EXHIBIT 10.12

              SECURITIES PURCHASE AGREEMENT DATED DECEMBER 23, 1998
           AMONG THE COMPANY, INTERNEXUS, S.A. AND FONDELEC ESSENTIAL
                           SERVICES GROWTH FUND, L.P.

                         ______________________________

                          SECURITIES PURCHASE AGREEMENT
                         ______________________________


                   SUBORDINATED EXCHANGEABLE PROMISSORY NOTES

                                       OF

                        CONVERGENCE COMMUNICATIONS, INC.

                          Dated as of December 23, 1998

<TABLE>
<CAPTION>
                                                  TABLE OF CONTENTS
Section                                                                                                        Page
<S>      <C>                                                                                                      <C>
1.       Definitions..............................................................................................1
2.       Issuance, Purchase and Sale of Securities................................................................6
                  2.1      Issuance of the Securities.............................................................6
         2.2      Sale and Purchase of the Securities.............................................................6
3.       Closing of Sale of Securities............................................................................7
4.       Covenants of the Company.................................................................................7
         4.1      Deliveries by the Company to the Purchasers on the Closing Date.................................7
                  (a)      Securities.............................................................................7
                  (b)      Opinion of Counsel.....................................................................7
                  (c)      Stockholders' Agreement................................................................7
                  (d)      Registration Rights Agreement..........................................................7
                  (e)      Officer's Certificate..................................................................7
                  (f)      Payment of Closing Fees................................................................7
         4.2      Deliveries by the Purchasers to the Company on the Closing Date.................................8
                  (a)      Purchase Price.........................................................................8
                  (b)      Stockholders' Agreement................................................................8
                  (c)      Registration Rights Agreement..........................................................8
5.       Representations and Warranties, Etc......................................................................8
         5.1      Organization and Qualification; Authority.......................................................8
         5.2      Corporate Authorization.........................................................................8
         5.3      No Conflict; Requisite Consents.................................................................9
         5.4      Capitalization..................................................................................9
         5.5      Litigation; Defaults...........................................................................10
         5.6      No Material Adverse Change.....................................................................10
         5.7      Employee Programs..............................................................................10
         5.8      Private Offerings..............................................................................12
         5.9      Company SEC Documents..........................................................................12
         5.10     Financial Statements; No Undisclosed Liabilities...............................................12
         5.11     Environmental Regulation, Etc..................................................................13
         5.12     Properties and Assets..........................................................................13
         5.13     Insurance......................................................................................13
         5.14     Employment Practices...........................................................................14
         5.15     Intellectual Property..........................................................................14
         5.16     Material Contracts.............................................................................14
         5.17     Taxes..........................................................................................14
         5.18     Licenses.......................................................................................15
         5.19     Transactions with Affiliates...................................................................15
         5.20     Federal Reserve Regulations....................................................................15
         5.21     Investment Company Act.........................................................................15
         5.22     Broker's or Finder's Commissions...............................................................15
         5.23     Books and Records..............................................................................15
         5.24     Disclosure.....................................................................................15
6.       Representations and Warranties of the Purchasers........................................................16
7.       Covenants of the Company................................................................................17
         7.1      Use of Proceeds................................................................................17
         7.2      Charter Documents..............................................................................17
         7.3      Ordinary Course................................................................................17
         7.4      Issuance of Securities.........................................................................17
         7.5      Dividends; Changes in Capital Stock............................................................17
         7.6      Change in Condition............................................................................18
         7.7      No Action......................................................................................18
         7.8      Replacement of Certificates....................................................................18
8.       Rights and Obligations of the Purchasers................................................................18
         8.1      Exchange Right.................................................................................18
         8.2      Reservation of Securities......................................................................18
         8.3      Anti-Dilution Provisions - Adjustment of Number of Shares of Capital Stock.....................19
                  (a)      Combinations and Subdivisions of Capital Stock........................................19
                  (b)      Distributions in Respect of Capital Stock.............................................19
                  (c)      Recapitalization, Reclassification and Succession.....................................19
                  (d)      Fractional Shares.....................................................................19
                  (e)      Issuance of Additional Shares of Capital Stock........................................20
                  (f)      Company to Prevent Dilution...........................................................20
         8.4      Notice to the Holder...........................................................................20
         8.5      Exchange Listing by the Company................................................................21
9.       Conditions to Closing...................................................................................22
         9.1      Conditions to the Company's Obligations........................................................22
         9.2      Conditions to the Purchasers' Obligations......................................................22
10.      Restrictions on Transfer................................................................................23
         10.1     Restrictive Legends............................................................................23
         10.2     Notice of the Proposed Transfer; Opinion of Counsel............................................23
11.      Miscellaneous...........................................................................................24
         11.1     Indemnification; Expenses, Etc.................................................................24
         11.2     Survival of Representations and Warranties.....................................................25
         11.3     Amendment and Waiver...........................................................................25
         11.4     Notices, Etc...................................................................................25
         11.5     Entire Agreement...............................................................................25
         11.6     Successors and Assigns.........................................................................26
         11.7     Agreement and Action of the Purchasers.........................................................26
         11.8     Expenses.......................................................................................26
         11.9     Descriptive Headings...........................................................................26
         11.10    Governing Law..................................................................................26
         11.11    Counterparts...................................................................................26
</TABLE>


                                    SCHEDULES

SCHEDULE 5.1      --       Qualified Jurisdictions and Subsidiaries

SCHEDULE 5.2      --       Authorization

SCHEDULE 5.3      --       Consents

SCHEDULE 5.4      --       Capitalization

SCHEDULE 5.5      --       Litigation; Defaults

SCHEDULE 5.6      --       Material Developments

SCHEDULE 5.7      --       ERISA

SCHEDULE 5.10     --       Undisclosed Liabilities

SCHEDULE 5.11     --       Environmental

SCHEDULE 5.12     --       Properties and Assets

SCHEDULE 5.13     --       Insurance

SCHEDULE 5.14     --       Employment Practices

SCHEDULE 5.15     --       Intellectual Property

SCHEDULE 5.16     --       Material Contracts

SCHEDULE 5.17     --       Taxes

SCHEDULE 5.18     --       Licenses

SCHEDULE 5.19     --       Transactions with Affiliates


                                    EXHIBITS

EXHIBIT A         --       Certificate of Designations of Series C Preferred 
                               Stock

EXHIBIT B         --       Form of Note

EXHIBIT C         --       Form of Registration Rights Agreement

EXHIBIT D         --       Stockholders' Agreement

EXHIBIT E         --       Form of Warrant

EXHIBIT F         --       Form of Opinion of Parsons Behle & Latimer

EXHIBIT G         --       List of DAC Aid Recipients

EXHIBIT H         --       Form of Exchange Notice

                          SECURITIES PURCHASE AGREEMENT

         This SECURITIES PURCHASE AGREEMENT ("Agreement"),  dated as of December
__, 1998, by and among Convergence  Communications,  Inc., a Nevada  corporation
(the "Company"), FondElec Essential Services Growth Fund, L.P., a Cayman Islands
limited partnership ("FESGF") and Internexus,  S.A., an Argentinian  corporation
("Internexus").  FESGF  and  Internexus  are also each  referred  to herein as a
"Purchaser," and collectively, the "Purchasers."

                              W I T N E S S E T H:

         WHEREAS,  the Company is in the process of raising  capital through the
sale by the Company of debt or equity securities  resulting in gross proceeds of
up to $35 million (the "Financing"); and

         WHEREAS,  the Company desires to issue and sell to the Purchasers,  and
the Purchasers desire to purchase from the Company, the Notes (as defined below)
in the aggregate  amount of $10,000,000 and the Warrants (as defined below),  on
the terms, and subject to the conditions, set forth herein.

         NOW,  THEREFORE,   in  consideration  of  these  premises,  the  mutual
covenants  and  agreements  set forth  herein  and for other  good and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

         1.  Definitions.  For  purposes  hereof  unless the  context  otherwise
requires, the following terms shall have the meanings indicated.  All accounting
terms not otherwise defined herein,  shall have the respective meanings accorded
to them under GAAP (as defined below).  Unless the context  otherwise  requires,
(i)  references  to a "Schedule" or an "Exhibit" are to a Schedule or an Exhibit
attached to this  Agreement,  (ii) references to a "section" are to a section of
this Agreement and (iii) any of the following  terms may be used in the singular
or the plural, depending on the reference.

                  "Affiliate"  means any Person (i) which directly or indirectly
through one or more  intermediaries  controls,  or is controlled by, or is under
common control with, the Company,  (ii) which  beneficially owns or holds 10% or
more of any class of the outstanding  Voting Stock of the Company or (iii) which
is a relative or spouse of such person, or any relative of such spouse,  who has
the same home as such person. The term "control" means the possession,  directly
or  indirectly,  of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of Voting Stock, by Contract
or otherwise.

                  "Agreement"  means this  Agreement,  as  amended,  modified or
supplemented  from time to time, in accordance  with the terms hereof,  together
with any exhibits, schedules or other attachments thereto.

                  "Benefit  Plans" has the meaning  ascribed  thereto in Section
5.7 hereof.

                  "Business Day" means any day that is not a Saturday,  a Sunday
or a day on which banking  institutions  in New York, New York are authorized or
obligated by Law, executive order or government decree to be closed.

                  "Capital Stock" means, with respect to any Person, any and all
shares,  interests,  participations,  rights  in or other  equivalents  (however
designated and whether  voting or  non-voting)  of such Person's  capital stock,
whether outstanding on the Closing Date or issued after the Closing Date and any
and  all  rights,  warrants  or  options  exercisable  or  exchangeable  for  or
convertible into such capital stock.

                  "Certificate  of   Designations"   means  the  Certificate  of
Designations  of the  Series C  Preferred  Stock,  substantially  in the form of
Exhibit A hereto.

                  "Charter  Documents"  has  the  meaning  ascribed  thereto  in
Section 5.1 hereof.

                  "Closing"  has the  meaning  ascribed  thereto  in  Section  3
hereof.

                  "Closing Date" has the meaning  ascribed  thereto in Section 3
hereof.

                  "Code" means the Internal  Revenue Code of 1986, and the rules
and regulations promulgated thereunder, as amended from time to time.

                  "Commission"  means the United States  Securities and Exchange
Commission or any other federal agency at the time  administering the Securities
Act.

                  "Common  Stock"  means the common  stock,  par value $.001 per
share, of the Company.

                  "Company" has the meaning ascribed thereto in the introduction
hereof.

