Document:

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                                                                   EXHIBIT 4.3.5

                                                                  EXECUTION COPY

                           STATE COMMUNICATIONS, INC.

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into on this 1st day of February, 2000, by and among STATE
COMMUNICATIONS, INC., a South Carolina corporation, and each of the other
parties listed on Schedule I hereto.

1. Certain Definitions. As used in this Agreement, the following terms shall
mean:

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

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

         "Company" means State Communications, Inc., a South Carolina
corporation.

         "Conversion Price" means the Conversion Price of the Preferred Stock as
defined in the Company's Articles of Amendment relating to the Preferred Stock,
as filed with the Office of the Secretary of State of South Carolina.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued thereunder, as they each may, from time to time, be in effect.

         "Holders" means holders of any of the Preferred Stock or the
Registrable Shares.

         "Non-Recoverable Expenses" means salaries and expenses of the Company's
officers and employees performing legal and accounting duties in connection with
the Company's obligations under this Agreement.

         "Preferred Stock" means the Series C Convertible Preferred Stock of the
Company, $.01 par value per share.

         "Public Offering" means a bona fide offering of Common Stock pursuant
to a Registration Statement.

         "Registrable Shares" means (i) the shares of Common Stock issued or
issuable upon conversion of shares of Preferred Stock and (ii) any other shares
of Common Stock of the Company issued in respect of such shares (because of
stock splits, stock dividends, reclassifications, recapitalizations or similar
events).

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         "Registration Expenses" means all expenses incurred by the Company in
complying with this Agreement, including, without limitation, (i) all Commission
and any National Association of Securities Dealers, Inc. registration and filing
fees and expenses, fees and expenses of compliance with securities and blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the Registrable
Shares), expenses relating to the preparation and printing of documents and of
certificates representing the Registrable Shares, fees and expenses of any
escrow agent, trustee or custodian acting for the Company, fees and
disbursements of counsel and independent certified public accountants of the
Company (including the expenses of any special audit or "cold comfort" letters
required by or incident to such compliance), fees and disbursements of counsel
retained in connection with each registration under Section 2 or 3 hereunder by
the holders of at least a majority of the Registrable Shares being registered
(which counsel shall be reasonably satisfactory to the Company), and fees and
expenses of any other persons, including special experts retained by the
Company, but excluding the fees and disbursements of any counsel or other
advisors or experts retained by holders of Registrable Shares (severally or
jointly), other than the counsel and experts specifically referred to above, and
excluding any underwriter discounts, fees or commissions attributable to the
sale of the Registrable Shares; and (ii) Non-Recoverable Expenses.

         "Registration Statement" means a registration statement filed by the
Company with the Commission for a Public Offering and sale of Common Stock of
the Company (other than (i) a registration statement on Form S-4 or Form S-8, or
their successors, or any other form for a limited purpose, (ii) any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation, (iii) a registration statement
filed in connection with an interest or dividend reinvestment plan, (iv) a
registration relating solely to employee benefit plans or to a transaction
subject to Rule 145 of the Securities Act, or (v) a registration relating to the
sale of indebtedness of the Company).

         "Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued thereunder, as they each may, from time to time, be in effect.

         "Series A Registration Rights Agreement" means the Registration Rights
Agreement dated October 28, 1998 between the Company and the holders of the
Company's Series A Convertible Preferred Stock.

         "Series B Registration Rights Agreement" means the Registration Rights
Agreement dated July 29, 1999 between the Company and the holders of the
Company's Series B Convertible Preferred Stock.

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2. Demand Registrations.

         (a) At any time after the expiration of 180 days after the closing of a
Public Offering, one or more Holders representing in the aggregate in excess of
30% of the Registrable Shares then held by all Holders, may request, in writing,
that the Company file a Registration Statement under the Securities Act. Upon
receipt of any such request, the Company shall promptly give written notice of
such proposed registration to all Holders. Each Holder shall have the right, by
giving written notice to the Company within 15 days after the Company provides
its notice, to elect to have included in such registration such of its
Registrable Shares as such Holder may request in such notice of election.
Thereupon, the Company shall, as expeditiously as possible, use its best efforts
to effect the registration under the Securities Act of all Registrable Shares
which the Company has been requested so to register.

         (b) If the Holders initiating the registration request hereunder (the
"Initiating Holders") intend to distribute the Registrable Shares covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to this Section 2 and the Company shall
include such information in the written notice referred to in Section 2(a)
hereof. In such event, the right of any Holder to include his or its Registrable
Shares in such registration shall be conditioned upon the inclusion of such
Holder's Registrable Shares in the underwriting. All Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2(b), if the managing underwriter with respect to the proposed offering
advises the Holders proposing to sell Registrable Shares that would otherwise be
included in the underwriting that marketing factors require a limitation on the
number of shares to be underwritten, the number of Registrable Shares that may
be included in the underwriting shall be allocated among all such Holders,
including the Initiating Holders, in proportion (as nearly as practicable) to
the amount of Registrable Shares proposed to be included in the Registration
Statement by each such Holder.

         (c) The Company shall not be required to effect more than three
registrations of Registrable Shares pursuant to Section 2(a) hereof.

         (d) At the time of any request to register Registrable Shares pursuant
to this Section 2, the Company may at its option direct that such request be
delayed for a period not in excess of three months if, in the opinion of the
Company's Board of Directors, the filing of such Registration Statement would
adversely affect the Company's ability to complete any pending or proposed
material transaction, provided that such right to delay a request may be
exercised by the Company not more than once in any twelve-month period.

         (e) The Initiating Holders of any Registration Statement filed pursuant
to this Section 2 shall designate the method of distribution of the Registrable
Shares. The Initiating Holders may designate the managing underwriter (who shall
be the lead

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underwriter) for any Registration Statement filed pursuant to this Section,
provided such designee is reasonably satisfactory to the Company, and the
Company may designate a co-managing underwriter in such offering, provided such
designee is reasonably satisfactory to Holders representing a majority of the
Registrable Shares to be included in the Registration. The Company shall afford
the underwriters, their accountants and attorneys full access to its personnel
and offices for the purpose of confirming the accuracy and completeness of the
Registration Statement, in accordance with the provisions of Section 4 hereof.

         (f) If in the opinion of the underwriters selected to manage the
underwriting, more Common Stock could be sold than is represented by the
Registrable Shares included in the registration without adversely affecting the
price per share, or with the consent of Holders representing two-thirds of the
Registrable Shares to be included, the Company shall be entitled to expand the
offering to include newly issued Common Stock or Common Stock held by third
parties. If the Common Stock so included represents more than half of all Common
Stock to be offered in the Registration Statement, the registration may, at the
option of the Initiating Holders, be deemed to be an incidental registration
under Section 3, rather than a required registration under this Section 2, and
the registration rights of the Holders provided in Section 2(c) shall remain
fully available as if the registration had originated under Section 3 rather
than under Section 2.

         (g) Notwithstanding anything set forth elsewhere in this Section 2, the
Company shall have no responsibility to cause a Registration Statement to become
effective (i) at a time when it would be required under the rules and
regulations of the Securities and Exchange Commission to prepare and file
audited financial statements for a period other than a completed fiscal year,
(ii) when the Company would be required to prepare and file audited financial
statements for a completed fiscal year prior to 90 days following the end of
such year, or (iii) within 180 days of the effective date of any prior
Registration Statement filed by the Company in which the Holders could
participate.

         (h) If any Registration Statement prepared pursuant to this Section 2
is not filed or does not become effective as a result of the decision of the
Initiating Holders or any underwriter designated by them, the obligation of the
Company to prepare and file a Registration Statement at the request of such
Initiating Holders shall nevertheless have been satisfied; provided that if the
decision not to file the Registration Statement or to withdraw the Registration
Statement prior to it becoming effective is the result of a material adverse
change in the business of the Company, the registration rights of the Holders
provided in Section 2(c) shall remain fully available as if the registration had
not been requested by the Initiating Holders. If the Registration Statement
otherwise fails to become effective, the registration rights of the Holders
provided in Section 2(c) remain fully available as if the registration had not
been requested by the Initiating Holders.

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3. Incidental Registration.

         (a) Whenever the Company proposes to file a Registration Statement it
shall, at least 30 days prior to such filing, give written notice to all Holders
of its intention to do so and, upon the written request of a Holder or Holders
given within 10 days after the Company provides such notice (which request shall
state the intended method of disposition of such Registrable Shares), the
Company shall use its best efforts to cause all Registrable Shares that the
Company has been requested by such Holder or Holders to register to be
registered under the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of distribution
specified in the request of such Holder or Holders; provided, that the Company
shall have the right to postpone or withdraw any registration effected pursuant
to this Section 3 without obligation to any Holder.

         (b) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such underwriting unless the Holders holding such Registrable Shares
thereof accept the terms of the underwriting as agreed upon between the Company
and the underwriters selected by it and enter into a customary underwriting
agreement, and then only in such quantity as will not, in the opinion of the
managing underwriter, jeopardize the success of the offering by the Company. If
in the opinion of the managing underwriter the registration of all, or any part
of, the Registrable Shares which Holders have requested to be included would
adversely affect such Public Offering, then the Company shall be required to
include in the underwriting only that number of Registrable Shares, if any, that
the managing underwriter believes may be sold without causing such adverse
effect. If the number of Registrable Shares to be included in the underwriting
in accordance with the foregoing is less than the total number of Registrable
Shares that Holders have requested to be included, then the amount of securities
to be offered for the accounts of all persons seeking to include securities of
the Company in the Registration Statement shall be reduced in the following
order of priority to the extent necessary to cause the amount to be included in
the Registration Statement not to exceed the amount recommended by such managing
underwriter:

                  (i) first, the amount of securities to be offered for the
accounts of Company shareholders other than Holders ("Other Shareholders") that
do not have a contractual right to require the Company to include the securities
held by them in a registration shall be reduced pro rata (based upon the amount
of securities each such person sought to include in the offering) to zero, if
necessary,

                  (ii) next, the amount of securities to be offered for the
account of Other Shareholders that have a contractual right (subordinate to the
Holders rights hereunder) to require the Company to include the securities held
by them in a registration shall be reduced pro rata (based upon the amount of
securities each such person sought to include in the offering) to zero, if
necessary, and

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                  (iii) finally, the amount of securities to be offered for the
account of Holders of Registrable Shares and all Other Shareholders that have a
contractual right (on parity with Holders' rights hereunder) to require the
Company to include the securities held by them in a registration shall be
reduced pro rata (based upon the amount of securities each such Person sought to
include in the offering); provided, that the rights granted in Sections 3 and 4
of the Series A Registration Rights Agreement and the Series B Registration
Rights Agreement and Section 2 of the Registration Rights Agreement between the
Company and Seruus Telecom Fund, L.P., dated February 19, 1998 shall be
subordinate to the rights granted in Section 2(a) of this Agreement.

