted  to such  holder  or  holders  under  applicable
Colorado  Law;  provided,  however,  that if the  status  of any such  shares as
"dissenter"  shares  shall not be  perfected,  or if any such shares  shall lose
their status as "dissenting shares," then, as of the later of the Effective Time
or the time of the failure to perfect  such  status or the loss of such  status,
such shares shall  automatically  be converted into and shall represent only the
right  to  receive  (upon  the  surrender  of the  certificate  or  certificates
representing such shares) Wavetech Common Stock in accordance with Section 1.6.

          (b)  The  Company  shall give  Wavetech  prompt  notice of any written
demand  received  by the  Company  prior to the  Effective  Time to require  the
Company to purchase shares of capital stock of the Company  pursuant to Colorado
Law and of any other demand, notice or instrument delivered to the Company prior
to the  Effective  Time pursuant to the Colorado Law. The Company shall not make
any payment or settlement  offer prior to the Effective Time with respect to any
such demand unless  Wavetech  shall have consented in writing to such payment or
settlement offer.

     1.10 TAX  CONSEQUENCES;   ACCOUNTING  TREATMENT.  For  federal  income  tax
purposes,  the Merger is  intended to  constitute  a  reorganization  within the
meaning of Section 368 of the  Internal  Revenue  Code of 1986,  as amended (the
"Code"). The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization"  within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States  Treasury  Regulations.  For  accounting  purposes,  the Merger is
intended to be accounted for as a purchase.

     1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. Wavetech, on the one hand,
and the Company, on the other hand, shall use all reasonable efforts to take all
such action (including specifically, but without limitation, action to cause the

                                       5
<PAGE>

satisfaction  of the  conditions  of the other to effect  the  Merger) as may be
necessary  or  appropriate  in order to  effectuate  the Merger as  promptly  as
possible.  If, at any time  after the  Effective  Time,  any  further  action is
necessary or desirable to carry out the purposes of this  Agreement  and to vest
the Surviving  Corporation  with full possession of all the rights,  privileges,
immunities  and  franchises of the  Constituent  Corporations,  the officers and
directors of the Surviving  Corporation are fully  authorized in the name of the
Constituent Corporations or otherwise to take, and shall take, all such actions.

     1.12 EMPLOYEE STOCK OPTIONS

          (a)  At the Effective Time, each option that is then outstanding under
the  Company's  1995 Stock  Option Plan (the "Stock  Plan"),  whether  vested or
unvested (a "Company  Option"),  shall be assumed by Wavetech in accordance with
the  terms (as in effect  on the date  hereof)  of the Stock  Plan and the stock
option agreement, if any, by which such Company Option is evidenced.  All rights
with respect to Company  Common Stock under  outstanding  Company  Options shall
thereupon  be  converted,  subject to the  provisions  hereof,  into rights with
respect to Wavetech  Common Stock.  From and after the Effective  Time, (i) each
Company Option assumed by Wavetech (collectively,  the "Assumed Options") may be
exercised solely for shares of Wavetech Common Stock,  (ii) the number of shares
of Wavetech  Common Stock subject to each such Assumed  Option shall be equal to
the number of shares of Wavetech  Common  Stock which the holder of such Assumed
Option would have received pursuant to Section 1.6 in exchange for the shares of
Company  Common Stock subject to such Assumed  Option if such Assumed Option had
been  exercised  immediately  prior to the Effective  Time,  (iii) the per share
exercise price for the Wavetech Common Stock issuable upon exercise of each such
Assumed  Option shall be determined by dividing the exercise  price per share of
Company Common Stock subject to such Assumed  Option,  as in effect  immediately
prior to the Effective  Time, by a fraction the numerator of which is the number
of shares of Wavetech  Common Stock subject to such Assumed  Option  immediately
after the Effective Time and the denominator of which is the number of shares of
Company  Common Stock subject to such Assumed  Option  immediately  prior to the
Effective  Time,  and rounding the  resulting  exercise  price up to the nearest
whole cent,  and (iv) all  restrictions  on the  exercise  of each such  Assumed
Option  shall  continue  in full force and effect and the term,  exercisability,
vesting  schedule,  status as an incentive  or  nonqualified  option,  and other
provisions of such Company Option shall otherwise  remain  unchanged;  PROVIDED,
HOWEVER,  that each such Assumed Option shall,  in accordance with its terms, be
subject to further adjustment as appropriate to reflect any stock split, reverse
stock split,  stock  dividend,  recapitalization  or other  similar  transaction
effected by Wavetech  after the Effective  Time.  The Company and Wavetech shall
take all action that may be necessary  (under the Stock Plan and  otherwise)  to
effectuate the provisions of this Section 1.12.

          (b)  Wavetech  will use its best efforts to cause the Wavetech  Common
Stock issuable upon exercise of the Assumed  Options to be registered  under the
Securities Act on Form S-8 promulgated by the Securities and Exchange Commission
(the "SEC"), to the extent Wavetech is eligible to use such registration form at
the time of such  registration,  and to be  registered  or qualified (or to have
established  that an  exemption  from  such  registration  or  qualification  is
available)  under the  "blue  sky" laws of all  states in which the  holders  of
Company  Options  reside,  within 30 business days after the Effective Time, and
Wavetech  shall use its best  efforts  to  maintain  the  effectiveness  of such

                                       6
<PAGE>

registration  statement or  registration  statements for so long as such Assumed
Options remain outstanding. With respect to any Company employee or director who
subsequent  to the Merger will be subject to the  reporting  requirements  under
Section 16(a) of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"),  with respect to the  securities of Wavetech  beneficially  owned by such
person,  Wavetech shall administer the Assumed Options in a manner that complies
with the disinterested  administration requirements of Rule 16b-3 promulgated by
the SEC under the Exchange Act. At or prior to the Effective Time, Wavetech will
reserve a sufficient number of shares of Wavetech Common Stock for issuance upon
exercise of the Assumed Options.

          1.13 WARRANTS.  At the Effective Time, each warrant to purchase shares
of Company Common Stock that is then outstanding (the "Company  Warrants") shall
be assumed by  Wavetech in  accordance  with the terms (as in effect on the date
hereof)  of the  agreement  or  instrument  by which  such  Company  Warrant  is
evidenced.  All rights with respect to Company  Common  Stock under  outstanding
Company Warrants shall thereupon be converted, subject to the provisions hereof,
into rights with respect to Wavetech Common Stock.  From and after the Effective
Time, (i) each Company Warrant assumed by Wavetech  (collectively,  the "Assumed
Warrants") may be exercised solely for shares of Wavetech Common Stock, (ii) the
number of shares of Wavetech  Common Stock subject to each such Assumed  Warrant
shall be equal to the number of shares of Wavetech Common Stock which the holder
of such Assumed Warrant would have received  pursuant to Section 1.6 in exchange
for the shares of Company  Common Stock subject to such Assumed  Warrant if such
Assumed  Warrant had been  exercised  immediately  prior to the Effective  Time,
(iii) the per share exercise  price for the Wavetech  Common Stock issuable upon
exercise of each such  Assumed  Warrant  shall be  determined  by  dividing  the
exercise  price  per share of  Company  Common  Stock  subject  to such  Assumed
Warrant, as in effect immediately prior to the Effective Time, by a fraction the
numerator of which is the number of shares of Wavetech  Common Stock  subject to
such Assumed Warrant immediately after the Effective Time and the denominator of
which is the number of shares of Company  Common  Stock  subject to such Assumed
Warrant  immediately  prior to the  Effective  Time,  and rounding the resulting
exercise  price up to the nearest whole cent, and (iv) all  restrictions  on the
exercise of each such Assumed  Warrant  shall  continue in full force and effect
and the term, exercisability,  limitations, and other provisions of such Company
Warrant shall otherwise  remain  unchanged;  provided,  however,  that each such
Assumed  Warrant  shall,  in  accordance  with its terms,  be subject to further
adjustment as appropriate to reflect any stock split, reverse stock split, stock
dividend,  recapitalization  or other similar  transaction  effected by Wavetech
after the Effective  Time.  The Company and Wavetech  shall take all action that
may be necessary  (under the agreements and  instruments  evidencing the Assumed
Warrants and otherwise) to effectuate the provisions of this Section 1.13.

                                   ARTICLE II

                   REPRESENTATIONS AND WARRANTIES OF WAVETECH

     Wavetech  hereby  represents  and warrants to the Company  that,  except as
otherwise  disclosed in  Wavetech's  Annual Report on Form 10-KSB for the fiscal
year ended August 31, 1997 ("Wavetech's Latest 10-KSB") or Wavetech's  Quarterly
Report on Form 10-Q for the  fiscal  quarter  ended  May 31,  1998  ("Wavetech's
Latest 10-QSB"):

                                       7
<PAGE>

     2.1  ORGANIZATION  AND  QUALIFICATION.   Wavetech  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the state of
Nevada, and has the requisite corporate and other power and authority (including
all licenses,  permits and authorizations) to own and operate its properties and
to carry on its business as now conducted and presently proposed to be conducted
and to perform its obligations under all contracts,  instruments, notes or other
binding commitments to which it is or my become a party or by which it is or its
assets  are  or  may  become  bound.  The  copies  of  Wavetech's   Articles  of
Incorporation  and  Bylaws,  which  have been  furnished  or made  available  by
Wavetech  to the  Company  prior  to the  date of this  Agreement,  reflect  all
amendments  made thereto through the date hereof and are correct and complete in
all  material  respects.  Wavetech is  qualified  to do business  and is in good
standing as a foreign  corporation in every  jurisdiction in which the nature of
its business or its ownership of property  requires it to be qualified and which
the  failure to be so  qualified  would have a  material  adverse  effect on the
financial condition and operations of Wavetech, taken as a whole.

     2.2  AUTHORITY  RELATIVE  TO THIS  AGREEMENT.  Wavetech  has the  requisite
corporate and other power and authority to enter into and perform this Agreement
and to carry out its obligations  hereunder (it being understood that Wavetech's
obligations  hereunder  to effect the Merger is subject to the  approval  of its
shareholders as set forth in this Agreement). The execution and delivery of this
Agreement  by Wavetech  and the  consummation  by  Wavetech of the  transactions
contemplated  hereby  have been duly  authorized  by the Board of  Directors  of
Wavetech  and,  except for the  approval of  Wavetech's  shareholders,  no other
corporate  proceedings  on the part of Wavetech are necessary to authorize  this
Agreement  and such  transactions.  This  Agreement  has been duly  executed and
delivered  by  Wavetech  and  constitutes  a valid  and  binding  obligation  of
Wavetech, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
relating  to the  enforcement  of  creditors'  rights  generally  and by general
principles  of equity.  Except as set forth in the  Wavetech  Disclosure  Letter
attached  hereto as SCHEDULE A, Wavetech is not subject to, or obligated  under,
any provision of (a) its Articles of Incorporation or Bylaws, (b) any agreement,
arrangement  or  understanding,  (c) any  license,  franchise  or  permit or (d)
subject to compliance with any of the statutes referred to in the next sentence,
any law,  regulation,  order,  judgment  or decree,  which  would be breached or
violated,  or in respect of which a right of termination or  acceleration or any
encumbrance on any of its or any of its  Subsidiaries'  assets would be created,
by  its  execution,   delivery  and   performance  of  this  Agreement  and  the
consummation by it of the transactions contemplated hereby, and Wavetech has not
taken  any  action  that  is  inconsistent  in any  material  respect  with  any
resolution adopted by Wavetech, its board of directors or any committee thereof.
The books of account, stock records,  minute books and other records of Wavetech
are  accurate,  up-to-date  and complete in all material  respects and have been
maintained  in  accordance  with  prudent  business  practices.  Other  than  in
connection  with or in  compliance  with the  provisions  of the Nevada Law, the
Securities Act and the Exchange Act, no  authorization,  consent or approval of,
or filing with, any public body,  court or authority is necessary on the part of
Wavetech for the consummation by each of the  transactions  contemplated by this
Agreement.

                                       8
<PAGE>

     2.3  CAPITALIZATION.

          (a)  The  authorized  equity  capitalization  of Wavetech  consists of
50,000,000  shares of  Wavetech  Common  Stock,  17,151,137  shares of which are
issued and outstanding as of the date hereof  (2,858,523 of which will be issued
and outstanding after giving effect to the Reverse Stock Split),  and 10,000,000
shares of preferred  stock, 600 shares of which have been designated as Series A
Convertible  Preferred Stock, $.001 par value ("Wavetech  Preferred Stock"), and
are issued and outstanding. All of the issued and outstanding shares of Wavetech
Common Stock and Wavetech  Preferred  Stock are validly  issued,  fully paid and
nonassessable.  Wavetech's  capital structure as of the date hereof is disclosed
to the Company  under the caption  "Capitalization"  in the Wavetech  Disclosure
Letter.

          (b)  As of the date of this Agreement, Wavetech has reserved 3,700,231
shares of Wavetech Common Stock for issuance under its 1997 Amended and Restated
Stock Incentive Plan, of which vested and unvested options to purchase 2,550,000
shares are outstanding as of the date of this Agreement. The Wavetech Disclosure
Letter,  under the caption  "Wavetech  Options,"  accurately  sets  forth,  with
respect  to each  Wavetech  Option  that is  outstanding  as of the date of this
Agreement:  (i) the name of the holder of such Wavetech  Option;  (ii) the total
number of shares of  Wavetech  Common  Stock that are  subject to such  Wavetech
Option and the number of shares of Wavetech  Common  Stock with respect to which
such Wavetech  Option is immediately  exercisable;  (iii) the date on which such
Wavetech  Option was  granted  and the term of such  Wavetech  Option;  (iv) the
vesting schedule for such Wavetech  Option;  (v) the exercise price per share of
Wavetech Common Stock purchasable  under such Wavetech Option;  and (vi) whether
such Wavetech Option has been designated an "incentive  stock option" as defined
in Section 422 of the Code. The Wavetech  Disclosure  Letter,  under the caption
"Wavetech  Warrants,"  accurately  sets  forth,  with  respect to each  Wavetech
Warrant that is  outstanding as of the date of this  Agreement:  (i) the name of
the holder of such Wavetech Warrant; (ii) the total number of shares of Wavetech
Common Stock that are subject to such Wavetech Warrant;  (iii) the date on which
such  Wavetech  Warrant  was granted and the  expiration  date of such  Wavetech
Warrant;  (iv) the exercise price per share of Wavetech  Common Stock subject to
such Wavetech Warrant; and (v) a description of any registration or other rights
granted to the holder of such Wavetech Warrant.

          (c)  Except as  specifically  referred to in  Sections  2.3(a) and (b)
above,  or as set forth in the  Wavetech  Disclosure  Letter,  there is no:  (i)
outstanding  subscription,  option,  call,  warrant  or  right  (whether  or not
currently  exercisable)  to  acquire  any shares of the  capital  stock or other
securities of Wavetech; (ii) outstanding security, instrument or obligation that
is or may become  convertible into or exchangeable for any shares of the capital
stock or other  securities of Wavetech;  (iii) contract or agreement under which
Wavetech is or may become obligated to sell or otherwise issue any shares or its
capital stock or any other  securities;  or (iv) condition or circumstance  that
may give rise to or provide a basis for the  assertion  of a claim by any person
or entity to the effect  that such  person or entity is  entitled  to acquire or
receive any shares of capital stock or other securities of Wavetech.

          (d)  All   outstanding   shares  of  Wavetech  Common  Stock  and  all
outstanding  Wavetech Options and Wavetech Warrants have been issued and granted

                                       9
<PAGE>

in compliance with (i) all applicable  securities laws and other applicable laws
and regulations, and (ii) all requirements set forth in applicable contracts and
agreements.

          (e)  Except as set forth in the Wavetech  Disclosure  Letter under the
caption  "Acquisition of Shares,"  Wavetech has never  repurchased,  redeemed or
otherwise  reacquired  shares of capital stock or other  securities of Wavetech.
All securities so reacquired by Wavetech were  reacquired in compliance with (i)
the applicable  provisions of the Nevada Law and all other  applicable  laws and
regulations,  and (ii) all requirements set forth in applicable restricted stock
purchase agreements and other applicable contracts and agreements.

          (f)  Except as set forth in the Wavetech  Disclosure  Letter under the
caption  "Registration  Rights,"  the  Company  is not under any  obligation  to
register under the Securities Act any of its presently outstanding securities or
any securities  that may be subsequently  issued,  and no person or entity holds
any right to participate in new issuances of securities by Wavetech.

          (g)  Except as set forth in the Wavetech  Disclosure  Letter under the
caption "Agreements  Relating to Wavetech Common Stock," Wavetech is not a party
to or obligated under any agreement, arrangement or understanding, contingent or
otherwise,  (i) involving the repurchase or redemption of any amount of Wavetech
Common Stock,  (ii)  requiring  Wavetech to issue any amount of Wavetech  Common
Stock to any person at any time, or (iii) contemplating the issuance at any time
of shares of Wavetech  Common  Stock or other  consideration  to any person as a
guarantee by Wavetech of a minimum market price for Wavetech Common Stock.

          (h)  Except as set forth in the Wavetech  Disclosure  Letter under the
caption  "Derivative  Securities  Not Effected by the Reverse Stock Split",  all
options,  warrants,  preferred  stock and  other  rights  to  acquire  shares of
Wavetech Common Stock shall,  immediately following  effectuation of the Reverse
Stock Split,  represent an option,  warrant,  preferred  stock or other right to
acquire  one-sixth  the  number of  shares  of  Wavetech  Common  Stock  covered
immediately  prior to the  Reverse  Stock Split  (except as may be adjusted  for
fractional shares).

     2.4  SEC FILINGS.  Wavetech has  heretofore  delivered or made available to
the Company copies of Wavetech's (a) Latest 10-KSB,  (b) Latest 10-QSB,  and (c)
all  other  reports,  registrations  statements  and  other  documents  filed by
Wavetech  with the SEC since January 1, 1995, in each case as filed with the SEC
(collectively,  the "Wavetech SEC Filings"),  and Wavetech has  heretofore  made
available to the Company all other  reports,  registration  statements and other
documents  filed  by  Wavetech  with  the  SEC  under  the  Exchange  Act or the
Securities Act since Wavetech's  inception.  Except as set forth in the Wavetech
Disclosure Letter, since January 1, 1995, Wavetech has timely filed all reports,
registration  statements and other  documents  required to be filed with the SEC
under the rules and  regulations of the SEC, and all such reports,  registration
statements and other documents  complied as to form with the requirements of the
Securities  Act or the Exchange Act, as the case may be. As of their  respective
dates,  the  reports,   statements  and  other  documents  referred  to  in  the
immediately  preceding sentence did not contain any untrue statement of material

                                       10
<PAGE>

fact or omit to state a material fact required to be stated therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

     2.5 FINANCIAL  STATEMENTS.  The audited financial  statements and unaudited
interim  financial  statements  of Wavetech  and its  Subsidiaries  included (or
incorporated  by  reference)  in the Wavetech SEC Filings have been  prepared in
accordance with generally accepted accounting principles applied on a consistent
basis  during the  periods  involved  (except as may be  indicated  in the notes
thereto),  are accurate and complete in all material respects and fairly present
the consolidated  financial  position of Wavetech and its Subsidiaries as of the
dates thereof and the  consolidated  results of their operations and the changes
in their consolidated financial position for the periods then ended, in the case
of  the  unaudited  interim  financial  statements  subject  to  year-end  audit
adjustments  which will not,  individually  or in the aggregate,  be material in
magnitude.  Such unaudited interim financial  statements reflect all adjustments
necessary  to present a fair  statement  of the results for the interim  periods
presented.

     2.6  SUBSIDIARIES.

          (a)  Except  as set  forth  under the  caption  "Subsidiaries"  in the
Wavetech  Disclosure Letter,  Wavetech does not own,  beneficially or otherwise,
any  stock  or  other  equity  interest,  partnership  interest,  joint  venture
interest, or any other security issued by any other corporation, organization or
entity,  and  Wavetech  has not agreed and is not  obligated  to make any future
investment in or capital  contribution to any such corporation,  organization or
entity.  Except as set forth under the caption  "Subsidiaries"  in the  Wavetech
Disclosure  Letter,  Wavetech owns all of the outstanding  capital stock of each
Subsidiary, free and clear of all liens, charges and encumbrances, and there are
no subscription rights,  warrants,  options,  conversion rights or agreements of
any kind  outstanding  to  purchase or  otherwise  acquire any shares of capital
stock of any Subsidiary or any securities or obligations of any kind convertible
into or exchangeable for any such shares of capital stock.  Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation,  and has the requisite corporate and other
power  and  authority  (including  all  authorizations,  licenses  and  permits)
necessary to own and operate its  properties and to carry on its business as now
conducted  and  presently  proposed to be  conducted.  The copies of the charter
documents and bylaws of each Subsidiary which have been furnished by Wavetech to
the Company  prior to the date of this  Agreement  reflect all  amendments  made
thereto through the date hereof and are correct and complete. Each Subsidiary is
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions  in which the nature of its business or its  ownership of property
requires it to be qualified.

