<PAGE>   1
                                                                   EXHIBIT 10.36











                         SERIES A CONVERTIBLE PREFERRED

                            STOCK PURCHASE AGREEMENT



                               BROADBANDNOW, INC.



                                JANUARY 27, 2000


<PAGE>   2


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>      <C>                                                                                                  <C>
1.       Purchase and Sale........................................................................................1
2.       Closing of Purchase and Sale.............................................................................1
         2.1      Closing; Closing Date...........................................................................1
         2.2      Transactions at Closing.........................................................................1
3.       Representations and Warranties of Company................................................................1
         3.1      Organization, Standing and Qualification........................................................1
         3.2      Capitalization..................................................................................2
         3.3      Validity of Stock...............................................................................3
         3.4      Subsidiaries....................................................................................3
         3.5      Financial Statements............................................................................3
         3.6      Absence of Undisclosed Liabilities..............................................................4
         3.7      Absence of Certain Changes......................................................................4
         3.8      Authorization; Approvals........................................................................5
         3.9      No Conflict with Other Instruments..............................................................5
         3.10     Labor Agreements and Actions....................................................................6
         3.11     Employee Matters................................................................................6
         3.12     Title to Properties; Liens and Encumbrances.....................................................6
         3.13     Compliance with Corporate Instruments...........................................................7
         3.14     Patents, Trademarks and Other Intangible Assets.................................................7
         3.15     Trade Secrets and Customer Lists................................................................8
         3.16     Tax Matters.....................................................................................8
         3.17     Litigation......................................................................................9
         3.18     Minute Books....................................................................................9
         3.19     Insurance.......................................................................................9
         3.20     Fees and Commissions............................................................................9
         3.21     Employee Benefit Plans.........................................................................10
         3.22     Material Contracts and Commitments.............................................................12
         3.23     Conflict of Interest Transactions..............................................................13
         3.24     Environmental Matters..........................................................................13
         3.25     Other Transactions.............................................................................14
         3.26     No Bankruptcies................................................................................14
         3.27     Year 2000 Compliance...........................................................................14
         3.28     Disclosure.....................................................................................14
         3.29     Legal Compliance...............................................................................15
         3.30     Small Business Concern.........................................................................15
         3.31     Small Business Administration Documentation....................................................15
         3.32     Prior Sales of Series A Convertible Preferred Stock............................................15
4.       Representations, Warranties and Covenants of Purchasers.................................................15
         4.1      Organization and Good Standing.................................................................15
         4.2      Authorization; Approvals.......................................................................16
         4.3      No Conflict with Other Instruments.............................................................16
         4.4      Investment Representations.....................................................................16
         4.5      Investment Experience; Access to Information...................................................16
         4.6      Absence of Registration........................................................................16
         4.7      Restrictions on Transfer.......................................................................17
</TABLE>


<PAGE>   3


<TABLE>
<S>      <C>                                                                                                  <C>
         4.8      Transfer Instructions..........................................................................19
         4.9      Economic Risk..................................................................................19
         4.10     Fees and Commissions...........................................................................19
5.       Conditions to Closing of the Purchasers.................................................................19
         5.1      Representations and Warranties.................................................................19
         5.2      Performance....................................................................................19
         5.3      Company Consents, etc..........................................................................19
         5.4      Compliance Certificates........................................................................20
         5.5      Government Actions.............................................................................20
         5.6      The Certificate of Designation.................................................................20
         5.7      The Articles of Incorporation..................................................................20
         5.8      Legal Opinion..................................................................................20
         5.9      Company Deliveries.............................................................................20
6.       Conditions to Closing of Company........................................................................21
         6.1      Representations and Warranties.................................................................21
         6.2      Performance....................................................................................21
         6.3      Purchaser Consents, etc........................................................................21
         6.4      Compliance Certificates........................................................................21
7.       Affirmative Covenants...................................................................................21
         7.1      Financial Information..........................................................................21
         7.2      Use of Proceeds................................................................................22
         7.3      Confidentiality................................................................................22
         7.4      Right of First Refusal.........................................................................22
         7.5      Sale of the Company............................................................................26
         7.6      Right of Co-Sale...............................................................................28
         7.7      Observers......................................................................................28
         7.8      Key Man Insurance..............................................................................28
         7.9      Access to Information..........................................................................28
         7.10     Restricted Corporate Actions...................................................................29
         7.11     Shareholder and Director Information...........................................................30
         7.12     Reserve for Conversion Shares..................................................................30
         7.13     Rule 144A Information..........................................................................30
         7.14     Sale of Series A Convertible Preferred Stock...................................................30
         7.15     Termination of Covenants.......................................................................30
8.       Expenses................................................................................................31
9.       Survival of Agreements..................................................................................31
10.      Notices.................................................................................................31
11.      Modifications; Waiver...................................................................................32
12.      Entire Agreement........................................................................................32
13.      Successors and Assigns..................................................................................33
14.      Enforcement.............................................................................................33
         14.1     Remedies at Law or in Equity...................................................................33
         14.2     Remedies Cumulative; Waiver....................................................................33
15.      Execution and Counterparts..............................................................................33
16.      Governing Law and Severability..........................................................................33
17.      Headings................................................................................................34
</TABLE>


                                       ii

<PAGE>   4



                                    EXHIBITS

Exhibit A - Certificate of Incorporation
Exhibit B - Bylaws
Exhibit C - Form of Certificate of Designation for the Series A Convertible
            Preferred Stock
Exhibit D - Placement Memorandum
Exhibit E - Form of Registration Rights Agreement
Exhibit F - Form of Opinion of Winstead Sechrest & Minick, P.C.



                                    SCHEDULES

Schedule 1        Purchasers
Schedule 3.1      Jurisdictions
Schedule 3.2      Capitalization
Schedule 3.4      Subsidiaries
Schedule 3.5      Financial Statements
Schedule 3.7      Absence of Certain Changes
Schedule 3.9      No Conflict with Other Instruments
Schedule 3.11     Employee Matters
Schedule 3.12     Title to Properties; Liens and Encumbrances
Schedule 3.14     Patents, Trademarks and Other Intangible Assets
Schedule 3.15     Trade Secrets and Customer Lists
Schedule 3.16     Tax Matters
Schedule 3.19     Insurance
Schedule 3.21     Employee Benefit Plans
Schedule 3.22     Material Contracts and Commitments
Schedule 3.23     Conflict of Interest Transactions
Schedule 3.29     Legal Compliance
Schedule 4.6      Registration Rights
Schedule 7.5      Prior Stock Purchase Agreement



                                      iii

<PAGE>   5


             SERIES A CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT


         This Series A Convertible Preferred Stock Purchase Agreement (this
"AGREEMENT"), dated as of January 27, 2000 is by and among BroadbandNOW, Inc., a
Delaware corporation (the "COMPANY"), and the purchasers identified in SCHEDULE
1 hereto (hereinafter referred to individually as a "PURCHASER" and collectively
as the "PURCHASERS").

         NOW, THEREFORE, the Company and the Purchasers agree as follows:

         1. Purchase and Sale. Subject to the provisions of this Agreement, on
the Closing Date (as hereinafter defined), the Company will sell to each of the
Purchasers, severally and not jointly, and each of the Purchasers, severally and
not jointly, will purchase from the Company, the number of shares of Series A
Convertible Preferred Stock, par value $0.001 per share (the "SERIES A
CONVERTIBLE PREFERRED STOCK"), set forth opposite each such Purchaser's name in
SCHEDULE 1 annexed hereto at a price per share of Eighteen and 80/100 Dollars
($18.80).

         2. Closing of Purchase and Sale.

                  2.1 Closing; Closing Date. The purchase and sale of the Series
         A Convertible Preferred Stock (the "CLOSING") shall take place at the
         offices of the Company at 1440 Corporate Drive, Irving, Texas 75038, at
         10:00 a.m., local time, on January 27, 2000 (the "CLOSING DATE") or at
         such other place or time as may be agreed upon by the Company and the
         Purchasers.

                  2.2 Transactions at Closing. At the Closing, the Company shall
         deliver to each Purchaser a certificate or certificates for the shares
         of Series A Convertible Preferred Stock to be issued and sold to such
         Purchaser at the Closing, duly registered in such Purchaser's name,
         against payment in full by such Purchaser of the aggregate purchase
         price set forth opposite such Purchaser's name in SCHEDULE 1 hereto by
         a wire transfer of funds made to the order of "BroadbandNOW, Inc." in
         the amount of such aggregate purchase price. The Company shall also
         deliver to the Purchasers those items required to be delivered to them
         by the Company as described in ARTICLE 5 of this Agreement. The
         Purchasers shall also deliver to the Company those items required to be
         delivered to the Company by the Purchasers as described in ARTICLE 6 of
         this Agreement.

         3. Representations and Warranties of Company. The Company represents
and warrants to the Purchasers that:

                  3.1 Organization, Standing and Qualification. The Company is a
         corporation duly organized, validly existing and in good standing under
         the laws of the State of Delaware, has all requisite corporate power
         and authority to own its property and assets and to carry on its
         business as it is presently being conducted and as it proposes to carry
         on its business. The Company has all requisite corporate power and
         authority to execute and deliver this Agreement and the other
         agreements contemplated herein, to issue and sell the Series A
         Convertible Preferred Stock hereunder, to issue shares of Class A
         Common Stock (as hereinafter defined) upon conversion of the Series A
         Convertible

<PAGE>   6


         Preferred Stock, and to carry out the transactions contemplated by this
         Agreement and the other agreements contemplated herein. The Certificate
         of Incorporation and Bylaws, copies of which are attached hereto as
         EXHIBITS A and B, respectively, are true, correct and complete. The
         Company is duly qualified and in good standing as a foreign corporation
         authorized to do business in each of the jurisdictions in which the
         failure to be so qualified would have a material adverse effect on the
         Company. SCHEDULE 3.1 sets forth the jurisdictions in which the Company
         is qualified.

                  3.2 Capitalization. The authorized capital stock of the
         Company, as of the Closing Date, will consist of: (a) 100,000,000
         shares of Class A Common Stock, par value $0.001 per share (the "CLASS
         A COMMON STOCK"), of which 4,684,400 shares are issued and outstanding,
         (b) 25,000,000 shares of Class B Common Stock, par value $0.001 per
         share (the "CLASS B COMMON STOCK"), of which 4,979,777 shares are
         issued and outstanding, (c) 25,000,000 shares of Class C Common Stock,
         par value $0.001 per share (the "CLASS C COMMON STOCK"), of which
         2,074,464 shares are issued and outstanding, and (d) 6,900,000 shares
         of Preferred Stock, all of which have been designated as Series A
         Convertible Preferred Stock, of which 3,756,420 shares are issued and
         outstanding. The relative rights, preferences, restrictions and other
         provisions relating to the Series A Convertible Preferred Stock are as
         set forth in the Certificate of Designations, Preferences and Relative
         Rights (the "CERTIFICATE OF DESIGNATION"), attached hereto as EXHIBIT
         C. The Class A Common Stock, Class B Common Stock and Class C Common
         Stock are hereinafter collectively referred to as the "COMMON STOCK".
         SCHEDULE 3.2 sets forth the name and, to the Company's knowledge, the
         current address of each holder of Common Stock and Series A Convertible
         Preferred Stock and number and class of shares so held by each holder.
         Of the Class A Common Stock, (i) 4,979,777 shares are reserved for
         issuance on the conversion of the Class B Common Stock, (ii) 2,074,464
         shares are reserved for issuance on the conversion of the Class C
         Common Stock, (iii) 4,893,617 shares are reserved for issuance on the
         conversion of the Series A Convertible Preferred Stock, and (iv)
         5,961,220 shares are reserved for issuance pursuant to employee stock
         purchase or stock option plans adopted or to be adopted by the Company
         for key employees and prior stock option grants. All of the outstanding
         shares of the Common Stock are duly authorized and validly issued in
         accordance with applicable law, fully paid and non-assessable.