4. Registrations on Form S-3. Notwithstanding any other term or provision of
this Agreement, at such time as the Company shall have qualified for the use of
Form S-3 promulgated under the Securities Act, the Holders shall have the right
to request in writing an unlimited number of registrations on Form S-3 (or such
successor form) of Registrable Shares, which request or requests shall (i)
specify the number of Registrable Shares intended to be sold or disposed of;
(ii) state the intended method of disposition of such Registrable Shares; and
(iii) relate to Registrable Shares having an anticipated aggregate offering
price of not less than $500,000, provided, however, the Holders may only make
one such request in any 12-month period. A requested registration on Form S-3
pursuant to this Section 4 shall not count as a registration demanded pursuant
to Section 2 hereof. During the pendency of any offering under this Section 4 if
the Company shall inform the Holders that there is material non-public
information regarding the Company, the Holders shall cease selling activities in
such offering and the Company shall promptly advise the members of its Board of
Directors of the material non-public information (to the extent not previously
disclosed to them) and a decision shall be made whether or when such information
should be publicly disclosed. The Holders shall not recommence selling
activities until the Company shall inform the Holders that there is no material
non-public information regarding the Company; provided, however, the Company
shall use its best efforts to insure that the delay arising out of the failure
to disclose such information does not persist for more than 30 days.

5. Registration Procedures. If and whenever the Company is required by Sections
2, 3, or 4 of this Agreement to use its best efforts to effect the registration
of any of the Registrable Shares under the Securities Act, the Company shall:

         (a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective for such reasonable period of time as
required to complete the Public Offering;

         (b) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for such reasonable period of time as required
to complete the Public Offering and comply with the provisions of the Securities
Act with respect to the disposition of all shares covered by such Registration
Statement;

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         (c) provide the selling stockholders and the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(11) of the Securities Act), if any,
of the shares being sold and counsel for such underwriters and counsel for such
selling stockholders (which counsel shall be subject to approval by the Company,
such approval not to be unreasonably withheld) the opportunity to participate in
the preparation of the Registration Statement, each prospectus included therein
or filed with the Commission, and each amendment or supplement thereto; and make
available for inspection by such selling stockholders or other persons such
financial and other information, books and records of the Company and cause the
officers, directors and employees of the Company and counsel and independent
certified public accountants of the Company to respond to such inquiries as
shall be reasonably necessary, in the opinion of respective counsel to such
selling stockholders and such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act;

         (d) promptly notify (in writing, if so requested) the selling
stockholders and the underwriters, if any, (i) when the Registration Statement,
the prospectus or any prospectus supplement or post-effective amendment has been
filed, and with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any material comments by
the Commission with respect thereto or any request by the Commission for
amendments or supplements to the Registration Statement or the prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the occurrence of any
event, at any time during which the Registration Statement remains effective,
that causes the representations and warranties of the Company contemplated by
Section 8 hereof to cease to be true and correct in all material respects, (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose, or (vi) of the
occurrence or failure to occur of any event, or change in circumstance, at any
time when a prospectus is required to be delivered under the Securities Act, as
a result of which the Registration Statement, prospectus, any prospectus
supplement, or any document incorporated by reference in any of the foregoing
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;

         (e) make reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement hereunder or any
post-effective amendment thereto at the earliest practicable date;

         (f) if requested by the managing underwriter or underwriters or by
selling stockholders representing at least a majority of the Registrable Shares
being included in the Registration Statement, promptly incorporate in a
prospectus supplement or post-effective amendment such information as such
managing underwriter or underwriters or

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such selling stockholders reasonably specify should be included therein relating
to the sale of the Registrable Shares, including, without limitation,
information with respect to the number or amount of Registrable Shares being
sold to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Registrable Shares to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment; provided
that the Company and its counsel are reasonably satisfied that such additional
information does not constitute an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.

         (g) as expeditiously as possible furnish to each selling stockholder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the selling stockholder may reasonably request in order to
facilitate the Public Offering; and furnish to each selling stockholder and each
underwriter, if any, such number of copies of the Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in the Registration Statement (including each
preliminary prospectus and any summary prospectus) , in conformity with the
requirements of the Securities Act, and such other documents as such selling
stockholder and underwriter, if any, may reasonably request in order to
facilitate the Public Offering; the Company consents to the use of the
prospectus or any amendment or supplement thereto by each of the selling
stockholders and the underwriters in connection with the offering and sale of
the Registrable Shares covered by the prospectus or any supplement or amendment
thereto;

         (h) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or blue sky laws of such states as the underwriters shall reasonably
request, and do any and all other acts and things that may be reasonably
necessary or desirable to enable the Public Offering to be consummated;
provided, however, that the Company shall not be required in connection with
this Section 5(h) to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction;

         (i) use its best efforts to cause all of the Registrable Shares to be
included in a Registration Statement hereunder to be registered with or approved
by such other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company to enable the Public Offering to
be consummated;

         (j) facilitate the timely preparation and delivery of certificates
representing Registrable Shares to be sold; and

         (k) provide a CUSIP number for all Registrable Shares, not later than
the effective date of the Registration Statement.

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         If the Company has delivered preliminary or final prospectuses to the
selling stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling stockholders and, if requested, the selling stockholders
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide the selling
stockholders with revised prospectuses and, following receipt of the revised
prospectuses, the selling stockholders shall be free to resume making offers of
the Registrable Shares.

6. Allocation of Expenses. The Company shall pay all Registration Expenses of
all registrations under this Agreement including, without limitation,
Registration Statements that are not declared effective as contemplated in
Section 2(h) hereof. All underwriting discounts and selling commissions
applicable to the sale of the Registrable Shares shall be borne by the
participating sellers in proportion to the number of shares sold by each or as
shall otherwise be agreed to by such participating sellers other than the
Company (except to the extent the Company shall be a seller).

7. Indemnification.

         (a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless the seller of such Registrable Shares, each director and
officer of such seller, each underwriter of such Registrable Shares, and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages
or liabilities, joint or several, including, without limitation, subject to
Section 7(c) hereof, any amounts paid in settlement, to which such seller,
underwriter or controlling person may become subject under the Securities Act,
the Exchange Act, state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Registrable Shares
were registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company shall reimburse such seller, underwriter and each such controlling
person for any legal or any other expenses reasonably incurred by such seller,
underwriter or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, (i) that
the Company shall not be liable to any such seller, underwriter or controlling
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company, in writing, by or on behalf of such seller
or underwriter or controlling person specifically for use in the preparation
thereof and (ii) provided, however, that the

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indemnity agreement contained in this Section 7(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld. Such indemnification and reimbursement of expenses
shall remain in full force and effect regardless of any investigation made by or
on behalf of such seller, its directors or officers, such underwriter, its
directors or officers, or such controlling person, and shall survive the
transfer of any or all Registrable Shares by such seller.

         (b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, shall indemnify and hold harmless the
Company, each of its directors and officers, each other seller and each
underwriter, if any, and each person, if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the Securities Act, Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of such seller specifically for use in connection with the preparation of
such Registration Statement, prospectus, amendment or supplement; and each such
seller shall reimburse the Company, each of its directors and officers, each
underwriter and each controlling person for any legal or any other expenses
reasonably incurred by the Company, such directors and officers, underwriters
and controlling persons in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 7(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such seller; provided, further,
however, that, to the extent permitted by law, the indemnification obligation of
each seller of Registrable Shares shall be limited to the net proceeds received
by such selling shareholder in the Public Offering in dispute. Such
indemnification and reimbursement of expenses shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company, its
officers or directors, any such other seller, its officers or directors, or any
such controlling person, and shall survive the transfer of any or all
Registrable Shares by any such other seller.

         (c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying

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Party to assume the defense of any such claim or any litigation resulting
therefrom; provided, however, that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld); provided,
however, that an Indemnified Party shall have the right to retain its own
counsel (limited to one counsel for all Indemnified Parties), with the fees and
expenses of such counsel to be paid by the Indemnifying Party, if representation
of such Indemnified Party by the counsel retained by the Indemnifying Party
would be inappropriate due to actual or potential differing interests between
such Indemnified Party and any other party represented by such counsel in such
proceeding. The failure by an Indemnified Party to deliver written notice to the
Indemnifying Party within a reasonable time of the Indemnified Party's discovery
of such claim, if materially prejudicial to its ability to defend such claim,
shall relieve the Indemnifying Party of its obligations under this Section 7 but
only to the extent of such material prejudice. The Indemnified Party may
participate in such defense at such party's expense. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation.

         (d) (i) If for any reason the indemnification provided for in this
Section 7 is unavailable to or insufficient to hold harmless an indemnified
party under this Section 7 in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to herein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims damages or liabilities (or
actions in respect thereof), in such proportion as is appropriate to reflect the
relative fault of each Indemnifying Party and the Indemnified Party as well as
any other relevant equitable considerations; provided, however, that to the
extent permitted by law, the indemnification obligation of each seller of
Registrable Shares shall be limited to the net proceeds received by such Selling
Shareholders in the Public Offering in dispute. The relative fault of each
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses, claims,
damages or liabilities referred to above shall be deemed to include, subject to
the limitations set forth in Section 7(c), any legal or other fees or expenses
reasonably incurred by such party.

                  (ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the sellers or any underwriters or all of them were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)

                                       11

<PAGE>   12

shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

                  (iii) The contribution provided for in this Section 7(d) shall
survive, with respect to a Holder, the transfer of Registrable Shares by such
Holder and with respect to a Holder or the Company shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Indemnified Party.

         (e) The indemnification required by this Section 7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or expense, loss, damage or liability
is incurred, subject to refund in the event any such payments are determined not
to have been due and owing hereunder.