          (b)  For purposes of this Article II, the term "Subsidiary"  means any
corporation of which  securities  having a majority of the ordinary voting power
in  electing  directors  are,  at the time of  determination,  owned by Wavetech
directly or through another Subsidiary.

     2.7  ABSENCE  OF  UNDISCLOSED   LIABILITIES.   Neither   Wavetech  nor  any
Subsidiary  has any  obligations  or  liabilities  (whether  accrued,  absolute,

                                       11
<PAGE>

contingent,  unliquidated  or  otherwise,  whether  due  or to  become  due  and
regardless of when  asserted)  arising out of  transactions  heretofore  entered
into, or any action or inaction, or any state of facts existing, including taxes
with  respect  to or based upon  transactions  or events  heretofore  occurring,
except (a) obligations under contracts or commitments  described in the Wavetech
Disclosure  Letter  under  the  caption  "Contracts,"  or  under  contracts  and
commitments  which  are  not  required  to  be  disclosed  thereunder  (but  not
liabilities  for breaches  thereof),  (b)  liabilities  reflected on the balance
sheet included in Wavetech's  Latest 10-QSB,  (c) liabilities  which have arisen
after the date of the balance sheet included in Wavetech's  Latest 10-QSB in the
ordinary course of business (none of which is a material uninsured liability for
breach of contract,  breach of warranty, tort, infringement,  claim or lawsuit),
and (d) liabilities otherwise disclosed in the Wavetech Disclosure Letter.

     2.8  NO  MATERIAL  ADVERSE  CHANGES.  Except as set forth under the caption
"Adverse Changes" in the Disclosure  Letter,  since May 31, 1998, there has been
no material adverse change, and no event has occurred that will or that would be
reasonably  be  expected  to  result  in  a  material  adverse  change,  in  the
consolidated assets, financial condition, operating results, customer, employee,
supplier or franchise relations,  business condition or prospects,  or financing
arrangements  of Wavetech and its  Subsidiaries,  taken as a whole.  Each of the
parties to this Agreement  hereby  acknowledge  and agree that the de-listing of
Wavetech  Common  Stock by the Nasdaq  SmallCap  Market  shall not  constitute a
Material Adverse Change for purposes of this Agreement.

     2.9  ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth under the caption
"Developments" in the Wavetech  Disclosure Letter,  since May 31, 1998, Wavetech
has not and, since the date of acquisition by Wavetech, each Subsidiary has not:

          (a)  redeemed or purchased,  directly or indirectly, any shares of its
capital  stock,  or  declared,  accrued,  set  aside  or paid any  dividends  or
distributions with respect to any shares of its capital stock;

          (b)  other than upon the exercise of outstanding  warrants or options,
issued or sold any of its  equity  securities,  securities  convertible  into or
exchangeable  for its equity  securities,  warrants,  options or other rights to
acquire  its  equity  securities,  or its bonds or other  securities;  PROVIDED,
HOWEVER,  that the  Company  acknowledges  and agrees  that the  issuance of the
Wavetech  Warrants and the underlying  Warrant Shares as contemplated by Section
1.6(c) shall not constitute a breach of this paragraph (b);

          (c)  borrowed any amount or incurred,  guaranteed or become subject to
any material  liability,  except  current  liabilities  incurred in the ordinary
course of business;

          (d)  discharged or satisfied any material lien or  encumbrance or paid
any  material  liability,  other than current  liabilities  paid in the ordinary
course of business;

          (e)  mortgaged,  pledged or subjected  to, or  otherwise  permitted to
become subject to, any lien, charge or other  encumbrance,  any of the assets of

                                       12
<PAGE>

Wavetech or any Subsidiary with a fair market value in excess of $50,000, except
liens for current property taxes not yet due and payable;

          (f)  sold,  assigned  or  transferred  (including  without  limitation
transfers  to any  employees,  shareholders  or  affiliates  of  Wavetech or any
Subsidiary) any tangible assets, except for fair value in the ordinary course of
business, or canceled any debts or claims;

          (g)  sold,  assigned  or  transferred  (including  without  limitation
transfers  to any  employees,  shareholders  or  affiliates  of  Wavetech or any
Subsidiary) any patents,  trademarks,  trade names, copyrights, trade secrets or
other  intangible  assets,  except  for fair  value in the  ordinary  course  of
business,  or disclosed any proprietary  confidential  information to any person
other  than  the  Company  or such  persons  who have  agreed  to  maintain  the
confidentiality of such information;

          (h)  suffered any extraordinary  loss or waived any rights of material
value, whether or not in the ordinary course of business or consistent with past
practice;

          (i)  taken any  other  action or  entered  into any other  transaction
other than in the ordinary course of business and in accordance with past custom
and practice,  or entered into any  transaction  with any Insider (as defined in
Section 2.21);

          (j)  suffered any material  theft,  damage,  destruction or loss of or
to, or any material interruption in the use of, any property or properties owned
or used by it, whether or not covered by insurance;

          (k)  made or  granted  any bonus or any wage,  salary or  compensation
increase,  or made or granted  any  increase  in any  employee  benefit  plan or
arrangement,  or amended or  terminated  any existing  employee  benefit plan or
arrangement  or adopted  any new  employee  benefit  plan or  arrangement,  with
respect to any  director,  officer or  consultant  of Wavetech or, except in the
ordinary course of Wavetech's business and consistent with Wavetech's historical
compensation practices, any other employee or group of employees;

          (l)  amended or waived  any of its  rights  under,  or  permitted  the
acceleration  of vesting under,  (i) any provision of its Stock Plan or (ii) any
provision  of any  agreement  evidencing  any  outstanding  Wavetech  Option  or
Wavetech Warrant;

          (m)  made any capital expenditures or commitments therefor (other than
any such expenditures or commitments made in the ordinary course of business for
leasehold  improvements  at, or the  furnishing or equipping of, the  facilities
operated by Wavetech as of the date of this  Agreement) that aggregate in excess
of $60,000;

          (n)  made any loans or advances to, or guarantees  for the benefit of,
any persons that aggregate in excess of $50,000;

                                       13
<PAGE>

          (o)  effected  or  been  a  party  to  any  acquisition   transaction,
recapitalization,  reclassification of shares,  stock split, reverse stock split
or similar  transaction  (except  that  nothing  shall  prohibit  Wavetech  from
effecting the Reserve Stock Split as contemplated by Section 1.5 hereof;

          (p)  formed any  subsidiary  or acquired any equity  interest or other
interest in any other entity;

          (q)  written off as  uncollectible,  or  established  any reserve with
respect to, any account receivable or other indebtedness in excess of a total of
$50,000;

          (r)  changed any of its methods of accounting or accounting  practices
in any material respect;

          (s)  made any tax election;

          (t)  commenced or settled any legal proceeding;

          (u)  waived or agreed to waive any  applicable  statute of limitations
or any  similar  statutory  or  judicial  doctrine  benefiting  Wavetech  or any
Subsidiary;

          (v)  entered into any material transaction or taken any other material
action  outside the ordinary  course of business or  inconsistent  with its past
practices; or

          (w)  made charitable  contributions  or pledges which in the aggregate
exceed $10,000.

     2.10 TITLE TO PROPERTIES.

          (a)  Wavetech  or one of the  Subsidiaries  owns  good and  marketable
title to each the  tangible  properties  and  tangible  assets  reflected on the
balance sheet  included in Company's  Latest  10-QSB or acquired  since the date
thereof, free and clear of all liens and encumbrances,  except for (A) liens for
current  taxes not yet due and  payable,  (B) liens set forth  under the caption
"Real  Estate"  in  the  Wavetech  Disclosure  Letter,  (C)  the  equipment  and
properties  subject to the leases set forth  under the  caption  "Leases" in the
Wavetech  Disclosure Letter,  (D) liens securing  indebtedness of Wavetech under
existing  bank credit  facilities  disclosed in the Wavetech SEC Filings and (E)
assets  disposed of since the date of the balance  sheet  included in Wavetech's
Latest 10-QSB in the ordinary course of business consistent with past practices.

          (b)  (i) the real estate  described under the caption "Real Estate" in
the  Wavetech  Disclosure  Letter and the  demised  leases  described  under the
caption "Leases" in the Wavetech  Disclosure Letter  constitutes all of the real
estate used or occupied by the Company and the Subsidiaries  (the "Real Estate")
and (ii) the Real Estate has access,  sufficient  for the conduct of  Wavetech's

                                       14
<PAGE>

and the Subsidiaries' businesses as now conducted or as presently proposed to be
conducted, to public roads and to all utilities, including electricity, sanitary
and storm sewer,  potable water,  natural gas and other  utilities,  used in the
operations of Wavetech and the Subsidiaries.

          (c)  The leases  described under the caption  "Leases" in the Wavetech
Disclosure  Letter  are in full force and  effect,  and  Wavetech  or one of the
Subsidiaries,  as the case may be, has a valid and existing  leasehold  interest
under each such lease for the term set forth therein.  Wavetech has delivered to
the Company  complete and accurate copies of each of the leases  described under
such caption and none of such leases has been modified in any material  respect,
except to the  extent  that  such  modifications  are  disclosed  by the  copies
delivered to the Company. Neither Wavetech nor any Subsidiary is in default, and
no  circumstances  exist which could result in such  default,  under any of such
leases;  nor, to the best knowledge of Wavetech or any Subsidiary,  is any other
party to any of such leases in default.

          (d)  All of the  buildings,  machinery,  equipment and other  tangible
assets necessary for the conduct of Wavetech's and the Subsidiaries'  businesses
are in good  condition  and  repair  (except  where  the  failure  to be in such
condition and repair, either individually or in the aggregate,  would not have a
material  adverse  effect on Wavetech or any  Subsidiary and except for ordinary
wear and tear), and are usable in the ordinary course of business.  Wavetech and
the  Subsidiaries  own, or lease under valid leases  which  afford  peaceful and
undisturbed  possession  of the  subject  matter of the  lease,  all  buildings,
machinery,  equipment  and other  tangible  assets  necessary for the conduct of
their businesses.

          (e)  Neither  Wavetech nor any of the  Subsidiaries is in violation of
any applicable zoning ordinance or other law, regulation or requirement relating
to the  operation  of any  properties  used in the  operation  of its  business,
including   without   limitation   applicable   environmental   protection   and
occupational  health and safety laws and  regulations,  and neither Wavetech nor
any  Subsidiary  has  received  any  notice  of any  such  violation,  or of the
existence of any condemnation proceeding with respect to any properties owned or
leased by Wavetech or any Subsidiary.

     2.11 ACCOUNTS  RECEIVABLE.  Wavetech's  and  the  Subsidiaries'  notes  and
accounts  receivable recorded on the balance sheet included in Wavetech's Latest
10-QSB and those arising since the date thereof are valid  receivables  (subject
to a  reasonable  allowance  for  doubtful  accounts as set forth in  Wavetech's
Latest 10-QSB) arising from bona fide transactions  entered into in the ordinary
course of business and are current and  collectible  in full in accordance  with
their terms, subject to no valid counterclaims or setoffs.

     2.12 INVENTORIES.  Except as set forth under the caption "Inventory" in the
Disclosure Letter, the inventories of Wavetech and the Subsidiaries  recorded on
the balance  sheet  included in  Wavetech's  Latest  10-QSB,  and the  inventory
created or purchased since the date thereof,  consists of a quantity and quality
usable and salable in the ordinary  course of business,  is not  slow-moving  as
determined  in  accordance  with  past  practices,   obsolete  or  damaged,   is
merchantable and fit for its particular use, and is not defective.

                                       15
<PAGE>

     2.13 TAX MATTERS.  Except as set forth under the caption  "Tax  Matters" in
the Wavetech Disclosure Letter,

          (a)  Wavetech and the Subsidiaries  have timely filed all returns that
are required to be filed by them with respect to any taxes, and all such returns
have been  accurately and completely  prepared in compliance with all applicable
legal  requirements  and are  true,  correct,  and  complete;  all taxes due and
payable by Wavetech  and the  Subsidiaries  have been paid;  Wavetech's  and the
Subsidiaries'  provisions  for taxes on the balance sheet included in Wavetech's
Latest 10-KSB are  sufficient for all accrued and unpaid taxes as of the date of
such balance sheet;  Wavetech and the  Subsidiaries  have paid all taxes due and
payable by them or which they are  obligated to withhold  from amounts  owing to
any employee,  creditor, or third party; neither Wavetech nor any Subsidiary has
waived any statute of  limitations  in respect of taxes relating to any of their
businesses or agreed to any  extension of time with respect to a tax  assessment
or  deficiency  relating  to any of  their  businesses;  the  assessment  of any
additional taxes relating to their businesses for periods for which returns have
been  filed is not  expected,  and no audit of  Wavetech  or any  Subsidiary  is
ongoing,  threatened,  or anticipated;  and there are no unresolved questions or
claims concerning the tax liability of Wavetech or any Subsidiary;

          (b)  All material  elections with respect to taxes of Wavetech and any
Subsidiary are set forth in the "Tax Matters" section of the Wavetech Disclosure
Letter;  neither Wavetech nor any Subsidiary (i) has consented at any time under
Section 341(f) of the Code to have the provisions of Section 341(f) apply to any
disposition  of assets of Wavetech  or any  Subsidiary,  (ii) has agreed,  or is
required, to make any adjustment under Section 481(a) of the Code by reason of a
change in  accounting  method or  otherwise  that will affect the  liability  of
Wavetech  or any  Subsidiary  for  taxes,  (iii)  has  made an  election,  or is
required,  to treat any asset of Wavetech or any  Subsidiary as owned by another
person pursuant to the provisions of Section 168(f) of the Code or as tax-exempt
bond financed  property or tax-exempt use property within the meaning of Section
168 of the Code, or (iv) has made any of the foregoing  elections or consents or
is required to apply any of the  foregoing  rules  under any  comparable  state,
county, local, or foreign tax provision.

          (c)  Neither  Wavetech  nor  any  Subsidiary  is or has  ever  been an
includible  corporation  in an  affiliated  group of  corporations,  within  the
meaning of Section 1504 of the Code, other than in the affiliated group of which
Wavetech is the common Wavetech corporation;

          (d)  Neither  Wavetech  nor any  Subsidiary  is now or has ever been a
party to any tax-sharing agreements or similar arrangements;

          (e)  Neither  Wavetech nor any Subsidiary has made or become obligated
to  make,  or  will,  as a  result  of  any  event  connected  with  the  Merger
contemplated  herein,  make or become  obligated to make, any "excess  parachute
payment," as defined in Section 280G of the Code  (without  regard to subsection
(b)(4) thereof);

          (f)  There are no liens for taxes  (other than for current  taxes that
are not yet due and  payable  or are being  contested  in good  faith)  upon the
assets of Wavetech or any Subsidiary;

                                       16
<PAGE>

          (g)  All  joint  ventures,  partnerships,  or  other  arrangements  or
contracts  to which  Wavetech  or any  Subsidiary  is a party and that  could be
treated as a partnership for federal income tax purposes are set forth under the
caption "Tax Matters" in the Wavetech Disclosure Letter;

          (h)  There  are no  outstanding  balances  of  deferred  gain  or loss
accounts   related  to  deferred   intercompany   transactions   or  outstanding
intercompany  items related to intercompany  transactions  (as each such term is
defined  in  Treas.  Reg.  Section  1.1502-13,  as  such  regulation  is or  was
applicable to Wavetech and the  Subsidiaries  in each relevant  taxable  period)
between Wavetech and any Subsidiary or between any Subsidiaries; and

          (i)  There  exists no excess loss  account (as such item is defined in
Treas. Reg. Section  1.1502-19) with respect to the capital stock of Wavetech or
any Subsidiary.

For  purposes  of this  Agreement,  the terms "tax" and  "taxes"  shall  include
income, gross receipts,  excise, real and personal property,  sales,  franchise,
employment,  and other taxes  imposed by any federal,  foreign,  state,  county,
municipal, local, or other governmental agency, including interest and penalties
relating to taxes and assessments in the nature of taxes.

     2.14 CONTRACTS AND COMMITMENTS.

          (a)  Except as set forth under the caption "Contracts" in the Wavetech
Disclosure  Letter,  neither  Wavetech nor any Subsidiary is a party to any: (i)
collective  bargaining  agreement or contract with any labor union;  (ii) bonus,
pension,  profit  sharing,  retirement,  or other form of deferred  compensation
plan;  (iii)  hospitalization  insurance or similar  plan or  practice,  whether
formal or informal; (iv) contract for the employment of any officer,  individual
employee,  or other  person on a full-time  or  consulting  basis or relative to
severance pay for any such person;  (v)  agreement or indenture  relating to the
borrowing of money in excess of $100,000 or to mortgaging, pledging or otherwise
placing a lien on any of the assets of Wavetech or any Subsidiary; (vi) guaranty
of any obligation for borrowed money or otherwise,  other than endorsements made
for collection; (vii) lease or agreement under which it is lessor of, or permits
any third party to hold or  operate,  any  property,  real or  personal,  for an
annual  rental  in excess  of  $100,000;  (viii)  contract  or group of  related
contracts  with the same party for the purchase of products or  services,  under
which the undelivered balance of such products and services has a purchase price
in excess of $50,000;  (ix) contract or group of related contracts with the same
party for the sale of products or services under which the  undelivered  balance
of such  products or services has a sales price in excess of $50,000;  (x) other
contract or group of related  contracts  with the same party  continuing  over a
period  of more  than six  months  from the date or dates  thereof,  either  not
terminable by it on 30 days' or less notice  without  penalty or involving  more
than $50,000;  (xi) contract which  prohibits  either Wavetech or any Subsidiary
from freely engaging in business anywhere in the world;  (xii) contract relating
to the distribution of Wavetech's or any Subsidiary's products; (xiii) franchise
agreement;  (xiv) contract,  agreement or understanding with any shareholder who
beneficially  owns 5% or more of  Wavetech  Common  Stock or with  any  officer,
director or employee  (other  than for  employment  on  customary  terms);  (xv)

                                       17
<PAGE>

license agreement or agreement providing for the payment or receipt of royalties
or other  compensation  by Wavetech or any  Subsidiary  in  connection  with the
proprietary rights listed under the caption "Proprietary Rights" in the Wavetech
Disclosure  Letter;  or (xvi)  other  agreement  material  to  Wavetec  s or any
Subsidiary's business or not entered into in the ordinary course of business.

          (b)  Except as specifically disclosed under the caption "Contracts" in
the Wavetech  Disclosure  Letter,  (i) no contract or commitment  required to be
disclosed  under such caption has been  breached or canceled by the other party;
(ii) since the date of the balance sheet  included in Wavetech's  Latest 10-QSB,
no customer or supplier has indicated  that it will stop or decrease the rate of
business  done with  Wavetech  or any  Subsidiary,  except  for  changes  in the
ordinary course of Wavetech' and the  Subsidiaries'  businesses;  (iii) Wavetech
and the Subsidiaries have performed all obligations  required to be performed by
them in connection  with the contracts or  commitments  required to be disclosed
under such  caption  and are not in  receipt  of any claim of default  under any
contract or commitment required to be disclosed under such caption; (iv) neither
Wavetech  nor any  Subsidiary  has any present  expectation  or intention of not
fully  performing  any  obligation  pursuant to any  contract or  commitment  or
commitment  set forth  under such  caption;  and (v)  neither  Wavetech  nor any
Subsidiary  has any knowledge of any breach or  anticipated  breach by any other
party to any contract or commitment set forth under such caption.

          (c)  Prior to the date of this Agreement,  Wavetech has made available
to the Company a true and correct copy of each written  contract or  commitment,
and a written description of each oral contract or commitment, referred to under
the caption  "Contracts" in the Wavetech  Disclosure  Letter,  together with all
amendments, waivers or other changes thereto.

     2.15 PROPRIETARY RIGHTS. Except as set forth under the caption "Proprietary
Rights"  in  the  Wavetech  Disclosure  Letter,  there  are no  patents,  patent
applications,   trademarks,   service  marks,  trade  names,   corporate  names,
copyrights,  trade secrets or other proprietary  rights owned by Wavetech or any
Subsidiary  or  necessary  to the  conduct  of  Wavetech's  or any  Subsidiary's
businesses  as now  conducted.  Wavetech or a Subsidiary  owns and possesses all
rights,  titles and  interest,  or a valid  license,  in and to the  proprietary
rights set forth under such caption.  The Wavetech  Disclosure  Letter describes
under such  caption  all  proprietary  rights  that have been  licensed to third
parties and all  proprietary  rights  which are licensed  from third  parties by
Wavetech  or any  Subsidiary.  Wavetech  and the  Subsidiaries  have  taken  all
necessary action to protect the proprietary rights set forth under such caption.
Neither  Wavetech nor any Subsidiary has received any notice of, nor is it aware
of any facts which indicate a likelihood of, any infringement, misappropriation,
or conflict  from any third party with respect to the  proprietary  rights which
are  listed  under  such  caption;  neither  Wavetech  nor  any  Subsidiary  has
infringed,  misappropriated or otherwise  conflicted with any proprietary rights
of any third parties,  nor is it aware of any infringement,  misappropriation or
conflict  which  will  occur  in the  continued  operation  of  Wavetech  or any
Subsidiary;  and no claim by any third  party  contesting  the  validity  of any
proprietary  rights  listed  under  such  caption  has been made,  is  currently
outstanding,  or to  the  best  knowledge  of  Wavetech  or  any  Subsidiary  is
threatened.