                  Except as set forth on SCHEDULE 3.2 hereto, or as otherwise
         contemplated by this Agreement, as of the date hereof there are, and
         immediately following the Closing, there will be (i) no outstanding
         options, warrants, agreements, conversion rights, preemptive rights or
         other rights to subscribe for, purchase or acquire any issued or
         unissued shares of capital stock of the Company, or any securities
         convertible or exchangeable for such stock, and (ii) no restrictions
         upon the voting or transfer of any shares of capital stock of the
         Company pursuant to its Certificate of Incorporation, Bylaws or other
         governing documents or any agreement or other instruments to which it
         is a party or by which it is bound, and (iii) there are no agreements
         to which the Company is a party or of which the Company has knowledge
         regarding the issuance, registration, voting or transfer of or
         obligation (contingent or otherwise) of the Company to repurchase or
         otherwise acquire


                                      -2-
<PAGE>   7

         or retire or redeem any of its outstanding shares of capital stock. No
         dividends are accrued but unpaid on any capital stock of the Company.

                  3.3 Validity of Stock. The Series A Convertible Preferred
         Stock, when issued, sold and delivered in accordance with the terms of
         this Agreement, will be duly and validly authorized and issued, fully
         paid, non-assessable and free and clear of all encumbrances or
         restrictions on transfer except those imposed by applicable securities
         laws, the Certificate of Incorporation, the Certificate of Designation
         and this Agreement. The Class A Common Stock issuable upon conversion
         of the Series A Convertible Preferred Stock, when issued, sold and
         delivered in accordance with the terms of this Agreement, will be duly
         and validly authorized and issued, fully paid, non-assessable and free
         and clear of all encumbrances or restrictions on transfer except those
         imposed by applicable securities laws, the Certificate of
         Incorporation, the Certificate of Designation and this Agreement. All
         existing preemptive rights have been waived for purposes of the
         issuance of the Series A Convertible Preferred Stock.

                  3.4 Subsidiaries. Except as set forth on SCHEDULE 3.4 hereto,
         the Company does not control, directly or indirectly, or own any equity
         interest in, any other corporation, partnership, joint venture,
         association or business entity. The Company owns all of the issued and
         outstanding capital stock of the corporation listed on Schedule 3.4
         (the "SUBSIDIARY"). The Company has no assets or liabilities other than
         the stock of the Subsidiary and holds a note from the Subsidiary
         secured by the real property used as the Company's and the Subsidiary's
         corporate headquarters. All issued and outstanding capital stock of the
         Subsidiary has been duly and validly authorized and issued and is fully
         paid and non-assessable and free and clear of all encumbrances. As of
         the date hereof there are, and immediately following the Closing there
         will be, no outstanding options, warrants, agreements, conversion
         rights, preemptive rights or other rights to subscribe for, purchase or
         acquire any issued or unissued shares of capital stock of the
         Subsidiary, or any securities convertible into or exchangeable for such
         stock. The Subsidiary is a corporation duly organized, validly existing
         and in good standing under the laws of the State of Texas, has all
         requisite corporate power and authority to own its property and assets
         and to carry on its business as it is presently being conducted and as
         it proposes to carry on its business. The Subsidiary is duly qualified
         and in good standing as a foreign corporation authorized to do business
         in each of the jurisdictions in which the failure to be so qualified
         would have a material adverse effect on the Subsidiary. SCHEDULE 3.4
         sets forth the jurisdictions in which the Subsidiary is qualified.

                  3.5 Financial Statements. Attached hereto as SCHEDULE 3.5 are
         the unaudited balance sheets as at December 31, 1997 and September 30,
         1999 and unaudited statements of income, changes in stockholders
         equity, and cash flow of the Subsidiary for the year ended December 31,
         1997 and the quarter ended September 30, 1999, and the audited balance
         sheet as at December 31, 1998, and audited statements of income,
         changes in stockholders equity, and cash flow of the Subsidiary for the
         year ended December 31, 1998 (collectively, the "FINANCIAL
         STATEMENTS"). The Financial Statements have been prepared in accordance
         with the books and records of the Subsidiary and generally accepted
         accounting principles ("GAAP") (except the


                                      -3-
<PAGE>   8


         September 30, 1999 financial statements and the September 30, 1999
         balance sheet (the "BALANCE SHEET") are subject to normal and recurring
         year-end audit adjustments which are not expected to be material in
         amount) and fairly and accurately reflect the financial condition and
         the results of operations (except for the year ended December 31, 1997)
         of the Subsidiary as of the respective dates thereof or for the periods
         covered in accordance with GAAP.

                  3.6 Absence of Undisclosed Liabilities. Except as provided in
         the Financial Statements, neither the Company nor the Subsidiary has
         any material debt, liability or obligation, absolute or contingent
         (including without limitation obligations in any capacity as guarantor
         or surety), other than obligations incurred in the ordinary course of
         business since September 30, 1999 (the "BALANCE SHEET DATE"). Without
         limiting the generality of the foregoing, the Company knows of no basis
         for the assertion against the Company or the Subsidiary as of the date
         hereof of any material liabilities (not reflected in the Financial
         Statements) of the Company or the Subsidiary.

                  3.7 Absence of Certain Changes. Except as set forth in
         SCHEDULE 3.7, since the Balance Sheet Date, neither the Company nor the
         Subsidiary has:

                           suffered any material adverse change, whether or not
                  caused by any deliberate act or omission of the Company or any
                  shareholder of the Company, or the Subsidiary, in their
                  respective condition (financial or otherwise), operations,
                  assets, liabilities, business or prospects, taken as a whole;

                           contracted for the purchase of any capital assets
                  having a cost in excess of $500,000 or paid any capital
                  expenditures in excess of $500,000;

                           incurred any indebtedness for borrowed money or
                  issued or sold any debt securities in excess of $150,000;

                           incurred or discharged any liabilities or
                  obligations, except in the ordinary course of business;

                           mortgaged, pledged or subjected to any security
                  interest, lien, lease or other charge or encumbrance any of
                  its properties or assets other than equipment financing liens
                  incurred in the ordinary course of business;

                           suffered any damage or destruction to or loss of any
                  assets (whether or not covered by insurance) that has
                  materially and adversely affected, or could reasonably be
                  expected to, materially and adversely affect, its business;

                           acquired or disposed of any assets except in the
                  ordinary course of business;

                           waived any material rights or forgiven any material
                  claims;



                                      -4-
<PAGE>   9

                           lost, terminated or, to the Company's knowledge,
                  experienced any change in the relationship with any employee,
                  customer or supplier, which termination or change has
                  materially and adversely affected, or could reasonably be
                  expected to materially and adversely affect, its business or
                  assets;

                           loaned any money to any person or entity in excess of
                  $100,000;

                           redeemed, purchased or otherwise acquired, or sold,
                  granted or otherwise disposed of, directly or indirectly, any
                  of its capital stock or securities or any rights to acquire
                  such capital stock or securities, or agreed to change the
                  terms and conditions of any such rights or paid any dividends
                  or made any distribution to the holders of the Company's
                  capital stock other than stock options granted to employees
                  under the Company's Incentive Stock Option Plan; or

                           committed to do any of the foregoing.

                  3.8 Authorization; Approvals. All corporate action on the part
         of the Company and its shareholders necessary for the authorization,
         execution, delivery, and performance of all its obligations under this
         Agreement, and for the authorization, issuance, and delivery of the
         Series A Convertible Preferred Stock being sold under this Agreement
         and of the Class A Common Stock issuable upon conversion of the Series
         A Convertible Preferred Stock has been taken. This Agreement
         constitutes a valid and legally binding obligation of the Company
         legally enforceable against it in accordance with its terms, subject as
         to enforcement to bankruptcy, insolvency, reorganization and other laws
         of general applicability relating to or affecting creditors' rights and
         to general principles of equity. The Company has obtained or will
         obtain prior to the Closing Date all necessary consents,
         authorizations, approvals and orders from any federal, state or other
         relevant governmental authority and from any individual, corporation,
         partnership, trust, incorporated or unincorporated association, joint
         venture, joint stock company or other entity, and has made all
         registrations, qualifications, designations, declarations or filings
         with all federal, state, or other relevant governmental authorities,
         all as may be required on the part of the Company in connection with
         the consummation of the transactions contemplated by this Agreement,
         except for filings pursuant to applicable securities laws which will be
         made after the Closing Date.

                  3.9 No Conflict with Other Instruments. Except as set forth on
         SCHEDULE 3.9, the execution, delivery and performance of this Agreement
         will not result in any violation of, be in conflict with, or constitute
         a default under any terms or provision of (a) the Company's Certificate
         of Incorporation or Bylaws; (b) any Commitments (as hereinafter
         defined); or (c) any judgment, decree or order or any statute, rule or
         governmental regulation applicable to the Company or the Subsidiary.
         Subject to the truth and accuracy of each Purchaser's representations
         and warranties herein and the Company making any required filings which
         the Company agrees to do, the offer and sale of the Series A
         Convertible Preferred Stock to each Purchaser will be in compliance
         with all federal and state securities laws.



                                      -5-
<PAGE>   10

                  3.10 Labor Agreements and Actions. Neither the Company nor the
         Subsidiary is bound by or subject to (and none of their respective
         assets or properties is bound by or subject to) any written or oral,
         express or implied, contract, commitment or arrangement with any labor
         union, and no labor union has requested or, to the Company's knowledge,
         sought to represent any of the employees, representatives or agents of
         the Company or the Subsidiary. There is no strike or other labor
         dispute involving the Company or the Subsidiary pending, or, to the
         Company's knowledge, threatened, which could have a material adverse
         effect on the financial condition, operating results, or business of
         the Company and the Subsidiary taken as a whole, nor is the Company
         aware of any labor organization activity involving its employees of the
         Company or the Subsidiary.

                  3.11 Employee Matters. SCHEDULE 3.11 contains a complete and
         accurate list of the names, titles and Cash Compensation (as
         hereinafter defined) of all members of executive management of the
         Company, regardless of compensation levels, and other employees who are
         currently compensated at a rate in excess of $100,000 per year or who
         earned in excess of $100,000 during the Company's preceding fiscal
         year. For purposes of this SECTION 3.11, "CASH COMPENSATION" shall mean
         wages, salaries, bonuses (discretionary or otherwise) and other
         compensation paid or payable in cash. Except as disclosed in SCHEDULE
         3.11, neither the Company nor the Subsidiary has any employment
         agreements, employee leasing agreements, employee service agreements,
         or noncompetition agreements.

                  3.12 Title to Properties; Liens and Encumbrances.

                           Except as disclosed on SCHEDULE 3.12(a), each of the
                  Company and the Subsidiary has good and marketable title to
                  its assets, including, without limitation, those reflected on
                  the Balance Sheet (other than those since disposed of in the
                  ordinary course of business), free and clear of all security
                  interests, liens, charges and other encumbrances, except for
                  (i) liens for taxes not yet due and payable or being contested
                  in good faith in appropriate proceedings, and (ii)
                  encumbrances that are incidental to the conduct of their
                  respective businesses or ownership of property, not incurred
                  in connection with the borrowing of money or the obtaining of
                  credit, and which do not in the aggregate materially detract
                  from the value of the assets affected or materially impair
                  their use by the Company or the Subsidiary. With respect to
                  the assets of the Company or the Subsidiary that are leased,
                  the Company or the Subsidiary is in compliance with all
                  material provisions of such leases. All facilities, machinery,
                  equipment, fixtures, vehicles and other properties owned,
                  leased or used by the Company or the Subsidiary are in good
                  operating condition and repair, normal wear and tear excepted,
                  and are adequate and sufficient for the business of the
                  Company and the Subsidiary.

                           The Company or the Subsidiary enjoys peaceful and
                  undisturbed possession under all real property leases under
                  which the Company or the Subsidiary is operating, and all such
                  leases are valid and subsisting and none of them is in
                  default. A listing of said real property leases, their terms
                  and total lease payments is attached hereto as SCHEDULE
                  3.12(b).


                                      -6-
<PAGE>   11

                           Except as disclosed in SCHEDULE 3.12(c), neither the
                  Company nor the Subsidiary owns any real property.

                  3.13 Compliance with Corporate Instruments. The Company is not
         in violation of any provision of its Certificate of Incorporation,
         Bylaws of the Company or Certificate of Designation, and neither the
         Company nor the Subsidiary is in default or violation of any Commitment
         to which the Company or the Subsidiary is a party or by which any of
         their respective property is bound, the default or violation of which
         would materially and adversely affect the Company's business,
         prospects, condition, affairs or operations of the Company and the
         Subsidiary taken as a whole.