                  "Company  Financial   Statements"  has  the  meaning  ascribed
thereto in Section 5.10 hereof.

                  "Company SEC  Documents" has the meaning  ascribed  thereto in
Section 5.9 hereof.

                  "Contracts" has the meaning  ascribed  thereto in Section 5.16
hereof.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, and the rules and regulations promulgated thereunder, as amended.

                  "ERISA   Affiliate"  means  any  trade  or  business  (whether
incorporated  or  unincorporated)  which is a  member  of a group  described  in
Section  414(b),  (c),  (m) or (o) of the Code,  of which the Company  also is a
member.

                  "ERISA  Affiliate  Title IV  Plan"  has the  meaning  ascribed
thereto in Section 5.7 hereof.

                  "Exchangeable  Securities" has the meaning ascribed thereto in
Section 8.4(b) hereof.

                  "Exchange Act" means the Securities  Exchange Act of 1934, and
the rules and regulations of the Commission promulgated thereunder, as amended.

                  "Exchange  Price" has the meaning  ascribed thereto in Section
8.1 hereof.

                  "Fair  Market  Value"  means,  with  respect  to the shares of
Common Stock  issuable upon  exchange of the Notes,  the lower of (a) the Market
Price on the date of exchange  of the Notes for Common  Stock or (b) the average
closing  sales  price per share of Common  Stock for the ten (10)  trading  days
immediately preceding the date of exchange of the Notes for Common Stock.

                  "Financing"   has  the   meaning   ascribed   thereto  in  the
introduction hereof.

                  "GAAP" means  generally  accepted  accounting  principles  and
practices  set  forth  in the  opinions  and  pronouncements  of the  Accounting
Principles Board and the American  Institute of Certified Public Accountants and
statements and pronouncements of the Financial  Accounting Standards Board or in
such other  statements  by such other entity as may be approved by a significant
segment of the accounting profession that are applicable to the circumstances as
of the date of determination.

                  "Governmental    Authority"    means   any   governmental   or
quasi-governmental  authority including, without limitation, any federal, state,
territorial,  county,  municipal  or other  governmental  or  quasi-governmental
agency, board, branch, bureau, commission, court, arbitration panel, department,
authority,  body or other  instrumentality  or political  unit or subdivision or
official thereof, whether domestic or foreign.

                  "Holder"  means any  Person  who now holds or shall  hereafter
acquire and hold the Notes.

                  "Indemnified  Party" or "Indemnified  Parties" has the meaning
ascribed thereto in Section 11.1(a) hereof.

                  "Intellectual  Property"  shall mean all  registered  patents,
trademarks,  product designations,  service marks, copyrights,  and applications
for any of the foregoing,  used, licensed, leased or owned, by a Person which is
material to the operations of such Person.

                  "Law" means any statute,  ordinance, code, rule, regulation or
order enacted,  adopted,  promulgated,  applied or followed by any  Governmental
Authority.

                  "License" or "Licenses"  has the meaning  ascribed  thereto in
Section 5.18 hereof.

                  "Lien"  means  any  security  agreement,  financing  statement
(whether or not filed) mortgage, lien (statutory or otherwise),  charge, pledge,
hypothecation,  conditional  sales  agreement,  adverse claim,  title  retention
agreement or other security interest,  encumbrance,  lien,  charge,  restrictive
agreement,  mortgage,  deed of trust,  indenture,  pledge,  option,  limitation,
exception to or other title defect in or on any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale, lease, consignment, or bailment given for security purposes, trust receipt
or other title retention agreement with respect to any Property or asset of such
Person, whether direct, indirect, accrued or contingent.

                  "Losses" has the meaning  ascribed  thereto in Section 11.1(a)
hereof.

                  "Market  Price"  means,  with  respect to the shares of Common
Stock  issuable  upon  exchange  of the  Notes,  (a) if the shares are listed or
admitted  for  trading on any  national  securities  exchange or included in The
Nasdaq National Market or Nasdaq SmallCap Market,  the last reported sales price
as  reported  on such  exchange  or market;  (b) if the shares are not listed or
admitted  for  trading on any  national  securities  exchange or included in The
Nasdaq  National  Market or Nasdaq  SmallCap  Market,  the  average  of the last
reported closing bid and asked quotation for the shares as reported on NASDAQ or
a similar service if NASDAQ is not reporting such information; (c) if the shares
are not listed or admitted  for trading on any national  securities  exchange or
included in The Nasdaq  National  Market or Nasdaq  SmallCap Market or quoted by
NASDAQ or a similar  service,  the  average of the last  reported  bid and asked
quotation  for the shares as quoted by a market maker in the shares (or if there
is more than one market  maker,  the bid and asked  quotation  shall be obtained
from two market  makers and the  average  of the  lowest bid and  highest  asked
quotation).  In the absence of any available  public  quotations  for the Common
Stock,  the Board of Directors of the Company shall  determine in good faith the
fair  value of the Common  Stock,  which  determination  shall be set forth in a
certificate by the Secretary of the Company.

                  "Material  Adverse Effect" has the meaning ascribed thereto in
Section 5.1 hereof.

                  "NASDAQ" means the National  Association of Securities Dealers
Automated Quotation System.

                  "Notes" means the Subordinated  Exchangeable  Promissory Notes
of the Company, substantially in the form of Exhibit B hereto.

                  "Person"  means any  individual,  entity or group,  including,
without limitation, individual,  corporation, limited liability company, limited
or general partnership,  joint venture, association, joint stock company, trust,
unincorporated   organization,   or   government  or  any  agency  or  political
subdivision thereof.

                  "Preferred  Stock" means the preferred  stock, par value $.001
per share, of the Company.

                  "Property"  means  any  interest  in any kind of  property  or
asset, whether real, personal or mixed, or tangible or intangible.

                  "Purchasers"   has  the  meaning   ascribed   thereto  in  the
introduction hereof.

                  "Registration  Rights Agreement" means the Registration Rights
Agreement  dated  as of the  date  hereof,  by and  among  the  Company  and the
Purchasers,  substantially in the form of Exhibit C hereto, as amended, modified
or supplemented from time to time in accordance with the terms thereof, together
with any exhibits, schedules or other attachments thereto.

                  "Regulation D" means Regulation D under the Securities Act.

                  "Restricted  Security"  has the  meaning  ascribed  thereto in
Section 10.2 hereof.

                  "Rule  144" means Rule 144 as  promulgated  by the  Commission
under the Securities Act, and any successor rule or regulation thereto.

                  "Rule 144A" means Rule 144A as  promulgated  by the Commission
under the Securities Act, and any successor rule or regulation thereto.

                  "Securities" means the Notes and the Warrants.

                  "Securities  Act" means the  Securities  Act of 1933,  and the
rules and regulations of the Commission promulgated thereunder, as amended.

                  "Series A Preferred Stock" means the Series A Preferred Stock,
par value $.001 per share, of the Company.

                  "Series B Preferred Stock" means the Series B Preferred Stock,
par value $.001 per share, of the Company.

                  "Series  C  Preferred  Stock"  shall  mean a class of stock or
series of  preferred  stock to be issued by the Company in  connection  with the
Financing  (and upon  exchange of the Notes as provided in Section  8.1),  which
class of stock or series of preferred  stock: (i) shall have the relative voting
rights,  designations,  preferences,  qualifications,  privileges,  limitations,
restrictions  and other special or relative rights  described in the Certificate
of Designations, and (ii) shall be senior to the Series B Preferred stock in its
rights to receive liquidating distributions.

                  "Stockholders'  Agreement" means the  Stockholders'  Agreement
dated as of the  date  hereof  by and  among  the  Company  and the  Purchasers,
substantially  in the  form  of  Exhibit  D  hereto,  as  amended,  modified  or
supplemented  from time to time in accordance  with the terms thereof,  together
with any exhibits, schedules or other attachments thereto.

                  "Significant   Subsidiaries"  means  the  following  entities:
Cablevisa,  S.A.,  Chispa  Dos,  Inc.,  InterAmerican  Net De  Venezuela,  S.A.,
Interamerican  Telecom,  Inc.,  Multicable,  S.A.,  WCI Cayman,  Inc. and WCI de
Venezuela, C.V.

                  "Subsidiary"   means   with   respect  to  any   Person,   any
corporation,   association  or  other  business   entity  of  which   securities
representing  more than 50% of the  combined  voting  power of the total  Voting
Stock (or in the case of an association or other business  entity which is not a
corporation,  more  than 50% of the  equity  interest)  is at the time  owned or
controlled,  directly or indirectly,  by that Person or one or more Subsidiaries
of that Person or a combination  thereof.  When used herein without reference to
any Person, "Subsidiary" means a Subsidiary of the Company.

                  "Taxes"  has the  meaning  ascribed  thereto in  Section  5.17
hereof.

                  "Transaction Documents" means,  collectively,  this Agreement,
the Notes, the Registration Rights Agreement,  the Stockholders'  Agreement, the
Warrants  and  any  and  all  agreements,  exhibits,  schedules,   certificates,
instruments and other documents delivered pursuant hereto and thereto.

                  "Voting  Stock"  means any class or classes  of Capital  Stock
pursuant  to which the  holders  thereof  have the  general  voting  power under
ordinary  circumstances  to vote for the  election  of  directors,  managers  or
trustees of any  Persons  (irrespective  of whether or not at the time,  Capital
Stock of any class or classes  will have,  or might  have,  voting  power by the
reason of the happening of any contingency).

                  "Warrants" means the warrants,  in  substantially  the form of
Exhibit E attached  hereto,  to acquire  shares of Common  Stock  which shall be
automatically  exercisable  without any action on the part of the Company on the
first day of each month  commencing  on February  1, 1999 in an amount  equal to
3.5% of the principal amount of the Notes then  outstanding  divided by the then
exercise price of the Warrant and pro rated for any period less than one month.

         2.  Issuance, Purchase and Sale of Securities

             2.1   Issuance of the  Securities.  The Company has  authorized the
issuance  and  sale of the  Securities  in the  aggregate  principal  amount  of
$10,000,000  to be acquired by the  Purchasers in  accordance  with the terms of
this Agreement.  Each Note will be issued in substantially  the form of the Note
attached hereto as Exhibit B. Each Warrant will be issued in  substantially  the
form of the Warrant attached hereto as Exhibit C.