                                       18
<PAGE>

     2.16 LITIGATION.  Except as set forth under the caption "Litigation" in the
Wavetech Disclosure Letter, there are no actions,  suits,  claims,  proceedings,
orders  or  investigations   pending  or  threatened  against  Wavetech  or  any
Subsidiary or otherwise affecting any of their respective  properties or assets,
or that  challenges  or may have the  effect  of  preventing,  delaying,  making
illegal  or  otherwise  interfering  with the  Merger or any other  transactions
contemplated  by  this  Agreement,  at law or in  equity,  or  before  or by any
federal, state, municipal or other governmental department,  commission,  board,
bureau, agency or instrumentality, domestic or foreign, or that could reasonably
be  expected  to have a material  adverse  effect on the  business,  properties,
assets, condition (financial or otherwise) or business prospects of Wavetech and
there is no basis known to Wavetech or any  Subsidiary for any of the foregoing.
There is no order, writ, injunction, judgment or decree:

          (a)  to which Wavetech or any Subsidiary or any of the assets owned or
used by Wavetech or any Subsidiary is subject, or

          (b)  to which any officer or employee of Wavetech or any Subsidiary is
subject that  prohibits  such officer or employee from engaging in or continuing
any conduct,  activity or practice  relating to Wavetech's  or any  Subsidiary's
business.  Except as set forth  under such  caption,  neither  Wavetech  nor any
Subsidiary  has received any opinion or legal advice to the effect that Wavetech
or any  Subsidiary  is  exposed  from a legal  standpoint  to any  liability  or
disadvantage which may be material to it or its prospects.

     2.17 BROKERAGE.   Except  as  set  forth  under  the   caption   "Brokerage
Agreements,"  there  are  no  claims  for  investment  banking  fees,  brokerage
commissions,  finders'  fees or  similar  compensation  in  connection  with the
transactions  contemplated  by  this  Agreement  based  on  any  arrangement  or
agreement  made by or on behalf of  Wavetech  or any  Subsidiary.  In  addition,
Wavetech currently intends,  however,  to enter into an agreement or arrangement
with a qualified  investment  banking or financial  advisory firm  regarding the
study of and the  rendering  of an opinion  with  respect to the fairness of the
Merger.

     2.18 EMPLOYMENT  MATTERS.  To  the  best  knowledge  of  Wavetech  and  the
Subsidiaries,  (i) no key executive employee of Wavetech or any Subsidiary,  and
no group of Wavetech's or any subsidiary's employees, has any plans to terminate
his or its employment, (ii) Wavetech and the Subsidiaries have complied with all
laws relating to the employment of labor,  including provisions thereof relating
to wages,  hours,  equal opportunity,  collective  bargaining and the payment of
social security and other taxes, and (iii) Wavetech and the Subsidiaries have no
material  labor  relations  problems  pending  and  their  labor  relations  are
satisfactory.

     2.19 EMPLOYEE BENEFIT PLANS. With respect to the employee benefits provided
to employees and former employees of Wavetech and the Subsidiaries:

          (a)  Wavetech  and  the  Subsidiaries   currently  maintain  only  the
employee  pension  benefit  plans,  as defined in Section  3(2) of the  Employee
Retirement  Income  Security Act of 1974,  as amended  ("ERISA"),  as are listed
under the caption "Employee Benefits" in the Disclosure Letter.

                                       19
<PAGE>

          (b)  Wavetech  and  the  Subsidiaries   currently  maintain  only  the
employee  welfare benefit plans, as defined in Section 3(1) of ERISA  (including
but not limited to, life insurance, medical, hospitalization, holiday, vacation,
disability  dental and vision  plans) as are listed under the caption  "Employee
Benefits" in the Wavetech Disclosure Letter (the "Welfare Plans").

          (c)  Wavetech and the Subsidiaries currently maintain, or have entered
into, only the compensation programs and/or employment arrangements,  (including
but not limited to, incentive compensation,  bonus, severance,  sick pay, salary
continuation, deferred compensation,  supplemental executive compensation plans,
and  employment  and  consulting  agreements)  as are listed  under the  caption
"Employee  Benefits"  in  the  Wavetech  Disclosure  Letter  (the  "Compensation
Programs").

          (d)  Wavetech and the  Subsidiaries  do not  contribute,  and have not
contributed within the last five years, to any multiemployer plan, as defined by
Section 3(37) of ERISA.

          (e)  Each Pension Plan and Welfare Plan is in  compliance  with ERISA;
each Pension Plan which is intended to be qualified  under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified or a
request for such  determination  has been timely filed with the Internal Revenue
Service (and to Wavetech's best knowledge  nothing has occurred between the date
of the last  such  determination  and the  Closing  Date to cause  the  Internal
Revenue Service to revoke such determination).

          (f)  Any  Pension  Plan or any  Welfare  Plan  designed to satisfy the
requirements of Section 125, Section 401,  Section 401(k),  Section 409, Section
501(c)(9), Section 4975(e)(7),  and/or Section 4980B of the Code, satisfies such
section.

          (g)  No  accumulated  funding   deficiency,   as  defined  in  Section
302(a)(2) of ERISA,  exists  (whether or not waived) with respect to any Pension
Plan as of the date hereof.

          (h)  All amounts required to be paid by Wavetech and or any Subsidiary
with respect to each Pension Plan,  Welfare Plan and Compensation  Program on or
before the Closing Date have been paid.

          (i)  None of the Pension Plans or Wavetech or any party in interest or
disqualified person has engaged in any non-exempt  "prohibited  transactions" as
defined in Section 406 of ERISA or Section 4975 of the Code.

          (j)  Except as disclosed under the caption "Employee  Benefits" in the
Wavetech  Disclosure  Letter, no Pension Plan or Welfare Plan provides benefits,
including without limitation death or medical benefits (whether or not insured),
with respect to current or former  employees  beyond their  retirement  or other
termination of service other than (i) coverage  mandated by applicable law, (ii)

                                       20
<PAGE>

retirement  benefits under a Pension Plan,  (iii) death benefits under a Welfare
Plan,  (iv)  deferred  compensation  accrued  on  the  books  of  Wavetech  or a
Subsidiary,  or (v)  benefits  the full cost of which is borne by the current or
former employee (or his or her beneficiary).

          (k)  No "leased  employee," as that term is defined in Section  414(n)
of the Code, performs services for Wavetech or any Subsidiary.

          (l)  No  liability  has  been,  or is  expected  by  Wavetech  or  any
Subsidiary  to be,  incurred by Wavetech or a Subsidiary  under  Section 4062 of
ERISA with respect to any Pension Plan.

          (m)  No  reportable  event within the meaning of Title IV of ERISA has
occurred with respect to any Pension Plan.

          (n)  Wavetech  has  furnished  the Company  with  correct and complete
copies of each Pension Plan,  Welfare Plan, and Compensation  Program,  together
with any trust agreements,  summary plan  descriptions,  employee  informational
material, financial statements relating thereto and participant listings.

     2.20 INSURANCE.   The  Wavetech   Disclosure  Letter,   under  the  caption
"Insurance,"  lists and briefly  describes  (including  name of insurer,  agent,
coverage  and  expiration  date) each  insurance  policy  maintained  by, at the
expense  of or for the  benefit  of  Wavetech  or any of the  Subsidiaries  with
respect to its  properties  and assets and  describes  any material  claims made
thereunder.  All of such  insurance  policies  are in full  force and effect and
neither  Wavetech  nor  any  Subsidiary  is  in  default  with  respect  to  its
obligations  under any of such  insurance  policies.  Except as set forth in the
Wavetech Disclosure Letter under the caption  "Insurance,"  Wavetech is the sole
beneficiary  of each such  policy.  The  insurance  coverage of Wavetech and the
Subsidiaries  is customary for  corporations  of similar size engaged in similar
lines of businesses. Wavetech has not received any notice or other communication
regarding  any  actual or  possible  (a)  cancellation  or  invalidation  of any
insurance  policy,  (b) refusal of any  coverage or rejection of any claim under
any  insurance  policy or (c)  material  adjustment  in the  amount of  premiums
payable with respect to any insurance policy.

     2.21 AFFILIATE  TRANSACTIONS.   Except  as  set  forth  under  the  caption
"Affiliate  Transactions"  in the  Wavetech  Disclosure  Letter,  no  officer or
director of Wavetech or any Subsidiary or any member of the immediate  family of
any such  officer or  director,  or any entity in which any of such persons owns
any beneficial  interest (other than a publicly-held  corporation whose stock is
traded on a national securities exchange or in the  over-the-counter  market and
less than 5% of the stock of which is beneficially owned by any of such persons)
(collectively "Insiders"), (a) has any agreement with Wavetech or any Subsidiary
(other than normal  employment  arrangements)  or any interest in any  property,
real,  personal or mixed,  tangible or intangible,  used in or pertaining to the
business  of Wavetech or any  Subsidiary,  (b) has been  indebted to Wavetech in
amounts in excess of $10,000 in the  aggregate at any time,  (c) has at any time
competed,  directly or indirectly,  with Wavetech, or (d) has any claim or right
against Wavetech (other than rights under Wavetech Options and rights to receive
compensation for services performed as an employee of Wavetech). For purposes of

                                       21
<PAGE>

the preceding  sentence,  the members of the  immediate  family of an officer or
director shall consist of the spouse, Wavetech's,  children,  siblings, mothers-
and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law
of such officer or director.

     2.22 SUPPLIERS.   The  Wavetech   Disclosure  Letter,   under  the  caption
"Suppliers," lists the 10 largest suppliers of Wavetech and the Subsidiaries (on
a consolidated  basis) for the fiscal year ended August 31, 1998, and sets forth
opposite the name of each such supplier the total amount of purchases  from such
supplier by Wavetech and the Subsidiaries during such period.

     2.23 OFFICERS AND DIRECTORS; BANK ACCOUNTS. The Wavetech Disclosure Letter,
under the caption  "Officers and Directors," lists all officers and directors of
Wavetech and the Subsidiaries  and, under the caption "Bank Accounts," lists all
of  Wavetech's  and the  Subsidiaries'  accounts at any bank or other  financial
institution (designating each authorized signer).

     2.24 COMPLIANCE WITH LAWS; PERMITS;  CERTAIN OPERATIONS.  Wavetech, each of
the Subsidiaries and their respective officers,  directors, agents and employees
have complied in all respects,  and currently are in compliance in all respects,
with all applicable  laws and regulations of foreign,  federal,  state and local
governments and all agencies thereof which affect the businesses or any owned or
leased  properties of Wavetech and the Subsidiaries and to which Wavetech or any
of the  Subsidiaries  may be  subject,  and no claims  have been  filed  against
Wavetech  or any of the  Subsidiaries  alleging a  violation  of any such law or
regulation,  except as set forth in the  Wavetech  Disclosure  Letter  under the
caption "Compliance." Neither Wavetech nor any Subsidiary has given or agreed to
give any money, gift or similar benefit (other than incidental gifts of articles
of nominal  value,  gifts and prizes awarded  pursuant to  promotional  programs
approved  by   Wavetech's   management   and   non-extraordinary   entertainment
expenditures) to any actual or potential customer, supplier, foreign or domestic
governmental  employee  or any other  person in a  position  to assist or hinder
Wavetech or any of the  Subsidiaries  in connection  with any actual or proposed
transaction.  Wavetech and the Subsidiaries  hold all of the permits,  licenses,
certificates  and other  authorizations  of  foreign,  federal,  state and local
governmental  agencies  required  for the conduct of their  businesses.  Without
limiting the  generality of the foregoing,  neither  Wavetech nor any Subsidiary
has  violated,  or received a notice or charge  asserting  any violation of, the
Occupational Safety and Health Act of 1970 or any other state or federal acts or
laws  (including  rules and  regulations  thereunder)  regulating  or  otherwise
affecting employee health and safety or the environment.

     2.25 DISCLOSURE.

          (a)  Neither this  Agreement  nor any other  agreement  or  instrument
executed in connection with the transactions  contemplated hereby nor any of the
attachments or exhibits hereto nor the Wavetech  Disclosure  Letter contains any
untrue  statement of a material fact or omits a material fact  necessary to make
the statements  contained  herein or therein,  in light of the  circumstances in
which they were made,  not  misleading,  and there is no fact which has not been
disclosed in writing to Wavetech of which any officer or director of Wavetech or

                                       22
<PAGE>

any Subsidiary is aware which materially  affects  adversely or could reasonably
be anticipated to materially affect adversely the business,  including operating
results, assets, customer relations,  employee relations and business prospects,
of Wavetech and the Subsidiaries, taken as a whole.

          (b)  None of the  information  supplied  or to be supplied by Wavetech
for  inclusion  or  incorporation  by  reference  in the Form S-4 and the  Joint
Prospectus/Proxy  Statement will, at the time the S-4 is declared effective,  at
the date the Joint  Prospectus/Proxy  Statement is mailed to the shareholders of
Wavetech  or at the time of the  Wavetech  Shareholders'  Meeting,  contain  any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary to make the  statements  therein (in light of
the circumstances under which they are made) not misleading.

     2.26 NON-CONTRAVENTION;  CONSENTS.  Except as set forth  under the  caption
"Consents"  in the  Wavetech  Disclosure  Letter,  neither  (1)  the  execution,
delivery  or  performance  of  this  Agreement  or any of the  other  agreements
referred to in this Agreement,  nor (2) the consummation of the Merger or any of
the  other  transactions  contemplated  by  this  Agreement,  will  directly  or
indirectly (with or without notice or lapse of time):

          (a)  contravene,  conflict with or result in a violation of (i) any of
the provisions of Wavetech's or any  Subsidiary's  Articles of  Incorporation or
Bylaws,  or (ii)  any  resolution  adopted  by  Wavetech's  or any  Subsidiary's
shareholders, Wavetech's or any Subsidiary's board of directors or any committee
of such board of directors;

          (b)  contravene,  conflict  with or result in a violation  of, or give
any governmental  authority or other person or entity the right to challenge any
of the transactions  contemplated by this Agreement or to exercise any remedy or
obtain any relief under, any legal requirement or any order,  writ,  injunction,
judgment  or decree to which  Wavetech or any  Subsidiary,  or any of the assets
owned or used by Wavetech or any Subsidiary, is subject;

          (c)  contravene,  conflict with or result in a violation of any of the
terms or  requirements  of,  or give any  governmental  authority  the  right to
revoke, withdraw,  suspend, cancel, terminate or modify, any governmental permit
or  authorization  that is held by Wavetech or any  Subsidiary or that otherwise
relates to Wavetech's business or to any of the assets owned or used by Wavetech
or any Subsidiary;

          (d)  contravene,  conflict with or result in a violation or breach of,
or result in a default  under,  any  provision  of any  contract or agreement to
which  Wavetech or any  Subsidiary is a party,  or give any person or entity the
right to (i) declare a default or exercise any remedy under any such contract or
agreement,  (ii)  accelerate the maturity or performance of any such contract or
agreement, or (iii) cancel,  terminate or modify any such contract or agreement;
or

          (e)  result  in the  imposition  or  creation  of any  lien  or  other
encumbrance  upon or with  respect to any asset owned or used by Wavetech or any
Subsidiary  (except  for  minor  liens  that  will  not,  in any  case or in the
aggregate,  materially  detract from the value of the assets subject  thereto or
materially impair the operations of Wavetech).



                                       23
<PAGE>

Except as set forth  under the caption  "Consents"  in the  Wavetech  Disclosure
Letter, Wavetech is not and will not be required to make any filing with or give
any notice to, or to obtain any consent from, any person or entity in connection
with (x) the execution,  delivery or performance of this Agreement or any of the
other agreements  referred to in this Agreement,  or (y) the consummation of the
Merger or any of the other transactions contemplated by this Agreement.

     2.27 STOCKHOLDER VOTE REQUIRED.  To the extent the Wavetech Common Stock is
listed on the Nasdaq SmallCap Market,  the affirmative vote of a majority of the
votes  entitled  to be cast by holders  of the  outstanding  shares of  Wavetech
Common Stock  (voting as a class) are the only votes of the holders of any class
or series of Wavetech's  capital stock  necessary to approve this  Agreement and
the Merger under the rules of the Nasdaq SmallCap  Market.  In addition,  to the
extent the Nevada Revised  Statutes  requires the affirmative vote of a majority
of the votes  entitled  to be cast by holders of the  outstanding  shares of the
Wavetech Common Stock (voting as a class),  are the only votes of the holders of
any class or series of Wavetech's Capital Stock necessary to approve the Merger.

     2.28 BOARD  APPROVAL.  The board of  directors of Wavetech has (i) approved
the Merger and the execution of this Agreement,  (ii) determined that the Merger
is in the best  interests of the  shareholders  of Wavetech and is on terms that
are fair to such  shareholders,  and (iii)  recommended that holders of Wavetech
Common Stock vote in favor of this Agreement and the Merger,  to the extent such
shareholder  approval is required under applicable law or under the rules of the
Nasdaq SmallCap Market.

     2.29 OPINION OF FINANCIAL ADVISOR. Promptly following the execution of this
Agreement,  Wavetech  intends to seek an opinion of its financial  advisor that,
from  a  financial  point  of  view,  the  consideration  to be  offered  to the
shareholders of Wavetech in the Merger contemplated hereby is fair to Wavetech.


                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company  hereby  represents  and warrants to Wavetech  that,  except as
otherwise  disclosed in the Company's  Annual Report on Form 10-K for the fiscal
year  ended  March  31,  1998 (the  "Company's  Latest  10-K") or the  Company's
Quarterly  Report on Form 10-Q for the fiscal  quarter  ended June 30, 1998 (the
"Company's Latest 10-Q"):

     3.1  ORGANIZATION  AND  QUALIFICATION.  The Company is a  corporation  duly
organized,  validly existing and in good standing under the laws of the state of
Colorado,  and has  the  requisite  corporate  and  other  power  and  authority
(including  all  licenses,  permits and  authorizations)  to own and operate its
properties and to carry on its business as now conducted and presently  proposed
to be conducted and to perform its obligations under all contracts, instruments,
notes  or  other  binding  commitments  to which it is or m become a party or by
which it is or its assets are, or may become, bound. The copies of the Company's
Articles of Incorporation and Bylaws which have been furnished by the Company to


                                       24
<PAGE>

Wavetech prior to the date of this Agreement reflect all amendments made thereto
through the date hereof and are correct and  complete.  The Company is qualified
to do  business  and is in good  standing  as a  foreign  corporation  in  every
jurisdiction  in which the nature of its  business or its  ownership of property
requires it to be qualified.

     3.2  AUTHORITY  RELATIVE TO THIS  AGREEMENT.  The Company has the requisite
corporate and other power and authority to enter into and perform this Agreement
and to  carry  out its  obligations  hereunder  (it  being  understood  that the
Company's  obligations hereunder to effect the Merger is subject to the approval
of its shareholders as set forth in Section 3.27). The execution and delivery of
this  Agreement  by the  Company  and the  consummation  by the  Company  of the
transactions  contemplated  hereby  have  been duly  authorized  by the Board of
Directors of the Company and, except for the approval of its shareholders as set
forth in Section 3.27, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement and such transactions.  This Agreement
has been duly executed and delivered by the Company and  constitutes a valid and
binding  obligation of the Company,  enforceable  in accordance  with its terms,
except as the enforceability  thereof may be limited by bankruptcy,  insolvency,
reorganization  or similar laws relating to the enforcement of creditors' rights
generally and by general  principles  of equity.  Except as set forth in the DCI
Disclosure  Letter,  neither the Company nor any of its Subsidiaries (as defined
in Section 3.6(b)) is subject to, or obligated  under,  any provision of (a) its
Certificate  of  Incorporation,  Articles of  Incorporation  or Bylaws,  (b) any
agreement, arrangement or understanding, (c) any license, franchise or permit or
(d)  subject to  compliance  with any of the  statutes  referred  to in the next
sentence,  any law,  regulation,  order,  judgment  or  decree,  which  would be
breached  or  violated,  or in  respect  of  which a  right  of  termination  or
acceleration or any encumbrance on any of its or any of its Subsidiaries' assets
would be created,  by its execution,  delivery and performance of this Agreement
and the  consummation by it of the  transactions  contemplated  hereby,  and the
Company has not taken any action that is  inconsistent  in any material  respect
with  any  resolution  adopted  by the  Company's  shareholders,  its  board  of
directors  or any  committee  of its board of  directors.  The books of account,
stock  records,  minute  books and other  records of the Company  are  accurate,
up-to-date  and complete in all material  respects and have been  maintained  in
accordance with prudent business practices.  Other than in connection with or in
compliance  with the  provisions  of the Colorado  Law and the Exchange  Act, no
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary  on the part of the Company for the  consummation  by the
Company of the transactions contemplated by this Agreement.

