Document:

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                                                                  EXHIBIT 10.1.3

                            SHAREHOLDERS AGREEMENT
                         COASTAL COMMUNICATIONS, INC.

          THIS SHAREHOLDERS AGREEMENT is made and entered into effective this
30th day of March, 2000, by and among Coastal Communications, Inc., a Delaware
corporation (the "Company"), and the persons indicated on Exhibit A hereto
                  -------                                 ---------
(individually a "Shareholder" and collectively the "Shareholders").
                 -----------                        ------------

                                   RECITALS
                                   --------

          WHEREAS, the Shareholders are collectively the owners of all the
issued and outstanding capital stock of the Company; and

          WHEREAS, the Company and the Shareholders wish to set forth the terms
and conditions under which the Series A and Series B Shareholders may sell to
the Company and the Company may purchase their Stock; and

          WHEREAS, the Company and the Shareholders wish to set forth the terms
and conditions under which the Company may pay dividends to the Shareholders;
and

          WHEREAS, the Company and the Shareholders realize that, in the event
of the sale, transfer or encumbrance of a Shareholder's stock in the Company,
should the stock of the Company owned by such Shareholder pass into the
ownership or control of a person or entity other than the remaining
Shareholders, it would tend to disrupt the harmonious and successful management
and control of the Company; and

          WHEREAS, it is the earnest desire of the Company and the Shareholders
to assure to the remaining Shareholders a succession to the ownership and
control of the Company through the acquisition of the stock of a Shareholder
prior to such Shareholder's sale or encumbrance of the stock held by such
Shareholder.

          NOW, THEREFORE, in consideration of the premises, the mutual promises
of the parties hereto and the mutual benefits to be gained by the performance
thereof, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company, for its successors and permitted
assigns, and the Shareholders, for themselves, their heirs, personal
representatives and permitted assigns, hereby agree as follows.

                                   ARTICLE I
                                  Definitions

          Whenever used in this Agreement, the following defined terms shall
have the meanings as set forth below in this Article:

1.01  "Affiliate" means any Person that, directly or indirectly, owns or
       ---------
Controls any other Person on an aggregate basis, including all beneficial
ownership and ownership or Control as a trustee, guardian or other fiduciary, or
that is controlled by or is under common control with such other Person.
<PAGE>

1.02  "Agreement" means this Shareholders Agreement and all schedules and
       ---------
exhibits hereto, if any, as from time to time hereafter further amended.

1.03  "Capital Contribution" means, with respect to a Shareholder, (i) any cash
       --------------------
or cash equivalents contributed to the Company with respect to such
Shareholder's Stock as provided herein, and (ii) the agreed fair market value,
net of liabilities secured by that contributed property that the Company is
considered to assume or to which such property is subject at the time of its
contribution to the Company, of any other property contributed to the capital of
the Company with respect to that Shareholder's Stock.

1.04  "Change of Control" means a sale of all or substantially all of the assets
      -------------------
and/or outstanding capital stock of MRTC and/or a merger in which MRTC is not
the surviving entity.

1.05  "Common Stock" means the Common Stock of the Company, no par value, which
       ------------
has the respective rights, preferences and restrictions specified with respect
to such Stock in this Agreement and the Certificate of Incorporation of the
Company.

1.06  "Closing Date" means the effective date on which the Company becomes the
       ------------
owner of more than fifty percent (50%) of all classes of stock of Coastal
Utilities, Inc., a Georgia corporation.

1.07  "Code" means the Internal Revenue Code of 1986, as amended and in effect
       ----
from time to time (and any corresponding provisions of succeeding law).

1.08  "Company" shall have the meaning set forth in the first paragraph of this
       -------
Agreement.

1.09  "Control" (including, with correlative meanings, the terms "controlled
       -------
by", "controlling" and "under common control with") means, as used with respect
to any Person, the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through ownership of voting securities, by contract or otherwise.