8. Agreements with Respect to Underwritten Offering. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2 hereof, the Company agrees to enter
into such customary agreements (including an underwriting agreement) and take
such other actions in connection therewith as the Holders representing at least
a majority of Registrable Shares to be included in a Registration Statement
hereunder shall reasonably request in order to expedite or facilitate the Public
Offering and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten registration
(i) make such representations and warranties to the selling stockholders and the
underwriters, if any, in form, substance and scope as are customarily made in
such a registration; (ii) obtain an opinion of counsel to the Company in
customary form and covering such matters of the type customarily covered by such
opinion as the Holders representing at least a majority of Registrable Shares to
be included in such registration and the underwriters, if any, may reasonably
request, addressed to each selling stockholder and the underwriters, if any, and
dated the effective date of such Registration Statement (or, if such
registration includes an underwritten offering, dated the date of the closing
under the underwriting agreement); (iii) obtain a "cold comfort" letter from the
independent certified public accountants of the Company addressed to the selling
stockholders and the underwriters, if any, (and which may also be addressed to
the Board of Directors of the Company) dated the effective date of such
Registration Statement (and, if such registration includes an underwritten
offering, dated the date of the closing under the underwriting agreement), such
letter to be in customary form and covering such matters of the type customarily
covered by such letter; and (iv) deliver such documents and certificates as may
be reasonably requested by the Holders representing at least a majority of
Registrable Shares being sold and the managing underwriters, if any, to evidence
compliance with clause (i) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company.

9. Information by Holder. It shall be a condition precedent to the obligations
of the Company under this Agreement that each Holder of Registrable Shares to be
included in any registration shall furnish to the Company such information
regarding such Holder

                                       12

<PAGE>   13

and the distribution proposed by such Holder as the Company may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.

10. Rule 144 Requirements. After the registration by the Company of a class of
securities under Section 12 of the Exchange Act, the Company agrees to:

         (a) make and keep public information available, as those terms are
understood and defined in Rule 144 (or any successor rule) under the Securities
Act;

         (b) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time after it has become subject to such reporting
requirements); and

         (c) furnish to any Holder upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the closing of the first sale of securities by
the Company pursuant to a Registration Statement), and of the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as such Holder may
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.

11. Transfer of Rights.

         (a) The rights granted to a Holder under this Agreement may be
transferred by such Holder to another Holder or to any transferee if (i) there
is transferred to such transferee at least 10% of the Registrable Shares
originally issued by the Company to the transferring Holder and (ii) the Company
is given written notice by the transferee at the time of such transfer stating
the name and address of the transferee and identifying the securities with
respect to which such rights are being assigned; provided, however, that the
rights granted to a Holder under this Agreement may not in any event be
transferred by any Holder with respect to securities which at the time of filing
of any Registration Statement are eligible for sale by the Holder under Rule
144(k) under the Securities Act. Any transferee to whom rights under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written instrument by which such transferee agrees to be bound by the
obligations imposed upon Holders under this Agreement to the same extent as if
such transferee were a Holder hereunder.

         (b) Notwithstanding anything to the contrary herein, any Holder may
transfer rights granted to such Holder under this Agreement to any affiliate of
such Holder, any liquidating trust established with respect to such Holder or
any limited partner, shareholder or member of such Holder in connection with a
distribution of assets to such Holder's partners, shareholders or members if
such transferee is a transferee of shares of Preferred Stock or Registrable
Shares and such transferee delivers to the Company a

                                       13

<PAGE>   14

written instrument by which such transferee agrees to be bound by the
obligations imposed upon Holders under this Agreement to the same extent as if
such transferee were a Holder hereunder. In the event of such transfer, such
transferee shall be deemed a Holder for purposes of this Section 11 and may
again transfer such rights to any other person or entity which acquires shares
of Preferred or Registrable Shares from such transferee, subject to and in
accordance with Section 11(a) hereof.

12. Other Registration Rights. Except (i) as provided in that certain
Registration Rights Agreement between the Company and Seruus Telecom Fund, L.P.
("Seruus"), dated February 19, 1998 (the "Seruus Registration Rights
Agreement"), (ii) as provided in the "Series A Registration Rights Agreement,
(iii) as provided in the Series B Registration Rights Agreement, and (iv) the
Company's right to grant selling shareholders registration rights on Form S-3
subject to the limitations set forth in Section 4 hereof, the Company shall not
grant demand registration rights to any party or any incidental registration
rights that are superior to or pari passu with the incidental registration
rights of the Holders, the holders of Series A or Series B Preferred Stock or
Seruus, without the written consent of Holders representing in the aggregate
more than 50% of the Registrable Shares. Except as set forth in Section
3(b)(iii) of this Agreement, the Company and the Holders acknowledge and agree
that the registration rights granted under the Seruus Registration Rights
Agreement, the Series A Registration Rights Agreement and the Series B
Registration Rights Agreement shall be deemed to be pari passu with the
registration rights granted hereunder.

13. Suspension Rights. Notwithstanding the provisions of this Agreement, the
Company's obligation to file a Registration Statement, or cause such
Registration Statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 12 month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of counsel to the Company, should not be disclosed.

14. Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived, either generally or in a
particular instance and either retroactively or prospectively, with the written
consent of the Company and Holders representing in the aggregate more than 66
2/3% of the Registrable Shares, provided that no such amendment or waiver of any
term of this Agreement shall affect any outstanding Registrable Shares on a
disproportionate basis without the specific consent of each Holder affected
thereby. Any amendment or waiver effected in accordance with this Section 14
shall be binding upon each Holder, each future Holder and the Company. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instance, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.

                                       14

<PAGE>   15

15. Entire Agreement: Successors and Assigns of the Company.

         (a) This Agreement embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.

         (b) This Agreement shall be binding, in accordance with its terms, upon
any successor, by way of merger, consolidation, sale of assets or otherwise, of
the Company.

16. Counterparts. This Agreement may be executed in several counterparts, all of
which need not be signed by all the parties hereto, and each of which shall be
deemed an original, but all of which together constitute one and the same
agreement.

17. Headings. The headings of the sections of this Agreement have been added for
convenience only and shall not be deemed to be a part of this Agreement.

18. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other severable
provision.

19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without regard for the
conflict of laws rules thereof.

20. Notices. All notices and other communications under this Agreement shall be
in writing and shall be (i) sent by facsimile transmission and by certified or
registered mail, return receipt requested, courier or overnight mail, or (ii)
sent by certified or registered mail, return receipt requested, courier or
overnight mail (1) if to any Holder, at the registered facsimile number and
address of such holder as set forth in the register kept at the principal office
of the Company, or (2) if to the Company, to 200 North Main Street, Suite 303,
Greenville, South Carolina 29601, Attention: Hamilton Russell II, Esq., or at
such other address or facsimile number as it shall have furnished in writing to
all holders of Registrable Shares at the time outstanding. Any written
communication so addressed, sent by facsimile transmission or certified or
registered mail, return receipt requested, courier or overnight mail, shall be
deemed to have been given when sent via facsimile or mailed. All other written
communications shall be deemed to have been given upon receipt thereof.

                     [remainder of page intentionally blank]

                                       15

<PAGE>   16

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                          STATE COMMUNICATIONS, INC.

                                          By: __________________________________
                                          Title: _______________________________

                                          RICHLAND VENTURES II, L.P.
                                          By:  Richland Partners II, Inc.,
                                               General Partner

                                          By: __________________________________
                                          Title: _______________________________

                                          RICHLAND VENTURES III, L.P.
                                          By:  Richland Partners III, Inc.,
                                               General Partner

                                          By: __________________________________
                                          Title: _______________________________

                                          FIRST UNION CAPITAL PARTNERS, INC.

                                          By: __________________________________
                                          Title: _______________________________

                                          MOORE GLOBAL INVESTMENTS, LTD.
                                          By:  Moore Capital Management, Inc.,
                                               Trading Advisor

                                          By: __________________________________
                                          Title: _______________________________

                                          REMINGTON INVESTMENTS STRATEGIES, L.P.
                                          By:  Moore Capital Advisors, L.L.C.,
                                               General Partner

                                          By: __________________________________
                                          Title: _______________________________

                       [SIGNATURES CONTINUED ON NEXT PAGE]

                                       16

<PAGE>   17

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                          BOSTON MILLENNIA PARTNERS
                                          LIMITED PARTNERSHIP
                                          By:  Glen Partners Limited
                                               Partnership, General Partner

                                          By: __________________________________
                                          Title: _______________________________

                                          BOSTON MILLENNIA ASSOCIATES I
                                          PARTNERSHIP

                                          By: __________________________________
                                          Title: _______________________________

                                          CITIZENS CAPITAL, INC.

                                          By: __________________________________
                                          Title: _______________________________

                      [SIGNATURES CONTINUED ON NEXT PAGE]

                                       17

<PAGE>   18

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                          SOUTHEASTERN TECHNOLOGY FUND

                                          By: __________________________________
                                          Title: _______________________________

                                          ________________________________(SEAL)
                                          Shaler P. Houser

                                          ________________________________(SEAL)
                                          Charles L. Houser

                                          ________________________________(SEAL)
                                          Charles S. Houser

                                          ________________________________(SEAL)
                                          Russell W. Powell

                                          ________________________________(SEAL)
                                          Daniel H. Sterling

                                          ________________________________(SEAL)
                                          Judith C. Slaughter

                                          ________________________________(SEAL)
                                          Thomas Houlihan

                                          ________________________________(SEAL)
                                          Clark Mizell

                                          SERUUS TELECOM FUND, L.P.
                                          By: _____________, its General Partner

                                          By: __________________________________
                                          Title: _______________________________

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       18

<PAGE>   19

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                          SERUUS VENTURES, LLC.

                                          By: __________________________________
                                          Title: _______________________________

                                          ________________________________(SEAL)
                                          Hamilton E. Russell III

                                          ________________________________(SEAL)
                                          John R. Tyrrell

                                          ________________________________(SEAL)
                                          John T. Mills, Sr.

                                          WYCHE BURGESS PROFIT SHARING PLAN
                                          FUND II
                                          By: __________________________________

                                          By: __________________________________
                                          Title: _______________________________

                                          WILLOU & CO.

                                          By: __________________________________
                                          Title: _______________________________

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       19

<PAGE>   20

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                          HOUSER CHARITABLE REMAINDER UNITRUST

                                          By: __________________________________
                                          Title: _______________________________

                                          VFO PARTNERS, LTD.
                                          By: __________________________________

                                          By: __________________________________
                                          Title: _______________________________

                                          TORONTO DOMINION CAPITAL
                                          (U.S.A.), INC.