            2.2    Sale and Purchase of the Securities. Subject to the terms and
conditions of this Agreement, on the Closing Date (as defined), the Company will
issue,  sell and deliver to each Purchaser and each Purchaser will purchase from
the  Company,  such  principal  amount of Notes and  Warrants,  as is  specified
opposite such Purchaser's name on the signature pages hereto. At the Closing (as
defined), the principal amount of the Notes and the Warrants shall be payable by
the Purchasers to the Company in cash by wire transfer of immediately  available
funds.

         3.  Closing of Sale of  Securities.  The  purchase  and delivery of the
Securities to be purchased by the Purchasers  hereunder  shall take place at the
offices of Swidler Berlin Shereff Friedman, LLP, 919 Third Avenue, New York, New
York 10022,  at a closing (the  "Closing") on or before  December 23, 1998 or at
such other  place or on such other date as the  Purchasers  and the  Company may
agree upon (such date on which the Closing  shall have  actually  occurred,  the
"Closing  Date").  At the  Closing,  the  Company  will  deliver  or cause to be
delivered to each  Purchaser the  Securities  to be purchased by such  Purchaser
pursuant hereto against  payment of the purchase price therefor.  The Securities
to be  purchased  by each  Purchaser  hereunder  shall be, with  respect to such
Purchaser, in the form of a single Note (or such greater number of Notes as each
Purchaser  may request no less than 48 hours prior to the  Closing) and Warrant,
dated the date of the Closing and registered in the Purchaser's  name or that of
its  nominee  (provided  to the  Company  no less  than 48  hours  prior  to the
Closing).

         4. Deliveries at the Closing.

            4.1    Deliveries  by the Company to the  Purchasers  on the Closing
Date. At the Closing,  the Company will deliver or cause to be delivered to each
Purchaser, against payment of the purchase price as provided herein:

                   (a)  Securities.  The  Notes and  Warrants,  as  provided  in
Section 3 hereof.

                   (b)  Opinion of Counsea.  A favorable  opinion  from  Parsons
Behle & Latimer, counsel for the Company, substantially in the form set forth in
Exhibit F,  addressed to the  Purchasers,  dated the Closing Date and  otherwise
satisfactory  in  substance  and form to the  Purchasers,  and their  respective
counsel.

                   (c)  Stockholders'  Agreement.  The Stockholders'  Agreement,
duly executed by the Company.

                   (d)  Registration  Rights Agreement.  The Registration Rights
Agreement, duly executed by the Company.

                   (e)  Officer's Certificate. A certificate,  dated the Closing
Date, of an officer of the Company, (i) certifying as true, complete and correct
its Charter Documents and resolutions relating to the transactions  contemplated
by this Agreement and the other Transaction Documents, (ii) as to the absence of
proceedings or other action for dissolution,  liquidation or  reorganization  of
the Company and (iii) as to the incumbency  and specimen  signatures of officers
who  shall  have  executed  instruments,   agreements  and  other  documents  in
connection with the transactions contemplated hereby.

                   (f)  Payment  of  Closing  Fees.   The  fees,   expenses  and
disbursements  of counsel for the  Purchasers  reflected in  statements  of such
counsel rendered prior to or on the Closing Date and the out-of-pocket  expenses
of the  Purchasers,  which fees,  expenses  and  disbursements  shall not exceed
$50,000 in the aggregate.

            4.2    Deliveries  by the  Purchasers  to the Company at the Closing
Date. At the Closing,  each  Purchaser  will deliver or cause to be delivered to
the Company the following:

                   (a)  Purchase Price. Such Purchaser's payment of the purchase
price, as provided herein.

                   (b)  Stockholders'  Agreement.  The Stockholders'  Agreement,
duly executed by the Purchasers.

                   (c)  Registration  Rights Agreement.  The Registration Rights
Agreement, duly executed by the Purchasers.

         5.  Representations  and  Warranties,  Etc.  In  order  to  induce  the
Purchasers to purchase the  Securities,  the Company  represents and warrants to
the Purchasers that, except as set forth on the disclosure schedule hereto:

             5.1   Organization and Qualification;  Authority.  The Company is a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Nevada. Schedule 5.1 attached hereto contains a list of the
name and jurisdiction of organization of each of the Company's  Subsidiaries and
the  Company's  ownership  interest  with  respect  thereto.   Each  Significant
Subsidiary  is a  corporation  duly  organized,  validly  existing  and in  good
standing under the laws of its  jurisdiction of  incorporation.  The Company and
each of its Significant  Subsidiaries has full corporate power and authority and
all necessary  government approvals to own and lease its properties and carry on
its business as presently conducted,  is duly qualified,  registered or licensed
as a  foreign  corporation  to do  business  and is in  good  standing  in  each
jurisdiction  in  which  the  ownership  or  leasing  of its  properties  or the
character of its present  operations makes such  qualification,  registration or
licensing  necessary,  except  where the  failure  to so  qualify  or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise),  assets,  business or results of  operations  of the Company and its
Significant  Subsidiaries,  taken as a whole (a "Material Adverse Effect").  The
Company has heretofore delivered to the Purchasers' counsel complete and correct
copies of (i) the  certificate  of  incorporation  and (ii) the  by-laws  of the
Company  and its  Significant  Subsidiaries,  each  as  amended  to date  and as
presently in effect (collectively, the "Charter Documents").

            5.2    Corporate   Authorization.   The   execution,   delivery  and
performance by the Company of this Agreement and the other Transaction Documents
are within the  Company's  corporate  power and  authority.  The  execution  and
delivery of this  Agreement and the other  Transaction  Documents by the Company
and the performance by the Company of its obligations  hereunder and thereunder,
have  been  duly  authorized  by all  requisite  corporate  action  and no other
corporate  proceedings  on the part of the  Company  other than those  listed on
Schedule 5.2 are necessary to authorize this Agreement and the other Transaction
Documents.  This  Agreement and the other  Transaction  Documents have been duly
executed and delivered by duly authorized  officers of the Company and, assuming
the due  authorization,  execution and delivery  thereof by all parties  thereto
other than the Company, constitutes a legal, valid and binding obligation of the
Company,  enforceable  against it in accordance with its terms, except as may be
limited by bankruptcy,  reorganization,  moratorium,  fraudulent  conveyance and
insolvency  laws and by other laws  affecting the rights of creditors  generally
and except as may be limited by the availability of equitable remedies.

            5.3    No Conflict; Requisite Consents. The execution,  delivery and
performance by the Company of this Agreement and the other Transaction Documents
does not and will not (i)  contravene  or conflict  with the Charter  Documents,
(ii)  constitute  a  default  under  or give  rise to a  right  of  termination,
cancellation or acceleration of any right or obligation of the Company or any of
the Company's Subsidiaries under any provision of any written agreement or other
instrument  binding  upon the Company or any of the  Company's  Subsidiaries  or
require the consent of any third party under any Law  applicable  to the Company
or any License held by the Company or any of the Company Subsidiaries,  or (iii)
result in the creation or  imposition of any Lien on any asset of the Company or
any  of  the  Company's  Subsidiaries,  except,  with  respect  to  each  of the
occurrences  or results  referred to in clauses (ii) and (iii) of this sentence,
(a) the third party  consents set forth in Schedule 5.3 and (b) such items which
would not have a Material Adverse Effect.

            5.4    Capitalization

                   (a)  As of December 23, 1998, the authorized Capital Stock of
the Company consists of 100,000,000 shares of Common Stock and 15,000,000 shares
of Preferred Stock  consisting of 750,000 shares of Series B Preferred Stock, of
which 11,738,277 shares of Common Stock and 101,379 shares of Series B Preferred
Stock are issued and outstanding. Prior to August 17, 1998, the Company also had
authorized 4,250,000 shares of Series A Preferred Stock, of which 3,257,490 were
outstanding.  All of the  previously  issued shares of Series A Preferred  Stock
have been  converted  into  shares of Common  Stock,  and there are no shares of
Series A Preferred  Stock  issued and  outstanding.  All issued and  outstanding
shares  of the  Company's  Capital  Stock are  validly  issued,  fully  paid and
nonassessable. Except as set forth on Schedule 5.4, there are no (i) outstanding
subscriptions,  options,  warrants  or rights  (including  registration  rights,
conversion  rights  and  preemptive  rights),  agreements,   calls,  convertible
securities, arrangements or commitments of any character to which the Company is
a party relating to the issued or unissued  Capital Stock or other securities of
the Company or obligating the Company to grant,  issue or sell any such options,
warrants or rights or (ii) shares of Common Stock reserved for issuance upon the
exercise  of any  warrants,  options  granted or to be  granted  under any stock
option plan or any options previously granted outside of any stock option plan.

                   (b)  All  the  outstanding  shares  of  Common  Stock  of the
Company's  Subsidiaries are validly issued, fully paid and nonassessable and are
owned by the Company or by a  Subsidiary  of the  Company  free and clear of all
Liens,  except as set forth on  Schedule  5.4 and except for Liens  which in the
aggregate are not material to the Company and its  Subsidiaries.  As of the date
of this Agreement,  there are no outstanding  options,  warrants,  preemptive or
other rights, Contracts, commitments,  undertakings or arrangements by which any
of the Company's Subsidiaries is or may become obligated to issue any additional
shares of their  Capital Stock or  securities  convertible  into any such shares
except as set forth on Schedule 5.4. The Company does not directly or indirectly
own any interest in any other corporation,  partnership,  joint venture or other
business  association  or entity,  which interest is material to the Company and
its  Subsidiaries,  taken as a whole,  except  as set  forth  on  Schedule  5.4.
Schedule  5.4  contains  a list of all  options,  warrants  or other  securities
convertible into shares of Common Stock granted or approved to be granted by the
Company's Board of Directors (or a committee thereof) prior to the date hereof.

            5.5    Litigation; Defaults. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, any of its Subsidiaries,  or any properties of any of the
foregoing,  before or by any Governmental  Authority or any other Person,  which
would (i) have a Material  Adverse  Effect,  or (ii)  impair the  ability of the
Company to perform  any  material  obligation  which the  Company  has under any
Transaction  Document  except as set forth on  Schedule  5.5 or  Schedule  5.11.
Neither  the  Company  nor any of its  Subsidiaries  is in  violation  of, or in
default  under  (and there does not exist any event or  condition  which,  after
notice or lapse of time or both,  would  constitute such a default  under),  any
term  of its  Charter  Documents,  or of any  term of any  agreement,  Contract,
instrument,  judgment,  decree, writ,  determination,  arbitration award, or Law
applicable to the Company or any of its  Subsidiaries or to which the Company or
any of its  Subsidiaries is bound, or to any Properties of the Company or any of
its  Subsidiaries,  except in each case to the extent  that such  violations  or
defaults would not (a) affect the validity or  enforceability of any Transaction
Document,  (b) have a Material  Adverse  Effect or (c) impair the ability of the
Company to perform  any  material  obligation  which the  Company  has under any
Transaction Document except as set forth on Schedule 5.5 or Schedule 5.11.