1.10  "Depository" shall have the meaning set forth in Section 4.07.
       ----------

1.11  "Determination Date" shall have the meaning set forth in Section 4.04.
       ------------------

1.12  "Entity" means any corporation, partnership, limited liability company,
       ------
trust or trustee on behalf of a trust, unincorporated organization, association
or other entity, whether foreign or domestic.

1.13  "Fiscal Year" means the calendar year.
       -----------

1.14  "IPO" means an initial sale pursuant to an underwriting registration filed
       ---
under the Securities Act of 1933, as amended, of equity securities of an Entity.

1.15  "Lifetime Option Period" shall have the meaning set forth in Section 4.01.
       ----------------------
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1.16  "Liquidation Event" shall have the meaning set forth in Section 5.02.
       -----------------

1.17  "MRC" means Madison River Capital, LLC, a Delaware limited liability
       ---
company, and any successor Entity thereof.

1.18  "MRTC" means Madison River Telephone Company, LLC, a Delaware limited
       ----
liability company, and any successor Entity thereof.

1.19  "Person" means an individual, a custodian for any individual under any
       ------
jurisdiction's Uniform Transfers to Minors Act or similar statute, a
guardianship or guardian on behalf of a guardianship, an estate, or an Entity.

1.20  "Risk Changing Event" means any of the following events occurring after
       -------------------
November 23, 1999:  (i) a change of control with respect to MRTC, the Company
(but only if such change in control results in one or more parties that are not
Affiliates of MRTC being in control of the Company), or Coastal Utilities, Inc.,
a Georgia corporation (other than the Company's acquisition of the stock
thereof); (ii) any sale of all or substantially all (as described in the
commentary to the Model Business Corporation Act) of the assets of MRTC and its
subsidiary Affiliates on a consolidated basis in one transaction or series of
related transactions (but excluding sales to Affiliates) for cash or marketable
securities; (iii) a merger, consolidation, unit exchange or other transaction
which accomplishes one or more of the foregoing; (iv) the issuance or the
refinancing of any publicly traded debt by MRTC; (v) the closing of an
additional acquisition of a business by MRTC, MRC or the Company for an
aggregate consideration in excess of fifty million dollars ($50,000,000); (vi)
an IPO of MRTC; (vii) an IPO of the Company; or (viii) the dissolution of the
Company.

1.21  "Securities Act" means the Securities Act of 1933, as amended.
       --------------

1.22  "Series A Call Right" shall have the meaning set forth in Section 3.06.
       -------------------

1.23  "Series A Exercise Price" means the amount to be paid to the Series A
       -----------------------
Shareholders upon the exercise of the Series A Call Right or the Series A Put
Right, which amount is more fully set forth on Exhibit B hereto.
                                               ---------

1.24  "Series A Put Right" shall have the meaning set forth in Section 3.07.
       ------------------

1.25  "Series A Shareholder" means any Shareholder owning Series A Stock.
       --------------------
"Series A Shareholders" means such Persons as a group.
----------------------

1.26  "Series A Stock" means the Series A Common Stock of the Company, no par
       --------------
value, which has the respective rights, preferences and restrictions specified
with respect to such Stock in this Agreement and the Certificate of
Incorporation of the Company.

1.27  "Series B Call Right" shall have the meaning set forth in Section 3.02.
       -------------------

1.28  "Series B Put Right" shall have the meaning set forth in Section 3.02.
       ------------------
<PAGE>

1.29  "Series B Shareholder" means any Shareholder owning Series B Stock.
       --------------------
"Series B Shareholders" refers to such Persons as a group.
 ---------------------

1.30  "Series B Stock" means the Series B Common Stock of the Company, no par
       --------------
value, which has the respective rights, preferences and restrictions specified
with respect to such Stock in this Agreement and the Certificate of
Incorporation of the Company.

1.31  "Series C Capital Contribution" means the amount of any Capital
       -----------------------------
Contributions made to the Company by a Series C Shareholder.