                                          By: __________________________________
                                          Title: _______________________________

                                          NEWCOURT COMMERCIAL FINANCE
                                            CORPORATION, an affiliate of The
                                            CIT Group, Inc.

                                          By: __________________________________
                                          Title: _______________________________

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       20

<PAGE>   21

         IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.

                                      BANCAMERICA CAPITAL INVESTORS SBIC I, L.P.

                                      By:  BancAmerica Capital Management
                                           SBIC I, LLC,
                                           Its general partner

                                      By:  BancAmerica Capital Management I,
                                           L.P.,
                                           Its sole member

                                      By:  BACM I GP, LLC,
                                           Its general partner

                                      By: ______________________________________
                                      Name:  Robert H. Sheridan, III
                                      Title: Member

                                      CAPITAL INSIGHTS GROWTH INVESTORS, L.P.

                                      By: ______________________________________
                                      Title: ___________________________________

                                      __________________________________________
                                      Terry E. Richardson, Jr.

                                      __________________________________________
                                      David C. Poole

                                      __________________________________________
                                      William Oberlin

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       21

<PAGE>   22

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first above written.

                                      __________________________________________
                                      Joseph A. Lawrence

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       22
<PAGE>   23

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
as of the date first above written.

                                      __________________________________________
                                      Larry Bouman

                        SIGNATURES CONTINUED ON NEXT PAGE

                                       23

<PAGE>   24

ACKNOWLEDGEMENT AND CONSENT

The undersigned party consents to the registration rights granted pursuant to
the terms of this Agreement.

SERUUS TELECOM FUND, L.P.

By: ___________________, its General Partner

By: ________________________________________
Title: _____________________________________

                      [SIGNATURES CONTINUED ON NEXT PAGE]

                                       24

<PAGE>   25

                                                                  EXECUTION COPY

ACKNOWLEDGEMENT AND CONSENT

The undersigned party consents to the registration
rights granted pursuant to the terms of this Agreement.

STATE COMMUNICATIONS, INC.

By: _____________________________________
Title: __________________________________

RICHLAND VENTURES II, L.P.
By: Richland Partners II, Inc., General Partner

By: _____________________________________
Title: __________________________________

RICHLAND VENTURES III, L.P.
By: Richland Partners III, Inc., General Partner

By: _____________________________________
Title: __________________________________

FIRST UNION CAPITAL PARTNERS, INC.

By: _____________________________________
Title: __________________________________

MOORE GLOBAL INVESTMENTS, LTD.
By: Moore Capital Management, Inc., Trading Advisor

By: _____________________________________
Title: __________________________________

REMINGTON INVESTMENTS STRATEGIES, L.P.
By: Moore Capital Advisors, L.L.C., General Partner

By: _____________________________________
Title: __________________________________

<PAGE>   26

ACKNOWLEDGEMENT AND CONSENT

The undersigned party consents to the registration
rights granted pursuant to the terms of this Agreement.

BOSTON MILLENNIA PARTNERS LIMITED PARTNERSHIP
By:  Glen Partners Limited Partnership, General Partner

By: _____________________________________
Title: __________________________________

BOSTON MILLENNIA ASSOCIATES I PARTNERSHIP

By: _____________________________________
Title: __________________________________

SOUTHEASTERN TECHNOLOGY FUND

By: _____________________________________
Title: __________________________________

_________________________________________
John R. Tyrrell

WYCHE BURGESS PROFIT SHARING PLAN
  FUND II
By: _____________________________________

By: _____________________________________
Title: __________________________________

_________________________________________
Charles S. Houser

HOUSER CHARITABLE REMAINDER UNITRUST

By: _____________________________________
Title: __________________________________

                                       2

<PAGE>   27

ACKNOWLEDGEMENT AND CONSENT

The undersigned party consents to the registration
rights granted pursuant to the terms of this Agreement.

_________________________________________
John T. Mills, Sr.

WILLOU & CO.

By: _____________________________________
Title: __________________________________

                                       3

<PAGE>   28

                                                                  EXECUTION COPY

                                   Schedule I

                                    INVESTORS

Richland Ventures II, L.P.
Richland Ventures III, L.P.
First Union Capital Partners, Inc.
Moore Global Investments, Ltd.
Remington Investments Strategies, L.P.
Southeastern Technology Fund
Boston Millennia Partners Limited Partnership
Boston Millennia Associates I Partnership
Toronto Dominion Capital (U.S.A.), Inc.
Newcourt Commercial Finance Corporation
BancAmerica Capital Investors SBIC I, L.P.<PAGE>   1

                                                                     EXHIBIT 4.4

                                WARRANT AGREEMENT

                            Dated as of May 27, 1999

                                 by and between

                           STATE COMMUNICATIONS, INC.

                                       and

                              NORTEL NETWORKS INC.

         WARRANT AGREEMENT (this "Agreement") is made and entered into as of May
27, 1999 by and between STATE COMMUNICATIONS, INC., a South Carolina corporation
(the "Company"), NORTEL NETWORKS INC., a Delaware corporation ("Nortel
Networks") and the Holders of the Warrants from time to time.

         WHEREAS, in consideration for, among other things, the execution of the
Credit Agreement (as defined below) and the purchase of the Series 1999A Note
(as defined below), the Company agrees to issue Common Stock warrants as
hereinafter described (the "Warrants") to purchase shares Common Stock (as
defined below), in such number and at such price determined in accordance with
this Agreement. Each Warrant entitles the holder thereof to purchase one share
of Common Stock.

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, and for the purpose of defining the respective
rights and obligations of the Company and Nortel Networks, the parties hereto
agree as follows:

         Section 1. Certain Definitions. Capitalized defined terms used in this
Agreement and not otherwise defined herein shall have the meanings given to
those terms in the Credit Agreement. As used in this Agreement, the following
terms shall have the following respective meanings:

         "Commission" means the Securities and Exchange Commission.

         "Common Equity Securities" means Common Stock and securities
convertible into, or exercisable or exchangeable for, Common Stock or rights or
options to acquire Common Stock or such other securities, excluding the
Warrants.

<PAGE>   2

         "Common Stock" means the common stock, par value $.001 per share, of
the Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution for, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.

         "Credit Agreement" means the Credit Agreement dated as of May 27, 1999,
by and between State Communications Telecom, Inc. (the "Borrower"), the lenders
named therein and Nortel Networks Inc., as agent, as the same may be amended,
renewed, extended, restated, replaced, substituted, supplemented or otherwise
modified from time to time.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute, and the rules and regulations promulgated thereunder.

         "Exercise Price" means the purchase price per share of Common Stock to
be paid upon the exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $2.00 per share, subject to adjustment from time
to time pursuant to Section 12 hereof.

         "Expiration Date" means May 27, 2006, as the same may be extended
pursuant to Section 6 hereof.

         "Holder" or "Warrant Holder" means a Person who is the owner as shown
on the Warrant register maintained by the Company.

         "Issue Date" means the date of the initial issuance of the Warrants,
which shall be the Closing Date under the Credit Agreement.

         "Registrable Securities" means any of (i) the Warrant Shares, (ii) any
shares of Common Stock issued upon the conversion of the Series 1999A Note, and
(iii) any other securities issued or issuable with respect to any Warrant Shares
or any conversion shares referred to in clause (ii) above, by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
unless, in each case, such Warrant Shares and securities, if any, have been
offered and sold to the Holders pursuant to an effective Registration Statement
under the Securities Act declared effective prior to the date of exercisability
of the Warrants or the date such Warrant Shares and securities, if any, may be
sold to the public pursuant to Rule 144 without any restriction on the amount of
securities which may be sold by such Holders or the satisfaction of any
condition. As to any particular Registrable Securities held by a Holder, such
securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the exercise or offering of such securities by the
Holder thereof shall have been declared effective under the Securities Act and
such securities shall have been exercised and/or disposed of by such Holder
pursuant to such Registration Statement, (ii) such securities may at the time of
determination be sold to the public pursuant to Rule 144 without any restriction
on the amount of securities which may be sold by such Holder (or any similar

                                       2

<PAGE>   3

provision then in force, but not Rule 144A) without the lapse of any further
time or the satisfaction of any condition, (iii) such securities shall have been
otherwise transferred by such Holder and new certificates for such securities
not bearing a legend restricting further transfer shall have been delivered by
the Company or its transfer agent and subsequent disposition of such securities
shall not require registration or qualification under the Securities Act or any
similar state law then in force or (iv) such securities shall have ceased to be
outstanding.

         "Registration Rights Agreement" means the registration rights
agreement, dated as of the date hereof by and between the Company and Nortel
Networks relating to the Warrants and the Warrant Shares.

         "Rule 144" shall mean Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the Commission providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.

         "Rule 144A" shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the Commission.

         "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute and the rules and regulations promulgated thereunder.

         "Series 1999A Note" means the Series 1999A Note in the original
principal amount of $4,000,000 dated as of May 27, 1999, issued by the Company
to Nortel Networks Inc.

         "Warrant Holder" or "Holder" means a Person who is the owner as shown
on the Warrant register maintained by the Company.

         "Warrant Shares" means the shares of Common Stock issued or issuable
upon the exercise of the Warrants.

         Section 2. Issuance of Warrants; Warrant Certificates.

         (a) The Warrants will be issued in the form of definitive certificates,
substantially in the form of Exhibit A (the "Warrant Certificates"). Each
Warrant shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate.

                                       3

<PAGE>   4

         (b) The Warrants shall be initially issued on the Issue Date in the
aggregate amount of 652,089 shares of Common Stock, subject to adjustment as
herein provided, and shall be issued under two Warrant Certificates in the
amount of 508,089 and 144,000 shares of Common Stock. .

         Section 3. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by the Company's President or a Vice
President and by its Secretary or an Assistant Secretary under its corporate
seal. Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise reproduced on
the Warrant Certificates and for that purpose the Company may adopt and use the
facsimile signature of any person who shall have been President, Vice President,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be countersigned and delivered or disposed of, such
person shall have ceased to hold such office. The seal of the Company may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.

         In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be countersigned and delivered or disposed of as
though such person had not ceased to be such officer of the Company; and any
Warrant Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Warrant Certificate, shall be a proper
officer of the Company to sign such Warrant Certificate, although at the date of
the execution of this Warrant Agreement any such person was not such officer.

         Section 4. Registration. The Company shall number and register the
Warrant Certificates in a register as they are issued by the Company.