     3.3  CAPITALIZATION.

          (a)  The authorized  equity  capitalization of the Company consists of
500,000,000  shares of  Company  Common  Stock,  21,677,802  shares of which are
issued and outstanding as of the date hereof,  and 5,000,000 shares of preferred
stock,  3,000 of which are issued and outstanding as of the date hereof.  All of
the issued and  outstanding  shares of Company Common Stock are validly  issued,
fully paid and  nonassessable.  The Company's  capital  structure as of the date
hereof is disclosed to Wavetech  under the caption  "Capitalization"  in the DCI
Disclosure Letter.

                                       25
<PAGE>

          (b)  The Company  has  reserved 10,000,000 shares  of  Company  Common
Stock for issuance under the Stock Plan, of which vested and unvested options to
purchase 4,226,065 shares are outstanding as of the date of this Agreement.  The
DCI Disclosure  Letter,  under the caption  "Company  Options,"  accurately sets
forth, with respect to each Company Option that is outstanding as of the date of
this  Agreement:  (i) the name of the holder of such  Company  Option;  (ii) the
total number of shares of Company  Common Stock that are subject to such Company
Option and the number of shares of Company  Common  Stock with  respect to which
such Company  Option is  immediately  exercisable;  (iii) the date on which such
Company Option was granted and the term of such Company Option; (iv) the vesting
schedule for such Company  Option;  (v) the exercise  price per share of Company
Common  Stock  purchasable  under such  Company  Option;  and (vi)  whether such
Company  Option has been  designated an  "incentive  stock option" as defined in
Section 422 of the Code. The DCI Disclosure  Letter,  under the caption "Company
Warrants,"  accurately sets forth,  with respect to each Company Warrant that is
outstanding as of the date of this Agreement: (i) the name of the holder of such
Company  Warrant;  (ii) the total number of shares of Company  Common Stock that
are  subject  to such  Company  Warrant;  (iii) the date on which  such  Company
Warrant was granted and the expiration  date of such Company  Warrant;  (iv) the
exercise  price  per share of  Company  Common  Stock  subject  to such  Company
Warrant;  and (v) a description of any  registration  or other rights granted to
the holder of such Company Warrant.

          (c)  Except as  specifically  referred to in  Sections  3.3(a) and (b)
above,  or as  set  forth  in the  DCI  Disclosure  Letter,  there  is  no:  (i)
outstanding  subscription,  option,  call,  warrant  or  right  (whether  or not
currently  exercisable)  to  acquire  any shares of the  capital  stock or other
securities of the Company; (ii) outstanding  security,  instrument or obligation
that is or may become  convertible  into or  exchangeable  for any shares of the
capital stock or other  securities of the Company;  (iii)  contract or agreement
under which the Company is or may become  obligated to sell or  otherwise  issue
any shares or its capital stock or any other  securities;  or (iv)  condition or
circumstance  that may give rise to or  provide a basis for the  assertion  of a
claim by any  person  or  entity to the  effect  that  such  person or entity is
entitled to acquire or receive any shares of capital  stock or other  securities
of the Company.

          (d)  All   outstanding   shares  of  Company   Common  Stock  and  all
outstanding Company Options and Company Warrants have been issued and granted in
compliance with (i) all applicable securities laws and other applicable laws and
regulations,  and (ii) all  requirements  set forth in applicable  contracts and
agreements.

          (e)  Except  as set  forth  in the DCI  Disclosure  Letter  under  the
caption "Acquisition of Shares," the Company has never repurchased,  redeemed or
otherwise reacquired shares of capital stock or other securities of the Company.
All securities so reacquired by the Company were  reacquired in compliance  with
(i) the applicable  provisions of the Colorado Law and all other applicable laws
and regulations,  and (ii) all  requirements set forth in applicable  restricted
stock purchase agreements and other applicable contracts and agreements.

          (f)  Except  as set  forth  in the DCI  Disclosure  Letter  under  the
caption  "Registration  Rights,"  the  Company  is not under any  obligation  to


                                       26
<PAGE>

register under the Securities Act any of its presently outstanding securities or
any securities  that may be subsequently  issued,  and no person or entity holds
any right to participate in new issuances of securities by the Company.

          (g)  Except  as set  forth  in the DCI  Disclosure  Letter  under  the
caption  "Agreements  Relating  to Company  Common  Stock," the Company is not a
party  to or  obligated  under  any  agreement,  arrangement  or  understanding,
contingent  or  otherwise,  (i)  involving  the  repurchase or redemption of any
amount of Company  Common Stock,  (ii) requiring the Company to issue any amount
of Company  Common Stock to any person at any time, or (iii)  contemplating  the
issuance at any time of shares of Company Common Stock or other consideration to
any person as a guarantee  by the Company of a minimum  market price for Company
Common Stock.

     3.4  SEC FILINGS. The Company has heretofore delivered or made available to
Wavetech  copies  of the  Company's  (a)  Latest  10-K,  (b)  Latest  10-Q,  (c)
definitive  proxy  statement  relating to the Company's  1998 annual  meeting of
shareholders  held on July 30, 1998,  and (e) all other  reports,  registrations
statements and other  documents  filed by the Company with the SEC since January
1, 1995,  in each case as filed with the SEC  (collectively,  the  "Company  SEC
Filings"),  and the Company has heretofore  made available to Wavetech all other
reports,  registration  statements and other documents filed by the Company with
the SEC under  the  Exchange  Act or the  Securities  Act  since  the  Company's
inception.  Except as set forth in the Disclosure Letter, since January 1, 1995,
the Company has timely  filed all  reports,  registration  statements  and other
documents  required to be filed with the SEC under the rules and  regulations of
the SEC,  and all such  reports,  registration  statements  and other  documents
complied as to form with the  requirements of the Securities Act or the Exchange
Act, as the case may be. As of their respective  dates, the reports,  statements
and other documents  referred to in the immediately  preceding  sentence did not
contain any untrue  statement of material  fact or omit to state a material fact
required to be stated  therein or necessary to make the statements  therein,  in
light of the circumstances under which they were made, not misleading.

     3.5  FINANCIAL  STATEMENTS.  The audited financial statements and unaudited
interim  financial  statements of the Company and its Subsidiaries  included (or
incorporated  by  reference)  in the Company SEC Filings  have been  prepared in
accordance with generally accepted accounting principles applied on a consistent
basis  during the  periods  involved  (except as may be  indicated  in the notes
thereto),  are accurate and complete in all material respects and fairly present
the  consolidated  financial  position of the Company and its Subsidiaries as of
the dates  thereof  and the  consolidated  results of their  operations  and the
changes in their consolidated  financial position for the periods then ended, in
the case of the unaudited interim financial statements subject to year-end audit
adjustments  which will not,  individually  or in the aggregate,  be material in
magnitude.  Such unaudited interim financial  statements reflect all adjustments
necessary  to present a fair  statement  of the results for the interim  periods
presented.

                                       27
<PAGE>

     3.6  SUBSIDIARIES.

          (a)  Except  as set  forth  under the  caption  "Subsidiaries"  in the
Disclosure  Letter,  the Company does not own,  beneficially  or otherwise,  any
stock or other equity interest, partnership interest, joint venture interest, or
any other security issued by any other corporation,  organization or entity, and
the Company has not agreed and is not obligated to make any future investment in
or capital contribution to any such corporation,  organization or entity. Except
as set forth under the caption  "Subsidiaries" in the DCI Disclosure Letter, the
Company owns all of the outstanding  capital stock of each Subsidiary,  free and
clear of all liens,  charges  and  encumbrances,  and there are no  subscription
rights,  warrants,   options,  conversion  rights  or  agreements  of  any  kind
outstanding to purchase or otherwise  acquire any shares of capital stock of any
Subsidiary or any  securities or  obligations  of any kind  convertible  into or
exchangeable  for any  such  shares  of  capital  stock.  Each  Subsidiary  is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation,  and has the requisite corporate and other
power  and  authority  (including  all  authorizations,  licenses  and  permits)
necessary to own and operate its  properties and to carry on its business as now
conducted  and  presently  proposed to be  conducted.  The copies of the charter
documents and bylaws of each Subsidiary which have been furnished by the Company
to Wavetech  prior to the date of this  Agreement  reflect all  amendments  made
thereto through the date hereof and are correct and complete. Each Subsidiary is
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions  in which the nature of its business or its  ownership of property
requires it to be qualified.

          (b)  For purposes of this Agreement,  the term "Subsidiary"  means any
corporation of which  securities  having a majority of the ordinary voting power
in electing  directors are, at the time of  determination,  owned by the Company
directly or through another Subsidiary.

     3.7  ABSENCE  OF  UNDISCLOSED  LIABILITIES.  Neither  the  Company  nor any
Subsidiary  has any  obligations  or  liabilities  (whether  accrued,  absolute,
contingent,  unliquidated  or  otherwise,  whether  due  or to  become  due  and
regardless of when  asserted)  arising out of  transactions  heretofore  entered
into, or any action or inaction, or any state of facts existing, including taxes
with  respect  to or based upon  transactions  or events  heretofore  occurring,
except (a)  obligations  under  contracts  or  commitments  described in the DCI
Disclosure  Letter  under  the  caption  "Contracts,"  or  under  contracts  and
commitments  which  are  not  required  to  be  disclosed  thereunder  (but  not
liabilities  for breaches  thereof),  (b)  liabilities  reflected on the balance
sheet included in the Company's  Latest 10-Q, (c) liabilities  which have arisen
after the date of the balance sheet included in the Company's Latest 10-Q in the
ordinary course of business (none of which is a material uninsured liability for
breach of contract,  breach of warranty, tort, infringement,  claim or lawsuit),
and (d) liabilities otherwise disclosed in the DCI Disclosure Letter.

     3.8  NO  MATERIAL  ADVERSE  CHANGES.  Except as set forth under the caption
"Adverse Changes" in the DCI Disclosure  Letter,  since June 30, 1998, there has
been no Material  Adverse  Change,  and no event has occurred  that will or that


                                       28
<PAGE>

would  reasonably  be expected to result in a material  adverse  change,  in the
consolidated assets, financial condition, operating results, customer, employee,
supplier or franchise relations,  business condition or prospects,  or financing
arrangements of the Company and its Subsidiaries, taken as a whole.

     3.9  ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth under the caption
"Developments"  in the Disclosure  Letter,  since June 30, 1998, the Company has
not and, since the date of acquisition by the Company, each Subsidiary has not:

          (a)  redeemed or purchased,  directly or indirectly, any shares of its
capital  stock,  or  declared,  accrued,  set  aside  or paid any  dividends  or
distributions with respect to any shares of its capital stock;

          (b)  other than upon the exercise of outstanding  warrants or options,
issued or sold any of its  equity  securities,  securities  convertible  into or
exchangeable  for its equity  securities,  warrants,  options or other rights to
acquire its equity securities, or its bonds or other securities;

          (c)  borrowed any amount or incurred,  guaranteed or become subject to
any material  liability,  except  current  liabilities  incurred in the ordinary
course of business;

          (d)  discharged or satisfied any material lien or  encumbrance or paid
any  material  liability,  other than current  liabilities  paid in the ordinary
course of business;

          (e)  mortgaged,  pledged or subjected  to, or  otherwise  permitted to
become subject to, any lien, charge or other  encumbrance,  any of the assets of
the Company or any  Subsidiary  with a fair market  value in excess of $500,000,
except liens for current property taxes not yet due and payable;

          (f)  sold,  assigned  or  transferred  (including  without  limitation
transfers to any  employees,  shareholders  or  affiliates of the Company or any
Subsidiary) any tangible assets, except for fair value in the ordinary course of
business, or canceled any debts or claims;

          (g)  sold,  assigned  or  transferred  (including  without  limitation
transfers to any  employees,  shareholders  or  affiliates of the Company or any
Subsidiary) any patents,  trademarks,  trade names, copyrights, trade secrets or
other  intangible  assets,  except  for fair  value in the  ordinary  course  of
business,  or disclosed any proprietary  confidential  information to any person
other  than   Wavetech  or  such   persons  who  have  agreed  to  maintain  the
confidentiality of such information;

          (h)  suffered any extraordinary  loss or waived any rights of material
value, whether or not in the ordinary course of business or consistent with past
practice;

          (i)  taken any  other  action or  entered  into any other  transaction
other than in the ordinary course of business and in accordance with past custom
and practice,  or entered into any  transaction  with any Insider (as defined in
Section 3.21);

                                       29
<PAGE>

          (j)  suffered any material  theft,  damage,  destruction or loss of or
to, or any material interruption in the use of, any property or properties owned
or used by it, whether or not covered by insurance;

          (k)  made or  granted  any bonus or any wage,  salary or  compensation
increase,  or made or granted  any  increase  in any  employee  benefit  plan or
arrangement,  or amended or  terminated  any existing  employee  benefit plan or
arrangement  or adopted  any new  employee  benefit  plan or  arrangement,  with
respect to any director,  officer or consultant of the Company or, except in the
ordinary  course of the  Company's  business and  consistent  with the Company's
historical compensation practices, any other employee or group of employees;

          (l)  amended or waived  any of its  rights  under,  or  permitted  the
acceleration  of vesting under,  (i) any provision of its Stock Plan or (ii) any
provision of any agreement  evidencing any outstanding Company Option or Company
Warrant;

          (m)  made any capital expenditures or commitments therefor (other than
any such expenditures or commitments made in the ordinary course of business for
leasehold  improvements  at, or the  furnishing or equipping of, the  facilities
operated  by the Company as of the date of this  Agreement)  that  aggregate  in
excess of $600,000;

          (n)  made any loans or advances to, or guarantees  for the benefit of,
any persons that aggregate in excess of $500,000;

          (o)  effected  or  been  a  party  to  any  acquisition   transaction,
recapitalization,  reclassification of shares,  stock split, reverse stock split
or similar transaction;

          (p)  formed any  subsidiary  or acquired any equity  interest or other
interest in any other entity;

          (q)  written off as  uncollectible,  or  established  any reserve with
respect to, any account  receivable or other indebtedness which in the aggregate
exceed $500,000;

          (r)  changed any of its methods of accounting or accounting  practices
in any material respect;

          (s)  made any tax election;

          (t)  commenced or settled any legal proceeding;

          (u)  waived or agreed to waive any  applicable  statute of limitations
or any similar  statutory  or judicial  doctrine  benefiting  the Company or any
Subsidiary;

          (v)  entered into any material transaction or taken any other material
action  outside the ordinary  course of business or  inconsistent  with its past
practices; or

                                       30
<PAGE>

          (w)  made charitable  contributions  or pledges which in the aggregate
exceed $100,000.

     3.10 TITLE TO PROPERTIES.

          (a)  The Company or one of the  Subsidiaries  owns good and marketable
title to each the  tangible  properties  and  tangible  assets  reflected on the
balance sheet  included in the Company's  Latest 10-Q or acquired since the date
thereof, free and clear of all liens and encumbrances,  except for (A) liens for
current  taxes not yet due and  payable,  (B) liens set forth  under the caption
"Real Estate" in the DCI Disclosure  Letter,  (C) the properties  subject to the
leases set forth under the caption  "Leases" in the DCI Disclosure  Letter,  (D)
liens securing  indebtedness of the Company and (E) assets disposed of since the
date of the balance sheet included in the Company's  Latest 10-Q in the ordinary
course of business consistent with past practices.

          (b)  (i) the real estate  described under the caption "Real Estate" in
the DCI  Disclosure  Letter and the demised leases  described  under the caption
"Leases" in the DCI Disclosure Letter constitutes all of the real estate used or
occupied by the Company and the  Subsidiaries  (the "Real  Estate") and (ii) the
Real Estate has access,  sufficient  for the  conduct of the  Company's  and the
Subsidiaries'  businesses  as  now  conducted  or as  presently  proposed  to be
conducted, to public roads and to all utilities, including electricity, sanitary
and storm sewer,  potable water,  natural gas and other  utilities,  used in the
operations of the Company and the Subsidiaries.

          (c)  The  leases  described  under  the  caption  "Leases"  in the DCI
Disclosure  Letter are in full force and  effect,  and the Company or one of the
Subsidiaries,  as the case may be, has a valid and existing  leasehold  interest
under each such lease for the term set forth therein.  The Company has delivered
to Wavetech  complete and accurate copies of each of the leases  described under
such caption and none of such leases has been modified in any material  respect,
except to the  extent  that  such  modifications  are  disclosed  by the  copies
delivered to Wavetech. Neither the Company nor any Subsidiary is in default, and
no  circumstances  exist which could result in such  default,  under any of such
leases;  nor, to the best  knowledge  of the Company or any  Subsidiary,  is any
other party to any of such leases in default.

          (d)  All of the  buildings,  machinery,  equipment and other  tangible
assets  necessary  for  the  conduct  of the  Company's  and  the  Subsidiaries'
businesses  are in good  condition and repair (except where the failure to be in
such condition and repair,  either  individually or in the aggregate,  would not
have a material  adverse  effect on the Company or any Subsidiary and except for
ordinary wear and tear), and are usable in the ordinary course of business.  The
Company and the  Subsidiaries  own, or lease under  valid  leases  which  afford
peaceful and  undisturbed  possession  of the subject  matter of the lease,  all
buildings,  machinery,  equipment and other  tangible  assets  necessary for the
conduct of their businesses.

          (e)  Neither the Company nor any of the  Subsidiaries  is in violation
of any  applicable  zoning  ordinance or other law,  regulation  or  requirement


                                       31
<PAGE>

relating  to the  operation  of any  properties  used  in the  operation  of its
business,  including without limitation applicable  environmental protection and
occupational health and safety laws and regulations, and neither the Company nor
any  Subsidiary  has  received  any  notice  of any  such  violation,  or of the
existence of any condemnation proceeding with respect to any properties owned or
leased by the Company or any Subsidiary.

     3.11 ACCOUNTS  RECEIVABLE.  The Company's and the  Subsidiaries'  notes and
accounts  receivable  recorded on the balance  sheet  included in the  Company's
Latest  10-Q and those  arising  since the date  thereof  are valid  receivables
(subject to a reasonable  allowance  for  doubtful  accounts as set forth in the
Company's Latest 10-Q) arising from bona fide  transactions  entered into in the
ordinary  course  of  business  and  are  current  and  collectible  in  full in
accordance with their terms, subject to no valid counterclaims or setoffs.

     3.12 INVENTORIES.  Except as set forth under the caption "Inventory" in the
DCI  Disclosure  Letter,  the  inventories  of the Company and the  Subsidiaries
recorded on the balance  sheet  included in the Company's  Latest 10-Q,  and the
inventory  created or purchased  since the date thereof,  consists of a quantity
and  quality  usable and  salable in the  ordinary  course of  business,  is not
slow-moving  as  determined  in  accordance  with past  practices,  obsolete  or
damaged, is merchantable and fit for its particular use, and is not defective.

     3.13 TAX MATTERS.  Except as set forth under the caption  "Tax  Matters" in
the DCI Disclosure Letter,

          (a)  the Company and the  Subsidiaries  have timely  filed all returns
that are  required to be filed by them with  respect to any taxes,  and all such
returns have been  accurately  and  completely  prepared in compliance  with all
applicable legal requirements and are true, correct, and complete; all taxes due
and payable by the Company and the  Subsidiaries  have been paid;  the Company's
and the Subsidiaries'  provisions for taxes on the balance sheet included in the
Company's  Latest 10-K are sufficient for all accrued and unpaid taxes as of the
date of such balance sheet; the Company and the Subsidiaries have paid all taxes
due and payable by them or which they are  obligated  to withhold  from  amounts
owing to any  employee,  creditor,  or third party;  neither the Company nor any
Subsidiary has waived any statute of limitations in respect of taxes relating to
any of their businesses or agreed to any extension of time with respect to a tax
assessment or deficiency relating to any of their businesses;  the assessment of
any additional  taxes relating to their businesses for periods for which returns
have been filed is not expected,  and no audit of the Company or any  Subsidiary
is ongoing, threatened, or anticipated; and there are no unresolved questions or
claims concerning the tax liability of the Company or any Subsidiary;

          (b)  All material  elections  with respect to taxes of the Company and
any Subsidiary are set forth in the "Tax Matters"  section of the DCI Disclosure
Letter;  neither the Company nor any  Subsidiary  (i) has  consented at any time
under Section  341(f) of the Code to have the provisions of Section 341(f) apply
to any disposition of assets of the Company or any Subsidiary,  (ii) has agreed,
or is  required,  to make any  adjustment  under  Section  481(a) of the Code by


                                       32
<PAGE>

reason of a change  in  accounting  method or  otherwise  that will  affect  the
liability  of the  Company  or any  Subsidiary  for  taxes,  (iii)  has  made an
election, or is required, to treat any asset of the Company or any Subsidiary as
owned by another person pursuant to the provisions of Section 168(f) of the Code
or as tax-exempt  bond financed  property or tax-exempt use property  within the
meaning  of  Section  168 of the  Code,  or (iv) has  made any of the  foregoing
elections or consents or is required to apply any of the  foregoing  rules under
any comparable state, county, local, or foreign tax provision.