                  3.14 Patents, Trademarks and Other Intangible Assets.

                           SCHEDULE 3.14(a) hereto sets forth the true and
                  correct list of all registered patents, trademarks and
                  copyrights (or applications therefor) held by the Company or
                  the Subsidiary. Except as set forth on SCHEDULE 3.14(a), the
                  Company or the Subsidiary possesses ownership or has the right
                  to use all patents, copyrights, trademarks, service marks,
                  trade secrets and other proprietary intellectual property
                  rights necessary for the operation of its business except
                  where the failure of the Company or the Subsidiary to own or
                  have such right to use such intellectual property would not
                  have a material adverse effect on the Company and the
                  Subsidiary, taken as a whole (the "INTELLECTUAL PROPERTY"). To
                  the Company's knowledge, neither the Company nor the
                  Subsidiary (a) is infringing upon the intellectual property
                  rights of others in connection with its business; (b) requires
                  the consent of any person which has not been obtained (all of
                  such consents being set forth in SCHEDULE 3.14(a)) to use the
                  Intellectual Property; (c) is restricted from freely
                  transferring the Intellectual Property (other than as set
                  forth in SCHEDULE 3.14(a)); or (d) has received any written
                  notice of conflict with respect to the intellectual property
                  rights of any other person or entity. All of the Intellectual
                  Property is valid and subsisting, has not been canceled,
                  abandoned or otherwise terminated and, if applicable, has been
                  duly issued or filed. The employees and consultants of the
                  Company or the Subsidiary, who, either alone or in concert
                  with others, developed, invested, discovered, derived,
                  programmed or designed any of the Intellectual Property owned
                  by the Company or the Subsidiary have entered into written
                  agreements to protect the confidentiality of such Intellectual
                  Property and to assign to the Company or the Subsidiary all
                  rights therein.

                           The Company has no knowledge of any claim that, or
                  inquiry as to whether, any product, activity or operation of
                  the Company or the Subsidiary infringes upon or involves, or
                  has resulted in the infringement of, any proprietary right of
                  any other person, corporation or other entity; and no
                  proceedings have been instituted, are pending or are
                  threatened that challenge the rights of the Company or the
                  Subsidiary with respect thereto. Any agreement of
                  indemnification by the Company or the Subsidiary for any
                  Intellectual Property as


                                      -7-
<PAGE>   12

                  to any license granted by it or any property manufactured,
                  used or sold by it is set forth in SCHEDULE 3.14(b).

                  3.15 Trade Secrets and Customer Lists. The Company or the
         Subsidiary has the right to use, free and clear of any claims or rights
         of others, except claims or rights specifically set forth in SCHEDULE
         3.15, all trade secrets, customer lists and proprietary information
         required for the marketing of all merchandise and services formerly or
         presently sold or marketed by the Company or the Subsidiary. To the
         Company's knowledge, neither it nor the Subsidiary is using, or in any
         way making use of, any confidential information or trade secrets of any
         third party, including, without limitation, any past or present
         employee of the Company or the Subsidiary, except under valid and
         existing license agreements (all such license agreements being set
         forth in SCHEDULE 3.15).

                  3.16 Tax Matters.

                           All required foreign, federal, state, local and other
                  tax returns, notices and reports (including, without
                  limitation, income, property, sales, use, franchise, capital
                  stock, excise, added value, employees' income withholding,
                  social security and unemployment tax returns) of the Company
                  and the Subsidiary have been accurately prepared in all
                  material respects and duly and timely filed, and all foreign,
                  federal, state, local and other taxes required to be paid with
                  respect to the periods covered by such returns have been paid.
                  Neither the Company nor the Subsidiary is or has been
                  delinquent in the payment of any tax, assessment or
                  governmental charge. Neither the Company nor the Subsidiary is
                  a party to any agreement, contract, arrangement or plan that
                  has resulted or would result, separately or in the aggregate,
                  in the payment of any "excess parachute payments" within the
                  meaning of Section 280G of the Code. Neither the Company nor
                  the Subsidiary has or has had a permanent establishment in any
                  foreign country, as defined in any applicable tax treaty or
                  convention between the United States and such foreign country.

                           Except as set forth in SCHEDULE 3.16, neither the
                  Company nor the Subsidiary has had any tax deficiency proposed
                  or assessed against it and has not executed any waiver of any
                  statute of limitations on the assessment or collection of any
                  tax or governmental charge. Except as set forth in SCHEDULE
                  3.16, and except for sales tax audits, none of the Company's
                  or the Subsidiary's franchise tax returns has ever been
                  audited by governmental authorities. No tax audit, action,
                  suit, proceeding, investigation or claim is now pending nor,
                  to the best knowledge of the Company, threatened against the
                  Company or the Subsidiary, and no issue or question has been
                  raised (and is currently pending) by any taxing authority in
                  connection with any of the Company's or the Subsidiary's tax
                  returns or reports.

                           To the Company's knowledge, the reserves for taxes,
                  assessments and governmental charges reflected on the Balance
                  Sheet are and will be sufficient for the payment of all unpaid
                  taxes and governmental charges payable by the


                                      -8-
<PAGE>   13


                  Company or the Subsidiary with respect to the period ended on
                  the Balance Sheet Date. Since the Balance Sheet Date, the
                  Company or the Subsidiary has made adequate provisions on its
                  books of account for all taxes, assessments and governmental
                  charges with respect to business, properties and operations
                  for such period. The Company or the Subsidiary withheld or
                  collected from each payment made to its employees, the amount
                  of all taxes (including, but not limited to, federal income
                  taxes, Federal Insurance Contribution Act taxes and Federal
                  Unemployment Tax Act taxes) required to be withheld or
                  collected therefrom, and has paid the same to the proper tax
                  receiving officers or authorized depositories.

                  3.17 Litigation. No action, proceeding or investigation is
         pending or threatened against the Company, the Subsidiary or any of
         their respective properties before any court, arbitration board or
         tribunal or administrative or other governmental agency (including,
         without limitation, unfair labor practices or discrimination charges or
         complaints), that might result, either individually or in the
         aggregate, in any material adverse change in the business, prospects,
         condition, affairs, operations, or assets of the Company and the
         Subsidiary, taken as a whole, or in any material liability on the part
         of the Company or the Subsidiary. The foregoing includes, without
         limiting its generality, actions pending or threatened involving the
         prior employment of any of the Company's or the Subsidiary's employees
         or use by any of them in connection with the Company's or the
         Subsidiary's business of any information, property or techniques
         allegedly proprietary to any of their former employers.

                  3.18 Minute Books. The minute books of the Company and the
         Subsidiary have been made available to the counsel for the Purchasers
         and contain a complete summary of all meetings of directors and
         shareholders since the time of incorporation and reflect all
         transactions referred to in such minutes accurately in all material
         respects.

                  3.19 Insurance. The Company and/or the Subsidiary carries
         property, liability, workers' compensation and such other types of
         insurance as is customary in the Company's and/or the Subsidiary's
         industry. A list and brief description of all insurance policies of the
         Company and the Subsidiary are set forth in SCHEDULE 3.19. All of such
         policies are valid and enforceable policies, issued by insurers of
         recognized responsibility in amounts and against such risks and losses
         as are customary in the Company's and/or the Subsidiary's industry. All
         casualty insurance is sufficient in amount to allow the Company or the
         Subsidiary to replace any of its properties that might be damaged or
         destroyed.

                  3.20 Fees and Commissions. The Company has retained Donaldson,
         Lufkin & Jenrette ("DLJ") as financial advisor and placement agent in
         connection with the transactions contemplated by this Agreement. The
         Company shall pay all fees owed DLJ in connection with the transactions
         contemplated by this Agreement from the proceeds of the sale of the
         Preferred Stock (the "OFFERING") pursuant to the Placement Memorandum
         (as hereinafter defined). The Company represents and warrants that
         other than as stated in this SECTION 3.20, neither it nor the
         Subsidiary has retained any finder, broker, agent, financial adviser or
         other intermediary in connection with the transactions contemplated


                                      -9-
<PAGE>   14


         by this Agreement. The Company agrees to indemnify and hold harmless
         the Purchasers for any brokerage commissions, finder's fees or similar
         compensation in connection with the transactions contemplated by this
         Agreement based on any arrangement or agreement made by the Company or
         the Subsidiary.

                  3.21 Employee Benefit Plans.

                           SCHEDULE 3.21 contains true, complete and correct
                  information as to any bonus, incentive, insurance (including
                  any self-insured arrangements), compensation plan, welfare,
                  retirement, defined benefit, 401(k), pension, profit sharing,
                  salary reduction, deferred compensation, stock purchase, stock
                  option, workers' compensation, disability benefits,
                  supplemental unemployment benefits (including without
                  limitation any "voluntary employees' beneficiary association"
                  as defined in Section 501(c)(9) of the Code) (as hereinafter
                  defined), vacation, holiday and sick pay or other similar
                  benefit plans, programs or arrangements (whether written or
                  oral) (said plans, programs or arrangements being referred to
                  as the "PLANS") in which any employees of the Company or the
                  Subsidiary participate. All Plans are listed on the attached
                  SCHEDULE 3.21. All obligations of the Company or the
                  Subsidiary, whether arising by operation of law, by contract
                  or by past custom, for payment by it to trusts, retirement
                  plans or other funds or any governmental agency with respect
                  to unemployment compensation benefits, social security
                  benefits or any other benefits for employees of the Company or
                  the Subsidiary have been paid or shall be paid by the Company
                  or the Subsidiary at the time the Company or the Subsidiary is
                  obligated to make such payments. All benefits payable directly
                  to the Company's or the Subsidiary's employees have been paid
                  or shall be paid by the Company or the Subsidiary at the time
                  the Company or the Subsidiary is obligated to make such
                  payments. All reasonably anticipated obligations of the
                  Company or the Subsidiary, whether arising by operation of
                  law, by contract or by past custom, for vacation and holiday
                  pay, bonuses and other forms of compensation or benefits which
                  are or may become payable to employees or any of them have
                  been paid, or shall be paid, in accordance with the provisions
                  of applicable laws, regulations, benefit plans or policies.

                           True, complete and correct copies of all relevant
                  documents with respect to the Plans, including, but not
                  limited to, each of the following documents: (i) a copy of the
                  Plan and each related trust or other funding agreement,
                  including insurance contracts (and all amendments thereto);
                  (ii) the last filed Form 5500, where applicable; (iii) the
                  most recent determination letter received from the Internal
                  Revenue Service with respect to each Plan that is intended to
                  be qualified under Section 401 of the Internal Revenue Code of
                  1986, as amended (the "CODE"); and (iv) the summary plan
                  descriptions and all material modifications thereto, have been
                  delivered to Purchasers.

                           All Plans, related trust agreements, annuity
                  contracts or other funding arrangements comply in all
                  substantial respects and the Company or the


                                      -10-
<PAGE>   15

                  Subsidiary has administered and operated each such Plan,
                  related trust agreements, annuity contracts or other funding
                  arrangements in substantial compliance with the requirements
                  of applicable law, including, without limitation, the Employee
                  Retirement Income Security Act of 1974 as amended ("ERISA"),
                  and the Code, and no such Plan that is subject to Part 3 of
                  Subtitle B of Title I of ERISA has incurred any "accumulated
                  funding deficiency" within the meaning of Section 302 of ERISA
                  or Section 412 of the Code, whether or not waived.

                           Neither the Company nor the Subsidiary maintains or
                  is required to contribute to any multi-employer plan (as
                  defined in Section 3(37) of ERISA) for the benefit of
                  employees or former employees of the Company or the
                  Subsidiary. Neither the Company nor the Subsidiary maintains a
                  self-insured "multiple employer welfare arrangement" as
                  defined in Section 3(40) of ERISA.

                           The Pension Benefit Guaranty Corporation ("PBGC") has
                  not instituted proceedings to terminate any of the Company's
                  or the Subsidiary's defined benefit plans and no condition
                  exists that presents a risk that such proceedings shall be
                  instituted. There has been no "reportable event" within the
                  meaning of Section 4043(b) of ERISA with respect to any
                  defined benefit plan and no defined benefit plan has been
                  terminated within the preceding six years or is expected to be
                  terminated. No liability (other than for the payment of
                  premiums) to the PBGC has been or is expected to be incurred
                  by the Company or the Subsidiary or any officer, director,
                  shareholder or employee of the Company or the Subsidiary with
                  respect to any defined benefit plan.