         The Company may deem and treat the person in whose name any Warrant is
registered as the absolute owner(s) thereof, for all purposes, and the Company
shall not be affected by any notice to the contrary.

         Section 5. Registration of Transfers and Exchanges.

         (a) Transfer and Exchange of Warrants and Registrable Securities. When
Warrants or Registrable Securities are presented to the Company with a request
to register their transfer; or to exchange such Warrants for an equal number of
Warrants of other authorized denominations, the Company shall register the
transfer or make the exchange as requested if the following requirements are
met:

                  (i) the Warrants presented or surrendered for registration of
         transfer or exchange shall be duly endorsed or accompanied by a written
         instruction of transfer in

                                       4

<PAGE>   5

         form satisfactory to the Company, duly executed by the Holder thereof
         or by his attorney-in-fact, duly authorized in writing; and

                  (ii) in the case of Registrable Securities, such request shall
         be accompanied by the following additional information and documents
         (all of which may be submitted by facsimile), as applicable:

                           (A) if such Registrable Security is being delivered
                  to the Company by a Holder for registration in the name of
                  such Holder, without transfer, a certification from such
                  Holder to that effect (in substantially the form of Exhibit B
                  hereto);

                           (B) if such Registrable Security is being transferred
                  (1) to a "qualified institutional buyer" (as defined in Rule
                  144A) in accordance with Rule 144A or (2) pursuant to an
                  exemption from registration in accordance with Rule 144 (and
                  based on an opinion of counsel if the Company so requests) or
                  (3) pursuant to an effective registration statement under the
                  Securities Act, a certification to that effect (in
                  substantially the form of Exhibit B hereto);

                           (C) if such Registrable Security is being transferred
                  pursuant to an exemption from registration in accordance with
                  Rule 904 under the Securities Act (and based on an opinion of
                  counsel if the Company so requests), a certification to that
                  effect (in substantially the form of Exhibit B hereto); or

                           (D) if such Registrable Security is being transferred
                  in reliance on another exemption from the registration
                  requirements of the Securities Act (and based on an opinion of
                  counsel if the Company so requests), a certification to that
                  effect (in substantially the form of Exhibit B hereto).

         (b) Legends.

                  (i) Except for any Registrable Security sold or transferred as
         discussed in clause (ii) below, each Warrant Certificate (and all
         Warrants issued in exchange therefor or substitution thereof) and each
         certificate representing the Warrant Shares shall bear a legend in
         substantially the following form:

         "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
         ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
         UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
         ACT"), AND THE SECURITY EVIDENCED HEREBY AND THE SECURITIES DELIVERED
         UPON EXERCISE THEREOF MAY NOT BE EXERCISED, OFFERED, SOLD OR OTHERWISE
         TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
         EXEMPTION

                                       5

<PAGE>   6

         THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY AND THE
         SECURITIES DELIVERED UPON THE EXERCISE THEREOF IS HEREBY NOTIFIED THAT
         THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
         SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. THE HOLDER OF
         THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT
         (A) SUCH SECURITY AND THE SECURITIES DELIVERED UPON EXERCISE HEREOF MAY
         BE EXERCISED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO
         A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
         INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
         IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
         TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
         ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S.
         PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A
         TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
         ACT, OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT (IN THE CASE OF (b), (c) or (d),
         UPON AN OPINION OF COUNSEL AND WRITTEN CERTIFICATION IF THE ISSUER,
         REGISTRAR OR TRANSFER AGENT FOR THE SECURITIES SO REQUESTS), (2) TO THE
         ISSUER OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
         EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
         STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
         THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
         PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY AND THE SECURITIES
         DELIVERED UPON EXERCISE HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN
         (A) ABOVE."

                  (ii) Upon any sale or transfer of a Registrable Security
         pursuant to an effective registration statement under the Securities
         Act, pursuant to Rule 144(A) or pursuant to an opinion of counsel
         reasonably satisfactory to the Company that no legend is required, the
         Holder thereof shall be permitted to exchange such Registrable Security
         for a Warrant that does not bear the legend set forth in clause (i)
         above and rescind any restriction on the transfer of such Registrable
         Security.

                                       6

<PAGE>   7

         (c) Obligations With Respect to Transfers and Exchanges of Warrants.

                  (i) To permit registrations of transfers and exchanges, the
         Company shall execute in accordance with the provisions of Section 4
         and this Section 5, Warrants as required pursuant to the provisions of
         this Section 5. Notwithstanding anything to the contrary contained
         herein, the Company shall refuse to register any transfer of the
         Warrants not made in accordance with Regulation S, pursuant to
         registration under the Securities Act or pursuant to an available
         exemption from the registration requirements of the Securities Act;
         provided, however, that if a foreign law prevents the Company from
         refusing to register securities transfers, the Company shall implement
         other reasonable measures designed to prevent transfers of the Warrants
         not made in accordance with Regulation S, pursuant to registration
         under the Securities Act or pursuant to an available exemption from the
         registration requirements of the Securities Act.

                  (ii) All Warrants issued upon any registration of transfer or
         exchange of Warrants shall be the valid obligations of the Company,
         entitled to the same benefits under this Warrant Agreement, as the
         Warrants surrendered upon such registration of transfer or exchange.

                  (iii) Prior to due presentment for registration of transfer of
         any Warrant, the Company may deem and treat the person in whose name
         any Warrant is registered as the absolute owner of such Warrant and the
         Company shall not be affected by notice to the contrary.

                  (iv) No service charge shall be made to a Holder for any
         registration of transfer or exchange.

         Section 6. Terms of Warrants; Exercise of Warrants. Subject to the
terms of this Agreement, each Warrant Holder shall have the right, which may be
exercised at any time and from time to time, in whole or in part, commencing on
the date hereof and ending at 5:00 p.m., New York City time, on the Expiration
Date, to receive from the Company the number of fully paid and nonassessable
Warrant Shares which the Holder may at the time be entitled to receive on
exercise of such Warrants and payment of the Exercise Price then in effect for
such Warrant Shares; provided, however, that no Warrant Holder shall be entitled
to exercise such Holder's Warrants at any time, unless, at the time of exercise,
(i) a registration statement under the Securities Act relating to the Warrant
Shares has been filed with, and declared effective by, the Commission, and no
stop order suspending the effectiveness of such registration statement has been
issued by the Commission or (ii) the issuance of the Warrant Shares is permitted
pursuant to an exemption from the registration requirements of the Securities
Act. Subject to the provisions of the following paragraph of this Section 6,
each Warrant not exercised prior to 5:00 p.m., New York City time, on the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time. No adjustments
as to dividends will be made upon exercise of the Warrants.

                                       7

<PAGE>   8

         The Company shall give notice not less than 90, and not more than 120,
days prior to the Expiration Date to the Holders of all then outstanding
Warrants to the effect that the Warrants will terminate and become void as of
5:00 p.m., New York City time, on the Expiration Date. If the Company fails to
give such notice, the Warrants will not expire until 90 days after the Company
gives such notice, provided, however, in no event will Holders be entitled to
any damages or other remedy for the Company's failure to give such notice other
than any such extension.

         A Warrant may be exercised upon surrender to the Company of the
certificate or certificates evidencing the Warrant to be exercised with the form
of election to purchase on the reverse thereof properly completed and signed,
which signature shall be guaranteed by a bank or trust company having an office
or correspondent in the United States or a broker or dealer which is a member of
a registered securities exchange or the National Association of Securities
Dealers, Inc., and upon payment to the Company of the Exercise Price as adjusted
as herein provided, for each of the Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made in cash or by certified or official bank check, payable to the order of the
Company. In the alternative, each Holder may exercise its right to receive
Warrant Shares (i) on a net basis, such that without the exchange of any funds,
the Holder receives that number of Warrant Shares otherwise issuable upon
exercise of its Warrants less that number of Warrant Shares having a fair market
value equal to the aggregate Exercise Price that would otherwise have been paid
by the Holder for the Warrant Shares being issued, (ii) by any Holder to whom
the Company is indebted, by tendering indebtedness having an aggregate principal
amount, plus accrued but unpaid interest, if any, thereon, to the date of
exercise equal to the aggregate Exercise Price that would otherwise have been
paid by the Holder for the Warrant Shares being issued, or (iii) by a
combination of the procedures in clauses (i) and (ii). For purposes of the
foregoing sentence, "fair market value" of the Warrant Shares shall be as
determined by the Board of Directors of the Company in good faith and evidenced
by a resolution thereof. The Company shall notify the Holders in writing of any
such determination of fair market value.

         Subject to the provisions of Section 7 hereof, upon surrender of
Warrants and payment of the Exercise Price as provided above, the Company shall
promptly transfer to the Holder of such Warrant a certificate or certificates
for the appropriate number of Warrant Shares or other securities or property
(including any money) to which the Holder is entitled, registered or otherwise
placed in, or payable to the order of, such name or names as may be directed in
writing by the Holder, and shall deliver such certificate or certificates
representing the Warrant Shares and any other securities or property (including
any money) to the Person or Persons entitled to receive the same, together with
an amount in cash in lieu of any fraction of a share as provided in Section 13.
Any such certificate or certificates representing the Warrant Shares shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed to have become a Holder of record of such Warrant Shares as of
the later of the date of the surrender of such Warrants and payment of the
Exercise Price.

                                       8

<PAGE>   9

         The Warrants shall be exercisable commencing on the Issue Date, at the
election of the Holders thereof, either in full or from time to time in part
and, in the event that a certificate evidencing Warrants is exercised in respect
of fewer than all of the Warrant Shares issuable on such exercise at any time
prior to the date of expiration of the Warrants, a new certificate evidencing
the remaining Warrant or Warrants will be issued and delivered pursuant to the
provisions of this Section and of Section 3 hereof.

         All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled. Such cancelled Warrant Certificates shall then be disposed of in
accordance with customary procedures.

         Section 7. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the issuance of the Warrant Certificates or the
initial issuance of Warrant Shares upon the exercise of Warrants; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any
certificates for Warrant Shares in a name other than that of the Holder of a
Warrant Certificate surrendered upon the exercise of a Warrant.

         Section 8. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and, if
requested, indemnity reasonably satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.

         Section 9. Reservation of Warrant Shares. The Company will at all times
reserve and keep available, free from any preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.