          (c)  Neither  the Company  nor any  Subsidiary  is or has ever been an
includible  corporation  in an  affiliated  group of  corporations,  within  the
meaning of Section 1504 of the Code, other than in the affiliated group of which
the Company is the common Company corporation;

          (d)  Neither the Company nor any  Subsidiary is now or has ever been a
party to any tax-sharing agreements or similar arrangements;

          (e)  Neither  the  Company  nor any  Subsidiary  has  made  or  become
obligated to make, or will, as a result of any event  connected  with the Merger
contemplated  herein,  make or become  obligated to make, any "excess  parachute
payment," as defined in Section 280G of the Code  (without  regard to subsection
(b)(4) thereof);

          (f)  There are no liens for taxes  (other than for current  taxes that
are not yet due and  payable  or are being  contested  in good  faith)  upon the
assets of the Company or any Subsidiary;

          (g)  All  joint  ventures,  partnerships,  or  other  arrangements  or
contracts  to which the Company or any  Subsidiary  is a party and that could be
treated as a partnership for federal income tax purposes are set forth under the
caption "Tax Matters" in the DCI Disclosure Letter;

          (h)  There  are no  outstanding  balances  of  deferred  gain  or loss
accounts   related  to  deferred   intercompany   transactions   or  outstanding
intercompany  items related to intercompany  transactions  (as each such term is
defined  in  Treas.  Reg.  Section  1.1502-13,  as  such  regulation  is or  was
applicable to the Company and the  Subsidiaries in each relevant taxable period)
between the Company and any Subsidiary or between any Subsidiaries; and

          (i)  There  exists no excess loss  account (as such item is defined in
Treas. Reg. Section  1.1502-19) with respect to the capital stock of the Company
or any Subsidiary.

For  purposes  of this  Agreement,  the terms "tax" and  "taxes"  shall  include
income, gross receipts,  excise, real and personal property,  sales,  franchise,
employment,  and other taxes  imposed by any federal,  foreign,  state,  county,
municipal, local, or other governmental agency, including interest and penalties
relating to taxes and assessments in the nature of taxes.

     3.14 CONTRACTS AND COMMITMENTS.

          (a)  Except as set  forth  under the  caption  "Contracts"  in the DCI
Disclosure Letter, neither the Company nor any Subsidiary is a party to any: (i)


                                       33
<PAGE>

collective  bargaining  agreement or contract with any labor union;  (ii) bonus,
pension,  profit  sharing,  retirement,  or other form of deferred  compensation
plan;  (iii)  hospitalization  insurance or similar  plan or  practice,  whether
formal or informal; (iv) contract for the employment of any officer,  individual
employee,  or other  person on a full-time  or  consulting  basis or relative to
severance pay for any such person;  (v)  agreement or indenture  relating to the
borrowing  of money in  excess  of  $1,000,000  or to  mortgaging,  pledging  or
otherwise  placing a lien on any of the assets of the Company or any Subsidiary;
(vi) guaranty of any  obligation  for borrowed  money or  otherwise,  other than
endorsements  made for  collection;  (vii) lease or agreement  under which it is
lessor of, or permits any third party to hold or operate, any property,  real or
personal,  for an annual rental in excess of $100,000;  (viii) contract or group
of  related  contracts  with the same  party for the  purchase  of  products  or
services,  under which the undelivered balance of such products and services has
a  purchase  price in excess of  $500,000;  (ix)  contract  or group of  related
contracts  with the same party for the sale of products or services  under which
the undelivered balance of such products or services has a sales price in excess
of  $500,000;  (x) other  contract or group of related  contracts  with the same
party  continuing  over a period of more than six months  from the date or dates
thereof,  either not terminable by it on 30 days' or less notice without penalty
or involving  more than  $500,000;  (xi)  contract  which  prohibits  either the
Company or any  Subsidiary  from freely  engaging  in  business  anywhere in the
world;  (xii)  contract  relating to the  distribution  of the  Company's or any
Subsidiary's products; (xiii) franchise agreement; (xiv) contract,  agreement or
understanding  with  any  shareholder  who  beneficially  owns 5% or more of the
Company Common Stock or with any officer,  director or employee  (other than for
employment on customary terms);  (xv) license  agreement or agreement  providing
for the payment or receipt of royalties or other  compensation by the Company or
any  Subsidiary  in  connection  with the  proprietary  rights  listed under the
caption  "Proprietary  Rights"  in the DCI  Disclosure  Letter;  or (xvi)  other
agreement material to the Company's or any Subsidiary's  business or not entered
into in the ordinary course of business.

          (b)  Except as specifically disclosed under the caption "Contracts" in
the  DCI  Disclosure  Letter,  (i) no  contract  or  commitment  required  to be
disclosed  under such caption has been  breached or canceled by the other party;
(ii) since the date of the balance sheet included in the Company's  Latest 10-Q,
no customer or supplier has indicated  that it will stop or decrease the rate of
business  done with the  Company or any  Subsidiary,  except for  changes in the
ordinary  course of the  Compan s and the  Subsidiaries'  businesses;  (iii) the
Company and the  Subsidiaries  have  performed  all  obligations  required to be
performed by them in connection with the contracts or commitments required to be
disclosed  under  such  caption  and are not in  receipt of any claim of default
under any contract or  commitment  required to be disclosed  under such caption;
(iv)  neither the  Company nor any  Subsidiary  has any present  expectation  or
intention of not fully  performing  any  obligation  pursuant to any contract or
commitment  or  commitment  set forth  under such  caption;  and (v) neither the
Company nor any Subsidiary has any knowledge of any breach or anticipated breach
by any other party to any contract or commitment set forth under such caption.

          (c)  Prior to the date of this  Agreement,  Wavetech has been supplied
with a true and  correct  copy of each  written  contract or  commitment,  and a


                                       34
<PAGE>

written  description of each oral contract or commitment,  referred to under the
caption "Contracts" in the DCI Disclosure Letter,  together with all amendments,
waivers or other changes thereto.

     3.15 PROPRIETARY RIGHTS. Except as set forth under the caption "Proprietary
Rights" in the DCI Disclosure Letter, there are no patents, patent applications,
trademarks,  service marks,  trade names,  corporate  names,  copyrights,  trade
secrets or other  proprietary  rights owned by the Company or any  Subsidiary or
necessary to the conduct of the Company's or any Subsidiary's  businesses as now
conducted. The Company or a Subsidiary owns and possesses all rights, titles and
interest,  or a valid license,  in and to the proprietary rights set forth under
such  caption.  The DCI  Disclosure  Letter  describes  under such  caption  all
proprietary rights which have been licensed to third parties and all proprietary
rights which are licensed from third  parties by the Company or any  Subsidiary.
The Company and the Subsidiaries  have taken all necessary action to protect the
proprietary  rights set forth  under such  caption.  Neither the Company nor any
Subsidiary  has  received  any  notice  of,  nor is it aware of any facts  which
indicate a likelihood of, any infringement,  misappropriation,  or conflict from
any third party with  respect to the  proprietary  rights which are listed under
such  caption;   neither  the  Company  nor  any   Subsidiary   has   infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties, nor is it aware of any infringement, misappropriation or conflict which
will occur in the continued  operation of the Company or any Subsidiary;  and no
claim by any third  party  contesting  the  validity of any  proprietary  rights
listed under such caption has been made,  is  currently  outstanding,  or to the
best knowledge of the Company or any Subsidiary is threatened.

     3.16 LITIGATION.  Except as set forth under the caption "Litigation" in the
DCI Disclosure Letter, there are no actions, suits, claims, proceedings,  orders
or investigations pending or threatened against the Company or any Subsidiary or
otherwise  affecting  any of their  respective  properties  or  assets,  or that
challenges or may have the effect of  preventing,  delaying,  making  illegal or
otherwise interfering with the Merger or any other transactions  contemplated by
this  Agreement,  at law or in  equity,  or  before  or by any  federal,  state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality,  domestic or foreign,  or that could  reasonably be expected to
have a material adverse effect on the business,  properties,  assets,  condition
(financial or  otherwise)  or business  prospects of the Company and there is no
basis known to the Company or any Subsidiary for any of the foregoing.  There is
no order, writ, injunction, judgment or decree:

          (a)  to which the Company or any Subsidiary or any of the assets owned
or used by the Company or any Subsidiary is subject, or

          (b)  to which any officer or employee of the Company or any Subsidiary
is  subject  that  prohibits  such  officer  or  employee  from  engaging  in or
continuing  any conduct,  activity or practice  relating to the Company's or any
Subsidiary's  business.  Except as set forth  under such  caption,  neither  the
Company nor any  Subsidiary  has  received  any  opinion or legal  advice to the
effect that the Company or any Subsidiary is exposed from a legal  standpoint to
any liability or disadvantage which may be material to it or its prospects.

                                       35
<PAGE>

     3.17 BROKERAGE.  There are no claims for investment banking fees, brokerage
commissions,  finders'  fees or  similar  compensation  in  connection  with the
transactions  contemplated  by  this  Agreement  based  on  any  arrangement  or
agreement  made by or on behalf of the  Company or any  Subsidiary.  The Company
currently  intends,  however,  to enter into an agreement or arrangement  with a
qualified  investment  banking or financial advisory firm regarding the study of
and the rendering of an opinion with respect to the fairness of the Merger.

     3.18 EMPLOYMENT  MATTERS.  To the best  knowledge  of the  Company  and the
Subsidiaries,  (i) no key executive  employee of the Company or any  Subsidiary,
and no group of the Company's or any  subsidiary's  employees,  has any plans to
terminate  his or its  employment,  (ii) the Company and the  Subsidiaries  have
complied with all laws relating to the employment of labor, including provisions
thereof relating to wages, hours, equal opportunity,  collective  bargaining and
the payment of social  security and other  taxes,  and (iii) the Company and the
Subsidiaries  have no material labor relations  problems pending and their labor
relations are  satisfactory.  

     3.19 EMPLOYEE BENEFIT PLANS. With respect to the employee benefits provided
to employees and former employees of the Company and the Subsidiaries:

          (a)  The  Company and the  Subsidiaries  currently  maintain  only the
employee  pension  benefit  plans,  as defined in Section  3(2) of the  Employee
Retirement  Income  Security Act of 1974,  as amended  ("ERISA"),  as are listed
under the caption "Employee Benefits" in the DCI Disclosure Letter.

          (b)  The  Company and the  Subsidiaries  currently  maintain  only the
employee  welfare benefit plans, as defined in Section 3(1) of ERISA  (including
but not limited to, life insurance, medical, hospitalization, holiday, vacation,
disability  dental and vision  plans) as are listed under the caption  "Employee
Benefits" in the DCI Disclosure Letter (the "Welfare Plans").

          (c)  The  Company and the  Subsidiaries  currently  maintain,  or have
entered into, only the  compensation  programs and/or  employment  arrangements,
(including but not limited to, incentive compensation,  bonus,  severance,  sick
pay,  salary  continuation,   deferred   compensation,   supplemental  executive
compensation  plans,  and employment  and  consulting  agreements) as are listed
under  the  caption  "Employee  Benefits"  in the  DCI  Disclosure  Letter  (the
"Compensation Programs").

          (d)  The Company and the Subsidiaries do not contribute,  and have not
contributed within the last five years, to any multiemployer plan, as defined by
Section 3(37) of ERISA.

          (e)  Each Pension Plan and Welfare Plan is in  compliance  with ERISA;
each Pension Plan which is intended to be qualified  under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified or a
request for such  determination  has been timely filed with the Internal Revenue
Service (and to Company's best knowledge  nothing has occurred  between the date
of the last  such  determination  and the  Closing  Date to cause  the  Internal
Revenue Service to revoke such determination).

                                       36
<PAGE>

          (f)  Any  Pension  Plan or any  Welfare  Plan  designed to satisfy the
requirements of Section 125, Section 401,  Section 401(k),  Section 409, Section
501(c)(9), Section 4975(e)(7),  and/or Section 4980B of the Code, satisfies such
section.

          (g)  No  accumulated  funding   deficiency,   as  defined  in  Section
302(a)(2) of ERISA,  exists  (whether or not waived) with respect to any Pension
Plan as of the date hereof.

          (h)  All  amounts  required  to be  paid  by  the  Company  and or any
Subsidiary  with respect to each  Pension  Plan,  Welfare Plan and  Compensation
Program on or before the Closing Date have been paid.

          (i)  None of the Pension Plans or the Company or any party in interest
or disqualified person has engaged in any non-exempt  "prohibited  transactions"
as defined in Section 406 of ERISA or Section 4975 of the Code.

          (j)  Except as disclosed under the caption "Employee  Benefits" in the
DCI  Disclosure  Letter,  no Pension  Plan or Welfare  Plan  provides  benefits,
including without limitation death or medical benefits (whether or not insured),
with respect to current or former  employees  beyond their  retirement  or other
termination of service other than (i) coverage  mandated by applicable law, (ii)
retirement  benefits under a Pension Plan,  (iii) death benefits under a Welfare
Plan,  (iv)  deferred  compensation  accrued  on the books of the  Company  or a
Subsidiary,  or (v)  benefits  the full cost of which is borne by the current or
former employee (or his or her beneficiary).

          (k)  No "leased  employee," as that term is defined in Section  414(n)
of the Code, performs services for the Company or any Subsidiary.

          (l)  No  liability  has been,  or is  expected  by the  Company or any
Subsidiary to be, incurred by the Company or a Subsidiary  under Section 4062 of
ERISA with respect to any Pension Plan.

          (m)  No  reportable  event within the meaning of Title IV of ERISA has
occurred with respect to any Pension Plan.

          (n)  The Company has  furnished  Wavetech  with  correct and  complete
copies of each Pension Plan,  Welfare Plan, and Compensation  Program,  together
with any trust agreements,  summary plan  descriptions,  employee  informational
material, financial statements relating thereto and participant listings.

     3.20 INSURANCE.  The DCI Disclosure Letter,  under the caption "Insurance,"
lists and briefly  describes  (including  name of insurer,  agent,  coverage and
expiration date) each insurance  policy  maintained by, at the expense of or for
the  benefit  of the  Company  or any of the  Subsidiaries  with  respect to its
properties and assets and describes any material claims made thereunder.  All of


                                       37
<PAGE>

such insurance policies are in full force and effect and neither the Company nor
any Subsidiary is in default with respect to its  obligations  under any of such
insurance  policies.  Except as set forth in the DCI Disclosure Letter under the
caption  "Insurance,"  the Company is the sole  beneficiary of each such policy.
The  insurance  coverage of the Company and the  Subsidiaries  is customary  for
corporations of similar size engaged in similar lines of businesses. The Company
has not  received  any  notice or other  communication  regarding  any actual or
possible (a) cancellation or invalidation of any insurance  policy,  (b) refusal
of any  coverage or  rejection  of any claim under any  insurance  policy or (c)
material  adjustment  in the  amount of  premiums  payable  with  respect to any
insurance policy.

     3.21 AFFILIATE  TRANSACTIONS.   Except  as  set  forth  under  the  caption
"Affiliate Transactions" in the DCI Disclosure Letter, no officer or director of
the Company or any Subsidiary or any member of the immediate  family of any such
officer  or  director,  or any  entity  in which  any of such  persons  owns any
beneficial  interest  (other  than a  publicly-held  corporation  whose stock is
traded on a national securities exchange or in the  over-the-counter  market and
less than 5% of the stock of which is beneficially owned by any of such persons)
(collectively  "Insiders"),  (a) has  any  agreement  with  the  Company  or any
Subsidiary  (other than normal  employment  arrangements) or any interest in any
property, real, personal or mixed, tangible or intangible, used in or pertaining
to the business of the Company or any  Subsidiary,  (b) has been indebted to the
Company in amounts in excess of $10,000 in the aggregate at any time, (c) has at
any time  competed,  directly or  indirectly,  with the Company,  or (d) has any
claim or right against the Company (other than rights under Company  Options and
rights to receive  compensation  for  services  performed  as an employee of the
Company).  For purposes of the preceding sentence,  the members of the immediate
family of an officer  or  director  shall  consist  of the  spouse,  Wavetech's,
children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and
brothers- and sisters-in-law of such officer or director.

     3.22 SUPPLIERS.  The DCI Disclosure Letter,  under the caption "Suppliers,"
lists  the 10  largest  suppliers  of the  Company  and the  Subsidiaries  (on a
consolidated  basis) for the fiscal  year ended March 31,  1998,  and sets forth
opposite the name of each such supplier the total amount of purchases  from such
supplier by the Company and the Subsidiaries during such period.

     3.23 OFFICERS AND  DIRECTORS;  BANK ACCOUNTS.  The DCI  Disclosure  Letter,
under the caption  "Officers and Directors," lists all officers and directors of
the Company and the  Subsidiaries  and, under the caption "Bank Accounts," lists
all of the  Company's  and the  Subsidiaries'  accounts  at any  bank  or  other
financial institution (designating each authorized signer).

     3.24 COMPLIANCE WITH LAWS; PERMITS;  CERTAIN OPERATIONS.  The Company, each
of the  Subsidiaries  and  their  respective  officers,  directors,  agents  and
employees have complied in all respects,  and currently are in compliance in all
respects,  with all applicable laws and regulations of foreign,  federal,  state
and local  governments  and all agencies  thereof which affect the businesses or
any owned or leased  properties of the Company and the Subsidiaries and to which
the Company or any of the Subsidiaries  may be subject,  and no claims have been
filed against the Company or any of the Subsidiaries alleging a violation of any
such law or regulation,  except as set forth in the DCI Disclosure  Letter under


                                       38
<PAGE>

the caption  "Compliance."  Neither the Company nor any  Subsidiary has given or
agreed to give any money,  gift or similar benefit (other than incidental  gifts
of articles of nominal value,  gifts and prizes awarded  pursuant to promotional
programs   approved   by  the   Company's   management   and   non-extraordinary
entertainment  expenditures)  to any  actual or  potential  customer,  supplier,
foreign or domestic  governmental  employee or any other person in a position to
assist or hinder the Company or any of the  Subsidiaries  in connection with any
actual or proposed transaction. The Company and the Subsidiaries hold all of the
permits,  licenses,  certificates and other authorizations of foreign,  federal,
state  and  local  governmental  agencies  required  for the  conduct  of  their
businesses.  Without  limiting  the  generality  of the  foregoing,  neither the
Company  nor any  Subsidiary  has  violated,  or  received  a notice  or  charge
asserting any violation  of, the  Occupational  Safety and Health Act of 1970 or
any  other  state or  federal  acts or laws  (including  rules  and  regulations
thereunder)  regulating or otherwise affecting employee health and safety or the
environment.

     3.25 DISCLOSURE.

          (a)  Neither this  Agreement  nor any other  agreement  or  instrument
executed in connection with the transactions  contemplated hereby nor any of the
attachments or exhibits hereto nor the DCI Disclosure Letter contains any untrue
statement  of a material  fact or omits a material  fact  necessary  to make the
statements  contained herein or therein,  in light of the circumstances in which
they  were  made,  not  misleading,  and  there  is no fact  which  has not been
disclosed in writing to Wavetech of which any officer or director of the Company
or  any  Subsidiary  is  aware  which  materially  affects  adversely  or  could
reasonably be anticipated to materially affect adversely the business, including
operating results,  assets, customer relations,  employee relations and business
prospects, of the Company and the Subsidiaries, taken as a whole.

          (b)  None of the information supplied or to be supplied by the Company
for  inclusion  or  incorporation  by  reference  in the Form S-4 and the  Joint
Prospectus/Proxy  Statement will, at the time the S-4 is declared effective,  at
the date the Joint  Prospectus/Proxy  Statement is mailed to the shareholders of
the Company or at the time of the  Company  Shareholders'  Meeting,  contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary to make the  statements  therein (in light of
the circumstances under which they are made) not misleading.

     3.26 NON-CONTRAVENTION;  CONSENTS.  Except as set forth  under the  caption
"Consents" in the DCI Disclosure Letter, neither (1) the execution,  delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement,  nor  (2)  the  consummation  of the  Merger  or  any  of  the  other
transactions  contemplated by this Agreement,  will directly or indirectly (with
or without notice or lapse of time):

          (a)  contravene,  conflict with or result in a violation of (i) any of
the provisions of the Company's or any Subsidiary's Articles of Incorporation or
Bylaws,  or (ii) any  resolution  adopted by the  Company's or any  Subsidiary's
shareholders,  the  Company's  or any  Subsidiary's  board of  directors  or any
committee of such board of directors;

                                       39
<PAGE>

          (b)  contravene,  conflict  with or result in a violation  of, or give
any governmental  authority or other person or entity the right to challenge any
of the transactions  contemplated by this Agreement or to exercise any remedy or
obtain any relief under, any legal requirement or any order,  writ,  injunction,
judgment or decree to which the Company or any Subsidiary,  or any of the assets
owned or used by the Company or any Subsidiary, is subject;

          (c)  contravene,  conflict with or result in a violation of any of the
terms or  requirements  of,  or give any  governmental  authority  the  right to
revoke, withdraw,  suspend, cancel, terminate or modify, any governmental permit
or authorization that is held by the Company or any Subsidiary or that otherwise
relates to the  Company's  business or to any of the assets owned or used by the
Company or any Subsidiary;

          (d)  contravene,  conflict with or result in a violation or breach of,
or result in a default  under,  any  provision  of any  contract or agreement to
which the Company or any Subsidiary is a party, or give any person or entity the
right to (i) declare a default or exercise any remedy under any such contract or
agreement,  (ii)  accelerate the maturity or performance of any such contract or
agreement, or (iii) cancel,  terminate or modify any such contract or agreement;
or

          (e)  result  in the  imposition  or  creation  of any  lien  or  other
encumbrance  upon or with  respect to any asset  owned or used by the Company or
any  Subsidiary  (except  for minor  liens that will not,  in any case or in the
aggregate,  materially  detract from the value of the assets subject  thereto or
materially impair the operations of the Company).