1.32  "Series C Dividends" means, with respect to a Series C Shareholder, an
       ------------------
amount equal to 15% per annum (prorated for any partial year), compounded
annually, of the Series C Shareholder's total Unreturned Series C Capital
Contribution, outstanding from time to time during the period to which the
Series C Dividend relates.  Series C Dividends shall accrue from and after the
Company's receipt of a Shareholder's Series C Capital Contribution.

1.33  "Series C Shareholder" means MRC.
       --------------------

1.34  "Series C Stock" means the Series C Common Stock of the Company, no par
       --------------
value, which has the respective rights, preferences and restrictions specified
with respect to such Stock in this Agreement and the Certificate of
Incorporation of the Company.

1.35  "Shareholder" shall have the meaning set forth in the first paragraph of
       -----------
this Agreement.

1.36  "Stock" shall have the meaning set forth in Section 2.01.
       -----

1.37  "Unpaid Series C Dividends" means, with respect to a Series C Shareholder,
       -------------------------
an amount equal to the excess, if any, of:  (i) that Shareholder's aggregate
accrued Series C Dividends, over (ii) the aggregate prior dividends paid to such
Shareholder by the Company that constitute a payment of Series C Dividends
pursuant to Section 5.01.

1.38  "Unreturned Series C Capital Contribution" means, with respect to a Series
       ----------------------------------------
C Shareholder on any day, an amount equal to the excess, if any, of:  (i) the
aggregate amount of Series C Capital Contributions made by or with respect to
such Shareholder's Series C Stock; over (ii) the excess, of any, of (A) the
aggregate amount of prior dividends and other distributions paid by the Company
with respect to such Shareholder's Series C Stock over (B) the aggregate amount
of Series C Dividends accrued with respect to such Shareholder's Series C Stock.

                                  ARTICLE II
                                   Ownership

      2.01  Ownership of Shares.  The authorized capital stock of the
            -------------------
Company consists of three thousand three hundred shares of no par value Common
Stock (the "Common Stock"), three hundred (300) shares of which is designated as
            ------------
Series A Common Stock (the "Series A Stock"), three hundred (300) shares of
                            --------------
which is designated as Series B Common Stock (the "Series B Stock") and two
                                                   --------------
thousand seven hundred (2,700) shares of which is designated as Series C Common
Stock (the "Series C Stock"), the issued and outstanding shares of which are
            --------------
owned as of the date hereof
<PAGE>

by the Shareholders as shown and set forth in Exhibit A attached hereto. Exhibit
                                              ---------                  -------
A shall be deemed automatically amended by the Shareholders to reflect any
-
subsequent transfers of stock by or to them, or to add new shareholders, as
permitted by this Agreement. The shares of the Company's stock now or hereafter
owned by the Shareholders sometimes shall collectively be referred to herein as
the "Stock."
     -----

          2.02  Compliance with Securities Laws; Endorsement of Stock
                -----------------------------------------------------
Certificates.  Shareholders may transfer Stock hereunder only upon compliance
------------
with the terms of this Agreement and only if (a) such stock is registered under
the Securities Act of 1933, as amended (the "Securities Act"), and all
                                             --------------
applicable state securities acts, or (b) an exemption from registration is
available and an opinion of counsel satisfactory to the Company to that effect
is obtained and the provisions of Section 4.03 hereof are satisfied.  Upon the
execution of this Agreement, the stock certificates held by each of the
Shareholders representing the shares of Stock owned by each of them, if not
already so endorsed, shall be surrendered to the Company for endorsement
substantially as follows.

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
          ACT AND MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE OF SUCH
          REGISTRATION UNLESS THE CORPORATION RECEIVES AN OPINION OF COUNSEL
          (WHICH MAY BE COUNSEL FOR THE CORPORATION) REASONABLY SATISFACTORY TO
          IT THAT SUCH TRANSFER MAY BE MADE IN COMPLIANCE WITH APPLICABLE
          FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS.

          THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
          AND PROVISIONS OF AN AGREEMENT AMONG THE CORPORATION AND CERTAIN OF
          ITS SHAREHOLDERS, AND ARE TRANSFERABLE ONLY IN ACCORDANCE WITH THE
          TERMS AND CONDITIONS OF SUCH AGREEMENT. A COPY OF SUCH AGREEMENT MAY
          BE EXAMINED IN THE OFFICE OF THE CORPORATION."

          After endorsement, the certificates shall be returned to the
Shareholders. Any and all stock certificates hereinafter governed by this
Agreement shall bear the same endorsement and shall be subject to the terms and
conditions of this Agreement.

                                  ARTICLE III
                                Put/Call Rights

          3.01  Transfer of Shares.  No Shareholder shall transfer, sell,
                ------------------
assign, encumber, pledge or in any way alienate any of the Stock, except as
provided herein.  Any transfer or encumbrance or attempted transfer or
encumbrance in violation of the terms of this Agreement shall be void and of no
force or effect whatsoever, and shall not transfer any interest in or title to
the purported transferee.  The Company shall not be required to transfer on its
books any Stock transferred in violation hereof or to treat as owner of such
Stock any transferee.  Notwithstanding the foregoing, any Shareholder may
transfer all or any part of his Stock in the Company to the trustee(s) of a
revocable trust agreement established by such Shareholder so long as (a) such
Shareholder retains the right to amend or revoke such revocable trust agreement
at any time, and (b) the trustee of such revocable trust agreement agrees in
writing to be bound by the terms of this Agreement.  All other
<PAGE>

transfers of the Stock must be approved by majority consent of the Series C
Shareholder, which approval shall not be unreasonably withheld.

          3.02  Series B Put/Call Rights Generally.  The Series B Stock shall
                ----------------------------------
carry certain rights whereby a holder of Series B Stock may require the Company
to purchase the Series B Stock (each a "Series B Put Right") and shall be
                                        ------------------
subject to certain provisions whereby a holder of Series B Stock may be required
to sell the Series B Stock (each a "Series B Call Right"), each as further
                                    -------------------
described in this Article III.  A Series B Put Right shall be exercised by the
Series B Shareholders giving written notice thereof to the Company, with a copy
to the holders of Series C Stock, in accordance with the provisions of Section
6.02.  A Series B Call Right shall be exercised by the Company's giving written
notice thereof to the Series B Shareholders in accordance with the provisions of
Section 6.02.  Upon valid exercise of a Series B Put Right or Series B Call
Right under this Article III, the Company shall pay cash to the Series B
Shareholders, in the amount of the put/call exercise price determined under this
Article III, by the date determined under Section 3.03; provided, however, the
                                                        --------  -------
Shareholders shall give any required notices to, make any filings with, and use
their best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with all puts and calls
exercised pursuant to this Agreement.

          3.03  Series B Put/Call Payment Date.
                ------------------------------

                (a)  If a Series B Put Right or a Series B Call Right under this
Article III is validly exercised within one (1) year after the Closing Date, the
Company shall pay cash to the Series B Shareholders, in an amount equal to the
put/call exercise price determined under Sections 3.04 or 3.05.  In the case of
the exercise of a Put Right, the price shall be paid on the first business day
(i.e., a day on which federally chartered banks in the States of North Carolina
and Georgia are open) after the second anniversary of the Closing Date.  In the
case of the exercise of a Call Right, the price shall be paid within ten (10)
days of the exercise of the Call Right.

                (b)  If a Series B Put Right or a Series B Call Right under this
Article III is validly exercised after the first anniversary of the Closing Date
but within two (2) years after the Closing Date, the Company shall pay cash to
the Series B Shareholders, in an amount equal to the put/call exercise price
determined under Sections 3.04 or 3.05.  In the case of the exercise of a Put
Right, the price shall be paid by the later of (i) the first business day (i.e.,
a day on which federally chartered banks in the States of North Carolina and
Georgia are open) after the second anniversary of the Closing Date, or (ii)
three (3) months following the exercise date.  In the case of the exercise of a
Call Right, the price shall be paid within ten (10) days of the exercise of the
Call Right.