         The transfer agent for the Common Stock (the "Transfer Agent") and
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of any of the rights of purchase aforesaid will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Company will
supply such Transfer Agent with duly executed certificates for such purposes and
will provide or otherwise make available any cash which may be payable as
provided in Section 13. The Company will furnish such Transfer Agent a copy of

                                       9

<PAGE>   10

all notices of adjustments and certificates related thereto, transmitted to each
Holder of the Warrants pursuant to Section 14 hereof.

         Before taking any action which would cause an adjustment pursuant to
Section 11 hereof that would reduce the Exercise Price below the then par value
(if any) of the Warrant Shares, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.

         The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants in accordance with the terms of this Agreement (including
the payment of the Exercise Price) will, upon issue, be duly and validly issued,
fully paid, nonassessable, and free of preemptive rights and Liens.

         Section 10. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets (including, without limitation,
the Nasdaq National or SmallCap Markets) within the United States of America, if
any, on which other shares of Common Stock are then listed. Upon the listing of
such Warrant Shares, the Company shall notify the Holders in writing. The
Company will obtain and keep all required permits and records in connection with
such listing.

         Section 11. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The number and kind of shares purchasable upon the exercise of
Warrants and the Exercise Price shall be subject to adjustment from time to time
(as set forth in the notices required by Section 14 hereof) as follows:

         (a) Stock Splits, Combinations, etc. In case the Company shall
hereafter (A) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of Common Stock, (C)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect and the number of
Warrant Shares issuable upon exercise of each Warrant immediately prior to such
action shall be adjusted so that the Holder of any Warrant thereafter exercised
shall be entitled to receive the number of shares of capital stock of the
Company which such Holder would have owned immediately following such action had
such Warrant been exercised immediately prior thereto. Any adjustment made
pursuant to this paragraph shall become effective immediately after the record
date in the case of a dividend and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this paragraph, the Holder of
any Warrant thereafter exercised shall become entitled to receive shares of two
or more classes of capital stock of the Company, the Board of Directors of the
Company (whose

                                       10

<PAGE>   11

determination shall be conclusive and evidenced by a Board resolution) shall
determine the allocation of the adjusted Exercise Price between or among shares
of such classes of capital stock.

         (b) Reclassification, Combinations, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of all or substantially all of the assets of the Company, then, as a
condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company or such a successor or purchasing corporation, as the
case may be, shall forthwith make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a Holder of the number of shares of
Common Stock issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and enter
into a supplemental warrant agreement so providing. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 11. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental warrant
agreement is an affiliate of the formed, surviving or transferee corporation,
that issuer shall join in the supplemental warrant agreement. The above
provisions of this paragraph (b) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.

         (c) Issuance of Additional Shares of Common Stock. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) any
additional shares of Common Stock without consideration or for a price per share
less than the current market price per share of Common Stock on the date of the
issuance, sale, distribution or granting of such additional shares, then,
effective upon such issuance or sale, (I) the Exercise Price shall be reduced to
the price (calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such issuance or sale multiplied by the current market
price per share of Common Stock on the date of such issuance or sale plus (ii)
the consideration, if any, received by the Company in respect of such issuance
or sale, and the denominator of which shall be the product of (A) the total
number of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such issuance or sale multiplied by (B) the current market
price per share of Common Stock on the record date for such issuance or sale and
(II) the number of shares of Common Stock purchasable upon the exercise of each
Warrant shall be increased to a number

                                       11

<PAGE>   12

determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such issuance or sale by a fraction,
the numerator of which shall be the Exercise Price in effect immediately prior
to the adjustment required by clause (I) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
The Holder hereof acknowledges and agrees that the Designations, Rights and
Preferences of the Series A Convertible Preferred Stock of the Company provides
the owners of the Series A Convertible Preferred Stock with rights to adjustment
similar to those provided the Holder in this clause (c) and agrees that in the
event all owners of Series A Convertible Preferred Stock waive such rights to
adjustment in connection with an issuance or sale of Common Stock of the
Company, that the Holder will waive its rights to adjustment under this clause
(c). In addition, Holder's rights under this clause (c) shall terminate upon
written notice from the Company that the similar rights of the Series A
Convertible Preferred Stock have terminated (for whatever reason) on any date
prior to the conversion of the Series A Convertible Preferred Stock.

         (d) Issuance of Options or Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, distribute or otherwise grant in any manner (including by assumption) any
rights to subscribe for or to purchase, or any warrants or options for the
purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (any such rights, warrants or options being herein
called "Options" and any such convertible or exchangeable stock or securities
being herein called "Convertible Securities") or any Convertible Securities
(other than upon exercise of any Option), whether or not such Options or the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and if the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if any,
received or receivable by the Company as consideration for the issuance, sale,
distribution or granting of such Options or any such Convertible Security, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Options or upon conversion or exchange of
all such Convertible Securities, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of Common Stock on the
date for the issuance, sale, distribution or granting of such Options or
Convertible Securities (any such event being herein called a "Distribution"),
then, effective upon such Distribution, (I) the Exercise Price shall be reduced
to the price (calculated to the nearest 1/1,000 of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Distribution
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Distribution multiplied by the current market price
per share of Common Stock on the date of such Distribution plus (ii) the
consideration, if any, received by the Company in respect of such Distribution,
and the denominator of which shall be the product of (A) the total number of
shares

                                       12

<PAGE>   13

of Common Stock outstanding (exclusive of any treasury shares) immediately after
such Distribution multiplied by (B) the current market price per share of Common
Stock on the record date for such Distribution and (II) the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall be increased to
a number determined by multiplying the number of shares of Common Stock so
purchasable immediately prior to the record date for such Distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to the adjustment required by clause (I) of this sentence and
the denominator of which shall be the Exercise Price in effect immediately after
such adjustment. For purposes of the foregoing, the total maximum number of
shares of Common Stock issuable upon exercise of all such Options or upon
conversion or exchange of all such Convertible Securities or upon the conversion
or exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options shall be deemed to have been issued as of
the date of such Distribution and thereafter shall be deemed to be outstanding
and the Company shall be deemed to have received as consideration therefor such
price per share, determined as provided above. Except as provided in paragraphs
(j) and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this paragraph if Holders
(concurrently with all holders of Common Stock) receive, as if the Warrants had
been exercised, the securities issued, sold, distributed or otherwise granted to
such holders of Common Stock on the same terms as holders of Common Stock and in
connection therewith there is no diminution of the economic value of the
Warrants and the Holders of the Warrants do not incur, or become obligated for,
additional cost or expense.

         (e) Dividends and Distributions. In the event the Company shall, at any
time or from time to time after the date hereof, distribute to all the holders
of Common Stock any dividend or other distribution of cash, evidences of its
indebtedness, other securities or other properties or assets (in each case other
than (i) dividends payable in Common Stock, Options or Convertible Securities
and (ii) any cash dividend that, when added to all other cash dividends paid
with respect to Common Stock in the one year prior to the declaration date of
such dividend (excluding any such other dividend included in a previous
adjustment of the Exercise Price pursuant to this paragraph (e) and excluding
any cash dividends or other cash distributions from current or retained
earnings), does not exceed 5% of the current market price per share of Common
Stock on such declaration date), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then (A) the Exercise Price
shall be decreased to a price determined by multiplying the Exercise Price then
in effect by a fraction, the numerator of which shall be the current market
price per share of Common Stock on the record date for such distribution less
the sum of (X) the cash portion, if any, of such distribution per share of
Common Stock outstanding (exclusive of any treasury shares) on the record date
for such distribution plus (Y) the then fair market value (as determined in good
faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants or subscription or purchase rights, and the denominator of

                                       13

<PAGE>   14

which shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of shares of
Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment. The adjustments required by this paragraph
(e) shall be made whenever any such distribution occurs retroactive to the
record date for the determination of stockholders entitled to receive such
distribution.

         (f) Current Market Price. For the purpose of any computation of current
market price under this Section 11 and Section 13, the current market price per
share of Common Stock at any date shall be (x) for purposes of Section 13, the
closing price on the business day immediately prior to the exercise of the
applicable Warrant pursuant to Section 6 and (y) in all other cases, the average
of the daily closing prices for the shorter of (i) the 20 consecutive trading
days ending on the last full trading day on the exchange or market specified in
the second succeeding sentence prior to the Time of Determination (as defined
below) and (ii) the period commencing on the date next succeeding the first
public announcement of the issuance, sale, distribution or granting in question
through such last full trading day prior to the Time of Determination. The term
"Time of Determination" as used herein shall be the time and date of the earlier
to occur of (A) the date as of which the current market price is to be computed
and (B) the last full trading day on such exchange or market before the
commencement of "ex-dividend" trading in the Common Stock relating to the event
giving rise to the adjustment required by paragraph (a), (b), (c), (d) or (e)
above. The closing price for any day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the closing bid and asked prices regular way for such day, in each
case (1) on the principal national securities exchange on which the shares of
Common Stock are listed or to which such shares are admitted to trading or (2)
if the Common Stock is not listed or admitted to trading on a national
securities exchange, in the over-the-counter market as reported by Nasdaq
National or SmallCap Markets or any comparable system or (3) if the Common Stock
is not listed on Nasdaq National or SmallCap Markets or a comparable system, as
furnished by two members of the NASD selected from time to time in good faith by
the Board of Directors of the Company for that purpose. In the absence of all of
the foregoing, or if for any other reason the current market price per share
cannot be determined pursuant to the foregoing provisions of this paragraph (f),
the current market price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company and evidenced
by a resolution of such Board, subject to the following dispute resolution right
of the Holders of the Warrants. In the event that Holders of a majority of the
Warrants dispute the determination of the Board of Directors, such Holders shall
notify the Company and the current market price shall be determined in a
reasonably prompt manner as follows:

         (1) The Company and Holders of a majority of the Warrants shall each
         appoint an independent, experienced appraiser who is a member of a
         recognized professional association of business appraisers. The two
         appraisers shall determine the value of shares

                                       14

<PAGE>   15

         of Common Stock at the relevant date, assuming a sale between a willing
         buyer and a willing seller, both of whom have full knowledge of the
         financial and other affairs of the Company, and neither of whom is
         under any compulsion to sell or to buy.

         (2) If the higher of the two appraisals is not more than 20% more than
         the lower of the appraisals, the current market price per share shall
         be the average of the two appraisals. If the higher of the two
         appraisals is 20% or more than the lower of the two appraisals, then a
         third appraiser shall be appointed by the two appraisers, and if they
         cannot agree on a third appraiser, the American Arbitration Association
         shall appoint the third appraiser. The third appraiser, regardless of
         who appoints him or her, shall have the same qualifications as the
         first two appraisers.