Except as set forth under the caption  "Consents" in the DCI Disclosure  Letter,
the  Company is not and will not be required to make any filing with or give any
notice to, or to obtain any  consent  from,  any person or entity in  connection
with (x) the execution,  delivery or performance of this Agreement or any of the
other agreements  referred to in this Agreement,  or (y) the consummation of the
Merger or any of the other transactions contemplated by this Agreement.

     3.27 STOCKHOLDER  VOTE REQUIRED.  The affirmative vote of a majority of the
votes entitled to be cast by holders of the outstanding shares of Company Common
Stock  (voting  as a class)  are the only  votes of the  holders of any class or
series of the Company's  capital stock  necessary to approve this  Agreement and
the Merger under Colorado Law.

     3.28 BOARD APPROVAL. The board of directors of the Company has (i) approved
the Merger and the execution of this Agreement,  (ii) determined that the Merger
is in the best interests of the shareholders of the Company and is on terms that
are fair to such  shareholders,  and (iii)  recommended  that holders of Company
Common Stock vote in favor of this Agreement and the Merger.




                                       40
<PAGE>

                                   ARTICLE IV

                     CONDUCT OF BUSINESS PENDING THE MERGER


     4.1  CONDUCT OF BUSINESS PENDING THE MERGER.

          (a)  COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing  until the earlier of the termination of this Agreement
or the  Effective  Time,  the  Company  agrees as to itself  and its  respective
Subsidiaries  (except to the extent that  Wavetech  shall  otherwise  consent in
writing,  which  consent  shall not be  unreasonably  withheld,  or as otherwise
expressly  contemplated or permitted by this Agreement) to carry on its business
in the usual,  regular,  and ordinary course in substantially the same manner as
previously conducted,  to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other obligations when due,
and, to the extent consistent with such business,  to use all reasonable efforts
consistent  with its past practices and policies to preserve  intact its present
business  organization,  to keep available the services of its present  officers
and key  employees and preserve its  relationships  with  customers,  suppliers,
franchisees,  distributors,  licensors,  licensees,  and others having  business
dealings with it, to the end that its goodwill and ongoing  businesses  shall be
unimpaired at the Effective  Time. The Company shall promptly notify Wavetech of
any event or occurrence not in the ordinary course of business of the Company.

          (b)  COVENANTS  OF  WAVETECH.  During the period from the date of this
Agreement and continuing  until the earlier of the termination of this Agreement
or  the  Effective  Time,  Wavetech  agrees  as to  itself  and  its  respective
Subsidiaries  (except to the extent that the Company shall otherwise  consent in
writing which consent shall not be unreasonably  withheld or otherwise expressly
contemplated  or permitted by this  Agreement),  to carry on its business in the
usual,  regular,  and  ordinary  course  in  substantially  the same  manner  as
previously conducted,  to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other obligations when due,
and, to the extent consistent with such business,  to use all reasonable efforts
consistent  with past  practices  and  policies to  preserve  intact its present
business  organization,  to keep available the services of its present  officers
and key  employees and preserve its  relationships  with  customers,  suppliers,
franchisees,  distributors,  licensers,  licensees,  and others having  business
dealings with it, to the end that its goodwill and ongoing  businesses  shall be
unimpaired at the Effective Time.  Wavetech shall promptly notify the Company of
any event or occurrence not in the ordinary course of business of Wavetech.

     4.2  DELIVERY OF DISCLOSURE  LETTERS.  No later than two (2) calendar weeks
from the date of this  Agreement,  DCI shall  deliver  the fully  completed  DCI
Disclosure  Letter to Wavetech and Wavetech  shall  deliver the fully  completed
Wavetech Disclosure Letter to DCI.



                                       41
<PAGE>

     4.3  NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.

          (a)  During the period  subsequent to the execution of this  Agreement
and prior to the Effective Time (the  "Pre-Closing  Period"),  the Company shall
promptly  notify  Wavetech and  Wavetech  shall  promptly  notify the Company in
writing of:

               (i)  the discovery by either of the parties  hereto of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this  Agreement and that caused or  constitutes an inaccuracy in or breach of
any  representation or warranty made by Wavetech in Article II or by the Company
in Article III in this Agreement;

               (ii) any event,  condition,  fact or  circumstance  that  occurs,
arises  or exists  after  the date of this  Agreement  and that  would  cause or
constitute an inaccuracy in or breach of any  representation or warranty made by
such party in this  Agreement  if (A) such  representation  or warranty had been
made as of the time of the  occurrence,  existence  or  discovery of such event,
condition,  fact  or  circumstance,  or  (B)  such  event,  condition,  fact  or
circumstance  had  occurred,  arisen or  existed on or prior to the date of this
Agreement;

               (iii) any breach of any covenant or obligation of such party; and

               (iv) any event,  condition,  fact or circumstance that would make
the timely  satisfaction of any of the conditions set forth in Sections 6.1, 6.2
or 6.3 impossible or unlikely.

          (b)  If any event, condition, fact or circumstance that is required to
be  disclosed  pursuant  to  Section  4.2(a)  requires  any change in either the
Wavetech  Disclosure Letter or the DCI Disclosure  Letter, as the case may be or
if any such event,  condition,  fact or circumstance would require such a change
assuming the Wavetech  Disclosure Letter or the DCI Disclosure Letter were dated
as of the  date  of the  occurrence,  existence  or  discovery  of  such  event,
condition,  fact or circumstance,  then the Company or Wavetech, as the case may
be,  shall  promptly  deliver  to the other  party an update in  writing  to the
Disclosure  Letter  specifying  such change and  disclosing  all material  facts
related  thereto.  No such  update  shall be deemed to  supplement  or amend the
respective  Disclosure Letter for the purpose of (i) determining the accuracy of
any of the representations and warranties made by the Company in this Agreement,
or (ii) determining whether any of the conditions set forth in Sections 6.1, 6.2
or 6.3 has been satisfied.

     4.4  SHAREHOLDER APPROVAL.

          (a)  The Company will call a meeting of its shareholders (the "Company
Shareholders'  Meeting"), to be held after the Form S-4 shall have been declared
effective by the SEC, to submit this  Agreement,  the Merger and related matters
for the consideration and approval of the Company's shareholders. Subject to the
fiduciary  obligations of the Company's  directors,  the Form S-4 will include a
statement to the effect that the Company's  board of directors  has  recommended


                                       42
<PAGE>

that  the  Company's  shareholders  vote in  favor of the  Merger.  The  Company
Shareholders'  Meeting will be called, held and conducted,  and any proxies will
be solicited,  in compliance  with  applicable law. The Company shall, if and to
the extent  requested by Wavetech,  subject to the fiduciary  obligations of the
directors of the Company as advised by counsel,  use its best efforts to solicit
from  shareholders of the Company proxies in favor of such adoption and approval
and shall  take all other  action  necessary  or, in the  opinion  of  Wavetech,
helpful to secure a vote of shareholders in favor of the Merger.  At the Company
Shareholders' Meeting, the Company shall cause to be voted all shares of Company
Common  Stock with  respect  to which  proxies  in the form  distributed  by the
Company shall have been given in favor of the Merger.

          (b)  To the extent  required by applicable  Nevada law or the rules of
the Nasdaq SmallCap Market (if such rules are applicable),  Wavetech will call a
meeting of its shareholders (the "Wavetech  Shareholders'  Meeting"), to be held
after the Form S-4 shall have been declared effective by the SEC, to submit this
Agreement,  the Merger,  the issuance of Wavetech  Common Stock  pursuant to the
Merger and related  matters for the  consideration  and  approval of  Wavetech's
shareholders (the "Wavetech Voting Proposals"). The Wavetech Shareholder Meeting
will be called,  held and  conducted,  and any  proxies  will be  solicited,  in
compliance with applicable law.  Wavetech shall, if and to the extent  requested
by the  Company,  subject  to the  fiduciary  obligations  of the  directors  of
Wavetech  as  advised  by  counsel,   use  its  best  efforts  to  solicit  from
shareholders  of Wavetech  proxies in favor of such  adoption  and  approval and
shall take all other action necessary or, in the opinion of Wavetech, helpful to
secure a vote of shareholders in favor of the Wavetech Voting Proposals.  At the
Wavetech Shareholders'  Meeting,  Wavetech shall cause to be voted all shares of
Wavetech  Common Stock with respect to which proxies in the form  distributed by
Wavetech shall have been given in favor of the Wavetech Voting Proposals.

                                   ARTICLE V

                              ADDITIONAL AGREEMENTS


     5.1  JOINT PROXY STATEMENT; REGISTRATION STATEMENT.

          (a)  As promptly as practical  after the execution of this  Agreement,
Wavetech  and the  Company  shall  prepare  and file with the SEC a joint  proxy
statement/prospectus  to be sent to the shareholders of Wavetech and the Company
in  connection  with  the  Wavetech   Shareholders'   Meeting  and  the  Company
Shareholders'    Meeting   to   consider    the   Merger   (the   "Joint   Proxy
Statement/Prospectus"),  and  Wavetech  shall  prepare  and file  with the SEC a
registration  statement on Form S-4 pursuant to which the issuance of the shares
of Wavetech  Common Stock as a result of the Merger will be registered  with the
SEC under the Securities Act (the "Registration Statement"),  in which the Joint
Proxy  Statement/Prospectus  will be included as a prospectus.  Wavetech and the
Company shall use all reasonable efforts to cause the Registration  Statement to
become  effective  as soon after such  filing as is  practical.  The Joint Proxy
Statement/Prospectus  shall include the recommendation of the Board of Directors


                                       43
<PAGE>

of the Company in favor of this Agreement and the Merger and the  recommendation
of the Board of Directors of Wavetech,  in favor of this  Agreement,  the Merger
and the issuing of Wavetech  Common Stock in the Merger and such other proposals
as are  necessary to carry out the intent of the  transactions  contemplated  by
this  Agreement (the "Wavetech  Voting  Proposals"),  provided that the Board of
Directors of either the Company or Wavetech may withdraw such  recommendation if
such Board of Directors shall have determined in good faith,  after consultation
with its outside legal counsel,  that the withdrawal of such  recommendation  is
necessary for such Board of Directors to comply with its fiduciary  duties under
applicable law.  Wavetech and the Company shall make all other necessary filings
with  respect to the Merger  under the  Securities  Act and Exchange Act and the
rules and regulations thereunder.  Wavetech shall have the right in its sole and
absolute  discretion  to approve or  disapprove  of the  outside  legal  counsel
selected by the Company for purposes of this Section 5.1(a).

          (b)  The Company  shall take such action as may be necessary to insure
that (i) the  information  to be supplied by the  Company for  inclusion  in the
Registration  Statement  shall  not at the time the  Registration  Statement  is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any  material  fact  required  to be  stated  in the  Registration
Statement  or  necessary  in order to make the  statements  in the  Registration
Statement,  in light of the  circumstances  under  which  they  were  made,  not
misleading,  and (ii) the  information  supplied by the Company for inclusion in
the Joint  Proxy  Statement/Prospectus  shall not,  on the date the Joint  Proxy
Statement/Prospectus is first mailed to shareholders of the Company or Wavetech,
at the time of the Company Shareholders' Meeting and the Wavetech  Shareholders'
Meeting,  and at the Effective Time,  contain any statement  which, at such time
and in  light of the  circumstances  under  which it shall be made,  is false or
misleading with respect to any material fact, or omit to state any material fact
necessary   in  order  to  make  the   statements   made  in  the  Joint   Proxy
Statement/Prospectus not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier  communication with respect to
the  solicitation of proxies for the Company  Shareholders'  Meeting or Wavetech
Shareholders' Meeting which has become false or misleading. If at any time prior
to  the  Effective  Time  any  event  relating  to  the  Company  or  any of its
Affiliates,  officers,  or directors  should be  discovered by the Company which
should  be  set  forth  in an  amendment  to  the  Registration  Statement  or a
supplement to the Joint Proxy  Statement/Prospectus,  the Company shall promptly
so inform Wavetech.

          (c)  Wavetech  shall take such  action as may be  necessary  to insure
that (i) the information  supplied by Wavetech for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue  statement of a material fact or omit to state any
material fact required to be stated in the  Registration  Statement or necessary
in order to make the statements in the Registration  Statement,  in light of the
circumstances  under  which  they  were  made,  not  misleading,  and  (ii)  the
information   supplied   by   Wavetech   for   inclusion   in  the  Joint  Proxy
Statement/Prospectus  shall not on the date the Joint Proxy Statement/Prospectus
is first mailed to shareholders  of Wavetech or the Company,  at the time of the
Wavetech  Shareholders'  Meeting and Company  Shareholders'  Meeting, and at the
Effective  Time,  contain any statement  which, at such time and in light of the
circumstances  under which it shall be made, is false or misleading with respect
to any material  fact, or omit to state any material fact  necessary in order to
make the statements  made in the Joint Proxy  Statement/Prospectus  not false or
misleading,  or omit to  state  any  material  fact  necessary  to  correct  any

                                       44
<PAGE>

statement  in any earlier  communication  with  respect to the  solicitation  of
proxies for the Wavetech  Shareholders' Meeting or Company Shareholders' Meeting
which has become false or misleading. If at any time prior to the Effective Time
any event relating to Wavetech or any of its Affiliates,  officers, or directors
should be  discovered  by Wavetech  which should be set forth in an amendment to
the   Registration    Statement   or   a   supplement   to   the   Joint   Proxy
Statement/Prospectus, Wavetech shall promptly so inform the Company.

     5.2  SHAREHOLDERS' MEETINGS. To the extent required by applicable statutory
law or the rules of the Nasdaq SmallCap  Market (if such rules are  applicable),
Wavetech  and  the  Company  each  shall  call  a  meeting  of  its   respective
shareholders to be held as promptly as practicable for the purpose of voting, in
the case of the Company,  upon this Agreement and the Merger and, in the case of
Wavetech,  upon the Wavetech  Voting  Proposals.  Subject to Section 5.1 hereof,
Wavetech and the Company  will,  through their  respective  Boards of Directors,
recommend  to their  respective  shareholders  approval of such matters and will
coordinate  and cooperate  with respect to the timing of such meetings and shall
use their  best  efforts  to hold such  meetings  on the same day and as soon as
practicable  after the date  hereof.  Subject to Section 5.1 hereof,  each party
shall use all  reasonable  efforts to solicit from its  shareholders  proxies in
favor of such matters.

     5.3  ACCOUNTANT COMFORT LETTERS.

          (a)  Prior to the date of this Agreement, the Company has delivered to
Wavetech a letter from  Schnitzer & Kondub,  P.C.  addressed  to the Company and
Wavetech and dated a date not more than one day  (excluding  Saturdays,  Sundays
and  holidays)  before  the date of this  Agreement,  confirming  that  they are
independent  accountants  within  the  meaning  of  the  Exchange  Act  and  the
applicable published rules and regulations  thereunder and stating to the effect
that in their opinion the audited financial  statements and financial  statement
schedules included in the Company's Latest 10-KSB and reported on by them comply
as to form in all material respects with the applicable accounting  requirements
of the Exchange Act and the related published rules and regulations.

          (b)  In  addition,  prior to the date (the  "Mailing  Date") the Proxy
Statement  is mailed to the  shareholders  of the  Company,  the  Company  shall
deliver to Wavetech a letter  from  Schnitzer & Kondub,  P.C.  addressed  to the
Company  and  Wavetech  and  dated a date  not  more  than  one  day  (excluding
Saturdays,  Sundays and holidays) before the Mailing Date,  confirming that they
are  independent  accountants  within the  meaning of the  Exchange  Act and the
applicable published rules and regulations  thereunder and stating to the effect
that:

               (i)  in  their  opinion  the  audited  financial  statements  and
financial statement schedules included in the Joint  Prospectus/Proxy  Statement
and  reported on by them  comply as to form in all  material  respects  with the
applicable accounting requirements of the Exchange Act and the related published
rules and regulations;

               (ii) on the basis of a reading  of the  amounts  included  in the
Joint  Prospectus/Proxy  Statement in response to Item 301 of Regulation S-K and
of the latest unaudited  consolidated financial statements made available by the
Company  and the  Subsidiaries  and the latest  unaudited  financial  statements

                                       45
<PAGE>

included in the Joint Prospectus/Proxy Statement relating to the Company and the
Subsidiaries;  carrying out certain specified procedures (but not an examination
in  accordance  with  generally  accepted  auditing  standards)  which would not
necessarily  reveal  matters of  significance  with  respect to the comments set
forth  in  such  letter;  a  reading  of  the  minutes  of the  meetings  of the
shareholders,  directors  and  executive  committees  of  the  Company  and  the
Subsidiaries;  and  inquiries  of  certain  officials  of the  Company  and  the
Subsidiaries who have responsibility for financial and accounting matters of the
Company and the  Subsidiaries  as to transactions  and events  subsequent to the
date  of the  latest  unaudited  financial  statements  included  in  the  Joint
Prospectus/Proxy Statement relating to the Company and the Subsidiaries, nothing
came to their attention which would cause them to believe that:

                    (A)  the  unaudited  financial  statements  included  in the
Joint  Prospectus/Proxy  Statement  of the Company and the  Subsidiaries  do not
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements of the Exchange Act and with the published rules and regulations of
the SEC with  respect  to proxy  statements;  or that said  unaudited  financial
statements  are not fairly  presented  in  conformity  with  generally  accepted
accounting  principles applied on a basis substantially  consistent with that of
the  audited  financial  statements  included  in  the  Joint   Prospectus/Proxy
Statement and reported on by them; or

                    (B)  with  respect to the period  subsequent  to the date of
the latest unaudited financial statements included in the Joint Prospectus/Proxy
Statement relating to the Company and the Subsidiaries,  there were any changes,
at a specified date not more than five days  (excluding  Saturdays,  Sundays and
holidays) prior to the date of the letter,  in the long-term debt of the Company
and the  Subsidiaries  or capital  stock of the Company or any  decreases in the
cash and cash equivalents,  marketable securities or shareholders' equity of the
Company and the Subsidiaries as compared with the amounts shown on the unaudited
consolidated balance sheet included in the Joint Prospectus/Proxy  Statement, or
for the  period  from  the date of the  latest  unaudited  financial  statements
included in the Joint Prospectus/Proxy Statement relating to the Company and the
Subsidiaries,  to such specified date there were any decreases, as compared with
the  corresponding  period  in the  preceding  year,  in  income  (loss)  before
extraordinary  items, or in total or per share amounts of net income (loss),  of
the  Company  and the  Subsidiaries,  except in all  instances  for  changes  or
decreases  set  forth  in such  letter,  in  which  case  the  letter  shall  be
accompanied by an explanation by the Company as to the significance thereof; and

               (iii) they have performed certain other specified  procedures as 
a result of which they  determined  that certain  information  of an accounting,
financial or statistical  nature (which is limited to  accounting,  financial or
statistical  information  derived  from the  general  accounting  records of the
Company and the Subsidiaries) set forth in the Joint Prospectus/Proxy  Statement
as reasonably  designated by Wavetech,  insofar as it relates to the Company and
the  Subsidiaries,  agrees  with the  accounting  records of the Company and the
Subsidiaries, excluding any legal interpretation.

     5.4  EXPENSES.  In no event shall the aggregate costs and expenses incurred
by the Company and Wavetech in connection  with this  Agreement,  the Merger and
the  transactions  contemplated  thereby  exceed  $400,000.  The parties  hereto
acknowledge  and agree that the  expenses to be paid by them  according  to this


                                       46
<PAGE>

Section 5.4 shall  include,  but not be limited to, all legal fees and  expenses
incurred in connection  with the  negotiation and preparation of this Agreement,
the Joint  Proxy/Prospectus  and all  matters  contemplated  thereby  or related
thereto,  accounting fees and expenses,  SEC registration  fees,  Nasdaq listing
fees, "blue sky" fees and expenses, fees associated with filings pursuant to the
Hart-Scott-Rodino   Antitrust   Improvements   Act  of  1976,  as  amended  (the
"Hart-Scott  Act"),  transfer  agent  fees,  fairness  opinions  and  investment
advisory services.

     5.5  ADDITIONAL  AGREEMENTS.  Subject  to the terms and  conditions  herein
provided,  each of the parties  hereto agrees to use all  reasonable  efforts to
take,  or cause to be taken,  all  action  and to do,  or cause to be done,  all
things  necessary,  proper or  advisable  to  consummate  and make  effective as
promptly  as  practicable  the  transactions  contemplated  by  this  Agreement,
including using reasonable efforts to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings,  including, but
not limited to, any required filings under the Hart-Scott Act and submissions of
information requested by governmental authorities.