                           Neither the Company nor the Subsidiary has any
                  liability with respect to any transaction which relates to any
                  Plan and which is in violation of Sections 404 or 406 of ERISA
                  or constitutes a "prohibited transaction," as defined in
                  Section 4975(c)(1) of the Code, and for which no exemption
                  exists under Section 408 of ERISA or Section 4975(c)(2) or (d)
                  of the Code. To the Company's knowledge, neither the Company
                  nor the Subsidiary has participated in a violation of Part 4
                  of Title I, Subtitle B of ERISA by any plan fiduciary of any
                  Plan and has no unpaid civil penalty under Section 502(1) of
                  ERISA.

                           There is no material action, order, writ, injunction,
                  judgment or decree outstanding or claim, suit, litigation,
                  proceeding, arbitral action, governmental audit or
                  investigation (including, without limitation, any such audit
                  or investigation by the Internal Revenue Service, Department
                  of Labor, or PBGC) relating to or seeking benefits under any
                  Plan that is pending or, to the Company's knowledge,
                  threatened or anticipated against the Company or the
                  Subsidiary other than routine claims for benefits.



                                      -11-
<PAGE>   16

                  3.22 Material Contracts and Commitments.

                           Material Contracts and Commitments. Except as set
                  forth in SCHEDULE 3.22, neither the Company nor the Subsidiary
                  has entered into, nor is the capital stock, the assets or the
                  business of the Company or the Subsidiary bound by, whether or
                  not in writing, any

                                    deed of trust securing a lien in any real
                           property owned by the Company or the Subsidiary;

                                    security agreement granting a security
                           interest in connection with the Company's or the
                           Subsidiary's incurrence of indebtedness for borrowed
                           money;

                                    guaranty or suretyship agreement or
                           performance bond, in each case involving a contingent
                           obligation of the Company or the Subsidiary in excess
                           of $100,000;

                                    consulting or compensation agreement or
                           similar arrangement that is not an Employment
                           Agreement and that involves compensation payable by
                           the Company or the Subsidiary in excess of $100,000
                           annually or an agreement relating to the election or
                           retention in office of any director or officer;

                                    debt instrument, loan agreement or other
                           obligation relating to indebtedness for borrowed
                           money;

                                    money lent or to be lent by the Company or
                           the Subsidiary to another in an amount in excess of
                           $10,000;

                                    lease of real property, whether as lessor,
                           lessee, sublessor or sublessee (excluding the real
                           estate leases set forth on SCHEDULE 3.12);

                                    lease of personal property, whether as
                           lessor, lessee, sublessor or sublessee involving
                           lease payments in an annual amount in excess of
                           $50,000;

                                    any agreement for the acquisition of
                           services, supplies, equipment or other personal
                           property (excluding leases of real or personal
                           property) and involving more than $100,000 in the
                           aggregate;

                                    contracts containing noncompetition
                           covenants restricting the Company's or the
                           Subsidiary's ability to compete in the
                           Telecommunications Business (as hereinafter defined);



                                      -12-
<PAGE>   17

                                    agreement providing for the purchase from a
                           supplier of all or substantially all of the
                           requirements of the Company or the Subsidiary of a
                           particular product or service; or

                                    agreement or commitment a copy of which
                           would be required to be filed with the Securities and
                           Exchange Commission (the "COMMISSION") as an exhibit
                           to a registration statement on Form S-1, or a
                           successor form, pursuant to Paragraph 10 of Item 601
                           of Regulation S-K, if the Company were registering
                           securities under the Securities Act of 1933, as
                           amended (the "Securities Act").

                  All of the documents listed on SCHEDULE 3.22 hereof are
                  hereinafter collectively referred to as the "COMMITMENTS."
                  True, correct and complete copies of the written Commitments
                  have heretofore been made available to Purchasers. To the
                  knowledge of the Company, the Commitments are in full force
                  and effect and are valid and enforceable obligations of the
                  parties thereto in accordance with their respective terms
                  (except as may be limited by the laws of bankruptcy,
                  insolvency or creditors rights generally and subject to the
                  enforceability and availability of equitable remedies), and to
                  the knowledge of the Company, no defenses, off-sets or
                  counterclaims have been asserted by any party thereto, nor has
                  the Company or the Subsidiary waived in writing any rights
                  thereunder, except as described in SCHEDULE 3.22. Neither the
                  Company nor the Subsidiary has received written notice of any
                  default with respect to any Commitment.

                           No Cancellation or Termination of Commitments.
                  Neither the Company nor the Subsidiary has received written
                  notice of any plan or intention of any other party to any
                  Commitment to exercise any right to cancel or terminate any
                  Commitment.

                  3.23 Conflict of Interest Transactions. Except as set forth on
         SCHEDULE 3.23, no director, Common Stock holder, member of management
         of the Company, or their spouses or children, owns directly or
         indirectly, on an individual or joint basis, any interests, has any
         investment in or serves as an officer, partner or director in any
         corporation, business or other person that is a customer, supplier or
         competitor of the Company or the Subsidiary, or that has a material
         contract or arrangement with the Company or the Subsidiary or their
         competitor, other than the ownership of less than one percent (1%) of
         the securities of any company that are publicly traded on any national
         exchange or over the counter market.

                  3.24 Environmental Matters. To the Company's knowledge,
         neither the Company nor the Subsidiary nor any of their respective
         assets is currently in material violation of, or subject to any
         material existing, pending or threatened investigation or inquiry by
         any governmental authority or to any remedial obligations under any
         environmental laws, and this representation and warranty would continue
         to be true and correct following disclosure to the applicable
         governmental authorities of all relevant facts, conditions and
         circumstances, if any, pertaining to the assets and operations of the
         Company and the



                                      -13-
<PAGE>   18

         Subsidiary. To the Company's knowledge, the assets of the Company and
         the Subsidiary have never been used in a manner that would be in
         material violation of any of the environmental laws. To the Company's
         knowledge, neither the Company nor the Subsidiary is required to obtain
         any permits, licenses or similar authorizations to construct, occupy,
         operate or use any buildings, improvements, fixtures and equipment
         owned or leased by the Company or the Subsidiary by reason of any
         environmental laws. None of the assets owned or leased by the Company
         or the Subsidiary are on any federal or state "Superfund" list or
         subject to any environmentally related liens.

                  3.25 Other Transactions. Other than the offering and sale of
         the Series A Convertible Preferred Stock hereunder, the Company has not
         entered into any agreements or arrangements and has no knowledge of any
         pending or possible offers or discussions concerning or providing for
         the merger or consolidation of the Company or the Subsidiary or the
         sale of all or any substantial portion of their respective assets, the
         sale by the Company or any material shareholder of the Company of any
         Securities of the Company or the Subsidiary or any similar transaction
         affecting the Company or the Subsidiary or their respective security
         holders.

                  3.26 No Bankruptcies. For the past five years, neither the
         Company nor the Subsidiary nor any of their respective officers,
         directors or affiliates, have voluntarily sought, consented to or
         acquiesced in the benefits of, or become the subject of a proceeding
         under the Bankruptcy Code of the United States or any other applicable
         liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
         receivership, insolvency, reorganization or similar debtor relief laws
         from time to time in effect affecting the rights of creditors
         generally.

                  3.27 Year 2000 Compliance. To the Company's knowledge, the
         computer systems used by the Company and the Subsidiary are Year 2000
         compliant, meaning that such systems will continue to function, and
         functionality and accuracy will not be affected as a result of the run
         date or the dates being processed in the twentieth or twenty-first
         century, including the advent of the Year 2000, or from the extra day
         occurring in any leap year.

                  3.28 Disclosure. To the Company's knowledge, this Agreement
         and the exhibits and schedules hereto, when taken as a whole with other
         documents and certificates furnished by the Company to the Purchasers
         or their counsel, do not contain any untrue statement of material fact
         or omit any material fact necessary in order to make the statements
         therein not misleading; provided, however, certain materials provided
         to the Purchasers contain projections and estimates of future events,
         and such projections and estimates are subject to the statements in the
         Placement Memorandum (as hereinafter defined), including, without
         limitation, the statements set forth on page 42 thereof. There is no
         fact known to the Company that has not been disclosed to the Purchasers
         prior to the date of this Agreement that materially and adversely
         affects the business, assets, properties, prospects or condition
         (financial or otherwise) of the Company and the Subsidiary, taken as a
         whole, or the ability of the Company to perform under this Agreement or
         the other agreements contemplated hereby or to consummate the
         transactions contemplated hereby or thereby. For purposes of this
         SECTION 3.28 only, "to the Company's knowledge" shall


                                      -14-
<PAGE>   19

         include any information the Company would have known except for its
         reckless disregard for the accuracy of any material fact.

                  3.29 Legal Compliance. Except as set forth on SCHEDULE 3.29,
         (a) each of the Company and the Subsidiary has all material franchises,
         permits, licenses and other rights and privileges necessary to permit
         it to own its respective properties and to conduct its respective
         businesses as presently conducted (all of which such items are set
         forth on SCHEDULE 3.29) and (b) the Company, the Subsidiary and the
         business and operations of the Company and the Subsidiary, have been
         and are being conducted in all material respects in accordance with all
         applicable laws, rules and regulations (including, without limitation,
         all employment, labor practices, safety and health laws and
         regulations), and the Company is not in violation of any judgment,
         order or decree. There is no existing law, rule, regulation or order
         which would prohibit or restrict the Company or the Subsidiary from, or
         otherwise materially adversely affect the Company or the Subsidiary in,
         conducting its business in any jurisdiction in which it is now
         conducting business or, to the Company's knowledge, in which it
         proposes to conduct business.

                  3.30 Small Business Concern. The Company, taken together with
         its "affiliates" (as that term is defined in Section 121.401 of Title
         13 of the Code of Federal Regulations) is a "Small Business Concern"
         within the meaning of Section 103(5) of the Small Business Investment
         Act of 1958, as amended (the "SBIC Act"), and the regulations
         thereunder, including Title 13, Code of Federal Regulations, Section
         121.3, and meets the applicable size and eligibility criteria set forth
         in Title 13, Code of Federal Regulations, Section 121.802(a)(2).
         Neither the Company nor any of its subsidiaries, if any, presently
         engages in any activity for which a small business investment company
         is prohibited from providing funds by the SBIC Act and the regulations
         thereunder, including Title 13, Code of Federal Regulations, Section
         107.

                  3.31 Small Business Administration Documentation. The Company
         has provided Purchasers, who have requested, a Small Business
         Administration "SBA" Form 480 (Size Status Declaration) and SBA Form
         652 (Assurance of Compliance), of such Forms, which have been completed
         and executed by the Company, and SBA Form 1031 (Portfolio Finance
         Report), Part A of which has been completed by the Company.

                  3.32 Prior Sales of Series A Convertible Preferred Stock. All
         shares of Series A Convertible Preferred Stock sold by the Company or
         sold by the Subsidiary and converted into or exchanged for Series A
         Convertible Preferred Stock of the Company have been sold on
         substantially the same terms as set forth in this Agreement for the
         Purchasers.

         4. Representations, Warranties and Covenants of Purchasers.

                  4.1 Organization and Good Standing. Each Purchaser severally
         represents and warrants that, if a corporation, partnership, trust or
         other form of business entity, it is duly organized, validly existing
         and in good standing under the laws of the state of its organization,
         has all requisite power and authority to own its property and assets
         and to


                                      -15-
<PAGE>   20

         carry on its business as it is presently being conducted and as it
         proposes to carry on its business, is duly qualified and in good
         standing and authorized to do business in each of the jurisdictions in
         which the failure to be so qualified would have a material adverse
         effect on the Purchaser.

                  4.2 Authorization; Approvals. Each Purchaser severally
         represents and warrants that the execution and delivery of this
         Agreement has been duly authorized by such Purchaser and this Agreement
         is a valid and legally binding obligation of such Purchaser legally
         enforceable against it in accordance with its terms, subject as to
         enforcement to bankruptcy, insolvency, reorganization and other laws of
         general applicability relating to or affecting creditor's rights and
         general principles of equity. Each Purchaser, if a corporation,
         partnership, trust or other form of business entity, is duly qualified
         to purchase and hold the Series A Convertible Preferred Stock sold
         hereunder. Each Purchaser represents and warrants that the information
         set forth on SCHEDULE 1 hereto regarding such Purchaser's business and
         residence addresses, telephone numbers, citizenship and taxpayer
         identification number is true, accurate and complete. Each Purchaser
         severally represents and warrants that it has obtained, or will obtain
         prior to the Closing Date, all necessary consents, authorizations,
         approvals and orders required on the part of such Purchaser in
         connection with the consummation of the transactions contemplated by
         this Agreement.