         (3) The current market price per share after the appointment of the
         third appraiser shall be the average of the two appraisals that are
         closest in value to each other.

         (4) The fees and expenses of the appraisers shall be paid one-half by
         the Company and one-half by the Holders.

         (g) Certain Distributions. If the Company shall pay a dividend or make
any other distribution payable in Options or Convertible Securities, then, for
purposes of paragraph (d) above, such Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.

         (h) Consideration Received. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for a consideration
other than cash, the amount of the consideration other than cash received by the
Company in respect thereof shall be deemed to be the then fair market value of
such consideration (as determined in good faith by the Board of Directors of the
Company and evidenced by a Board resolution). If any Options shall be issued in
connection with the issuance and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued without consideration; provided, however, that if
such Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.

         (i) Deferral of Certain Adjustments. No adjustment to the Exercise
Price (including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
of the Exercise Price; provided that any adjustments which by reason of this
paragraph (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. No adjustment need be made for a
change in the par value of the Common Stock.

                                       15

<PAGE>   16

All calculations under this Section shall be made to the nearest 1/1,000 of one
cent or to the nearest 1/1000 of a share, as the case may be.

         (j) Changes in Options and Convertible Securities. If the exercise
price provided for in any Options referred to in paragraph (d) above, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (d) or (e) above, or the rate at
which any Convertible Securities referred to in paragraph (d) or (e) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 11), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of each Warrant shall forthwith be
readjusted (effective only with respect to any exercise of any Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.

         (k) Expiration of Options and Convertible Securities. If, at any time
after any adjustment to the number of shares of Common Stock purchasable upon
the exercise of each Warrant shall have been made pursuant to paragraph (d), (e)
or (j) above or this paragraph (k), any Options or Convertible Securities shall
have expired unexercised, the number of such shares so purchasable shall, upon
such expiration, be readjusted and shall thereafter be such as they would have
been had they been originally adjusted (or had the original adjustment not been
required, as the case may be) as if (i) the only shares of Common Stock deemed
to have been issued in connection with such Options or Convertible Securities
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such Options or Convertible Securities and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the aggregate consideration, if
any, actually received by the Company for the issuance, sale, distribution or
granting of all such Options or Convertible Securities, whether or not
exercised; provided that no such readjustment shall have the effect of
decreasing the number of such shares so purchasable by an amount (calculated by
adjusting such decrease to account for all other adjustments made pursuant to
this Section 11 following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution or granting of such Options or Convertible
Securities.

         (l) Other Adjustments. In the event that at any time, as a result of an
adjustment made pursuant to this Section 11, the Holders shall become entitled
to receive any securities of the Company other than shares of Common Stock,
thereafter the number of such other securities so receivable upon exercise of
the Warrants and the Exercise Price applicable to such exercise shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as

                                       16

<PAGE>   17

practicable to the provisions with respect to the shares of Common Stock
contained in this Section 11.

         Section 12. Statement on Warrants. Irrespective of any adjustment in
the number or kind of shares issuable upon the exercise of the Warrants or the
Exercise Price, Warrants theretofore or thereafter issued may continue to
express the same number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.

         Section 13. Fractional Interest. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
shares of Common Stock acquirable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall direct the Transfer Agent to pay an amount in cash
calculated by it equal to (i) the then current market price per share multiplied
by such fraction computed to the nearest whole cent, less (ii) an amount equal
to the Exercise Price multiplied by such fraction computed to the nearest whole
cent. The Holders, by their acceptance of the Warrant Certificates, expressly
waive any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.

         Section 14. Notices to Warrant Holders. Upon any adjustment of the
Exercise Price pursuant to Section 11, the Company shall promptly thereafter
cause to be given to each of the registered Holders by first-class mail, postage
prepaid, a certificate executed by the Chief Financial Officer of the Company
setting forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence, absent manifest error, of the
correctness of the matters set forth therein.

         In case:

                  (a) the Company shall authorize the issuance to all holders of
         shares of Common Stock of rights, options or warrants to subscribe for
         or purchase shares of Common Stock or of any other subscription rights
         or warrants; or

                  (b) the Company shall authorize the distribution to all
         holders of shares of Common Stock of evidences of its indebtedness or
         assets (other than cash dividends or cash distributions payable out of
         consolidated earnings or earned surplus or dividends payable in shares
         of Common Stock or distributions referred to in Section 11 hereof); or

                                       17

<PAGE>   18

                  (c) of any consolidation or merger to which the Company is a
         party for which approval of any shareholders of the Company is required
         and following which the shareholders of the Company before such
         consolidation or merger no longer hold at least 50% of the outstanding
         capital stock of the Company following the merger or consolidation, or
         of the conveyance or transfer of all or substantially all of the
         properties and assets of the Company, or of any reclassification or
         change of Common Stock issuable upon exercise of the Warrants (other
         than a change in par value, or from par value to no par value, or from
         no par value to par value, or as a result of a subdivision or
         combination), or a tender offer or exchange offer for shares of Common
         Stock, or other transaction that would result in a change in control;
         or

                  (d) of the voluntary or involuntary dissolution, liquidation
         or winding up of the Company; or

                  (e) the Company proposes to take any other action that would
         require an adjustment of the Exercise Price or the number of Warrant
         Shares pursuant to Section 11; then the Company shall cause to be given
         to each of the registered Holders of the Warrants at such Holder's
         address appearing on the Warrant register, at least 20 days (or 10 days
         in any case specified in clauses (a) or (b) above) prior to the
         applicable record date hereinafter specified, or promptly in the case
         of events for which there is no record date, by first-class mail,
         postage prepaid, a written notice stating (i) the date as of which the
         holders of record of shares of Common Stock to be entitled to receive
         any such rights, options, warrants or distribution are to be
         determined, or (ii) the initial expiration date set forth in any tender
         offer or exchange offer for shares of Common Stock, or (iii) the date
         on which any such consolidation, merger, conveyance, transfer,
         dissolution, liquidation or winding up or change of control is expected
         to become effective or consummated, and the date as of which it is
         expected that holders of record of shares of Common Stock shall be
         entitled to exchange such shares for securities or other property, if
         any, deliverable upon such reclassification, consolidation, merger,
         conveyance, transfer, dissolution, liquidation or winding up or change
         of control. The failure to give the notice required by this Section 14
         or any defect therein shall not affect the legality or validity of any
         distribution, right, option, warrant, consolidation, merger,
         conveyance, transfer, dissolution, liquidation or winding up, or change
         of control or the vote upon any action. Nothing contained in this
         Agreement or in any of the Warrant Certificates shall be construed as
         conferring upon the Holders thereof the right to vote or to consent or
         to receive notice as shareholders in respect of the meetings of
         shareholders or the election of Directors of the Company or any other
         matter, or any rights whatsoever as shareholders of the Company.

         Section 15. Registration. The Company acknowledge that Holders of
Warrants shall have the registration rights set forth in the Registration Rights
Agreement.

                                       18

<PAGE>   19

         Section 16. Reports. For each fiscal quarter and each fiscal year of
the Company, the Company will transmit by mail to all Warrant Holders, as their
names and addresses appear in the register, without cost to such Warrant
Holders, unaudited quarterly and audited annual financial statements of the
Company prepared in accordance with GAAP. Beginning with the initial public
offering of the Company and thereafter, whether or not the Company is subject to
Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto,
the Company shall prepare the annual and quarterly reports and other
information, and documents ("SEC Reports") as the Commission shall prescribe
pursuant to such Section 13(a) or 15(d) and which the Company is or would be (if
they were so subject) required to file with the Commission pursuant to such
Section 13(a) or 15(d) or any successor provision thereto (on or prior to the
respective dates (the "Required Filing Dates") by which the Company is or would
(if they were so subject) be required so to file such SEC Reports) and shall,
within 15 days of the Required Filing Date transmit by mail to all Warrant
Holders, as their names and addresses appear in the register, without cost to
such Warrant Holders, copies of such annual and quarterly reports.

         Section 17. Rule 144A. The Company hereby agrees with each Holder, for
so long as any Registrable Securities remain outstanding and the Company is not
subject to Section 13(a) or 15(d) of the Exchange Act, to make available, upon
request of any Holder of Registrable Securities, to any Holder or beneficial
owner of Registrable Securities in connection with any sale thereof and any
prospective purchaser of such Registrable Securities designated by such Holder
or beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Securities
pursuant to Rule 144A.

         Section 18. Notices to Company. Any notice or demand authorized by this
Agreement to be given or made by the Holder of any Warrants to or on the Company
shall be sufficiently given or made when and if deposited in the mail,
first-class or registered, postage prepaid, addressed (until another address is
filed in writing by the Company), as follows:

                  State Communications, Inc.
                  200 N. Main Street, Suite 303
                  Greenville, South Carolina 29601
                  Attention: Clark H. Mizell
                  Telephone: (864) 271-6335
                  Telecopy:  (864) 271-7810

         Any notice pursuant to this Agreement to be given by the Company to the
Holders shall be sufficiently given when and if deposited in the mail,
first-class or registered, postage prepaid, addressed (until another address is
filed in writing with the Company) to the addresses of the Holders provided to
the Company from time to time.

         Section 19. Supplements and Amendments. The Company and Nortel Networks
may from time to time supplement or amend this Agreement without the approval of
any Holders of Warrants in order to cure any ambiguity or to correct or
supplement any provision contained

                                       19

<PAGE>   20

herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company and Nortel Networks may deem necessary or desirable
and which shall not in any way adversely affect the interests of the Holders of
Warrants. Any amendment or supplement to this Agreement that has a material
adverse effect on the interests of Holders shall require the written consent of
Holders representing a majority of the then outstanding Warrants (excluding
Warrants held by the Company or any of its Affiliates); provided, however, that
the consent of each Holder of a Warrant affected shall be required for any
amendment pursuant to which the Exercise Price would be increased or the number
of Warrant Shares purchasable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided for in Section 11 hereof). Nortel
Networks shall be entitled to receive and shall be fully protected in relying
upon an officer's certificate and opinion of counsel as conclusive evidence that
any such amendment or supplement is authorized or permitted hereunder, that it
does or does not, as the case may be, require the written consent of Holders to
be effective hereunder, that it is not inconsistent herewith, and that it will
be valid and binding upon the Company in accordance with its terms.

         Section 20. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.