                (c)  If a Series B Put Right or a Series B Call Right under this
Article III is validly exercised after the second anniversary of the Closing
Date, the Company shall pay cash to the Series B Shareholders, in an amount
equal to the put/call exercise price determined under Sections 3.04 or 3.05.  In
the case of the exercise of a Put Right, the price shall be paid by the later of
(i) December 31st following the exercise date or (ii) three (3) months following
the exercise date.  In the case of the exercise of a Call Right, the price shall
be paid within ten (10) days of the exercise of the Call Right.
<PAGE>

          3.04  Series B Put Rights.
                -------------------

                (a)  Prior to the second anniversary of the Closing Date, the
Series B Put Rights shall be exercisable by the Series B Shareholders only
during (i) the nine (9)-month period beginning on the day after the occurrence
of a "Risk Changing Event", or (ii) if such "Risk Changing Event" shall have
      -------------------
occurred after November 23, 1999, but before the Closing Date, then during the
nine (9)-month period beginning after the Closing Date. The put exercise price
for all of the Series B Stock, if the Series B Put Right is exercised during
this time period, shall be $35,000,000.

                (b)  Beginning on the day after the fourth anniversary of the
Closing Date, the Series B Put Right shall be exercisable by the Series B
Stockholders at any time. The put exercise price for all of the Series B Stock,
if the Series B Put Right is exercised during this time period, shall be
$60,000,000.

                (c)  The Series B Put Right may be exercised during a valid
exercise period under Sections 3.04(a) or (b) above only by the majority consent
of the Series B Shareholders, and the exercise of the Series B Put Right under
this Section 3.04(c) shall be binding on all Persons holding Series B Stock.

          3.05  Series B Call Right.
                -------------------

                (a)  On or prior to the first anniversary of the Closing Date,
the Series B Call Right shall be exercisable upon the majority consent of the
Series C Shareholder only upon an IPO of securities of MRTC, a successor Entity
thereto, or an Affiliate of MRTC holding a direct or indirect interest in the
Company. If the Series B Call Right is exercised during this time period, the
call exercise price shall be $35,000,000.

                (b)  For the period beginning on the day after the first
anniversary of the Closing Date and ending on the date that is four (4) years
after the Closing Date, the Series B Call Right shall be exercisable by majority
consent of the Series C Shareholder at any time. If the Series B Call Right is
exercised during this time period, but on or prior to the second anniversary of
the Closing Date, the call exercise price shall be $45,000,000; if the Series B
Call Right is exercised after the second anniversary, but on or prior to the
third anniversary of the Closing Date, the call exercise price shall be
$50,000,000; and if the Series B Call Right is exercised after the third
anniversary, but on or prior to the fourth anniversary of the Closing Date, the
call exercise price shall be $55,000,000.

                (c)  For the period beginning on the day after the fourth
anniversary of the Closing Date and ending on the date that is five (5) years
after the Closing Date, the Series B Call Right shall be exercisable by majority
consent of the Series C Shareholder only upon an IPO of securities of MRTC, a
successor Entity thereto, or an Affiliate of MRTC holding a direct or indirect
interest in the Company. If the Series B Call Right is exercised during this
time period, the call exercise price shall be $60,000,000.

                (d)  Beginning on the day after the fifth anniversary of the
Closing Date, the Series B Call Right shall be exercisable by majority consent
of the Series C Shareholder at any
<PAGE>

time. If the Series B Call Right is exercised during this time period, the call
exercise price shall be $60,000,000.

          3.06  Series A Call Right.  Subject to the payment conditions of
                -------------------
Section 3.08, the Company may at any time require all holders of Series A Stock
to sell their Series A Stock to the Company in redemption of the entire Series A
Stock (a "Series A Call Right") by the Company's making payment to the Series A
          -------------------
Shareholders of the Series A Exercise Price.  A Series A Call Right shall be
exercised by the Company's giving written notice thereof to the Series A
Shareholders in accordance with the provisions of Section 6.02.