            5.6    No Material  Adverse Change.  Since September 30, 1998, there
has  been  (i) no  material  adverse  change  in  the  condition  (financial  or
otherwise),  assets, business,  projects or results of operations of the Company
or any of its Subsidiaries, (ii) no material obligation or liability (contingent
or  otherwise)  incurred by the Company or any of its  Subsidiaries,  other than
obligations and  liabilities  incurred in the ordinary course of business and no
material  Lien  placed on any of the  Properties  of the  Company  or any of its
Subsidiaries  that  remains  in  existence  on  the  date  hereof,   other  than
liabilities  and  Liens  described  on  Schedule  5.12  hereto,   and  (iii)  no
acquisition or  disposition of any material  assets by the Company or any of its
Subsidiaries  (or any Contract or arrangement  therefor),  or any other material
transaction,  otherwise than for fair value in the ordinary  course of business,
except as set forth on Schedule 5.6 or in the Company SEC Documents.

            5.7    Employee Programs

                   (a)  Neither the Company nor its  Subsidiaries  provide,  nor
has an obligation to provide,  or make contributions to provide  compensation or
benefits of any kind or description  whatsoever (whether current or deferred and
whether  paid in cash or in kind) to, or on behalf  of,  one,  or more than one,
current or former employees or directors of the Company, its Subsidiaries or any
of its current or former Affiliates or any of their  dependents,  other than any
plans, programs or other arrangements which only provide for the payment of cash
compensation   currently   from  the  general  assets  of  the  Company  or  its
Subsidiaries  on a payday by  payday  basis as base  salary or hourly  wages for
current  services and other than  policies for vacation and sick days and except
as disclosed on Schedule 5.7 (individually,  a "Benefit Plan," and collectively,
the "Benefit Plans"). Each of the Benefit Plans is listed on Schedule 5.7.

                   (b)  Except as disclosed on Schedule 5.7:

                        (i)   No ERISA Affiliate  (other than the Company or its
             Subsidiaries)   provides,   or  has  an   obligation   to  provide,
             contributions,  compensation  or  benefits  of or under  any  plan,
             program  or  arrangement  which  is  subject  to  Title IV of ERISA
             ("ERISA Affiliate Title IV Plan").

                        (ii)  The Company has furnished or made available to the
             Purchasers  a true,  complete  and  current  copy  of each  written
             Benefit Plan and any  amendments  thereto,  a summary of each other
             Benefit Plan, and all Internal Revenue Service, Department of Labor
             or Pension Benefit Guaranty  Corporation rulings or determinations,
             annual  reports,  summary plan  descriptions,  actuarial  and other
             financial reports and such other  documentation with respect to any
             Benefit Plan as was reasonably requested by the Purchasers.

                        (iii) No assets  have been set aside in a trust or other
             separate  account to pay directly or indirectly  any benefits under
             any Benefit Plan or to the extent  assets have been set aside,  all
             assets are shown on the books and records of such trust or separate
             account  at their  fair  market  value as of the date of any report
             last provided with respect to such trust.

                        (iv)  Each Benefit Plan and each ERISA  Affiliate  Title
             IV Plan  has  been  established,  maintained  and  administered  in
             compliance in all material  respects with all applicable  Laws. The
             Company has no duty or  obligation  to  indemnify or hold any other
             person or entity  harmless for any  liability  attributable  to any
             acts or  omissions  by such  person or entity  with  respect to any
             Benefit  Plan  or  ERISA  Affiliate  Title  IV  Plan,   other  than
             indemnification  obligations to Benefit Plan fiduciaries  under the
             terms of the Benefit Plan documents and corporate charters, by-laws
             and state corporate Law.

                        (v)   Neither  the  Company  nor  its  Subsidiaries  has
             incurred any material liability for any tax or penalty with respect
             to any Benefit  Plan,  ERISA  Affiliate  Title IV Plan or any group
             health plan (as  described in Section 5000 of the Code) of an ERISA
             Affiliate including,  without limitation,  any tax or penalty under
             ERISA or under the Code.

                        (vi)  Neither  the  Company  nor  its  Subsidiaries  has
             terminated  or  withdrawn  from,  or sought a funding  waiver  with
             respect to, any Benefit Plan which is subject to Title IV of ERISA.

                        (vii) To the  knowledge  of  the  Company,  there  is no
             proposed  or  actual  audit or  investigation  by any  Governmental
             Authority with respect to any Benefit Plan or ERISA Affiliate Title
             IV Plan.

                        (viii)Neither the Company nor its  Subsidiaries  has any
             obligation  to make,  or reimburse  another  employer,  directly or
             indirectly,  for making,  contributions to a multi employer plan as
             described in Title IV of ERISA.

            5.8    Private  Offerings.  Assuming  the  truth of the  Purchasers'
representations and acknowledgments  contained in Section 6 hereof,  neither the
Company nor any Person  acting on its behalf (other than the  Purchasers,  as to
whom the Company makes no representations) has offered or sold the Securities by
means of any general  solicitation or general  advertising within the meaning of
Rule 502(c) under the Securities Act. The Company has not sold the Securities to
anyone other than the Purchasers designated in this Agreement.  No securities of
the same class or series as the Notes have been  issued and sold by the  Company
prior to the date  hereof.  The  Securities  shall bear  substantially  the same
legend set forth in Section  10.1 hereof for at least so long as required by the
Securities  Act.  Assuming  the  truth of the  Purchasers'  representations  and
acknowledgments  contained in Section 6 hereof and any required filings pursuant
to the Securities Act or any state securities  laws, or such other  post-closing
filings as may be required, the offer and sale of the Securities are and will be
exempt  from  the  registration  and  prospectus  delivery  requirements  of the
Securities  Act,  and have been  registered  or  qualified  (or are exempt  from
registration and qualification) under the registration,  permit or qualification
requirements of all applicable state securities laws.

            5.9    Company  SEC  Documents.  The  Company  has  filed  with  the
Commission,  and has  heretofore  made  available  to the  Purchasers,  true and
complete copies of, each report, schedule, registration statement and definitive
proxy  statement  required  to be  filed  by it under  the  Exchange  Act or the
Securities  Act (as such  documents  have been  amended  since the time of their
filing,  collectively,  the "Company  SEC  Documents").  As of their  respective
dates,  the Company SEC  Documents  do not  contain  any untrue  statement  of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances under which they were made, not misleading.

            5.10   Financial  Statements;   No  Undisclosed   Liabilities.   The
financial statements of the Company included or incorporated by reference in the
Company SEC Documents (the "Company Financial Statements") have been prepared in
accordance  with GAAP applied on a consistent  basis (except as may be indicated
therein or in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and the consolidated Subsidiaries
of the  Company as at the dates  thereof and the  consolidated  results of their
operations  and cash flows for the periods then ended  (subject,  in the case of
any unaudited interim financial  statements,  to normal year-end adjustments and
any other adjustments described therein).  Since September 30, 1998, neither the
Company nor any of the Company's  Subsidiaries  has incurred any  liabilities or
obligations  of any nature,  whether or not  accrued,  absolute,  contingent  or
otherwise, that would have a Material Adverse Effect, other than liabilities (i)
disclosed on Schedule 5.10, or the Company SEC Documents filed prior to the date
of this  Agreement (all of which have been  furnished to the  Purchasers),  (ii)
adequately provided for in the Company Financial  Statements or disclosed in any
related  notes  thereto (all of which have been  furnished  to the  Purchasers),
(iii)  not  required  under  GAAP  to be  reflected  in  the  Company  Financial
Statements,  or  disclosed  in any  related  notes  thereto,  (iv)  incurred  in
connection  with this  Agreement  or the  other  Transaction  Documents,  or (v)
incurred in the ordinary course of business.

            5.11   Environmental  Regulation,  Etc.  To  the  knowledge  of  the
Company,  (i) the operations of the Company and its  Subsidiaries  comply in all
material  respects with all applicable  federal,  state or local  environmental,
health and safety statutes and  regulations;  (ii) none of the operations of the
Company or its  Subsidiaries  is the subject of any  judicial or  administrative
proceeding alleging the violation of any federal,  state or local environmental,
health or safety  statute or  regulation;  (iii) none of the  operations  of the
Company or its  Subsidiaries is the subject of a federal or state  investigation
evaluating  whether any remedial action is needed to respond to a release of any
hazardous or toxic waste, substance or constituent,  or other substance into the
environment;  (iv) neither the Company nor its Subsidiaries has filed any notice
under any federal or state Law indicating past or present treatment,  storage or
disposal of a hazardous  waste or reporting a spill or release of a hazardous or
toxic waste, substance or constituent,  or other substance into the environment;
and (v) neither the Company nor its  Subsidiaries  has  contingent  liability in
connection  with any  release of any  hazardous  or toxic  waste,  substance  or
constituent,  or other  substance  into the  environment  except as set forth on
Schedule 5.11.

            5.12   Properties and Assets.  The Company and its Subsidiaries have
good record and marketable fee title to all real Property and all other Property
and  assets,  whether  tangible  or  intangible,  owned by them  and  reasonably
necessary  in the  conduct  of  business  of  the  Company  or  its  Significant
Subsidiaries,  except  defects in title which would not have a Material  Adverse
Effect or  disclosed on Schedule  5.12.  The Company and its  Subsidiaries  have
complied with all  commitments  and obligations on their part to be performed or
observed  under  each of the leases  listed on  Schedule  5.12,  except for such
noncompliance  which would not have a Material  Adverse  Effect.  All buildings,
machinery and equipment of the Company and its  Subsidiaries  are in good repair
and working  order,  except for ordinary wear and tear,  and except as would not
have a Material Adverse Effect.

            5.13   Insurance.  A list of all  insurance  policies  covering  the
assets, business, equipment and Properties under which the Company or any of its
Subsidiaries  may derive any  material  benefit  is set forth on  Schedule  5.13
hereof.  Except as set forth on Schedule  5.13,  such  policies of insurance and
bonds (or other policies and bonds  providing  substantially  similar  insurance
coverage)  are and have been in full force and effect for at least the last year
and remain in full force and effect. Such policies of insurance and bonds are of
the type and in  amounts  customarily  carried by  Persons  conducting  business
similar to that  presently  conducted by the Company and its  Subsidiaries.  The
Company knows of no threatened termination of any such policies or bonds.