     5.6  NO  NEGOTIATIONS,  ETC. The Company shall not (nor shall it permit any
of the Subsidiaries to), directly or indirectly,  through any officer, director,
agent or otherwise,  solicit,  initiate or encourage  submission of any inquiry,
proposal  or offer  from any  person  or entity  (including  any of its or their
officers  or  employees)  other  than  Wavetech  relating  to  any  liquidation,
dissolution,  recapitalization, merger, consolidation or acquisition or purchase
of all or a material  portion of the assets of, or any equity  interest  in, the
Company or any Subsidiary or other similar  transaction or business  combination
involving  the Company or any  Subsidiary,  or,  unless the  Company's  Board of
Directors  receives a written opinion from the Company's outside counsel stating
that there would be a material  risk of  liability on the part of the members of
the Company's Board of Directors to the Company's shareholders for failure to do
so, participate in any discussions or negotiations  regarding, or furnish to any
other person any information with respect to, or otherwise  cooperate in any way
with,  or assist or  participate  in,  facilitate  or  encourage,  any effort or
attempt by, or consider,  entertain  or accept any  proposal or offer from,  any
other  person or entity to do or seek any of the  foregoing.  The Company  shall
promptly  notify  Wavetech if any such proposal or offer, or any inquiry from or
contact with any person with respect thereto, is made and shall promptly provide
Wavetech  with such  information  regarding  such  proposal,  offer,  inquiry or
contact as Wavetech may request.

     5.7  NOTIFICATION OF CERTAIN  MATTERS.  Each party shall give prompt notice
to each  other  party of (a) the  occurrence  or  failure to occur of any event,
condition,  fact or circumstance  which occurrence or failure would be likely to
cause any  representation or warranty on its part contained in this Agreement to
be untrue or inaccurate at, or at any time prior to, the Effective Time, and (b)
any  material  failure of such party,  or any  officer,  director,  shareholder,
employee or agent thereof, to comply with or satisfy any covenant,  condition or
agreement to be complied with or satisfied by it hereunder.

     5.8  ACCESS  TO   INFORMATION;   CONFIDENTIALITY.   (a)  Wavetech  and  its
attorneys,  accountants,  consultants and representatives shall continue to have
access  to the books and  records  of the  Company  and such  other  information
pertaining  to  the  business  and  assets  of the  Company  as  Wavetech  shall


                                       47
<PAGE>

reasonably request, and the Company and its attorneys, accountants,  consultants
and  representatives  shall  continue to have access to the books and records of
Wavetech  and such other  information  pertaining  to the business and assets of
Wavetech as the Company shall reasonably  request,  and each of Wavetech and the
Company shall provide the other with reasonable access to its officers and other
personnel.  

          (b)  Each party shall treat in confidence  all  documents,  materials,
and other information  which it has and shall have obtained  regarding the other
party during the course of the  negotiations  leading to the consummation of the
transactions  contemplated by this Agreement  (whether  obtained before or after
the date of this  Agreement)  and the  preparation  of this  Agreement and other
related  documents.  The  obligation  of each  party  to treat  such  documents,
materials and other information in confidence shall not apply to any information
which (i) such party can  demonstrate  was already  lawfully  in its  possession
prior to the disclosure  thereof by the other party, (ii) is known to the public
and did not become so known through any violation of a legal  obligation,  (iii)
became  known  to the  public  through  no fault  of such  party,  (iv) is later
lawfully  acquired  by such party  from other  sources,  (v) is  required  to be
disclosed  under  the  provisions  of any  Federal,  state or local  statute  or
regulation issued by a duly authorized agency,  board or commission  thereof, or
(vi) is required to be  disclosed  by a rule or order of any court of  competent
jurisdiction. Each party agrees, if it breaches any of the terms of this SECTION
5.8(b),  it  will  consent  to the  issuance  of a  temporary  and/or  permanent
injunction  by any court of  competent  jurisdiction  enjoining  such party from
continuing  to breach the terms of this SECTION  5.8(b).  In the event that this
Agreement  shall be terminated  for any reason,  the parties  hereto shall,  and
shall cause  their  respective  officers,  directors,  employees  and agents to,
promptly  return  any and all  copies  of all  documents,  materials  and  other
information which are  confidential,  proprietary or otherwise relate to a trade
secret of the other party which was received in connection  with the negotiation
of the transactions  contemplated by this Agreement. 

     5.9  SHAREHOLDER  CLAIMS.  The Company shall not settle or  compromise  any
claim  brought  by any  present,  former  or  purported  holder  or owner of any
securities  of the  Company  in  connection  with the Merger  without  the prior
written consent of Wavetech.

     5.10 CONSENTS.  As  promptly as  practicable  after the  execution  of this
Agreement,  each party to this Agreement (a) shall make all filings (if any) and
give  all  notices  (if any)  required  to be made  and  given by such  party in
connection  with the  Merger  and the other  transactions  contemplated  by this
Agreement,  and (b) shall use all commercially  reasonable efforts to obtain all
consents  (if any)  required to be obtained  (pursuant  to any  applicable  law,
regulation,  contract or  agreement,  or  otherwise) by such party in connection
with the  Merger  and the other  transactions  contemplated  by this  Agreement.
Wavetech  shall (upon  request)  promptly  deliver to the Company a copy of each
such filing  made,  each such  notice  given and each such  consent  obtained by
Wavetech  during  the  period  subsequent  to the date  hereof  and prior to the
Effective  Time;  and the  Company  shall  (upon  request)  promptly  deliver to
Wavetech a copy of each such filing  made,  each such notice given and each such
consent obtained by the Company during the period  subsequent to the date hereof
and prior to the Effective Time.

                                       48
<PAGE>

     5.11 STATE  SECURITIES  LAW  COMPLIANCE.  Wavetech  shall use  commercially
reasonable  efforts to (a) qualify,  prior to the Effective  Time,  the Wavetech
Common Stock to be issued  pursuant to the Merger under state "blue sky" laws of
every jurisdiction of the United States in which (i) any registered  shareholder
of the  Company  has an address on the  records of the Company as of the date of
this agreement, and (ii) an exemption from the qualification  requirements under
such laws is unavailable  with respect to the issuance of Wavetech  Common Stock
in the Merger, and (b) qualify, prior to the Effective Time, the Assumed Options
and Assumed  Warrants under the state "blue sky" laws of every  jurisdiction  of
the United  States in which (i) the  records of the  Company,  as of the date of
this  Agreement,  indicate  that a holder of such  Assumed  Options  or  Assumed
Warrants  resides,  and (ii) an exemption  from the  qualification  requirements
under such laws is unavailable.

     5.12 AFFILIATE   AGREEMENTS.   The  Company  shall  use  all   commercially
reasonable efforts to cause each Company-Affiliated Person identified on Exhibit
4 (and any other Person that  Wavetech  notifies the Company may  reasonably  be
deemed to be an "Affiliate" of the Company for purposes of the Securities  Act),
to execute  and  deliver to  Wavetech,  as  promptly  as  practicable  after the
execution of this  Agreement,  an Affiliate  Agreement in the form of Exhibit 5,
which Affiliate Agreement shall include,  specifically,  but without limitation,
an agreement to vote such shares in favor of the Merger and such other proposals
to be voted upon at the Company  Shareholders'  Meeting.  Wavetech shall use all
commercially reasonable efforts to cause each Wavetech-Affiliated  Person listed
on Exhibit 6 and each other  Person  that  could  reasonably  be deemed to be an
"Affiliate"  of  Wavetech  for  purposes  of the  Securities  Act to execute and
deliver to Wavetech, as promptly as practical after execution of this Agreement,
an Affiliate Agreement in the form of Exhibit 5.

     5.13 COMMERCIALLY  REASONABLE  EFFORTS.  During the Pre-Closing Period, (a)
the  Company  shall  use  all  commercially  reasonable  efforts  to  cause  the
conditions  set forth in Sections 6.1 and 6.3 to be satisfied on a timely basis,
and (b)  Wavetech  shall use all  commercially  reasonable  efforts to cause the
conditions set forth in Section 6.1 and 6.2 to be satisfied on a timely basis.

     5.14 TAX MATTERS.  Prior to the Closing, (a) Wavetech and the Company shall
execute  and  deliver  to  Squire,  Sanders  &  Dempsey  L.L.P.   Representation
Certificates in substantially the forms of Exhibits 7 and 8 (which shall be used
in connection with any legal opinion  contemplated  by this  Agreement,  and (b)
each of the  Company-Affiliated  Persons  listed on Exhibit 5 shall  execute and
deliver to  Squire,  Sanders & Dempsey  L.L.P.  a  Shareholders'  Representation
Certificate in the form of Exhibit 9.

     5.15 BOARD OF DIRECTORS.  Contemporaneously  with the  consummation  of the
Merger,  persons designated by the Company (the "Company  Nominees") pursuant to
Section 1.5 shall be appointed to  Wavetech's  board of directors to serve until
the  first  annual  meeting  of  shareholders  of  Wavetech  to occur  following
consummation  of the Merger.  The Board of  Directors of the  Surviving  Company
shall agree, except to the extent that they shall have a reasonable  significant
objection  at such time,  to nominate  and support  the  persons  designated  by
Wavetech (the "Wavetech  Nominees")  pursuant to Section 1.5 for election to the
Surviving  Corporation's  board of  directors  at the first  annual  meeting  of
shareholders of the Surviving Corporation to occur following consummation of the

                                       49
<PAGE>

Merger.  If the seat on the Surviving  Corporation's  board of directors held by
the  Wavetech  Nominees  shall  become  vacant for any reason  during the period
commencing upon  consummation of the Merger and ending on the date of the second
annual meeting of shareholders  of the Surviving  Corporation to occur following
consummation of the Merger, the Surviving  Corporation's  agrees,  except to the
extent the Surviving  Corporation shall have a reasonable  significant objection
at such time,  to appoint to the Surviving  Corporation's  board of directors to
serve the remaining  term of such Wavetech  Nominees a person  designated by the
other Wavetech Nominee.

     5.16 INDEMNIFICATION.

          (a)  The  Articles  of  Incorporation  and  Bylaws  of  the  Surviving
Corporation  shall contain the same provisions with respect to  indemnification,
advancement and director  exculpation set forth in the Articles of Incorporation
and Bylaws of Wavetech on the date of this Agreement, which provisions shall not
be amended,  repealed or otherwise  modified for a period of six (6) years after
the  Effective  Time in any  manner  that  would  adversely  affect  the  rights
thereunder of persons who at any time prior to the Effective  Time were entitled
to   indemnification,   advancement  or   exculpation   under  the  Articles  of
Incorporation or Bylaws of Wavetech in respect of actions or omissions occurring
at or prior to the Effective Time.

          (b)  From and after the  Effective  Time,  the  Surviving  Corporation
shall  indemnify,  defend and hold  harmless  the present  and former  officers,
directors and employees of the Company (collectively, the "Indemnified Parties")
against all losses, expenses,  claims, damages,  liabilities or amounts that are
paid in settlement of (with approval of Wavetech and the Surviving Corporation),
or  otherwise  in  connection  with,  any claim,  action,  suit,  proceeding  or
investigation  (a  "Claim"),  based in whole  or in part on the fact  that  such
person is or was such a director, officer or employee and arising out of actions
or omissions  occurring at or prior to the  Effective  Time, in each case to the
fullest  extent  permitted  under the Nevada  law,  (and shall pay  expenses  in
advance  of the  final  disposition  of any such  action or  proceeding  to each
Indemnified  Party to the fullest  extent  permitted  under the Nevada law, upon
receipt  from  the  Indemnified  Party  to whom  expenses  are  advanced  of the
undertaking to repay such advances.

          (c)  Any Indemnified Party wishing to claim indemnification under this
Section  5.18,  upon  learning of any such  Claim,  shall  notify the  Surviving
Corporation  (although the failure so to notify the Surviving  Corporation shall
not relieve the Surviving  Corporation from any liability that it may have under
this Section 5.16, except to the extent such failure materially  prejudices such
party).  Wavetech and the Surviving  Corporation  shall have the right to assume
the defense  thereof and the Surviving  Corporation,  including its  affiliates,
shall not be liable to such Indemnified  Parties for any legal expenses of other
counsel or any other expenses  subsequently incurred by such Indemnified Parties
in  connection  with  the  defense  thereof,  except  that if  Wavetech  and the
Surviving Corporation elect not to assume such defense or there is a conflict of
interest between, or different defenses exist for the Surviving  Corporation and
the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to them (and  reasonably  satisfactory  to the  Surviving  Corporation)  and the
Surviving Corporation shall pay all reasonable fees and expenses of such counsel

                                       50
<PAGE>

for the  Indemnified  Parties  promptly as  statements  therefor  are  received;
PROVIDED, HOWEVER, that (i) the Surviving Corporation, including its affiliates,
shall not, in connection  with any one such action or proceeding or separate but
substantially  similar  actions or  proceedings  arising out of the same general
allegations,  be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all  Indemnified  Parties except to the extent that
local counsel,  in addition to such parties'  regular  counsel,  is necessary or
desirable in order to effectively defend against such action or proceeding, (ii)
the Surviving  Corporation  and the  Indemnified  Parties will  cooperate in the
defense of any such matter, and (iii) the Surviving  Corporation,  including its
affiliates,  shall not be liable for any settlement  effected without Wavetech's
prior  written  consent,  which  consent  will not be  unreasonably  withheld or
delayed,  and  PROVIDED,  FURTHER,  however,  that  the  Surviving  Corporation,
including  its  affiliates,  shall  not have  any  obligation  hereunder  to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine,  and such  determination  shall have become  final and not subject to
further appeal, that the indemnification of such Indemnified Party in the manner
contemplated  hereby is prohibited by applicable law. No Indemnified Party shall
consent to entry of judgment or enter into any settlement  that does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release, in form and substance reasonably satisfactory to
such  Indemnified  Party,  from  all  liability  in  respect  of such  claim  or
litigation for which such Indemnified Party would be entitled to indemnification
hereunder.

          (d)  This Section 5.16 is intended to be for the benefit of, and shall
be enforceable by, the Indemnified  Parties referred to herein,  their heirs and
personal  representatives and shall be binding on the Surviving  Corporation and
their respective successors and assigns.

     5.17 NASDAQ  LISTING.  To the extent it is at the time  eligible  to do so,
Wavetech shall use all reasonable efforts to cause the shares of Wavetech Common
Stock to be issued in the Merger and the shares of Wavetech  Common  Stock to be
reserved for issuance under the Assumed  Options and the Assumed  Warrants to be
approved for listing on the Nasdaq SmallCap  Market,  subject to official notice
of  issuance,  prior  to the  Closing  Date.  Notwithstanding  anything  in this
Agreement to the contrary, the de-listing of Wavetech Common Stock subsequent to
the  date  of  this  Agreement  shall  not  be  deemed  to be a  breach  of  any
representation,  warranty or covenant of  Wavetech  made in this  Agreement  and
shall not be a basis for the Company to terminate this Agreement.

     5.18 EMPLOYEES.  Following the Effective  Time,  the Surviving  Corporation
shall honor in accordance with their terms all employee  benefit plans disclosed
by the  Company  under  the  caption  "Employee  Benefit  Plans"  under  the DCI
Disclosure Schedule, and all accrued benefits vested thereunder. Wavetech agrees
to provide,  after the Effective  Time, or cause the  Surviving  Corporation  to
provide,   employees  of  the  Company,  not  otherwise  covered  by  collective
bargaining agreements,  with employee benefits in the aggregate substantially no
less  favorable than those benefits  provided to Wavetech's  similarly  situated
employees for a period ending on the second anniversary of the Effective Time.

                                       51
<PAGE>

                                   ARTICLE VI

                                   CONDITIONS

     6.1  CONDITIONS  TO  OBLIGATIONS  OF EACH PARTY TO EFFECT THE  MERGER.  The
respective  obligations  of each party to effect the Merger  shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:

          (a)  this Agreement  (including  without limitation the plan of merger
contained  herein)  and the  Merger,  and,  in the case of  Wavetech  only,  the
issuance of  Wavetech  Common  Stock as a result of the Merger,  shall have been
approved and adopted by the requisite vote of the  shareholders  of Wavetech and
the  Company as may be  required  by law,  by the rules of the  Nasdaq  SmallCap
Market, and by any applicable provisions of their respective charter and bylaws;

          (b)  the Form S-4 shall have been declared effective by the SEC and no
order or other  declaration  suspending the  effectiveness of the S-4 shall have
been issued or promulgated;

          (c)  there shall not be  threatened,  instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign,  (i)  challenging or seeking to make illegal,  or to delay or otherwise
directly or indirectly to restrain or prohibit,  the consummation of the Merger,
or seeking  to obtain  material  damages in  connection  with the  Merger,  (ii)
seeking to prohibit direct or indirect ownership or operation by Wavetech of all
or a  material  portion  of the  business  or  assets  of the  Company  and  the
Subsidiaries or of Wavetech and its  Subsidiaries,  or to compel Wavetech or any
of its  Subsidiaries or the Company or any of the  Subsidiaries to dispose of or
to hold  separately  all or a  material  portion  of the  business  or assets of
Wavetech  and its  subsidiaries  or of the  Company and the  Subsidiaries,  as a
result of the  Merger,  (iii)  seeking to impose or confirm  limitations  on the
ability of Wavetech  effectively to exercise  directly or indirectly full rights
of  ownership  of any shares of Company  Common  Stock on all  matters  properly
presented  to the  Company's  shareholders,  (iv)  seeking to require  direct or
indirect  divestiture  by Wavetech of any shares of Company  Common Stock or any
shares of the Surviving  Corporation to be issued in the Merger,  (v) seeking or
causing any material  diminution in the direct or indirect  benefits expected to
be  derived  by  Wavetech  a result  of the  transactions  contemplated  by this
Agreement,  (vi) invalidating or rendering  unenforceable any material provision
of  this  Agreement  (including  without  limitation  any  of  the  exhibits  or
attachments hereto), (vii) which otherwise might materially adversely affect the
Company  and the  Subsidiaries  or  Wavetech  and its  subsidiaries,  or  (viii)
otherwise  relating to the  transactions  contemplated  by this Agreement or the
Merger;

          (d)  there shall not have occurred (i) any general  suspension  of, or
limitation on prices for, trading in securities on the Nasdaq SmallCap Market or
the Nasdaq National  Market,  (ii) a declaration of a banking  moratorium or any
suspension  of  payments  in  respect  of  banks  in the  United  States  or any
limitation  by United States  authorities  on the extension of credit by lending
institutions,   (iii)  a  commencement  of  war,  armed   hostilities  or  other
international or national calamity  directly or indirectly  involving the United


                                       52
<PAGE>

States, (iv) any limitation by any governmental authority on, or any other event
which, in the sole judgment of Wavetech, might affect the extension of credit by
banks or other lending  institutions in the United States, or (v) in the case of
any of the foregoing  existing at the date hereof,  a material  acceleration  or
worsening thereof;

          (e)  each of Wavetech,  the Company and their respective  Subsidiaries
shall have obtained each material  consent and approval  necessary in order that
the Merger and the transactions  contemplated  herein not constitute a breach or
violation  of,  or  result  in a right of  termination  or  acceleration  or any
encumbrance on any of their respective assets pursuant to the provisions of, any
agreement, arrangement or understanding or any license, franchise or permit;

          (f)  there shall have been no damage, destruction or loss of or to any
property or properties owned or used by the Company or any of the  Subsidiaries,
whether  or not  covered by  insurance,  which in the  aggregate  has a material
adverse effect on the Company and the Subsidiaries, taken as a whole;

          (g)  the principal  terms of this  Agreement and the Merger shall have
been approved and adopted by the Company's  shareholders  in accordance with all
applicable laws and regulations and the Company's  Articles of Incorporation and
By-Laws; and

          (h)  no party hereto shall have terminated this Agreement as permitted
herein.

     6.2  ADDITIONAL  CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of
the Company to effect the Merger is also subject to the following conditions:

          (a)  the  representations  and  warranties  of  Wavetech  set forth in
Article 2 shall be true and correct in all material respects as of the Effective
Time as if made at and as of the  Effective  Time,  and  Wavetech  shall  in all
material respects have performed each obligation and agreement and complied with
each  covenant to be performed  and complied with by it hereunder at or prior to
the Effective Time. A representation  or warranty that is expressly subject to a
materiality  limitation shall not be subject to a further materiality limitation
as a result of the use of the phrase "in all material respects" in the preceding
sentence;

          (b)  Wavetech  shall have  furnished to the Company a  certificate  in
which  Wavetech  shall  certify that  Wavetech has no reason to believe that the
conditions set forth in Section 6.2(a) have not been fulfilled;

          (c)  Wavetech  shall have  furnished  to the Company (i) a copy of the
text of the  resolutions  by which the corporate  action on the part of Wavetech
necessary  to  approve  this   Agreement  and  the  Merger  were  taken,   (iii)
certificates  executed  on  behalf  of  Wavetech  by  its  respective  corporate
secretary or assistant  corporate  secretary  certifying to the Company, in each
case,  that such copy is a true,  correct and complete copy of such  resolutions
and that  such  resolutions  were  duly  adopted  and have not been  amended  or
rescinded, and (iii) an incumbency certificate executed on behalf of Wavetech by


                                       53
<PAGE>

its respective corporate secretary or assistant corporate secretary  certifying,
in each case, the signature and office of each officer  executing this Agreement
or any  other  agreement,  certificate  or other  instrument  executed  pursuant
hereto;

          (d)  the Company shall have received a letter addressed to the Company
from Squire,  Sanders & Dempsey L.L.P.,  based on customary reliance and subject
to customary qualifications, to the effect that:

               (i)  Wavetech  is a  corporation  validly  existing  and in  good
standing under the laws of the State of Nevada.