                  4.3 No Conflict with Other Instruments. The execution,
         delivery and performance of this Agreement will not result in any
         violation of, be in conflict with, or constitute a default under any
         terms or provisions of (a) if a corporation, partnership, trust or
         other form of business entity, the applicable charter documents of such
         Purchaser; (b) any material contract, indenture or other agreement to
         which the Purchaser is a party; or (c) any judgment, decree or order or
         any material statute, rule or governmental regulation applicable to the
         Purchaser.

                  4.4 Investment Representations. Each Purchaser severally
         represents and warrants that it is acquiring the Series A Convertible
         Preferred Stock to be purchased by it (and any Class A Common Stock
         into which it may be converted) for its own account, for investment and
         not with a view to, or for sale in connection with, any distribution of
         such stock or any part thereof.

                  4.5 Investment Experience; Access to Information. Each
         Purchaser severally represents and warrants that it (a) is an
         "accredited investor" as that term is defined in Rule 501(a)
         promulgated under the Securities Act (or any successor provision), (b)
         has such knowledge and experience in financial and business matters as
         to be capable of evaluating the merits and risks of this investment,
         (c) has the ability to bear the economic risks of this investment for
         an indefinite period of time, and (d) has received a copy of the
         Private Placement Memorandum and any supplements thereto (collectively,
         the "PLACEMENT MEMORANDUM") attached hereto as EXHIBIT D.

                  4.6 Absence of Registration. Each Purchaser understands that:


                                      -16-
<PAGE>   21

                           The Series A Convertible Preferred Stock to be sold
                  and issued hereunder and the Class A Common Stock into which
                  it may be converted have not been registered under the
                  Securities Act or any other securities laws on the basis that
                  the sale of such stock to the Purchaser is exempt from
                  registration under the Securities Act and such other
                  securities laws, and the Purchaser may be required to hold
                  such stock indefinitely unless it is subsequently registered
                  under the Securities Act and any other applicable securities
                  laws, or exemptions from such registration are available.

                           The Company's reliance on the exemptions referred to
                  in SECTION 4.6(a) above is predicated in part upon the
                  Purchaser's representations and warranties contained in this
                  ARTICLE 4.

                           Except as provided in that certain Registration
                  Rights Agreement, to be executed at the Closing, by and among
                  the Company and the Purchasers (the "REGISTRATION RIGHTS
                  AGREEMENT"), attached hereto as EXHIBIT E and as noted in
                  SCHEDULE 4.6 hereto, the Company is under no obligation to
                  file a registration statement with the Commission or any other
                  securities regulatory agency with respect to the Series A
                  Convertible Preferred Stock or the Class A Common Stock into
                  which it may be converted.

                           Rule 144 promulgated under the Securities Act or any
                  successor provision ("RULE 144"), which provides for certain
                  limited sales of unregistered securities, is not presently
                  available with respect to the Series A Convertible Preferred
                  Stock or the Class A Common Stock into which it may be
                  converted, and the Company is under no obligation to make Rule
                  144 available.

                  4.7 Restrictions on Transfer. Each Purchaser agrees that: (a)
         it will not offer, sell, pledge, hypothecate, or otherwise dispose of
         the Series A Convertible Preferred Stock or the Class A Common Stock
         into which it may be converted unless such offer, sale, pledge,
         hypothecation or other disposition is in accordance with the
         Certificate of Designation and this Agreement and is (i) registered
         under the Securities Act and any other applicable securities laws, or
         (ii) in compliance with an opinion of counsel to such Purchaser,
         delivered to the Company and reasonably acceptable to it, to the effect
         that such offer, sale, pledge, hypothecation or other disposition
         thereof does not violate the Securities Act or such other securities
         laws; and (b) the certificate(s) representing the Series A Convertible
         Preferred Stock (and any Class A Common Stock into which it may be
         converted) shall bear a legend stating in substance:

                  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER
                  APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
                  OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
                  UNTIL REGISTERED UNDER SAID ACT OR SUCH LAWS OR, IN THE
                  OPINION OF COUNSEL IN FORM AND SUBSTANCE


                                      -17-
<PAGE>   22

                  SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
                  SALE OR TRANSFER, PLEDGE OR HYPOTHECATION DOES NOT VIOLATE THE
                  PROVISIONS THEREOF.

         In addition, the certificates evidencing the Series A Convertible
Preferred Stock shall bear legends stating in substance:

                  THE SECURITIES REPRESENTED BY THIS CERTIFICATE ALSO ARE
                  SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND
                  OBLIGATIONS, TO WHICH ANY TRANSFEREE AGREES BY HIS ACCEPTANCE
                  HEREOF, AS SET FORTH IN THE STOCK PURCHASE AGREEMENT BETWEEN
                  THE ISSUER AND INITIAL PURCHASER, A COPY OF WHICH MAY BE
                  OBTAINED FROM THE COMPANY. NO TRANSFER OF SUCH SHARES WILL BE
                  MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY
                  EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND BY
                  AN AGREEMENT OF THE TRANSFEREE TO BE BOUND BY THE RESTRICTIONS
                  SET FORTH IN SAID STOCK PURCHASE AGREEMENT.

                  THE ISSUER IS AUTHORIZED TO ISSUE MORE THAN ONE CLASS OR
                  SERIES OF CAPITAL STOCK. A STATEMENT OF THE POWERS,
                  DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING OPTIONAL
                  OR OTHER SPECIAL RIGHTS OF EACH CLASS OR SERIES OF CAPITAL
                  STOCK AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF
                  SUCH PREFERENCES AND/OR RIGHTS (TO THE EXTENT ESTABLISHED) IS
                  ON FILE WITH THE SECRETARY OF STATE OF THE STATE OF DELAWARE.
                  THE ISSUER WILL FURNISH A COPY OF SUCH STATEMENT TO ANY
                  SHAREHOLDER OF RECORD, WITHOUT CHARGE, UPON THE WRITTEN
                  REQUEST TO THE ISSUER AT ITS PRINCIPAL PLACE OF BUSINESS OR
                  REGISTERED OFFICE.

                  Upon request of a holder of Series A Convertible Preferred
         Stock or the Class A Common Stock into which it has been converted, the
         Company shall remove the legend set forth above from the certificates
         evidencing such Series A Convertible Preferred Stock or Class A Common
         Stock or issue to such holder new certificates therefor free of such
         legend, if with such request the Company shall have received an opinion
         of counsel selected by the holder and reasonably satisfactory to the
         Company, in form and substance reasonably satisfactory to the Company,
         to the effect that a transfer by said holder of such Series A
         Convertible Preferred Stock or Class A Common Stock will not violate
         the Securities Act or any other applicable securities laws.

                  Notwithstanding the provisions above, no such registration or
         opinion of counsel shall be necessary for a pro rata transfer by a
         Purchaser which is a corporation to an


                                      -18-
<PAGE>   23

         affiliate of such corporation, or a Purchaser which is a partnership to
         a partner of such partnership or a retired partner of such partnership
         who retires after the date hereof without the payment of compensation
         by such partner, or to the estate of any such partner or retired
         partner or the transfer by gift, will or intestate succession of any
         partner to his spouse or lineal descendants or ancestors, if the
         transferee agrees in writing to be subject to the terms hereof to the
         same extent as if such transferee were an original Purchaser hereunder,
         including without limitation, the representations, warranties,
         covenants and agreements contained in SECTIONS 4.1 to 4.7 hereto,
         inclusive.

                  4.8 Transfer Instructions. Each Purchaser agrees that the
         Company may place and make appropriate notations in its record books
         against the transfer of the shares of Series A Convertible Preferred
         Stock to be purchased by it and any Class A Common Stock into which
         such shares may be converted, and may take any other actions which it
         deems necessary to prevent any violations of the Securities Act or any
         other securities laws by reason of the delivery of such stock or any
         subsequent transaction with respect to such stock.

                  4.9 Economic Risk. Each Purchaser understands that it must
         bear the economic risk of the investment represented by the purchase of
         Series A Convertible Preferred Stock and any Class A Common Stock into
         which it may be converted for an indefinite period.

                  4.10 Fees and Commissions. Each Purchaser represents and
         warrants that it has retained no finder, broker, agent, financial
         advisor or other intermediary (hereinafter collectively referred to as
         "INTERMEDIARY") in connection with the transactions contemplated by
         this Agreement and agrees to indemnify and hold harmless the Company
         from liability for any compensation to any Intermediary retained by
         such Purchaser and the fees and expenses of defending against such
         liability or alleged liability.

         5. Conditions to Closing of the Purchasers. The obligation of each
Purchaser on the Closing Date to consummate the transactions contemplated by
this Agreement shall be subject to each of the following conditions precedent,
any one or more of which may be waived by such Purchaser:

                  5.1 Representations and Warranties. The representations and
         warranties made by the Company herein shall be true and accurate on and
         as of the Closing Date.

                  5.2 Performance. The Company shall have performed and complied
         with all agreements, conditions and covenants contained herein or in
         any other ancillary documents incident to the transactions contemplated
         by this Agreement required to be performed or complied with by it prior
         to or at the Closing.

                  5.3 Company Consents, etc. The Company shall have secured all
         permits, consents and authorizations that shall be necessary or
         required lawfully to consummate


                                      -19-
<PAGE>   24

         this Agreement, to issue the Series A Convertible Preferred Stock to be
         purchased by the Purchasers and to issue the Class A Common Stock into
         which it may be converted.

                  5.4 Compliance Certificates. The Company shall have delivered
         to each Purchaser or its representative at the Closing an Officer's
         Certificate to the effect that the representations and warranties of
         the Company continue to be true and accurate in all material respects
         on the Closing Date, and that all conditions specified in SECTIONS 5.1
         to 5.3 hereof, inclusive, have been fulfilled and that there has been
         no materially adverse change in the business, affairs, prospects,
         operations or condition of the Company since the Balance Sheet Date.

                  5.5 Government Actions. No action, suit or proceeding shall
         have been instituted before any court, governmental or regulatory body
         or arbitral tribunal, or instituted or threatened by any governmental
         or regulatory body to restrain, modify or prevent the carrying out of
         the transactions contemplated hereby or to seek damages or a discovery
         order in connection with such transactions.

                  5.6 The Certificate of Designation. Each Purchaser shall have
         received evidence that the Company shall have duly authorized and filed
         the Certificate of Designation with the Secretary of State of the State
         of Delaware, substantially in the form attached hereto as EXHIBIT C;

                  5.7 The Certificate of Incorporation. Each Purchaser shall
         have received a copy of the Certificate of Incorporation of the Company
         and all amendments thereto, certified by the Secretary of State of
         Delaware, which shall include evidence that the Company shall have duly
         authorized and filed the Certificate of Incorporation with the
         Secretary of State of the State of Delaware, substantially in the form
         attached hereto as EXHIBIT A;

                  5.8 Legal Opinion. Counsel for the Company, Winstead, Sechrest
         & Minick, P.C., shall have delivered to the Purchasers a legal opinion,
         dated as of the Closing Date and substantially in the form attached
         hereto as EXHIBIT F;

                  5.9 Company Deliveries. The Company shall have delivered to
         the Purchasers:

                           (i) copies of the resolutions of the Company's Board
                  of Directors authorizing and approving this Agreement and all
                  of the transactions and agreements contemplated hereby and
                  thereby, (ii) the Bylaws of the Company and (iii) the names of
                  the officer or officers of the Company authorized to execute
                  this Agreement and any and all documents, agreements and
                  instruments contemplated herein, all certified by the
                  Secretary of the Company to be true, correct, complete and in
                  full force and effect and unmodified as of the Closing Date;



                                      -20-
<PAGE>   25

                           a certificate of good standing for the Company from
                  the Secretary of State of the State of Delaware and a
                  certificate of existence for the Subsidiary from the State of
                  Texas;

                           a certificate of account status for the Subsidiary
                  from the Comptroller of the State of Texas; and

                           certificates from each state where the Company or the
                  Subsidiary is required to be qualified as a foreign
                  corporation showing such qualification, dated as of a date
                  within ten (20) days of the Closing Date; and

                           a Registration Rights Agreement in substantially the
                  form attached hereto as EXHIBIT E.

         6. Conditions to Closing of Company. The obligation of the Company on
the Closing Date to consummate the transactions contemplated by this Agreement
with respect to a particular Purchaser shall be subject to the following
conditions precedent, any one or more of which may be waived by the Company:

                  6.1 Representations and Warranties. The representations and
         warranties made by such Purchaser herein shall be true and accurate on
         and as of the Closing Date.