            5.14   Employment   Practices.   Neither   the   Company   nor   its
Subsidiaries  is a party to, or bound by, any collective  bargaining  agreement,
Contract or other  agreement or  understanding  with a labor union  organization
except as set forth on  Schedule  5.14.  Except as set forth on  Schedule  5.14,
there (i) is no unfair labor practice or material labor  arbitration  proceeding
pending or, to the Company's  knowledge,  threatened  against the Company or its
Subsidiaries,  (ii) are no organizational  efforts with respect to the formation
of a  collective  bargaining  unit  presently  being  made or, to the  Company's
knowledge,  threatened  involving  employees of the Company or its Subsidiaries,
and (iii) is no material  labor  controversy  in  existence  with respect to the
Company's or the Subsidiaries' business and operations.

            5.15   Intellectual  Property.  Schedule  5.15  annexed  hereto sets
forth an  accurate  and  complete  list of all  Intellectual  Property  owned or
licensed by the Company  and its  Subsidiaries.  Except as set forth on Schedule
5.15, (i) the Company and its  Subsidiaries  own, are licensed or otherwise have
the right to use, all Intellectual  Property used in the business of the Company
and its  Subsidiaries,  as presently  conducted or as proposed by the Company or
its Subsidiaries to be conducted,  (ii) to the knowledge of the Company, the use
of the  Intellectual  Property  by the  Company  or its  Subsidiaries  does  not
infringe  upon or otherwise  violate the rights of any third party in or to such
Intellectual Property, and no claim has been asserted with respect thereto which
violation  or  assertion  would have a  Material  Adverse  Effect,  and (iii) no
employee of the Company or its  Subsidiaries has a right to receive a royalty or
similar  payment,  or has any other monetary  rights,  in respect of any item of
Intellectual Property of the Company or its Subsidiaries.

            5.16   Material Contracts. Schedule 5.16 sets forth a true, complete
and correct list of all  contracts,  agreements,  commitments,  obligations  and
licenses to which the Company or its  Subsidiaries  is a party that are material
("Contracts");  provided, however, purchase agreements involving payments in the
aggregate  of  $100,000  per annum or less  shall  not be deemed to be  material
unless such purchase  agreement is by and between the Company and any Affiliate.
All of the  Contracts  are valid and  binding  and are in full force and effect;
and, except as set forth on Schedule 5.16 hereto, there are no existing material
defaults  (or  events  which,  with  notice  or  lapse  of time or  both,  would
constitute a material  default) by the Company or its  Subsidiaries,  or, to the
Company's knowledge, any other party thereunder.

            5.17   Taxes. The Company and its Subsidiaries  have in all material
respects filed or obtained  extensions of all federal,  state, local and foreign
income,  excise,  franchise,  real  estate,  sales and use and other tax returns
heretofore  required  by Law to be filed by it.  All  material  federal,  state,
county, local, foreign or other income taxes which have become due or payable by
the Company or any of its Subsidiaries  (collectively,  "Taxes"), have been paid
in full or are adequately  provided for in accordance with GAAP on the financial
statements of the applicable Person. No Liens arising from or in connection with
Taxes have been filed and are currently in effect  against the Company or any of
its  Subsidiaries,  except  for Liens  for Taxes  which are not yet due or which
would not have a Material Adverse Effect.  Except as set forth on Schedule 5.17,
no audits or  investigations  are pending or, to the  knowledge  of the Company,
threatened with respect to any tax returns or Taxes of the Company or any of its
Subsidiaries.

            5.18   Licenses.  The Company and its Subsidiaries hold all material
licenses, franchises, permits, consents,  registrations,  certificates and other
approvals (individually, a "License" and collectively,  "Licenses") required for
the  conduct of their  business as now being  conducted,  and are  operating  in
substantial  compliance  therewith,  except  where the  failure to hold any such
License or to operate in compliance  therewith would not have a Material Adverse
Effect.  Except as set forth on Schedule 5.18, the Company and its  Subsidiaries
are in  substantial  compliance  with all Laws  applicable to it, except in each
case where the failure so to comply would not have a Material  Adverse Effect or
a  material  adverse  effect  on the  ability  of the  Company  to  perform  any
obligation that it has under any Transaction Document to which it is a party.

            5.19   Transactions   with   Affiliates.   There  are  no   material
transactions, agreements or understandings,  existing or presently contemplated,
between  or  among  the  Company  or any of its  Subsidiaries,  and any of their
officers or directors or stockholders  or any of their  Affiliates or associates
except as set forth on Schedule 5.19.

            5.20   Federal  Reserve   Regulations.   None  of  the  transactions
contemplated  by this  Agreement  (including  without  limitation the use of the
proceeds from the sale of the Securities)  will violate or result in a violation
of Section 7 of the  Exchange  Act, or any  regulation  promulgated  thereunder,
including  without  limitation,  Regulations  G,  T,  U and X of  the  Board  of
Governors of the Federal Reserve System.

            5.21   Investment  Company  Act.  Neither the Company nor any of its
Subsidiaries  is an  "investment  company"  within the meaning of the Investment
Company Act of 1940, as amended.

            5.22   Broker's  or  Finder's  Commissions.   The  Company  has  not
employed any agent,  broker,  investment banker,  finder or financial advisor or
incurred any liability for any broker's or finder's fee or any other  commission
or similar fee in connection with the transaction contemplated by this Agreement
and the other Transaction Documents.

            5.23   Books and Records. The books of account,  minute books, stock
record books and other  records of the Company and the  Company's  Subsidiaries,
all of which  have been made  available  to the  Purchasers,  are  complete  and
correct in all material respects.

            5.24   Disclosure.   This   Agreement  and  the  other   Transaction
Documents  do not contain  any untrue  statement  of a material  fact or omit to
state a material  fact  required to be stated  therein or  necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.

         6.  Representations and Warranties of the Purchasers

             (a)   Each Purchaser  represents for itself to the Company that (i)
it is an  accredited  investor as defined in  Regulation D under the  Securities
Act,  and (ii) by reason  of its  business  and  financial  experience,  and the
business and financial  experience of those persons,  if any,  retained by it to
advise it with  respect to its  investment  in the  Securities,  such  Purchaser
together with such advisers have such knowledge,  sophistication  and experience
in business and financial  matters as to be capable of evaluating the merits and
risk of the prospective investment, and that it is purchasing the Securities for
its own account or for one or more separate accounts maintained by it or for the
account of one or more  institutional  investors on whose behalf such  Purchaser
has authority to make this  representation for investment and not with a view to
the  distribution  thereof or with any  present  intention  of  distributing  or
selling any of the Securities  except in compliance  with the Securities Act and
except  to  one  or  more  such  institutional  investors,   provided  that  the
disposition of such  Purchaser's or such investor's  property shall at all times
be within its control.  Each Purchaser understands and agrees that the Company's
offer and sale of the Securities have not been  registered  under the Securities
Act  and  the  Securities  may be  resold  only if  registered  pursuant  to the
provisions thereunder or if an exemption from registration is available.

             (b)   Each Purchaser which is an insurance company  represents,  to
the knowledge of such  Purchaser,  that no part of the funds to be used by it to
purchase the  Securities to be purchased by such  Purchaser  constitutes  assets
allocated to any separate account maintained by such Purchaser that contains the
assets of any Benefit Plan listed on Schedule 5.7 (or its related  trust).  Each
Purchaser  which is not an  insurance  company or an  "investment  company"  (as
defined in the Investment  Company Act of 1940, as amended) also represents,  to
the  knowledge  of such  Purchaser,  that no  part  of the  funds  to be used to
purchase the  Securities to be purchased by such  Purchaser  constitutes  assets
allocated to any trust or other entity which  contains the assets of any Benefit
Plan listed on Schedule 5.7. The representations made in the preceding sentences
are made solely in reliance  upon, and subject to, the accuracy of the Company's
representations  contained  in  Section  5.7 of this  Agreement  and the list of
Benefit Plans shown on Schedule 5.7. As used in this section, the term "separate
account" shall have the meaning assigned to it in Section 3(17) of ERISA.

             (c)   Each  Purchaser  represents for itself to the Company that it
has full power and authority and has taken all action  necessary to authorize it
to enter into and perform its  obligations  under this  Agreement  and the other
Transaction Documents. This Agreement is the legal, valid and binding obligation
of each Purchaser,  and is enforceable against each Purchaser in accordance with
its terms, except as may be limited by bankruptcy,  reorganization,  moratorium,
fraudulent conveyance and insolvency laws and by other laws affecting the rights
of  creditors  generally  and except as may be limited  by the  availability  of
equitable remedies.

             (d)   Each  Purchaser  has  received  all  the  information  it has
requested  from the Company and has had the  opportunity to ask questions of the
Company and, relying on the completeness and accuracy of such information,  such
Purchaser  believes such information is sufficient to make an informed  decision
with respect to its purchase of the Securities.

             (e)   Each Purchaser  acknowledges  for itself that the address set
forth on such Purchaser's  signature page hereto is such  Purchaser's  principal
place of business.

         7.  Covenants of the  Company.  The Company  covenants  and agrees that
from the date hereof  until the earlier of (i) the  consummation  of the sale of
the Series C Preferred Stock to the holders of the Notes as  contemplated  below
or (ii)  the  repayment  of the  Notes  in full,  unless  Holders  of at least a
majority of the aggregate  principal amount of the Notes then outstanding  shall
otherwise consent in writing, it will do or cause the following:

            7.1    Use of Proceeds.  Use the net  proceeds  from the sale of the
Notes  to  provide  for  working  capital  requirements  and  general  corporate
purposes; provided, however, that with respect to net proceeds received from the
sale of Notes to FESGF,  the Company  shall use at least 90% of such proceeds to
invest directly or indirectly in entities in countries which are included on the
DEC Deutsche Investitions - und  Entwicklingsgesellscheft  mbH's list of DAC aid
recipients on Exhibit G hereto, as amended from time to time by FESGF.

            7.2    Charter Documents.  The Charter Documents shall not have been
modified or amended  since the date  delivered  by the  Company,  except for the
Company's  Certificate  of  Incorporation  which may be amended to increase  the
number of  authorized  shares of Capital Stock and to perform such other acts as
are necessary to establish the terms of the Series C Preferred Stock.