               (ii) Wavetech  has  the  corporate   power  to   consummate   the
transactions on its part contemplated by this Agreement. Wavetech has duly taken
all requisite  corporate action to authorize this Agreement;  and this Agreement
has been duly executed and delivered by Wavetech and  constitutes  the valid and
binding obligation of Wavetech.

               (iii) The authorized  capital of Wavetech  consists of 50,000,000
shares of capital stock, designated "Common Stock," having a par value of $0.001
per  share,  of  which  the  number  of  shares  indicated  in such  letter  are
outstanding,  all of which were duly and  validly  issued and are fully paid and
non-assessable,  and 10,000,000 shares of capital stock,  designated  "Preferred
Stock,"  having a par value of $.001 per  share,  of which the  number of shares
indicated  in such  letter are  outstanding,  all of which were duly and validly
issued and are fully paid and non-assessable.

               (iv) Each of the  Subsidiaries is a corporation  validly existing
and in good standing under the laws of its jurisdiction of incorporation.

               (v)  Each of the  Subsidiaries is a corporation  validly existing
and in good standing under the laws of its jurisdiction of incorporation.

               (vi) No  actions  are  required  to be taken in order to make the
Merger  effective  which have not been taken on or prior to the delivery of such
letter except the delivery of the articles of merger contemplated in Section 1.3
to the Secretary of State of the State of Nevada in accordance  with Nevada Law;
and

          (e)  a  letter  from  a  qualified  investment  banking  or  financial
advisory  firm  confirming  the fairness to the  Company's  shareholders  from a
financial point of view of the  consideration to be paid in the Merger (the form
of which  letter  shall have been  received by the Company for  inclusion in the
Joint   Prospectus/Proxy   Statement   prior  to  the   filing   of  the   Joint
Prospectus/Proxy  Statement  with the SEC)  shall  have  been  delivered  to the
Company's  Board of Directors  prior to the Mailing Date and shall not have been
subsequently withdrawn or amended;

          (f)  Wavetech's Closing Balance Sheet reflects aggregate cash and cash
equivalents  of not less than One  Million  Six  Hundred  Thousand  ($1,600,000)
(without giving effect to the expenses  payable by Wavetech  pursuant to Section
5.4); and


                                       54
<PAGE>

          (g)  The Reverse Stock Split shall have been effected.

     6.3  ADDITIONAL  CONDITIONS TO OBLIGATIONS OF WAVETECH.  The obligations of
Wavetech to effect the Merger are also subject to the following conditions:

          (a)  the  representations  and  warranties  of  the  Company  in  this
Agreement shall be true and correct in all material respects as of the Effective
Time as if made at and as of the  Effective  Time,  and the Company shall in all
material respects have performed each obligation and agreement and complied with
each  covenant to be performed  and complied with by it hereunder at or prior to
the Effective Time. A representation  or warranty that is expressly subject to a
materiality  limitation shall not be subject to a further materiality limitation
as a result of the use of the phrase "in all material respects" in the preceding
sentence;

          (b)  the Company  shall have  furnished to Wavetech a  certificate  in
which  the  Chief  Executive  Officer  of the  Company  shall  certify  that  an
appropriate inquiry has been made of the executive officers and employees of the
Company and the Subsidiaries having principal  responsibilities  for the matters
as to which representations and warranties have been made by the Company in this
Agreement and for the  performance  of the covenants of the Company set forth in
this Agreement,  and after  completion of such inquiry,  neither the Company nor
any of the  Subsidiaries  nor any of the individuals  executing such certificate
has any reason to believe that the  conditions  set forth in Section 6.3(a) have
not been fulfilled;

          (c)  the Company  shall have  furnished  to Wavetech (i) a copy of the
text of the resolutions by which the board of Directors and  shareholders of the
Company  approved this Agreement  (including,  without  limitation,  the plan of
merger contained herein) and the Merger;  (ii) a certificate  executed on behalf
of the Company by its corporate secretary  certifying to Wavetech that such copy
is a true,  correct  and  complete  copy  of  such  resolutions  and  that  such
resolutions were duly adopted and have not been amended or rescinded;  and (iii)
an  incumbency  certificate  executed on behalf of the Company by its  corporate
secretary  certifying  the signature and office of each officer  executing  this
Agreement  or any other  agreement,  certificate  or other  instrument  executed
pursuant hereto;

          (d)  Wavetech shall have received a letter  addressed to Wavetech from
the law firm of Alfano & Baroff,  based on  customary  reliance  and  subject to
customary qualifications, to the effect that:

               (i)  The Company is a  corporation  validly  existing and in good
standing under the laws of the State of Colorado.

               (ii) The   authorized   capital  of  the   Company   consists  of
500,000,000  shares of capital stock,  designated  "Common  Stock," having a par
value of $.0001  per  share,  of which the  number of shares  indicated  in such
letter are outstanding,  all of which were duly and validly issued and are fully
paid and  non-assessable,  and  5,000,000  shares of capital  stock,  designated
"Preferred  Stock," having a par value of $.0001 per share, of which the number


                                       55
<PAGE>

of shares indicated in such letter are  outstanding,  all of which were duly and
validly issued and are fully paid and non-assessable.

               (iii)Each of the  Subsidiaries is a corporation  validly existing
and in good standing under the laws of its jurisdiction of incorporation.

               (iv) The Company  owns all of the  outstanding  capital  stock of
each of the Subsidiaries, free and clear of any lien, claim or encumbrance.

               (v)  The  Company  has the  corporate  power  to  consummate  the
transactions on its part  contemplated  by this Agreement;  the Company has duly
taken  all  requisite  corporate  action to  authorize  this  Agreement  and the
articles of merger  contemplated  in Section  1.3; and this  Agreement  and such
articles  of merger have been duly  executed  and  delivered  by the Company and
constitute valid and binding obligations of the Company.

               (vi) No  actions  are  required  to be taken in order to make the
Merger  effective  which have not been taken on or prior to the delivery of such
letter except the delivery of the articles of merger contemplated in Section 1.3
to the Secretary of State of the State of Colorado in  accordance  with Colorado
Law;

          (e)  Wavetech  shall have  received a letter from  Schnitzer & Kondub,
P.C.,  dated the date of the Effective Time  "bringing  down" to a date not more
than three days  (excluding  Saturdays,  Sundays and holidays) prior thereto the
information specified in Section 5.3(b);

          (f)  Wavetech  shall  not have  discovered  any  fact or  circumstance
existing as of the date of this Agreement which has not been publicly  disclosed
by the Company as of the date of this Agreement regarding the business,  assets,
properties,  condition  (financial  or  otherwise),  results  of  operations  or
prospects of the Company and the Subsidiaries  which is,  individually or in the
aggregate  with other such facts and  circumstances,  materially  adverse to the
Company and the Subsidiaries  taken as a whole, or to the value of the shares of
Company Common Stock; and

          (g)  on the date of the Joint Proxy  Statement/Prospectus the Board of
Directors of Wavetech shall have received from  Wavetech's  financial  advisor a
written  update,  dated as of such date,  confirming the opinion  referred to in
Section 2.29 hereof.

                                  ARTICLE VII

                        TERMINATION, AMENDMENT AND WAIVER

     7.1  TERMINATION.  Subject to Section 7.4, this Agreement may be terminated
prior to the Effective Time:

                                       56
<PAGE>

          (a)  by Wavetech if there has been a material breach by the Company of
any covenant or  agreement of the Company set forth in this  Agreement or in any
other agreement or instrument  delivered to Wavetech,  which breach has not been
cured within thirty (30) days of the date on which written notice of such breach
was first  given to the  Company or which is not  reasonably  anticipated  to be
cured by the Scheduled Closing Time;

          (b)  by the Company if there has been a material breach by Wavetech of
any covenant or agreement  of Wavetech in this  Agreement,  which breach has not
been cured within 30 days of the date on which written notice of such breach was
first given to Wavetech or which is not  reasonably  anticipated  to be cured by
the Scheduled Closing Time;

          (c)  by  Wavetech if Wavetech  reasonably  determines  that the timely
satisfaction  of any  condition set forth in Section 6.1 or 6.3 by the Scheduled
Closing Time has become impossible (other than as a result of any failure on the
part of  Wavetech  to comply  with or perform  any  covenant  or  obligation  of
Wavetech set forth in this Agreement);

          (d)  by  Wavetech  at or  after  the  Scheduled  Closing  Time  if any
condition  set  forth  in  Section  6.1 or 6.3 has  not  been  satisfied  by the
Scheduled  Closing  Time  (other  than as a result of any failure on the part of
Wavetech to comply with or perform any  covenant or  obligation  of Wavetech set
forth in this Agreement); or

          (e)  by  Wavetech  if the Closing has not taken place on or before the
Final Date  (other  than as a result of any  failure on the part of  Wavetech to
comply with or perform any covenant or  obligation of Wavetech set forth in this
Agreement);

          (f)  by the  Company if the  Closing  has not taken place on or before
the Final Date (other than as a failure on the part of the Company or any of the
Designated  Persons to comply with or perform any  covenant  or  obligation  set
forth in this  Agreement or in any other  agreement or  instrument  delivered to
Wavetech);

          (g)  by the Company  if, on or prior to the end of the fifth  business
day  following  receipt by the  Company of the  Wavetech  Disclosure  Letter the
Company delivers written notice to Wavetech that the Wavetech  Disclosure Letter
discloses any material adverse change that has occurred, that will or that would
reasonably  be  expected  to  result  in  a  material   adverse  change  in  the
consolidated assets, financial condition,  operating results, business condition
or prospects, or financing arrangements of Wavetech and its Subsidiaries,  taken
as a whole,  from that as reflected in Wavetech's  Latest 10-KSB and  Wavetech's
Latest 10-QSB.

          (h)  by Wavetech if, on or prior to the end of the fifth  business day
following  receipt by Wavetech of the DCI Disclosure  Letter,  Wavetech delivers
written  notice to the Company  that the DCI  Disclosure  Letter  discloses  any
material adverse change that has occurred, that will or that would reasonably be
expected  to result in a material  adverse  change in the  consolidated  assets,


                                       57
<PAGE>

financial  condition,  operating results,  business  condition or prospects,  or
financing  arrangements of the Company and its  Subsidiaries,  taken as a whole,
from that as reflected in the  Company's  Latest 10-K and the  Company's  Latest
10-Q.

          (i)  by the mutual consent of Wavetech and the Company.

     As used herein,  the Final Date shall be August 31, 1999,  except that if a
temporary,  preliminary or permanent injunction or other order by any Federal or
state court that would prohibit or otherwise restrain consummation of the Merger
shall have been issued and shall remain in effect on August 31,  1999,  and such
injunction  shall not have become  final and  nonappealable,  either  party,  by
giving the other  written  notice  thereof on or prior to August 31,  1999,  may
extend the time for  consummation  of the Merger up to and including the earlier
of the date such injunction  shall become final and  nonappealable or August 31,
1999, so long as such party shall,  at its own expense,  use its best efforts to
have such injunction dissolved.

     7.2  TERMINATION PROCEDURES. If Wavetech wishes to terminate this Agreement
pursuant to Section 7.1(a),  Section  7.1(c),  Section 7.1(e) or Section 7.1(g),
Wavetech  shall deliver to the Company a written notice stating that Wavetech is
terminating this Agreement and setting forth a brief description of the basis on
which Wavetech is terminating this Agreement. If the Company wishes to terminate
this Agreement pursuant to Section 7.1(b), the Company shall deliver to Wavetech
a written  notice  stating that the Company is  terminating  this  Agreement and
setting  forth  a brief  description  of the  basis  on  which  the  Company  is
terminating this Agreement.

     7.3  EFFECT OF  TERMINATION.  If this  Agreement is terminated  pursuant to
Section 7.1, all further  obligations of the parties under this Agreement  shall
terminate;  provided,  however, that: (a) neither the Company nor Wavetech shall
be relieved of any obligation or liability arising from any prior breach by such
party of any  provision  of this  Agreement  or of any  obligation  or liability
arising  pursuant to Section 7.4. If this  Agreement is  terminated  pursuant to
Section 7.1 as a result of the inaccuracy of any  representation  or warranty of
Wavetech  set forth in  Article 2 or the  inaccuracy  of any  representation  or
warranty of the Company set forth in Article 3, the party making such inaccurate
representation  or warranty shall be subject to liability for the termination of
this  Agreement  as a  result  thereof  only  if  and  to the  extent  that  any
Responsible  Officer (as defined  below) of such party had actual  knowledge  of
such inaccuracy.  For purposes hereof,  "Responsible Officer" of any party shall
mean the chairman of the board of directors,  the chief executive  officer,  the
chief  operating  officer,  the chief  financial  officer,  any  executive  vice
president,  the  treasurer  or the  secretary  of such party.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

     8.1  AMENDMENT.  This  Agreement may not be amended except by an instrument
in writing  approved  by the parties to this  Agreement  and signed on behalf of


                                       58
<PAGE>

each of the parties  hereto;  provided,  however,  that,  after  approval of the
Merger by the shareholders of the Company or Wavetech,  no amendment may be made
which  changes the amount into which each share of Company  Common Stock will be
converted  in the  Merger or effects  any  change  which  would  materially  and
adversely affect the shareholders of the Company or Wavetech without the further
approval of the shareholders of the Company or Wavetech, as the case may be.

     8.2  WAIVER.  At any time prior to the Effective Time, any party hereto may
(a) extend the time for the  performance of any of the obligations or other acts
of any other party hereto or (b) waive  compliance  with any of the agreement of
any other party or with any conditions to its own obligations, in each case only
to the extent such  obligations,  agreements and conditions are intended for its
benefit.  No  failure  on the part of any party  hereto to  exercise  any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party  hereto in  exercising  any power,  right,  privilege or remedy under this
Agreement,  shall operate as a waiver of such power, right, privilege or remedy,
and no single or partial exercise of any such power, right,  privilege or remedy
shall  preclude  any other or future  exercise  thereof  or of any other  power,
right,  privilege or remedy.  No party hereto shall be deemed to have waived any
claim arising out of this Agreement,  or any power,  right,  privilege or remedy
under this Agreement,  unless the waiver of such claim, power, right,  privilege
or remedy is  expressly  set forth in a written  instrument  duly  executed  and
delivered on behalf of such party,  and any such waiver shall not be  applicable
or have any effect except in the specific instance in which it was given.

     8.3  PUBLIC  STATEMENTS.  Except as  required by  applicable  law, no party
shall make any public announcement or statement with respect to the Merger, this
Agreement  or any related  transaction  without the approval of the other party,
which  approval will not be  unreasonably  withheld or delayed.  Moreover,  each
party  agrees to consult  with the other  party prior to issuing any such public
announcement or statement.

     8.4  NOTICES.  All notices and other  communications  hereunder shall be in
writing and shall be sufficiently  given if made by hand delivery,  by telex, by
telecopier,  or by  registered  or certified  mail  (postage  prepaid and return
receipt  requested) to the parties at the following  addresses (or at such other
address for a party as shall be specified by it by like notice):


          If to Wavetech:                 Wavetech International, Inc.
                                          5210 E. Williams Circle
                                          Suite 200
                                          Phoenix, Arizona  85711
                                          Attn.:  Gerald I. Quinn

          With a copy to:                 Squire, Sanders & Dempsey L.L.P.
                                          40 N. Central Avenue, Suite 2700
                                          Phoenix, Arizona  85004
                                          Telecopy:  (602) 253-8129
                                          Attn:  Christopher D. Johnson, Esq.

                                       59
<PAGE>

          If to the Company or
          the Surviving Corporation:      DCI Telecommunications, Inc.
                                          611 Access Road
                                          Stratford, Connecticut  06497
                                          Attn.:  Joseph J. Murphy

          With a copy to:                 Alfano & Baroff
                                          814 Elm Street
                                          Manchester, New Hampshire  03101
                                          Attn.:  Paul J. Alfano, Esq.

          All such notices and other communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered;  five business days
after being deposited in the mail,  postage prepaid,  if delivered by mail; when
answered back, if telexed; and when receipt acknowledged, if telecopied.

     8.5  INTERPRETATION.  When  a  reference  is  made  in  this  Agreement  to
subsidiaries  of  Wavetech,  the word  "subsidiary"  means  any  "majority-owned
subsidiary"  (as  defined in Rule 12b-2  under the  Exchange  Act) of  Wavetech;
PROVIDED,  HOWEVER,  that  the  Company  shall  in no  event  and at no  time be
considered a subsidiary of Wavetech for purposes of this Agreement. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the  meaning  or  interpretation  of this  Agreement.  References  to
Sections and Articles  refer to sections and articles of this  Agreement  unless
otherwise stated.  Words such as "herein,"  "hereinafter,"  "hereof,"  "hereto,"
"hereby" and "hereunder," and words of like import,  unless the context requires
otherwise,  refer to this  Agreement  (including  the exhibits  and  attachments
hereto). As used in this Agreement,  the masculine,  feminine and neuter genders
shall be deemed to include the others if the context requires.

     8.6  SEVERABILITY.  If term,  provision,  covenant or  restriction  of this
Agreement is held by a court of competent  jurisdiction  to be invalid,  void or
unenforceable,   the  remainder  of  the  terms,   provisions,   covenants,  and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected,  impaired or invalidated  and the parties shall negotiate
in good faith to modify this  Agreement  to preserve  each  party's  anticipated
benefits under this Agreement.

     8.7  MISCELLANEOUS.  This Agreement  (together with all other documents and
instruments  referred to herein):  (a)  constitutes  the entire  agreement,  and
supersedes all other prior agreements and  undertakings,  both written and oral,
among the  parties,  with  respect  to the  subject  matter  hereof;  (b) is not
intended to confer upon any other person any rights or remedies  hereunder;  (c)
shall not be assigned by operation of law or otherwise, except that Wavetech may
assign all or any portion of their  rights  under this  Agreement  to any wholly
owned  subsidiary,  but  no  such  assignment  shall  relieve  Wavetech  of  its
obligations  hereunder,  and  except  that this  Agreement  may be  assigned  by
operation of law to any  corporation  with or into which Wavetech may be merged;
and (d) shall be governed in all respects,  including  validity,  interpretation


                                       60
<PAGE>

and effect, by the internal laws of the State of Arizona,  without giving effect
to the principles of conflict of laws thereof. This Agreement may be executed in
two or more counterparts which together shall constitute a single agreement.

     8.8  NON-SURVIVAL OF REPRESENTATIONS  AND WARRANTIES.  The  representations
and  warranties  of the  parties  set forth  herein  shall  terminate  as of the
Effective Time.

     8.9  ENTIRE AGREEMENT;  NO THIRD PARTY BENEFICIARIES;  RIGHTS OF OWNERSHIP.
This Agreement  (including the documents and the instruments referred to herein)
(a) constitutes the entire  agreement among the parties all prior agreements and
understandings,  both  written and oral,  among the parties  with respect to the
subject  matter  hereof,  other than any  confidentiality  agreement  previously
entered into among the parties,  which should survive the execution and delivery
of this  Agreement  and (b) except as provided in Sections 5.18 and 5.20, is not
intended to confer upon any person  other than the parties  hereto any rights or
remedies  hereunder.  The parties acknowledge that no party shall have the right
to acquire  or shall be deemed to have  acquired  shares of common  stock of the
other party pursuant to the Merger until consummation thereof.

                  [Remainder of Page Intentionally Left Blank.]


                                       61
<PAGE>

                                MERGER AGREEMENT


                                 SIGNATURE PAGE



     IN WITNESS WHEREOF,  Wavetech and the Company have caused this Agreement to
be  executed  on the date  first  written  above by  their  respective  officers
thereunder duly authorized.

                                       WAVETECH INTERNATIONAL, INC.


                                       By: /s/ Gerald I. Quinn
                                           -------------------------------------
                                       Name: Gerald I. Quinn
                                             -----------------------------------
                                       Title: President & CEO
                                              ----------------------------------

                                       DCI TELECOMMUNICATIONS, INC.


                                       By: /s/ Joseph J. Murphy
                                           -------------------------------------
                                       Name: Joseph J. Murphy
                                             -----------------------------------
                                       Title: President; CEO
                                              ----------------------------------





                                       62