                  6.2 Performance. Such Purchaser shall have performed and
         complied with all agreements and conditions contained herein or in any
         other ancillary documents incident to the transactions contemplated by
         this Agreement required to be performed or complied with by such
         Purchaser prior to or at the Closing.

                  6.3 Purchaser Consents, etc. Such Purchaser shall have secured
         all permits, consents, waivers and authorizations that shall be
         necessary or required lawfully to consummate this Agreement.

                  6.4 Compliance Certificates. Such Purchaser shall have
         delivered to the Company at the Closing an Officer's Certificate to the
         effect that the representations and warranties of such Purchaser
         continue to be true and accurate in all material respects on the
         Closing Date, and that all conditions specified in SECTIONS 6.1 to 6.3
         hereof, inclusive, have been fulfilled.

         7. Affirmative Covenants.

                  7.1 Financial Information. The Company will deliver to each
         Purchaser for the Company and the Subsidiary on a consolidated basis:

                           within forty five (45) days of the end of each
                  calendar quarter, quarterly and year-to-date balance sheet and
                  statements of income, changes in stockholders equity, and cash
                  flow prepared in accordance with GAAP and certified by the


                                      -21-
<PAGE>   26


                  Company's Chief Financial Officer, except such financial
                  statements shall not contain normal and recurring year-end
                  audit adjustments.

                           within one hundred twenty (120) days after the fiscal
                  year end, an annual independent certified audit from an
                  outside accounting firm reasonably designated by the Company;

                           as soon as practicable, but no later than thirty (30)
                  days after the beginning of each fiscal year, beginning
                  January 1, 2000, the Company shall provide to the Purchasers a
                  copy of the annual budget and plan for such year which shall
                  include, without limitation, plans for incurrences of
                  indebtedness for borrowed money and projections regarding
                  types of sources of funds, monthly projected capital and
                  operating expense budgets and cash flow projections.

                  7.2 Use of Proceeds. The Company shall use the proceeds from
         the sale of Series A Convertible Preferred Stock for the purposes of
         capital expenditures and general corporate purposes, including working
         capital.

                  7.3 Confidentiality. Any information provided pursuant to this
         Agreement shall be used by a Purchaser solely in furtherance of its
         interests as an investor in the Company, and each Purchaser shall
         (except as otherwise required by law) maintain the confidentiality of
         all non-public information of the Company in accordance with this
         SECTION 7.3. Each Purchaser will have no obligation to maintain
         confidentiality of any information which (i) at the time of disclosure
         or thereafter is generally available to and known by the public (other
         than as a result of a disclosure directly or indirectly by a Purchaser
         or the Purchaser's representatives), (ii) was available to a Purchaser
         on a nonconfidential basis from a source other than the Company or its
         advisors, provided that such source is not and was not directly or
         indirectly bound by a confidentiality agreement with the Company or
         otherwise prohibited from transmitting the information to such
         Purchaser or the Purchaser's representatives by a contractual, legal or
         fiduciary obligation, or (iii) has been independently acquired or
         developed by a Purchaser without violating any of such Purchaser's
         obligations under this Agreement or any other agreement such Purchaser
         has with the Company or its agents.

                  7.4 Right of First Refusal. Except in the event of and after
         the consummation of an Approved Offering (as hereinafter defined) and
         with respect to dispositions to any direct or indirect parent or
         subsidiary of a Purchaser who agrees to be bound by the terms of this
         Agreement, no Purchaser shall be permitted to dispose of any shares of
         the Series A Convertible Preferred Stock unless such shares shall have
         been offered for sale in writing first to the Company and then to the
         other shareholders of the Company (including the other Purchasers) pro
         rata as set forth in this SECTION 7.4. In the event a shareholder
         desires to transfer any Series A Convertible Preferred Stock, the
         shareholder desiring to make such transfer (the "TRANSFERRING
         SHAREHOLDER") shall deliver written notice (the "OFFER NOTICE") to the
         Company and to all other shareholders (including the other Purchasers)
         at least ninety (90) days prior to the proposed transfer. The Offer


                                      -22-
<PAGE>   27


         Notice will disclose in reasonable detail the proposed number of shares
         to be transferred, the proposed transferee and the proposed price,
         terms and conditions of the transfer.

                           Upon receipt of the Offer Notice, the Company shall
                  have the option (the "COMPANY'S OPTION") for a period of
                  thirty (30) days to purchase or otherwise acquire all or part
                  of the shares described in the Offer Notice for an aggregate
                  amount (such aggregate amount being hereinafter referred to as
                  the "OPTION PRICE") equal to the bona fide purchase price to
                  be paid by the proposed purchaser as described in the Offer
                  Notice (which amount shall be zero if the proposed transfer
                  would take the form of a gift or other gratuitous transfer).
                  The Company shall notify in writing all then current holders
                  of Series A Convertible Preferred Stock as to whether it will
                  exercise, partially exercise or not exercise the Company's
                  Option before the expiration of the Company's Option.

                           In the event that the Company does not elect to fully
                  exercise the Company's Option within thirty (30) days after
                  receipt of the Offer Notice, the remaining holders of Series A
                  Convertible Preferred Stock shall have the option (each a
                  "SERIES A SHAREHOLDER'S OPTION") for a period of ten (10) days
                  from the earlier of (i) their receipt of written notice from
                  the Company of its decision not to exercise or to only
                  partially exercise the Company's Option, or (ii) the
                  expiration of the Company's Option (the "SERIES A SHAREHOLDER
                  ELECTION PERIOD"), to purchase or otherwise acquire all or
                  part of the remaining shares which the Company does not choose
                  to purchase pursuant to the Company's Option, in proportion to
                  their respective ownership of shares of Series A Convertible
                  Preferred Stock which, for purposes of such determination,
                  shall include without duplication all outstanding options,
                  warrants or other rights owned by such shareholders that are
                  convertible into shares of Series A Convertible Preferred
                  Stock as of the date of such notice from the Company (or the
                  expiration of the Company's Option), for an amount equal to
                  the applicable portion of the Option Price. Each holder of
                  Series A Convertible Preferred Stock shall notify in writing
                  all then current holders of Series A Convertible Preferred
                  Stock as to whether such shareholder will exercise, partially
                  exercise or not exercise the Series A Shareholder's Option
                  before the expiration of the Series A Shareholder Election
                  Period.

                           (c) For a period of ten (10) days from the earlier of
                  (i) the receipt by the other holders of Series A Convertible
                  Preferred Stock of a written notice from a holder of Series A
                  Convertible Preferred Stock that it does not want to exercise
                  its option or will only partially exercise its option, or (ii)
                  the expiration of the Series A Shareholder Election Period,
                  the other holders of Series A Convertible Preferred Stock
                  shall have the right (the "SERIES A SHAREHOLDER'S SECOND
                  OPTION") to purchase or otherwise acquire such shareholder's
                  portion of the shares described in the Offer Notice in
                  proportion to their respective ownership of shares of Series A
                  Convertible Preferred Stock (determined as described in
                  SECTION 7.4(b) above).



                                      -23-
<PAGE>   28

                           In the event that the holders of Series A Convertible
                  Preferred Stock do not elect to fully exercise the Series A
                  Shareholder's Second Option before the expiration of the
                  Series A Shareholder's Second Option, the remaining
                  shareholders shall have the option (each a "SHAREHOLDER'S
                  OPTION") for a period of ten (10) days from the earlier of (i)
                  their receipt of written notice from the holders of the Series
                  A Convertible Preferred Stock of their decision not to
                  exercise or to only partially exercise the Series A
                  Shareholder's Second Option, or (ii) the expiration of the
                  Series A Shareholder's Second Option (the "OTHER SHAREHOLDER
                  ELECTION PERIOD"), to purchase or otherwise acquire all or
                  part of the remaining shares which the holders of Series A
                  Convertible Preferred Stock do not choose to purchase pursuant
                  to the Series A Shareholder's Second Option, in proportion to
                  their respective ownership of shares which, for purposes of
                  such determination, shall include without, duplication all
                  outstanding options, warrants or other rights owned by such
                  shareholders that are convertible into shares as of the date
                  of such notice from the holders of the Series A Convertible
                  Preferred Stock (or the expiration of the Series A
                  Shareholder's Second Option), for an amount equal to the
                  applicable portion of the Option Price. Each shareholder shall
                  notify in writing all then current shareholders as to whether
                  such shareholder will exercise, partially exercise or not
                  exercise the Shareholder's Option before the expiration of the
                  Other Shareholder Election Period.

                           For a period of ten (10) days from the earlier of (i)
                  the receipt by the other shareholders of a written notice from
                  a shareholder that it does not want to exercise its option or
                  will only partially exercise its option, or (ii) the
                  expiration of the Other Shareholder Election Period, the other
                  shareholders shall have the right to purchase or otherwise
                  acquire such shareholder's portion of the shares described in
                  the Offer Notice in proportion to their respective ownership
                  of shares (determined as described in SECTION 7.4(d) above).

                           If shares of a Transferring Shareholder remain unsold
                  after compliance with the procedures set forth in this SECTION
                  7.4, the Company shall have the final option for ten (10) days
                  to purchase or otherwise acquire all of the remaining shares
                  proposed to be transferred for an amount equal to the
                  applicable portion of the Option Price. If, however, the
                  Company and the other shareholders do not individually or
                  collectively elect to purchase all of the shares being
                  offered, the Transferring Shareholder may, within thirty (30)
                  days after the expiration of the Other Shareholder Election
                  Period (subject to the provisions of SECTION 7.4(h) below),
                  transfer all of the shares specified in the Offer Notice to
                  the transferee identified in the Offer Notice at the price and
                  terms stated in the Offer Notice. Any shares so transferred
                  thereupon shall continue to be subject to this Agreement, and
                  the transferee shall have the rights and obligations set forth
                  in this Agreement hereunder with respect to such shares. If
                  the Transferring Shareholder fails to consummate such transfer
                  within the thirty (30) day period after the expiration of the
                  Other Shareholder Election Period, any transfer of the shares
                  thereafter shall again be subject to the provisions of this
                  SECTION 7.4.



                                      -24-
<PAGE>   29

                           Unless otherwise agreed in writing, signed by the
                  person against whom such writing is sought to be enforced, the
                  closing of any acquisition of Series A Convertible Preferred
                  Stock hereunder pursuant to the Company's Option, a Series A
                  Shareholder's Option, or a Shareholder's Option shall take
                  place within forty-five (45) days of an applicable option's
                  exercise. If any such closing does not take place within such
                  forty-five (45) day period, then the shares that were to be
                  acquired shall be offered in accordance with this SECTION 7.4
                  as though the applicable option had not been exercised.

                           Notwithstanding the foregoing provisions of this
                  SECTION 7.4, the following shall apply in the event of any
                  Involuntary Transfer of Series A Convertible Preferred Stock.
                  An "INVOLUNTARY TRANSFER" shall mean any transfer caused by
                  the death of a shareholder, as well as any transfer,
                  proceeding or action by, through, as a consequence of, or in
                  which a shareholder shall be deprived or divested of any
                  right, title or interest in or to any of the Series A
                  Convertible Preferred Stock of the Company, including, without
                  limitation, any seizure under levy, attachment or execution,
                  any transfer in connection with bankruptcy (whether pursuant
                  to a filing of a voluntary or an involuntary petition under
                  the United States Bankruptcy Code, or any amendments,
                  modifications, revisions or successor statutes thereto) or
                  other court proceeding to a debtor-in-possession, trustee in
                  bankruptcy or receiver or other officer or agency, any
                  transfer to a state or to a public officer or agency pursuant
                  to any statute pertaining to escheat or abandoned property,
                  any transfer pursuant to a separation agreement, equitable
                  distribution agreement or community property distribution
                  agreement, or the entry of a final court order in a divorce
                  proceeding from which there is no further right of appeal.