            7.3    Ordinary Course. The Company's business and the businesses of
its Subsidiaries  shall be conducted only in the ordinary course of business and
in a manner  consistent with past practice and the business  plan(s) approved by
the Company's Board of Directors.  The Company shall use commercially reasonable
efforts to preserve substantially intact the business organization of itself and
its  Subsidiaries,  to keep  available the services of its present  officers and
employees and to preserve its present  relationships  with customers,  suppliers
and other persons with which it has a significant business relationship.

            7.4    Issuance of  Securities.  The Company shall not, nor shall it
permit any of its  Subsidiaries  to,  issue,  deliver,  sell,  redeem,  acquire,
authorize or propose to issue, deliver, sell, redeem, acquire or authorize,  any
shares of its Capital Stock of any class or any securities  convertible into, or
any  rights,  warrants or options to  acquire,  any such  shares or  convertible
securities  or other  ownership  interest,  provided  that the Company  shall be
permitted  to (i) issue  Common  Stock,  warrants  or Series C  Preferred  Stock
resulting from the Financing, (ii) issue up to 500,000 shares of Common Stock at
a price of not less  than  $8.70  per  share in  connection  with the  Company's
contemplated  purchase of  Metrotelecom,  S.A. and related  companies  and (iii)
grant options (which shall include outstanding  options to officers,  directors,
employees  and agents) to purchase  up to an  aggregate  of 10% of the shares of
Common Stock outstanding, as determined on a fully-diluted basis.

            7.5    Dividends;  Changes in Capital Stock.  The Company shall not,
nor shall it propose to: (i)  declare,  set aside,  make or pay any  dividend or
other distribution,  payable in cash, stock, property or otherwise, with respect
to any of its  Capital  Stock,  except  with  respect to the Series B  Preferred
Stock,  which dividends shall not exceed the annual amount of 6.75% per share or
(ii)  reclassify,  combine,  split,  subdivide or redeem,  purchase or otherwise
acquire, directly or indirectly, any of its Capital Stock.

            7.6    Change in Condition.  The Company shall  promptly  advise the
Purchasers in writing of any change in the condition  (financial or  otherwise),
operations or properties or businesses of the Company or any of its Subsidiaries
which would have a Material Adverse Effect.

            7.7    No Action. The Company shall not, and shall not permit any of
its  Subsidiaries  to, take or agree or commit to take any  action,  (i) that is
likely to make any of its representations or warranties hereunder inaccurate; or
(ii) that is prohibited pursuant to the provisions of this Section 7.

            7.8    Replacing   of   Certificates.   Upon   receipt  of  evidence
reasonably  satisfactory  to the  Company of the loss,  theft,  destruction,  or
mutilation of any certificate  representing  any of the  Securities,  and in the
case of loss, theft or destruction, upon receipt of indemnity in reasonable form
and scope, the Company will issue a new certificate representing such Securities
in lieu of such lost, stolen, destroyed, or mutilated certificate.

         8.  Rights and Obligations of the Purchasers

             8.1   Exchange  of Right.  In the event the  Company has not issued
$10,000,000  face amount of Series C Preferred  Stock to Persons  other than the
Purchasers  as of July 1, 1999,  any Holder may,  upon five Business Days notice
furnished to the Company,  exchange, in whole or in part, the Notes beneficially
owned by such  Holder  into (i) a number of shares of Series C  Preferred  Stock
having a liquidation preference equal to the principal amount outstanding of the
Notes held by such  Holder  and,  at the option of the  Holder,  the accrued but
unpaid  interest  on those  Notes or (ii) a number of  shares  of Common  Stock,
Preferred  Stock or any other  equity  security  offered for sale by the Company
after the date hereof having a liquidation preference or Fair Market Value as of
such date, as the case may be, equal to the principal amount  outstanding of the
Notes held by such Holder. The Company shall pay all accrued but unpaid interest
on the Notes  through  the date of such  exchange,  except for the  accrued  but
unpaid  interest on the Notes which has been  converted  into shares of Series C
Preferred  Stock  pursuant to  subsection  (i) of this  Section  8.1. The notice
furnished  by a Holder to the Company  pursuant to this  Section 8.1 shall be in
substantially  the form attached hereto as Exhibit H. The "Exchange Price" means
$8.70  per  share of Series C  Preferred  Stock  subject  to  adjustment  if the
liquidation  preference  of the  Series C  Preferred  Stock is reduced or if the
Series C Preferred Stock or Common Stock is issued at less than $8.70 per share.

             8.2   Reservation of Securities.  The Company shall reserve and set
apart  and have at all  times,  free  from  preemptive  rights,  the  number  of
authorized but unissued  shares of Series C Preferred  Stock or Common Stock, to
conform  to the  Company's  obligations  set  forth in  Section  8 and under the
Warrants.

             8.3   Anti-Dilution  Provisions - Adjustment of Number of Shares of
Capital  Stock.  The number of shares of Common  Stock or  Preferred  Stock into
which the Notes are exchangeable  shall be subject to adjustment with respect to
the shares of Common Stock or Preferred Stock of the Company as follows:

                   (a)  Combinations  and  Subdivisions  of Capital Stock. If at
any time the  outstanding  shares  of  Common  Stock or  Preferred  Stock of the
Company shall be  subdivided  into a greater or combined into a lesser number of
shares  (whether  with the same or a different  par value or without par value),
the number of shares of such Common Stock or Preferred Stock  transferable  upon
the exchange of the Notes shall be proportionately increased or decreased.

                   (b)  Distributions  in  Respect  of  Capital  Stock.  If  the
Company  shall  distribute  by way of dividend or  otherwise  upon its shares of
Common Stock or Preferred Stock any cash, securities or property (excluding cash
dividends paid out of earnings or surplus and dividends or distributions payable
in rights, warrants or options to subscribe for or purchase such Common Stock or
Preferred Stock, or to subscribe for or purchase securities  convertible into or
exchangeable for such Common Stock or Preferred  Stock,  with or without payment
of additional  consideration,  such convertible or exchangeable securities being
herein called "Exchangeable Securities," or payable in Exchangeable Securities),
then  thereafter each Holder will be entitled to receive the number of shares of
the Common Stock or Preferred Stock of the Company then deliverable  pursuant to
the terms hereof, and, in addition,  the cash, securities or property which such
Holder would have received by way of such dividends or other  distributions  if,
continuously since the date of delivery hereof,  such Holder had been the record
holder of the number of shares of such Common  Stock or Preferred  Stock,  which
would have been deliverable upon the exercise of such Holder's exchange right if
such  exchange had been effected  immediately  prior to the record date for such
distribution of cash, securities or property.

                   (c)  Recapitalization,  Reclassification  and Succession.  If
any  recapitalization  of the  Company or  reclassification  of shares of Common
Stock or Preferred  Stock of the Company or any merger or  consolidation  of the
Company into or with a  corporation  or other  business  entity,  or the sale or
transfer of all or substantially all of either of the Company's assets or of any
successor  corporation's assets to any other corporation or business entity (any
such  corporation or business  entity being  included  within the meaning of the
term  "successor  corporation")  shall be  effected,  then,  each  Holder  shall
thereafter  have the  right to  receive  upon the  basis  and upon the terms and
conditions  specified  herein  and in lieu of the  shares  of  common  stock  or
preferred stock of such corporation  immediately  theretofore  issuable upon the
exercise  of such  Holder's  exchange  rights,  such  shares of  capital  stock,
securities  or other  property as may be issued or payable with respect to or in
exchange  for a number of  outstanding  shares of such common stock or preferred
stock equal to the number of shares of Common  Stock or  Preferred  Stock of the
Company immediately  theretofore  deliverable upon the exercise of such Holder's
exchange   rights   had   such   recapitalization,   reclassification,   merger,
consolidation, sale or transfer not taken place.

                   (d)  Fractional  Shares. In the event that the application of
the provisions of this Section 8 would result in the issuance of a fraction of a
share of Common  Stock or Preferred  Stock of the  Company,  or a number of full
shares plus a fraction of a share of such Common Stock or Preferred Stock,  then
such fractional share shall be disregarded if less than one-half a share, or, if
more than one-half of a share,  the number of shares issuable upon such exchange
shall be rounded out to the next full share.

                   (e)  Issuance of Additional  Shares of Capital Stock.  If the
Company shall issue any additional  shares of Common Stock,  Preferred  Stock or
Common  Stock or  Preferred  Stock  equivalents  (other  than as provided in the
foregoing   subsections  (a)  through  (d))  for  no   consideration  or  for  a
consideration  per share less than the  Exchange  Price in effect on the date of
and immediately prior to such issue, then and in such event, such Exchange Price
shall be reduced  concurrently with such issue, to a price equal to the lower of
$8.70 or the price at which  the  Company  offers  such  securities  in a future
offering of securities;  provided,  however, that this provision shall not apply
to (i) the issue of up to 500,000  shares of Common Stock at a price of not less
than $8.70 per share in connection with the Company's  contemplated  purchase of
Metrotelecom,  S.A.  and  related  companies  and  (ii)  the  grant  of  options
(including outstanding options to officers, directors,  employees and agents) to
purchase up to an aggregate of 10% of the shares of Common Stock outstanding, as
determined on a  fully-diluted  basis as  authorized  by the Company's  Board of
Directors.

                   (f)  Company to Prevent  Dilution.  If any event or condition
occurs  as to  which  other  provisions  of  this  Section  8 are  not  strictly
applicable  or if strictly  applied  would not fairly  protect  the  exercise of
exchange rights hereunder in accordance with the essential intent and principles
of such provisions,  or which might materially and adversely affect the exercise
of exchange rights of the Holders under any provisions hereof,  then the Company
shall  make  an  adjustment  in  the  application  and  interpretation  of  such
provisions,  in accordance with such essential  intent and principles,  so as to
protect such rights as aforesaid,  and any adjustment  necessary with respect to
the  Exchange  Price per share and the number of shares  subject to the exchange
right  hereunder so as to preserve  without  dilution the rights of the Holders;
provided,  however,  that in no event  shall any such  adjustment  (other than a
reverse  stock  split or the like) have the effect of  increasing  the  Exchange
Price per share as otherwise determined pursuant to this Agreement.