         Section 21. Termination. This Agreement (other than any party's
obligations with respect to Warrants previously exercised and with respect to
indemnification) shall terminate at 5:00 p.m., New York City time on the
Expiration Date.

         Section 22. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF SAID STATE, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.

         Section 23. Benefits of This Agreement.

         (a) The Holders are the third-party beneficiaries of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other than
the Company, Nortel Networks and the Holders of the Warrants any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, Nortel Networks and the
Holders of the Warrants from time to time.

         (b) Prior to the exercise of the Warrants, no Holder of a Warrants, as
such, shall be entitled to any rights of a stockholder of a Company, including,
without limitation, the right to receive dividends or subscription rights, the
right to vote, to consent, to exercise any preemptive right, to receive any
notice of or to participate in meetings of stockholders for the election of
directors of the Company or any other matter or to receive any notice of any
proceedings of the

                                       20

<PAGE>   21

Company, except as may be specifically and expressly provided for herein. The
Holders of the Warrants are not entitled to share in the assets of the Company
in the event of the liquidation, dissolution or winding up of the Company's
affairs.

         (c) All rights of action in respect of this Agreement are vested in the
Holders of the Warrants, and any Holder of any Warrant, without the consent of
the Holder of any other Warrant, may, on such Holder's own behalf and for such
Holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company suitable to enforce, or otherwise in respect
of, such Holder's rights hereunder, including the right to exercise, exchange or
surrender for purchase such Holder's Warrants in the manner provided in this
Agreement.

         Section 24. Representations and Warranties.

         (a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of South Carolina, has the
corporate power and authority to conduct its business as currently conducted and
as intended to be conducted, has the corporate power and authority to execute
and deliver this Agreement and the Warrant Certificates, to issue the Warrants
and to perform its obligations under this Agreement and the Warrant
Certificates, has the corporate power and authority and legal right to own and
lease its properties and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which it owns or leases real property or in
which the conduct of its business requires such qualification, except where
failure to be so qualified could not be reasonably expected to have a material
adverse effect on the business, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole.

         (b) The execution, delivery and performance by the Company of this
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon exercise of the Warrants have been duly
authorized by all necessary corporate action and do not and will not violate, or
result in a breach of, or constitute a default under, or require any consent
under, or result in the creation of any lien, charge of encumbrance upon any of
the assets of the Company pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Company or its
subsidiaries or the Company's Articles of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Company or its subsidiaries or by which any of their respective properties are
bound.

         (c) This Agreement and the Warrant Certificates executed and delivered
on the date hereof have been duly executed and delivered by the Company. This
Agreement, the Warrant Certificates and the Warrants constitute legal, valid,
binding and enforceable obligations of the Company. The Warrant Shares, when
issued upon exercise of the Warrants in accordance with the terms hereof, will
be duly authorized, validly issued, fully paid, nonassessable and free of any
lien or encumbrance not created by the Holder thereof. The Warrants and the
Warrant Shares are not subject to any preemptive right or right of first
refusal.

                                       21

<PAGE>   22

         (d) The authorized capital stock of Company consists solely of (x)
50,000,000 shares of Common Stock, of which 10,870,295 shares are currently
issued and outstanding, and (y) 10,000,000 shares of preferred stock (the
"Preferred Stock"), of which 4,791,668 shares of Series A Convertible Preferred
Stock, par value of $.01 per share, are currently issued and outstanding (the
Common Stock and the Preferred Stock being, collectively, the "Capital Stock").
Except for the Warrants, and except as set forth on Schedule 1 attached hereto,
there are outstanding on the date hereof no options, warrants or other
securities exercisable or exchangeable for or convertible into shares of Capital
Stock of the Company or any other rights to acquire Capital Stock of the
Company.

         (e) The representations and warranties as to the financial statements
of the Company set forth in Section 7.2 of the Credit Agreement are true and
correct.

         Section 25. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.

                                       STATE COMMUNICATIONS, INC.

                                       By:
                                           -------------------------------------
                                       Name:  Clark H. Mizell
                                       Title: Executive Vice President and Chief
                                              Financial Officer

                                       NORTEL NETWORKS INC.

                                       By:
                                           -------------------------------------
                                       Name:  Michael W. McCorkle
                                       Title: Director, Customer Finance

                                       22

<PAGE>   23

                                                                       Exhibit A

                           FORM OF WARRANT CERTIFICATE

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY AND THE SECURITIES DELIVERED UPON EXERCISE THEREOF MAY NOT BE
EXERCISED, OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY AND THE SECURITIES DELIVERED UPON THE EXERCISE THEREOF
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A. THE HOLDER
OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
SUCH SECURITY AND THE SECURITIES DELIVERED UPON EXERCISE HEREOF MAY BE
EXERCISED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A PERSON THAT IS NOT A U.S.
PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR (d) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (IN THE CASE OF (b), (c) or (d), UPON AN OPINION OF COUNSEL AND
WRITTEN CERTIFICATION IF THE ISSUER, REGISTRAR OR TRANSFER AGENT FOR THE
SECURITIES SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY AND THE SECURITIES
DELIVERED UPON EXERCISE HEREOF OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.

_________ Shares of Common Stock                      Warrant Certificate No. __

                               WARRANT CERTIFICATE
                       For the Purchase of Common Stock of
                           STATE COMMUNICATIONS, INC.

         1. Certificate. THIS IS TO CERTIFY THAT _________________, or its
registered assigns ("Holder"), is entitled to exercise this Warrant Certificate
to purchase from State Communications, Inc., a South Carolina corporation (the
"Company"), ____________________ (________) shares of common stock, par value
$0.001 per share, of the Company (the "Common Stock"), all on the terms and
conditions and pursuant to the provisions hereinafter set forth. This Warrant
Certificate is executed pursuant to the terms

<PAGE>   24

of that certain Warrant Agreement of even date herewith (the "Agreement")
between the Company and the Holder. Any capitalized terms not defined herein
will have the meanings set forth in the Agreement.

         2. Exercise Price. The exercise price per share of Common Stock shall
be $2.00 (the "Exercise Price"). Such Exercise Price and the number of shares of
Common Stock into which this Warrant Certificate is exercisable are subject to
adjustment from time to time as provided in the Agreement.

         3. Exercise. This Warrant Certificate may be exercised at any time or
from time to time on or after the date hereof; provided, however, that this
Warrant Certificate shall be void and all rights represented hereby shall cease
unless exercised in full before May 27, 2006, as such date may be extended
pursuant to Section 6 of the Agreement (the "Expiration Date").

         In order to exercise this Warrant Certificate, in whole or in part, the
Holder hereof shall deliver to the Company at its principal office, or at such
other office as shall be designated by the Company pursuant to the Agreement:

         (a) written notice of Holder's election to exercise this Warrant
Certificate, which notice shall specify the number of shares of Common Stock to
be purchased pursuant to such exercise;

         (b) payment of the Exercise Price in cash or by certified check or on a
"net basis" as set forth in Section 6 of the Agreement; and

         (c) this Warrant Certificate, properly indorsed.

Upon receipt thereof, the Company shall promptly execute or cause to be executed
and deliver to such Holder a certificate or certificates representing the
aggregate number of full shares of Common Stock issuable upon such exercise. The
stock certificate or certificates so delivered shall be registered in the name
of such Holder, or such other name as shall be designated in said notice. If the
exercise is for less than all of the shares of Common Stock issuable as provided
in the Warrant Certificate, the Company will issue a new Warrant Certificate of
like tenor and date for the balance of such shares issuable hereunder to the
Holder.

         4. Transfer. This Warrant Certificate and all options and rights
hereunder are transferable, as to all or any part of the number of shares of
Common Stock purchasable upon its exercise, in accordance with the Agreement.

         5. Registration Rights. If this Warrant Certificate represents a right
to purchase greater than _____ shares of Common Stock pursuant to the Agreement,
the Common Stock into which this Warrant Certificate is exercisable is subject
to registration rights as provided in the Registration Rights Agreement.

         6. Successors and Assigns. This Warrant Certificate and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Holder hereof and, shall be enforceable by any
such Holder.

<PAGE>   25

         7. Headings. Headings of the paragraphs in this Warrant Certificate are
for convenience and reference only and shall not, for any purpose, be deemed a
part of this Warrant Certificate.

         IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed and issued.

         DATED as of ___________, ____.

                                           STATE COMMUNICATIONS, INC.

                                           By:    ______________________________
                                           Name:  ______________________________
                                           Title: ______________________________

                                           ATTEST:

                                           By:    ______________________________
                                           Name:  ______________________________
                                           Title: ______________________________

CORPORATE SEAL:

<PAGE>   26

                                                                       Exhibit B

                  CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
                      REGISTRATION OF TRANSFER OF WARRANTS

Re:      _______ Warrants to Purchase Common Stock (the "Warrants") of State
         Communications, Inc.

         This Certificate relates to ________ Warrants held in _____ book-entry
or _____ definitive form by _______________ (the "Transferor"). The Transferor:

         [ ] has requested the Company by written order to exchange or register
the transfer of a Warrant or Warrant(s).

         In connection with such request and in respect of each such Warrant,
the Transferor does hereby certify that the Transferor is familiar with the
Warrant Agreement relating to the above captioned Warrants and that the transfer
of each such Warrant does not require registration under the Securities Act of
1933, as amended (the "Securities Act"), because:

         [ ] Each such Warrant is being acquired for the Transferor's own
account without transfer.

         [ ] Each such Warrant is being transferred (i) to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act), in
reliance on Rule 144A or (ii) pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act (and, in the case of clause
(ii), based on an opinion of counsel and written certification if the Company so
requests).

         [ ] Each such Warrant is being transferred (i) in accordance with Rule
144 under the Securities Act (and based on an opinion of counsel if the Company
so requests) or (ii) pursuant to an effective registration statement under the
Securities Act.

         [ ] Each such Warrant is being transferred in reliance on and in
compliance with another exemption from the registration requirements of the
Securities Act (and based on an opinion of counsel if the Company so requests).

                                           [INSERT NAME OF TRANSFEROR]

                                           By:    ______________________________
                                           Name:  ______________________________
                                           Title: ______________________________

Date:

<PAGE>   27

                                                                      Schedule 1

       OUTSTANDING OPTIONS, WARRANTS, CONVERTIBLE SECURITIES OR RIGHTS TO
                              ACQUIRE CAPITAL STOCK

[To be provided by State Communications]

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