                           In the event of any Involuntary Transfer, the Company
                  shall give written notice to each shareholder upon the
                  occurrence, or prospective occurrence, of such Involuntary
                  Transfer within fifteen (15) days of the date on which the
                  Company is notified of the occurrence or prospective
                  occurrence of such Involuntary Transfer. The foregoing
                  provisions of this SECTION 7.4 then shall apply, except (i)
                  the Option Price shall be the value of the Company as
                  determined by a qualified representative of a nationally
                  recognized investment banking or accounting firm mutually
                  agreeable to the Company and the shareholder who made, or may
                  make, the Involuntary Transfer, multiplied by the percentage
                  of all equity interests in the Company that is then
                  represented by the shares that are the subject of the
                  Involuntary Transfer, such independent appraised value to take
                  into account the earnings and book value of the Company, and
                  (ii) the appraiser shall deliver written notice of such
                  valuation to the Company and to all other shareholders
                  promptly following his completion of such valuation, and such
                  written notice shall be considered the Option Notice for
                  purposes of this SECTION 7.4. The cost of the appraisal shall
                  be shared equally by the Company and the shareholder who made,
                  or may make, the Involuntary Transfer.



                                      -25-
<PAGE>   30

                           At the closing of any purchase by the Company or any
                  shareholders pursuant to this SECTION 7.4(g), the involuntary
                  transferee shall deliver certificates representing the Series
                  A Convertible Preferred Stock being purchased, duly endorsed
                  for transfer and accompanied by all requisite stock transfer
                  taxes, and such shares shall be conveyed free and clear of any
                  liens, claims, options, charges, encumbrances or rights of
                  others arising through the action or inaction of the
                  involuntary transferee, and the involuntary transferee shall
                  so represent and warrant. The involuntary transferee shall
                  further represent and warrant that he is the beneficial owner
                  of such shares.

                           In the event the provisions of this SECTION 7.4(g)
                  shall be held to be unenforceable with respect to any
                  particular Involuntary Transfer of Series A Convertible
                  Preferred Stock, or if all of the shares subject to the
                  Involuntary Transfer are not purchased by the Company and/or
                  one or more shareholders, and if the involuntary transferee
                  subsequently desires to transfer such Series A Convertible
                  Preferred Stock, the involuntary transferee shall be deemed to
                  be a "Transferring Shareholder" under this SECTION 7.4 and
                  shall be bound by the other provisions of this Agreement.

                           Notwithstanding anything to the contrary contained in
                  this SECTION 7.4, no shareholder shall transfer any Series A
                  Convertible Preferred Stock at any time if such action would
                  constitute a violation of any federal or state securities laws
                  or a breach of the conditions to any exemption from
                  registration of the shares under any such laws or a breach of
                  any undertaking or agreement of such shareholder entered into
                  pursuant to such laws or in connection with obtaining an
                  exemption thereunder. Each shareholder agrees that any shares
                  purchased or acquired by such shareholder shall bear
                  appropriate legends restricting the sale or other transfer of
                  such shares in accordance with applicable federal and state
                  securities laws, in addition to a legend referring, to the
                  restrictions set forth in this Agreement.

                           The Certificate of Incorporation shall contain
                  provisions similar to the foregoing provisions of SECTION 7.4
                  by which all of the holders of the Common Stock grant a
                  similar right of first refusal to purchase the shares of such
                  holders to the Company and the holders of the Series A
                  Convertible Preferred Stock, and such provisions may not be
                  amended without the consent or approval of the holders of a
                  majority of the outstanding shares of the Series A Convertible
                  Preferred Stock.

                           7.5 Sale of the Company. At any time after April 4,
                  2001, and before the consummation of an Approved Offering, if
                  a bona fide offer is made by any person (other than I 3S
                  Funding I, L.L.C. ("FUNDING"), Blue Ridge Investors Limited
                  Partnership ("BLUE RIDGE") and Spotswood Capital, LLC
                  ("SPOTSWOOD"), or any person or entity related to or
                  affiliated with Funding, Blue Ridge and Spotswood), to
                  purchase all or substantially all of the assets or shares of
                  stock of the Company, and Funding gives the Company written
                  notice that it desires such


                                      -26-
<PAGE>   31


                  offer to be accepted, the Company shall either accept the
                  offer and consummate the sale on the terms and conditions of
                  the offer (in which case, if the transaction is a stock sale
                  or merger, Spotswood and Blue Ridge also shall sell all of
                  their equity interests in the Company on those terms and
                  conditions), or, subject to the last paragraph of this SECTION
                  7.5, the Company shall acquire all the equity interests owned
                  by Funding, Spotswood and Blue Ridge in the Company on the
                  same terms and conditions as the offer; provided, however,
                  that if such offer is made prior to April 4, 2003, the Company
                  shall have no such obligation unless the total consideration
                  of such offer is at least $350,000,000. If at any time Funding
                  approves the sale of substantially all of the assets or shares
                  of stock of the Company or if the transaction is a stock sale
                  or merger, Blue Ridge and Spotswood shall sell all of their
                  equity interests in the Company on the terms and conditions so
                  approved. If the Company accepts an offer to sell the Company
                  made after April 4, 2001, the Purchasers and any person that
                  acquires the Series A Convertible Preferred Stock shall sell
                  their shares of Series A Convertible Preferred Stock (and
                  Class A Common Stock, if the shares of Preferred Stock have
                  been converted) and/or vote in favor of the proposed
                  transaction (as the case may be) so long as the holders of the
                  Series A Convertible Preferred Stock shall receive for their
                  shares of Preferred Stock an amount in cash equal to the
                  aggregate Liquidation Preference (as defined in the
                  Certificate of Designation of the Series A Convertible
                  Preferred Stock) plus accrued and unpaid dividends for such
                  shares of Series A Convertible Preferred Stock, in preference
                  to any other holders of capital stock of the Company. At least
                  twenty (20) days prior to the consummation of any such sale,
                  the Company shall give the holders of the Series A Convertible
                  Preferred Stock written notice of the material terms of the
                  proposed sale. The holders of the outstanding shares of Series
                  A Convertible Preferred Stock shall have the right to convert
                  their shares into shares of Class A Common Stock prior to or
                  concurrently with the consummation of any such sale and
                  thereby be entitled to receive their pro rata share of the
                  proceeds of the sale that would otherwise be payable to the
                  holders of the Class A Common Stock (assuming for such
                  calculation the conversion of such shares of Series A
                  Convertible Preferred Stock as have exercised such right to
                  convert). The exercise of such right to convert by a holder of
                  Series A Convertible Preferred Stock shall be in lieu of any
                  right to receive such Liquidation Preference plus accrued and
                  unpaid dividends as a holder of such Series A Convertible
                  Preferred Stock or otherwise. In determining the total
                  consideration for purposes of the foregoing, any deferred
                  payment shall be discounted to present value at a discount
                  rate of eight percent (8%) per annum.

         Under its agreements with Funding, the Company has the right to avoid
the required sale of the Company, as described in this SECTION 7.5, by redeeming
the outstanding shares of Class B Common Stock and Class C Common Stock held by
Funding, Blue Ridge and Spotswood. The Company acknowledges and agrees that it
may not redeem such shares without first obtaining the consent or approval of
the holders of a majority of the outstanding shares of Series A Convertible
Preferred Stock, as required by the Certificate of Designation.



                                      -27-
<PAGE>   32

                  7.6 Right of Co-Sale. At any time prior to the consummation of
         an Approved Offering, the Purchasers and the holders of Series A
         Convertible Preferred Stock, Class B Common Stock and Class C Common
         Stock shall have the right to participate pro rata to the fullest
         extent of their equity interest in the Company in any sale or transfer
         of stock (with each share of Series A Convertible Preferred Stock being
         treated for such purposes as the number of shares of Class A Common
         Stock into which it could then be converted), by any holder of shares
         of Class A Common Stock to any third party.

                  7.7 Observers. Each Purchaser who purchases at least 531,915
         shares of Series A Convertible Preferred Stock, and so long as such
         Purchaser continues to beneficially own at least 531,915 shares of
         Series A Convertible Preferred Stock or Common Stock (as adjusted for a
         Recapitalization Event), may designate one person to serve as an
         observer (an "OBSERVER"). An observer shall be entitled (i) to receive
         the same notice in respect of all meetings (both regular and special)
         of the Board of Directors and each committee thereof (other than the
         Audit Committee and Compensation Committee) as required to be furnished
         to members of the Board of Directors of such committee by law or by the
         Certificate of Incorporation or the Bylaws of the Company, (ii) to
         attend all meetings of the Board of Directors and each committee
         thereof (other than the Audit Committee and Compensation Committee),
         (iii) to receive all information and reports which are furnished to
         members of the Board of Directors and each committee thereof (including
         the Audit Committee and Compensation Committee) at the time so
         furnished, and (iv) to participate in all discussions conducted at
         meetings of the Board of Directors and each committee thereof (other
         than the Audit Committee and Compensation Committee). In the event that
         the directors are discussing or voting on matters that directly relate
         to any business dealings between the Company and (i) any Purchaser
         beneficially owning at least 531,915 shares of Series A Convertible
         Preferred Stock or (ii) any other vendor that competes with a Purchaser
         that has observer rights hereunder, the Board may recuse all (but not
         less than all) of the Observers until such matters have been concluded.
         An Observer may share any information gained from presence at such
         meetings with the Purchaser that designated such Observer and such
         Purchaser's employees, officers, directors, attorneys and advisors
         (collectively, the "PURCHASER'S REPRESENTATIVES"), but such information
         shall otherwise be kept confidential by the Observer, Purchaser and
         Purchaser's Representatives to the same extent that financial
         information or other confidential information with regard to the
         Company is required to be kept confidential in accordance with SECTION
         7.3.

                  7.8 Key Man Insurance. The Company has obtained and will
         maintain (so long as they are officers of the Company) a "key man life
         insurance policy" in the amount of $1,000,000 each on the lives of
         Charles W. Price, Matthew Hutchins, Sr. and Daniel A. Gillett.

                  7.9 Access to Information. The Company will permit the
         Purchasers to inspect at the Purchasers' expense any of the properties
         or books and records of the Company, and to discuss the affairs and
         condition of the Company with representatives of the Company, except
         for information that (i) relates to any of the business dealings
         between the Company and any of the Purchasers, (ii) relates to any
         other vendor that


                                      -28-
<PAGE>   33

         competes with any of the Purchasers, or (iii) is subject to any
         obligation of the Company to maintain the confidentiality of such
         information, during normal business hours and upon at least 24 hours
         prior notice to the Company, but no more frequent than once each
         calendar quarter.

                  7.10 Restricted Corporate Actions. The Company will not,
         without the vote or written approval of the holders of a majority of
         the outstanding Series A Convertible Preferred Stock, take or permit
         the Subsidiary to take, any of the following actions:

                           engage in any business outside the Telecommunications
                  Business. For purposes of this SECTION 7.10(a) and as
                  otherwise used in this Agreement, "TELECOMMUNICATIONS
                  BUSINESS" shall mean the business of (i) transmitting, or
                  providing services relating to the transmission of, voice,
                  data or video through owned or leased transmission facilities,
                  (ii) constructing, creating, developing or marketing
                  communications-related network equipment, software and other
                  devices for use in a telecommunications business or (iii)
                  evaluating, participating or pursuing any other activity or
                  opportunity that is primarily related to those identified in
                  clauses (i) or (ii) above;

                           make any loans to any officers, directors or
                  affiliates of the Company in an aggregate amount exceeding
                  $100,000, other than commission advances and travel or
                  miscellaneous cash advances in the ordinary course of business
                  and loans to employees seeking to exercise stock options
                  issued pursuant to any of the Plans, the proceeds of which are
                  used to exercise such options;

                           (c) enter into any business arrangement or agreement
                  (other than a stock option agreement in accordance with the
                  Plans) with any officer, director or affiliate of the Company
                  or the Subsidiary on terms less favorable to the Company or
                  the Subsidiary than an arms-length transaction;

                           (d) acquire substantially all of the assets,
                  properties or capital stock of other persons or entities in
                  one or more transactions for an aggregate total consideration
                  consisting of an amount of cash exceeding ten percent (10%) of
                  the total purchase price paid to the Company for the original
                  issuance of all of the Series A Convertible Preferred Stock;
                  or

                           (e) issue any stock, options, warrants, or securities
                  convertible into the capital stock of the Company with
                  exercise prices, in the case of options or warrants, or issue
                  prices, in the case of stock or convertible securities, at
                  less than fair market value, as determined in good faith by
                  the Company's Board of Directors, as of the date of grant in
                  the case of options or warrants or the date of issuance in the
                  case of stock or securities convertible into the capital stock
                  of the Company. No such restriction shall apply upon the
                  issuance of capital stock pursuant to the exercise of options
                  or warrants or the conversion of convertible securities of the
                  Company.