          3.07  Series A Put Right.
                ------------------

                (a)  At any time after the fifth anniversary of the Closing
Date, the Series A Shareholders may require the Company to purchase all of the
Series A Stock (a "Series A Put Right"), as further described in this Article
                   ------------------
III. A Series A Put Right shall be exercised by the Series A Shareholders giving
written notice thereof to the Company, with a copy to the Series C Shareholder,
in accordance with the provisions of Section 6.02.  Upon the exercise of the
Series A Put Right, the Company shall redeem all of the Series A Stock by making
payment to the Series A Shareholders of the Series A Exercise Price.

                (b)  The Series A Put Right may be exercised during a valid
exercise period under this Section 3.07 only by the majority consent of the
Series A Shareholders, and the exercise of the Series A Put Right under this
Section 3.07(b) shall be binding on all Persons holding Series A Stock.

          3.08  Series A Put/Call Payment Date.
                ------------------------------

                (a)  If a Series A Call Right under Section 3.06 is validly
exercised within one (1) year after the Closing Date, the Company shall pay cash
to the Series A Shareholders, in an amount equal to the Series A Exercise Price
determined under Section 3.06, by the later of (i) December 31st following the
exercise date or (ii) three (3) months following the exercise date.

                (b)  If a Series A Call Right under Section 3.06 is validly
exercised after the first anniversary of the Closing Date but within two (2)
years after the Closing Date, the Company shall pay cash to the Series A
Shareholders, in an amount equal to the Series A Exercise Price determined under
Section 3.06, by the later of (i) the first business day (i.e., a day on which
federally chartered banks in the States of North Carolina and Georgia are open)
after the second anniversary of the Closing Date or (ii) three (3) months
following the exercise date.

                (c)  If a Series A Call Right under Section 3.06 is validly
exercised after the second anniversary of the Closing Date or if a Series A Put
Right under Section 3.07 is validly exercised after the fifth anniversary of the
Closing Date, the Company shall pay cash to the Series A Shareholders, in an
amount equal to the Series A Exercise Price determined under Section 3.06 or
Section 3.07, by the later of (i) December 31st following the exercise date or
(ii) three (3) months following the exercise date.

          3.09  Exercise of Put Upon Dissolution.  The Series C Shareholder may
                --------------------------------
voluntarily dissolve the Company by majority consent of the Series C Shareholder
(which, as provided in
<PAGE>

Section 1.19, shall be a Risk Changing Event), provided that prior to any such
voluntary dissolution, written notice thereof must be given to the Series A and
Series B Shareholders in accordance with the provisions of Section 6.02, and
such Series A and Series B Shareholders must be granted thirty (30) days from
the date of receipt of the written notice to exercise any put rights available
to them under this Agreement.

                                  ARTICLE IV
                                Other Transfers

          4.01  Manner of Transfer.  Except for permitted transfers under
                ------------------
Section 3.01 of this Agreement, in the event that any Shareholder, or the estate
of a deceased Shareholder, desires to sell, exchange or otherwise convey for
consideration, or give, assign, pledge or otherwise transfer all or any part of
such Shareholder's Stock, including a voluntary or involuntary transfer in
connection with equitable distribution or similar proceedings, such Shareholder
shall first offer in writing for the period ending thirty (30) days after the
date of notice (the "Lifetime Option Period") all of such Shareholder's Stock to
                     ----------------------
the Company; provided that, notwithstanding any prior acceptance of the offer by
             --------
the Company, it may reject the offer within five (5) days of the determination
of the purchase price pursuant to Section 4.04 hereof. The method for allocating
the shares to be purchased by the Company shall be as described in Section 4.02.