             8.4  Notice to the Holder

                  (a)   If the  character of  securities  or assets  deliverable
upon  exchange  of the Notes  shall be  changed  as a result  of the  provisions
hereof,  then in each such case the Company shall  forthwith and within  fifteen
(15) days prior to such proposed change cause a written certificate of the chief
executive  officer  or the chief  financial  officer of the  Company  and by its
treasurer to be sent  first-class,  certified  mail,  return receipt  requested,
postage  prepaid,  to each Holder  specifying the character of the securities or
assets and the amount thereof so deliverable and the details of the computations
thereof.

                   (b)  In case at any time:

                        (i)  the  Company   shall  pay  any  dividend  upon  its
                   outstanding Common Stock or Preferred Stock payable in shares
                   of Common Stock or Preferred  Stock or make any  distribution
                   (other  than cash  dividends  out of earned  surplus)  to the
                   holders of its shares of Common Stock or Preferred Stock; or

                        (ii) the Company shall offer for  subscription  pro rata
                   to the  holders of its Common  Stock or  Preferred  Stock any
                   additional shares of Common Stock or Preferred Stock or other
                   rights; or

                        (iii)there shall be effected any recapitalization of the
                   Company or  reclassification of the shares of Common Stock or
                   Preferred   Stock  of  the   Company,   or  any   merger   or
                   consolidation   of  the  Company   into  or  with  any  other
                   corporation  or business  entity and as a result of which the
                   Company  is not the  surviving  corporation,  or the  sale or
                   transfer  of all or  substantially  all of the  assets of the
                   Company to any other corporation or business entity; or

                        (iv) there   shall  be  a   voluntary   or   involuntary
                   dissolution, liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice to
each Holder of the date which is the record date for such dividend, distribution
or subscription  rights,  or on which such  recapitalization,  reclassification,
merger, consolidation,  sale, transfer,  dissolution,  liquidation or winding up
shall take place, as the case may be. Such notice shall also specify the date as
of which the holders of record of the Company's  Common Stock or Preferred Stock
shall  participate in such dividend,  distribution  or subscription  rights,  or
shall be entitled to exchange its Common Stock or Preferred Stock for securities
or other  property  deliverable  upon such  recapitalization,  reclassification,
merger, consolidation,  sale, transfer, dissolution,  liquidation or winding up,
as the case may be. Such  written  notice  shall be given at least ten (10) days
prior to the  action in  question  and not less than ten (10) days  prior to the
record date.

             8.5   Exchange  Listing  by the  Company.  If any  shares of Common
Stock or Preferred Stock required to be reserved for purposes of exchange of the
Notes requires  listing on any national  securities  exchange before such shares
may be issued upon exchange,  the Company will, at its expense, as expeditiously
as  possible,  cause such shares to be duly listed on the  appropriate  national
securities exchange.

         9.  Conditions to Closing

             9.1   Conditions to the Company's Obligations

         The  obligations  of the Company to effect the sale and issuance of the
Securities  shall be subject to the  satisfaction  of the  conditions  set forth
below,  at or before the Closing (which  conditions may be waived by the Company
in writing).

                  (a)   The representations and warranties of the Purchasers set
forth in Section 6 of this  Agreement  shall be true and correct in all material
respects  as of the  date  hereof  and as of the  date of the  Closing,  and the
Company shall have  received a  certificate  signed by an officer of each of the
Purchasers  dated  as  of  the  date  of  each  Closing   certifying  that  such
representations and warranties are true and correct.

                  (b)  The  Purchasers  shall  have  performed,   satisfied  and
complied in all material respects with all covenants,  agreements and conditions
required by this  Agreement,  and the Company  shall have received a certificate
signed  by an  officer  of each of the  Purchasers  dated  as of the date of the
Closing certifying the performance, satisfaction and compliance therewith in all
material respects.

                  (c) The Purchasers  shall have delivered to the Company at the
Closing the items set forth in Section 4.2.

             9.2   Conditions to the Purchasers' Obligations

         The  obligations  of the  Purchasers  to  effect  the  purchase  of the
Securities  shall be subject to the  satisfaction  of the  conditions  set forth
below,  at or  before  the  Closing  (which  conditions  may  be  waived  by the
Purchasers in writing).

                  (a) The  representations  and  warranties  of the  Company set
forth in Section 5 of this  Agreement  shall be true and correct in all material
respects  as of the  date  hereof  and as of the  date of the  Closing,  and the
Purchasers  shall have  received  a  certificate  signed by the Chief  Executive
Officer of the Company dated as of the date of the Closing  certifying that such
representations and warranties are true and correct.

                  (b) The Company shall have  performed,  satisfied and complied
in all material respects with all covenants,  agreements and conditions required
by this Agreement and the Purchasers shall have received a certificate signed by
the Chief  Executive  Officer of the Company dated as of the date of the Closing
certifying  the  performance,  satisfaction  and  compliance  therewith  in  all
material respects.

                  (c) The Company shall deliver to the Purchasers at the Closing
the items set forth in Section 4.1.

                  (d) The  Company  shall not have  suffered a Material  Adverse
Effect.

         10. Restrictions on Transfer

             10.1  Restrictive  Legends.  Except as otherwise  permitted by this
Section 10, each Note issued  pursuant to this Agreement and any security issued
upon exchange  thereof shall be stamped or otherwise  imprinted with a legend in
substantially the following form:

              THE  SECURITIES  REPRESENTED  BY THIS  CERTIFICATE  HAVE  NOT BEEN
              REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS  AMENDED,  OR
              PURSUANT TO THE  SECURITIES OR "BLUE SKY" LAWS OF ANY STATE.  SUCH
              SECURITIES  MAY  NOT  BE  OFFERED,  SOLD,  TRANSFERRED,   PLEDGED,
              HYPOTHECATED  OR  OTHERWISE  ASSIGNED,  EXCEPT  PURSUANT  TO (i) A
              REGISTRATION  STATEMENT WITH RESPECT TO SUCH  SECURITIES  WHICH IS
              EFFECTIVE  UNDER  SUCH ACT,  (ii) RULE 144 OR RULE 144A UNDER SUCH
              ACT, OR (iii) ANY OTHER  EXEMPTION  FROM  REGISTRATION  UNDER SUCH
              ACT,  PROVIDED  THAT,  IF REQUESTED BY THE COMPANY,  AN OPINION OF
              COUNSEL REASONABLY SATISFACTORY IN FORM AND SUBSTANCE IS FURNISHED
              TO  THE  COMPANY   THAT  AN   EXEMPTION   FROM  THE   REGISTRATION
              REQUIREMENTS OF SUCH ACT IS AVAILABLE.

         The Company shall  maintain a copy of this Agreement and any amendments
thereto  on file in its  principal  office,  and will make  such copy  available
during normal business hours for inspection to any party thereto or will provide
such copy to any Purchaser upon its request.

             10.2  Notice of the  Proposed  Transfer;  Opinion of Counsel.  Each
Purchaser of each Note bearing the restrictive  legend set forth in Section 10.1
above  ("Restricted  Security")  agrees that prior to any  transfer or attempted
transfer of such  Restricted  Security to give to the Company (a) written notice
describing the manner or  circumstances  of such transfer or proposed  transfer,
and (b) an opinion of counsel, which is knowledgeable in securities law matters,
in form and substance reasonably satisfactory to the Company, to the effect that
the  proposed  transfer of such  Restricted  Security  may be  effected  without
registration of such Restricted Security under the Securities Act. If the holder
of the Restricted Security delivers to the Company an opinion of counsel in form
and substance  reasonably  satisfactory to the Company that subsequent transfers
of such Restricted  Security will not require  registration under the Securities
Act, the Company will after such  contemplated  transfer  deliver new Securities
for such  Restricted  Security  which do not bear the  Securities Act legend set
forth in Section 10.1 above.  The  restrictions  imposed by this Section 10 upon
the  transferability  of any  particular  Restricted  Security  shall  cease and
terminate  (i) when  such  Restricted  Security  has been  sold  pursuant  to an
effective  registration  statement  under  the  Securities  Act,  (ii) when such
Restricted  Security  has been  transferred  pursuant  to Rule 144 or Rule  144A
promulgated  under the  Securities  Act, or (iii) upon the date which is two (2)
years after the later of (A) the original issue date of the Restricted  Security
and (B) the last date on which the Company or any  Affiliate  of the Company was
the owner of the Restricted Security (or any predecessor  Restricted  Security).
As used in this Section 10.2, the term "transfer" encompasses any sale, transfer
or other disposition of any Securities referred to herein.

         11. Miscellaneous

             11.1   Indemnification; Expenses, Etc

                    (a) The Company  agrees to indemnify  and hold harmless each
Purchaser,  its  Affiliates  and  each of its and  their  respective  directors,
officers,  partners,  principals,  shareholders and attorneys (individually,  an
"Indemnified  Party" and,  collectively,  the  "Indemnified  Parties")  from and
against any and all  losses,  claims,  damages,  liabilities,  costs  (including
reasonable attorneys' fees) and expenses  (collectively,  "Losses") to which any
Indemnified  Party may become  subject,  insofar as such Losses arise out of, in
any way  relate  to, or result  from (i) any  breach  of any  representation  or
warranty  made by the  Company,  or the  failure of the  Company to fulfill  any
agreement  or covenant  contained  in this  Agreement  or any other  Transaction
Document,  or (ii) any proceeding  against the Company or any Indemnified  Party
brought by any third party arising out of or in connection  with this  Agreement
or the other Transaction  Documents;  provided,  however, that the Company shall
not  have any  obligation  under  this  indemnity  provision  to  indemnify  any
Indemnified  Party with respect to Losses until the aggregate  combined total of
all such Losses incurred by any Indemnified Party exceeds $5,000,  whereupon the
Indemnified Party shall be entitled to indemnity with respect to the full amount
of Losses,  and the Company shall reimburse the  Indemnified  Party for all such
Losses as they are incurred or suffered by such  Indemnified  Party. The Company
shall not have any obligation  under this  indemnity  provision for claims which
are first made after the expiration of all applicable  statutes of  limitations,
or for liabilities  resulting from the gross negligence or willful misconduct of
any Indemnified Party.