                                      -29-
<PAGE>   34

                  7.11 Shareholder and Director Information. At the request of
         the Purchasers, the Company shall promptly deliver to the Purchasers
         information regarding the security holders, officers and directors of
         the Company, including, without limitation, names, addresses, types of
         securities held and terms of securities held.

                  7.12 Reserve for Conversion Shares. The Company shall at all
         times reserve and keep available out of its authorized but unissued
         shares of Common Stock, for the purpose of effecting the conversion of
         the Series A Convertible Preferred Stock and otherwise complying with
         the terms of this Agreement, such number of its duly authorized shares
         of Common Stock as shall be sufficient to effect the conversion of the
         Series A Convertible Preferred Stock from time to time outstanding or
         otherwise to comply with the terms of this Agreement. If at any time
         the number of authorized but unissued shares of Common Stock shall not
         be sufficient to effect the conversion of the Series A Convertible
         Preferred Stock or otherwise to comply with the terms of this
         Agreement, the Company will forthwith take such corporate action as may
         be necessary to increase its authorized but unissued shares of Common
         Stock to such number of shares as shall be sufficient for such
         purposes. The Company will obtain any authorization, consent, approval
         or other action by or make any filing with any court or administrative
         body that may be required under applicable state securities laws in
         connection with the issuance of shares of Common Stock upon conversion
         of the Series A Convertible Preferred Stock.

                  7.13 Rule 144A Information. The Company shall, at all times
         during which it is neither subject to the reporting requirements of
         Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
         (the "EXCHANGE ACT"), nor exempt from reporting pursuant to Rule
         12g3-2(b) under the Exchange Act, provide in writing, upon the written
         request of the Purchasers or a prospective buyer of the Series A
         Convertible Preferred Stock or shares of Common Stock issued upon
         conversion of the Series A Convertible Preferred Stock from the
         Purchasers, all information required by Rule 144A(d)(4)(i) of the
         General Regulations promulgated by the Commission under the Securities
         Act ("RULE 144A INFORMATION"). The Company's obligations under this
         SECTION 7.13 shall at all times be contingent upon the Purchasers
         obtaining from the prospective buyer of Series A Convertible Preferred
         Stock or shares of Common Stock issued upon conversion of the Series A
         Convertible Preferred Stock a written agreement to take all reasonable
         precautions to safeguard the Rule 144A Information from disclosure to
         anyone other than a person who will assist such buyer in evaluating the
         purchase of any Series A Convertible Preferred Stock or of Common Stock
         issued upon conversion of the Series A Convertible Preferred Stock.

                  7.14 Sale of Series A Convertible Preferred Stock. The Company
         agrees that any additional shares of Series A Convertible Preferred
         Stock sold by the Company after the Closing will be sold on
         substantially the same terms as set forth in this Agreement for the
         Purchasers.

                  7.15 Termination of Covenants. The covenants set forth in
         SECTIONS 7.1, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13 AND
         7.14 hereof shall terminate and be of no


                                      -30-
<PAGE>   35

         further force or effect on the earlier of the consummation of the first
         underwritten public offering of common stock of the Company pursuant to
         a registration statement filed with the Commission under the Securities
         Act with a concurrent listing on the New York Stock Exchange, the
         American Stock Exchange, or the Nasdaq Stock Market, Inc. at an initial
         offering price of at least $20.00 per share (as adjusted for a
         Recapitalization Event) that results in gross proceeds to the Company
         (before deduction of underwriting discounts and expenses of sale) of
         not less than $30,000,000 (an "APPROVED OFFERING"). For purposes of
         this Agreement, a "RECAPITALIZATION EVENT" means an event described
         under Section 2.5 of the Certificate of Designation of the Series A
         Convertible Preferred Stock.

         8. Expenses. Whether or not the transactions contemplated hereby are
consummated, the Company will pay: (a) all the costs and expenses of the
reproduction of the Placement Memorandum, this Agreement, of all agreements and
documents referred to herein and of the certificates for the Series A
Convertible Preferred Stock and the Class A Common Stock into which it may be
converted; (b) all taxes (if any) payable with respect to this Agreement and the
issuance of the Series A Convertible Preferred Stock and the Class A Common
Stock into which it may be converted; (c) all costs of complying with the
securities or Blue Sky laws of any jurisdiction with respect to the offering or
sale of the Series A Convertible Preferred Stock and the Class A Common Stock
into which it may be converted; (d) the cost of delivering to such address as
each Purchaser shall specify the certificates for the Series A Convertible
Preferred Stock purchased by each such Purchaser and the certificates for the
Class A Common Stock into which the Series A Convertible Preferred Stock may be
converted; (e) the fees, expenses and disbursements of the Company's counsel in
connection with the Closing; and (f) the fees and expenses incurred with respect
to any amendments to this Agreement or the Certificate of Incorporation of the
Company proposed by the Company (whether or not the same become effective).

         9. Survival of Agreements. All agreements, representations and
warranties contained herein or made in writing in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement (despite any investigation at any time made by the parties hereto
or on their behalf) and any disposition of the Series A Convertible Preferred
Stock or of the Class A Common Stock issued upon conversion thereof and shall
continue to survive for a period of time expiring on the earlier of (a) the
consummation of an Approved Offering, or (b) June 30, 2001. All statements
contained in any certificate or other instrument executed and delivered by the
parties hereto or their duly authorized officers or representatives pursuant
hereto in connection with the transactions contemplated hereby shall be deemed
representations hereunder, and no officer or representative of such parties
shall have personal liability for such statements unless such officer or
representative shall make such statement in a grossly negligent manner, in bad
faith, fraudulently or pursuant to willful misconduct.

         10. Notices. All notices, requests, consents and other communications
herein (except as stated in the last sentence of this SECTION 10) shall be in
writing and shall be mailed by first class or certified mail, postage prepaid,
sent by a nationally recognized overnight delivery service, or personally
delivered, as follows:


                                      -31-
<PAGE>   36

             If to the Company:

                    BroadbandNOW, Inc.
                    1440 Corporate Drive
                    Irving, Texas  75038
                    Attn:  Matthew Hutchins, Sr., President





                    with a copy which shall not constitute notice to:

                    Winstead Sechrest & Minick, P.C.
                    1201 Elm Street
                    5400 Renaissance Tower
                    Dallas, Texas  75270
                    Attn:  Thomas W. Hughes, Esq.

             If to the Purchasers at the address set forth on SCHEDULE 1 hereto.

or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. For purposes of computing the time periods
set forth in ARTICLE 7 hereof, the date of mailing shall be deemed to be the
delivery date. The financial statements required by ARTICLE 7 hereof may be
mailed by first-class regular mail.

         11. Modifications; Waiver. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any provision of this Agreement may be amended and the observance of
any such provision may be waived (either generally or in a particular instance
and either retroactively or prospectively) with (but only with) the written
consent of (a) the Company, and (b) holders of at least 66 2/3% of the
outstanding shares of the Series A Convertible Preferred Stock acting together
as a single class; provided, however, that prior to the Closing Date, this
Agreement may not be amended with respect to any Purchaser without the consent
of such Purchaser. Additionally, SECTION 9 of this Agreement may not be amended,
in any manner, without the unanimous consent of the holders of the outstanding
shares of the Series A Convertible Preferred Stock.

         12. Entire Agreement. This Agreement and the Registration Rights
Agreement contain the entire agreement between the parties with respect to the
transactions contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties and commitments relating to the transactions
contemplated hereby, whether in writing or oral, prior to the date hereof,
except for those certain Confidentiality Agreements entered into by the
Purchasers with Donaldson, Lufkin & Jenrette on behalf of the Company.



                                      -32-
<PAGE>   37

         13. Successors and Assigns. The Company may not assign or delegate any
of its rights or duties under this Agreement. Except as otherwise provided in
this Agreement, all of the terms of this Agreement including the agreements,
representations and warranties set forth herein shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, except that the rights set forth in the Registration Rights
Agreement may only be transferred in accordance with Section 12 of the
Registration Rights Agreement.

         14. Enforcement.

                  14.1 Remedies at Law or in Equity. If any party shall default
         in any of its obligations under this Agreement or if any representation
         or warranty made by or on behalf of such party in this Agreement or in
         any certificate, report or other instrument delivered under or pursuant
         to any term hereof shall be untrue or misleading in any material
         respect as of the date of this Agreement or as of the Closing Date or
         as of the date it was made, furnished or delivered, any party damaged
         may proceed to protect and enforce its rights by suit in equity or
         action at law, whether for the specific performance of any term
         contained in this Agreement or the Certificate of Incorporation of the
         Company (including the Certificate of Designation) or for an injunction
         against the breach of any such term or in furtherance of the exercise
         of any power granted in this Agreement or such Certificate (including
         the Certificate of Designation), or to enforce any other legal or
         equitable right of such party or to take any one or more of such
         actions. The prevailing party in such dispute shall be entitled to
         recover from the losing party all fees, costs and expenses of enforcing
         any right of such prevailing party under or with respect to this
         Agreement or the Certificate of Incorporation (including the
         Certificate of Designation) of the Company, including without
         limitation reasonable fees and expenses of attorneys and accountants,
         which shall include, without limitation, all fees, costs and expenses
         of appeals.

                  14.2 Remedies Cumulative; Waiver. No remedy referred to herein
         is intended to be exclusive, but each shall be cumulative and in
         addition to any other remedy referred to above or otherwise available
         at law or in equity. No express or implied waiver of any default shall
         be a waiver of any future or subsequent default. The failure or delay
         in exercising any rights granted hereunder shall not constitute a
         waiver of any such right and any single or partial exercise of any
         particular right shall not exhaust the same or constitute a waiver of
         any other right provided herein.

         15. Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.

         16. Governing Law and Severability. THIS AGREEMENT SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF TEXAS AS APPLIED TO AGREEMENTS ENTERED INTO AND TO BE
PERFORMED ENTIRELY WITHIN TEXAS. To the maximum extent practicable, this
Agreement will be deemed to call for performance in Dallas


                                      -33-
<PAGE>   38

County, Texas. In the event any provision of this Agreement or the application
of any such provision to any party shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this Agreement
shall remain in full force and effect.

         17. Headings. The descriptive headings of the Sections hereof and the
Schedules and Exhibits hereto are inserted for convenience only and do not
constitute a part of this Agreement.



                                      -34-
<PAGE>   39




         This Agreement is hereby executed as of the date first above written.


                                 THE COMPANY

                                 BROADBANDNOW, INC.



                                 By:
                                     -------------------------------------------
                                     Daniel A. Gillett,
                                     Vice President of Corporate Development and
                                     Chief Financial Officer



                     [PURCHASER SIGNATURE ON FOLLOWING PAGE]




                                      -35-
<PAGE>   40




                                 THE PURCHASER:

                                 ARCHSTONE COMMUNITIES INVESTMENT
                                 LLC-I


                                 By:
                                    --------------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------




                                      -36-
<PAGE>   41




                                    EXHIBIT A

                          CERTIFICATE OF INCORPORATION



<PAGE>   42



                                    EXHIBIT B

                                     BYLAWS





<PAGE>   43



                                    EXHIBIT C

                FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES
                           AND RELATIVE RIGHTS FOR THE
                      SERIES A CONVERTIBLE PREFERRED STOCK


<PAGE>   44



                                    EXHIBIT D

                              PLACEMENT MEMORANDUM


<PAGE>   45



                                    EXHIBIT E

                      FORM OF REGISTRATION RIGHTS AGREEMENT


<PAGE>   46



                                    EXHIBIT F

               FORM OF OPINION OF WINSTEAD SECHREST & MINICK, P.C.


<PAGE>   47



                                  SCHEDULE I

                                 THE PURCHASERS

<TABLE>
<CAPTION>
                                                                        No. of
                                                                       Shares of
                                                                       Series A
                                                                      Convertible      Aggregate
                                                                       Preferred      Purchase            Copy of Notices
   Name of Purchasers                     Notice Address                 Stock          Price              Must be sent to
-------------------------    -------------------------------------- -------------- -------------- --------------------------------
<S>                           <C>                                    <C>           <C>            <C>
Archstone Communities        7670 S. Chester Street                      26,596    $500,000       Mayer Brown & Platt
Investment LLC-I             Suite 100                                                            190 South La Salle Street
                             Englewood, Colorado  80112                                           Chicago, Illinois  60603-3441
                             Attn:  Charles E. Mueller                                            Attention:  Edward J. Schneidman
</TABLE>