          If the Company does not accept such offer to purchase all such Stock
so offered, the remaining Shareholders shall have a thirty (30)-day right,
beginning on the later of the day after the expiration of the Lifetime Option
Period or the Company's express rejection of the offer following determination
of the purchase price, to purchase all such Stock.  This offer shall be at a
price and on terms determined in accordance with the provisions of Sections 4.04
and 4.05 hereof; provided that, notwithstanding any prior acceptance of the
                 --------
offer by the remaining Shareholders, they may reject the offer within five (5)
days of the determination of the purchase price pursuant to Section 4.04 hereof.

          If all such Stock is not accepted for purchase by the remaining
Shareholders or by the Company within said option periods, the Shareholder
desiring to sell or otherwise dispose of his Stock may sell or otherwise dispose
of such Shareholder's Stock to any other person or persons, but shall not sell
it for a lower price than that initially determined under Section 4.04 hereof
without first giving the remaining Shareholders the primary right, and the
Company a secondary right if the remaining Shareholders do not exercise their
primary right, for a period of thirty (30) days from notice of such right, to
purchase such Stock at the price and on the terms offered to such other persons.
Notwithstanding the forgoing, any transfer of Stock of the Company shall be
subject to the approval of the Series C Shareholder, which approval shall not be
unreasonably withheld.

          Any transfer in accordance with this Section 4.01 shall also be
subject to the conditions set forth in Section 4.03, below.

          4.02. Allocation of Shares among Purchasing Shareholders.  In the
                --------------------------------------------------
event any Stock is to be purchased by a group of Shareholders hereunder, such
Stock shall be purchasable by each Shareholder in the proportion that the shares
of Stock then owned by each such purchasing Shareholder bears to the shares of
Stock owned by all the remaining Shareholders (excluding the selling
Shareholder), unless otherwise mutually agreed among all remaining Shareholders.
If one or more of such Shareholders signify their intention to accept such
offer, and other Shareholders fail to
<PAGE>

accept such offer, then each of the accepting Shareholders shall have the right
to purchase all such Stock from the offeror, for a period of thirty (30) days
after the date the applicable option period otherwise would have expired (and
such option period shall automatically be extended by such thirty (30)-day
period), in the proportion that the shares of Stock then owned by such
purchasing Shareholder bears to the shares of Stock owned by all the purchasing
Shareholders, unless otherwise mutually agreed among all such purchasing
Shareholders.

          4.03  Transferee Restrictions.  Any transferee of Stock under this
                -----------------------
Agreement must become a "Shareholder" party to this Agreement by executing any
instruments or documents that may be deemed necessary or advisable by counsel to
the Company to make such transferee a party to this Agreement, or such transfer
shall be deemed null and void.

          4.04  Purchase Price for Stock.  The purchase price to be paid for
                ------------------------
Stock purchased according to this Agreement shall be the amount offered in
writing to be paid for such Stock by the unaffiliated purchaser.

          The determination date for the purpose of establishing the purchase
price hereunder shall be the date on which the transferring Shareholder offers
to transfer his stock to the remaining Shareholders, or the Company as the case
may be, according to Section 4.01 hereof (the "Determination Date").
                                               ------------------

          4.05  Terms of Payment.  In the event Stock shall be purchasable from
                ----------------
a Shareholder under Section 4.01 on account of the proposed sale of his Stock
during his lifetime or existence, the terms of sale of the Stock shall be the
terms offered in writing by the unaffiliated purchaser.