                   (b)  If any Indemnified Party is entitled to  indemnification
hereunder,  such Indemnified Party shall give notice to the Company of any claim
or of the commencement of any proceeding  against the Company or any Indemnified
Party  brought by any third party with respect to which such  Indemnified  Party
seeks indemnification pursuant hereto;  provided,  however, that the delay to so
notify  the  Company  shall not  relieve  the  Company  from any  obligation  or
liability  except to the extent the Company is  prejudiced  by such  delay.  The
Company  shall  have the  right,  exercisable  by  giving  written  notice to an
Indemnified  Party within 30 days after the receipt of written  notice from such
Indemnified Party of such claim or proceeding,  to assume, at the expense of the
Company,  the defense of any such claim or  proceeding  with counsel  reasonably
satisfactory  to such  Indemnified  Party.  After notice from the Company to the
Indemnified  Party of its  election  to  assume  the  defense  of such  claim or
proceeding,  the Company  shall not be liable to the  Indemnified  Party for any
legal  or other  expenses  subsequently  incurred  by the  Indemnified  Party in
connection   with  the  defense   thereof   other  than   reasonable   costs  of
investigation;  provided  that the  Indemnified  Party  shall  have the right to
employ separate counsel to represent the Indemnified Party who may be subject to
liability  arising out of any claim in respect of which  indemnity may be sought
by the Indemnified Party against the Company,  but the fees and expenses of such
counsel  shall be for the  account  of such  Indemnified  Party  unless  (i) the
Company and the Indemnified Party shall have mutually agreed to the retention of
such  counsel  or (ii) in the  opinion of  counsel  to such  Indemnified  Party,
representation of both parties by the same counsel would be inappropriate due to
actual or potential  conflicts of interest  between them,  it being  understood,
however,  that the Company shall not, in  connection  with any one such claim or
proceeding  or  separate  but   substantially   similar  or  related  claims  or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances,  be liable for the fees and expenses of more than one separate
firm of attorneys  (together with appropriate local counsel) at any time for all
Indemnified  Parties.  The Company shall not consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by claimant or  plaintiff to such  Indemnified  Party or Parties of a
release, in form and substance satisfactory to the Indemnified Party or Parties,
from all liability in respect of such claim, litigation or proceeding.

             11.2  Survival   of    Representations    and    Warranties.    All
representations  and  warranties  contained  in this  Agreement  or in the other
Transaction  Documents  shall survive,  for a period of three (3) years from the
date hereof, the execution and delivery of this Agreement,  any investigation at
any time made by any Purchaser or on such  Purchaser's  behalf,  the purchase of
the Securities by the Purchasers  under this Agreement and any disposition of or
payment on the Securities.

             11.3  Amendment and Waiver. This Agreement may be amended, modified
or  supplemented,  and  waivers or consents to  departures  from the  provisions
hereof may be given,  provided  that the same are in  writing  and signed by the
Purchasers  and/or the other  holders of the  Notes,  holding a majority  of the
aggregate principal amount of the Notes, and the Company.

             11.4  Notices, Etc. Except as otherwise provided in this Agreement,
notices and other  communications  under this Agreement  shall be in writing and
shall be delivered personally,  sent by telecopier (with written confirmation of
receipt),  mailed by registered or certified mail, return receipt requested,  or
by a nationally recognized overnight courier, postage prepaid, addressed, (a) if
to  Internexus,  at such  address or  telecopier  number as is set forth next to
Internexus'  name on the  signature  page hereto,  or as  Internexus  shall have
furnished to the Company in writing, with a copy to Greenberg,  Peden, Siegmeyer
& Oshman, P.C., 12 Greenway Plaza, 10th Floor, Houston, Texas 77046,  telecopier
no.: (713) 627-7057,  to the attention of H.B.  Naylor,  III, Esq., or (b) if to
FESGF, at such address or telecopier number as is set forth next to FESGF's name
on the signature page hereto, or as FESGF shall have furnished to the Company in
writing, with a copy to Swidler Berlin Shereff Friedman,  LLP, 919 Third Avenue,
New York, New York 10022,  telecopier no.: (212)  758-9526,  to the attention of
Morris Orens, Esq., or (c) if to the Company,  at 102 West 500 South, Suite 320,
Salt Lake City, Utah 84101,  telecopier no.: (801) 532-6060, to the attention of
Chief Executive  Officer,  or at such other address or telecopier  number, or to
the attention of such other officer,  as the Company shall have furnished to the
Purchasers in writing,  with a copy to Parsons Behle & Latimer,  telecopier no.:
(801) 532-1234, to the attention of Scott Carpenter, Esq.

             11.5  Entire  Agreement.  This Agreement and the other  Transaction
Documents embody the entire agreement and  understanding  between the Purchasers
and the Company and supersede all prior agreements and  understandings  relating
to the subject matter hereof.

             11.6  Successors and Assigns. Whenever in this Agreement any of the
parties  hereto are referred to, such  reference  shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of the respective  parties which are contained in this Agreement
shall bind and inure to the benefit of the  successors  and assigns of all other
parties.  The terms and provisions of this  Agreement and the other  Transaction
Documents  shall inure to the benefit of and shall be binding  upon any assignee
or transferee of any Purchaser, and in the event of such transfer or assignment,
the  rights  and  privileges  herein  conferred  upon any such  Purchaser  shall
automatically  extend to and be vested  in, and become an  obligation  of,  such
transferee  or  assignee,  all subject to the terms and  conditions  hereof.  In
connection therewith, such transferee or assignee may disclose all documents and
information which such transferee or assignee now or hereafter may have relating
to the Notes, this Agreement,  the other Transaction Documents, the Company, any
other Persons  referred to herein or any of the business of any of the foregoing
entities,  subject to such  transferee or assignee  executing a  confidentiality
agreement reasonably satisfactory to the Company.

             11.7  Agreement  and Action of the  Purchasers.  Upon any  occasion
requiring,  permitting or  referencing an act or an approval,  consent,  waiver,
election or other  action on the part of the  Purchasers,  any such action shall
(i) be taken  upon the  affirmative  vote of the  Purchasers  and/or  the  other
holders of the Notes,  holding a majority  or  agreeing  to  purchase a majority
under this Agreement of the aggregate  principal amount of the Notes, or (ii) be
deemed to have been taken by the Purchasers  upon such action being taken by the
Purchasers  and/or the other  holders of the  Notes,  holding a majority  of the
aggregate principal amount of the Notes.

             11.8  Expenses.  Subject to the  limitation  set forth in  Sections
4.1(f),  the Company  agrees to pay all costs and expenses of the  Purchasers in
connection with the preparation,  execution, delivery and administration of this
Agreement or any amendments or  modifications  hereto and other  instruments and
documents  to  be  executed  contemporaneously  herewith,  including  reasonable
attorney's fees and out-of-pocket expenses of counsel for the Purchasers.

             11.9  Descriptive Headings.  The headings in this Agreement are for
purposes of reference  only and shall not limit or otherwise  affect the meaning
hereof.

             11.10 Governing Law. This Agreement shall be construed and enforced
in  accordance  with,  and the rights of the parties  shall be governed  by, the
internal  laws of the State of New  York,  without  regard to any  choice-of-law
principles thereof.

             11.11 Counterparts.  This Agreement may be executed  simultaneously
in two or more counterparts, each of which shall be deemed an original.

         If this  Agreement is  satisfactory,  please so indicate by signing the
applicable  attached  signature  page  of this  Agreement  and  delivering  such
counterpart  to the Company,  whereupon this Agreement will become binding among
the parties hereto in accordance with its terms.


                                         CONVERGENCE COMMUNICATIONS, INC.


                                         By: /S/ Troy D'Ambrosio
                                             __________________________________
                                             Name:   Troy D'Ambrosio
                                             Title:  Senior Vice President


<TABLE>
<CAPTION>
                                                  SECURITIES PURCHASE AGREEMENT FOR
                                             SUBORDINATED EXCHANGEABLE PROMISSORY NOTES
                                                      PURCHASER SIGNATURE PAGE
<S>                                                           <C>
Accepted and agreed as of the                                 Aggregate Principal Amount and
date first written above:                                     Purchase Price of Notes to be Purchased
                                                              by Internexus, S.A.: $5,000,000

         By:      /S/ Edwardo Priu
                  ________________________
                  Name:
                  Title:

Address:          Peron 925, 5th Floor
                  Buenos Aires 1038, Argentina

Telephone: 011-541-327-1702
Telecopy:  011-541-325-8705

with a copy to:

Address:                                                      Tax I.D. Number:
           Greenberg, Peden, Siegmeyer
            & Oshman, P.C.
           12 Greenway Plaza, 10th Floor                      (if acquired in the name of a
           Houston, Texas 77046                               nominee, the taxpayer I.D.
           Attention: H.B. Naylor, III, Esq.                  number of such nominee)

Telephone: (713) 627-2720
Telecopy:   (713) 627-7057

                                                              Designated Bank:
Nominee (name in which the                                                                         
Notes are to be registered,                                   _____________________________________
if different than name of                                     Name
Purchaser): 
                                                              _____________________________________
                                                              ABA #

                                                              _____________________________________
______________________________________                        Street Address
      (Nominee's Name)
                                                              _____________________________________
                                                              City     State      Zip Code

                                                              _____________________________________
                                                              Account Number    Attention
</TABLE>

<TABLE>
<CAPTION>
                                                 SECURITIES PURCHASE AGREEMENT FOR
                                             SUBORDINATED EXCHANGEABLE PROMISSORY NOTES
                                                      PURCHASER SIGNATURE PAGE
<S>                                                           <C>   
Accepted and agreed as of the                                 Aggregate Principal Amount
date first written above:                                     and Purchase Price of Notes to be
                                                              Purchased by FondElec Essential
                                                              Services Growth Fund, L.P.: $5,000,000

      By:  /S/ Thomas Cauchois
           ________________________
           Name: Thomas Cauchois
           Title:   Director of FondElec ESGP Corp.,
                     the General Partner of FESGF
Address:          333 Ludlow Street
                  Stamford, Connecticut 06902
Telephone: (203) 326-4570
Telecopy:  (203) 326-4578

with a copy to:

Address:                                                      Tax I.D. Number: 98 0177158
           Swidler Berlin Shereff Friedman, LLP
           919 Third Avenue                                   (if acquired in the name of a
           New York, New York 10022-9998                      nominee, the taxpayer I.D.
           Attention: Morris Orens, Esq.                      number of such nominee)

Telephone: (212) 891-9450
Telecopy:  (212) 758-9526

                                                              Designated Bank:
Nominee (name in which the                                    Barclays Bank plc____________________
Notes are to be registered,                                   Name
if different than name of
Purchaser):                                                   026 002 574__________________________
                                                              ABA #

                                                              75 Wall Street_______________________
___________________________________                           Street Address
      (Nominee's Name)
                                                              New York, New York___________________
                                                              City        State   Zip Code

                                                              215 954 099__________________________
                                                              Account Number    Attention
</TABLE>