          4.06  Title to Stock Under Installment Payment.  Title to any Stock
                ----------------------------------------
subject to an installment payment shall be transferred to the purchaser(s).
However, until full payment of the purchase price of such Stock is made by the
purchaser(s), each purchaser shall at the closing of such purchase endorse the
share certificates for the Stock purchased by such purchaser in blank and
deposit such share certificates with the Depository, as hereinafter defined,
upon terms and conditions mutually acceptable to the seller, the purchaser and
the Depository as security for the obligations of the purchaser.  Nevertheless,
so long as a purchaser is not in default hereunder or under the obligations
relating to payment for the Stock, such Stock shall be voted by such purchaser,
and all regular dividends declared and paid on such Stock or distributions made
to the purchaser, shall be applied, first, on account of any interest that may
be due from such purchaser and, second, on account of installments of the
purchase price in the inverse order of maturity.  However, upon default of an
individual purchaser, and so long as a default of such individual purchaser
remains uncured, the transferring Shareholder or the personal representative of
the estate of a deceased Shareholder shall be permitted to vote such Stock, and
each purchaser shall execute at the time of transfer irrevocable proxies in
favor of the transferring Shareholder or the personal representative of the
estate of a deceased Shareholder to this effect.  In the event of any default by
an individual purchaser, the seller of such Stock may direct the Depository, as
hereinafter defined, to sell all such individual purchaser's Stock at public or
private sale on notice to such purchaser.  At such sale, the seller of such
Stock may become the purchaser of such Stock and apply on account of the bid
price any unpaid portion of the purchase price and interest due thereon.  From
the net proceeds of such sale, after the payment of all expenses of the
Depository and all expenses of the sale, there shall be paid to the seller the
unpaid portion of the purchase price and all interest due thereon, and any
excess shall be paid to the purchaser.  If there is any deficiency, the
purchaser shall
<PAGE>

remain liable to the seller. The foregoing remedy shall not be exclusive, and
the seller of such Stock may resort to any other legal as well as equitable
remedy available under the law.

          4.07  Closing of Purchase.  Within thirty (30) days following the
                -------------------
offer and acceptance of an offer to sell Stock in accordance with the provisions
of Article IV of this Agreement, or within thirty (30) days following the
exercise of any option or options to purchase the Stock of a Shareholder, as the
case may be, the purchaser(s) of such Stock shall tender the purchase price for
such Stock, to counsel designated by the Company (hereinabove and hereinafter
referred to as the "Depository"), and the transferring Shareholder or the
                    ----------
personal representative of a deceased Shareholder's estate, as the case may be,
shall deliver to the Depository:

                (a)  The certificate or certificates evidencing the Stock held
or owned by the transferor Shareholder either duly endorsed in blank or with
appropriate blank stock powers properly executed; and

                (b)  Any and all other documents that reasonably may be required
by the Company and remaining Shareholders in connection with the transfer of the
shares of the transferor.

          Upon receipt of such certificates and other documents, the Depository
shall deliver the purchase price for such Stock to the transferor of such Stock
and shall deliver the stock certificates to the purchaser(s), and shall
thereupon be relieved of any and all further duties hereunder.

          4.08  Indemnity of Transferring Shareholder.  The remaining
                -------------------------------------
Shareholders and the Company shall jointly and severally defend, indemnify and
hold harmless each Shareholder transferring shares hereunder to the remaining
Shareholders or to the Company from and against all claims, demands, suits,
obligations, liabilities, damages, losses and judgments, including out-of-pocket
costs and expenses and reasonable attorneys' fees incident thereto for which the
transferring Shareholder personally was a guarantor, pledgor, endorser or co-
signer and that were in any way connected with the debts and obligations of the
Company incurred in the ordinary course of business by the Company or upon
authorization of the Board of Directors of the Company.

                                   ARTICLE V
                           Dividends and Liquidation

          5.01  Dividends.  Dividends by the Company to and among the
                ---------
Shareholders, other than dividends in connection with the liquidation and
winding up of the Company, shall be in accordance with the provisions of this
Section 5.01.  Subject to any restrictions or limitations mandatorily imposed on
the Company by the Delaware General Corporation Law and any restrictions
contained in any financing agreements to which the Company or any of its
Affiliates is a party, the Board of Directors may, in its sole and absolute
discretion, cause the Company to pay dividends to the Shareholders at any time
and from time to time.  Any such dividends shall first be applied to the payment
to the Series C Shareholder(s) of an amount equal to the Unpaid Series C
Dividends, if any, as determined immediately prior to such dividends (which, if
there is more than one Shareholder having Unpaid Series C Dividends at such
time, shall be distributed among all such Shareholders in proportion to their
respective amounts, if any, of Unpaid Series C Dividends).  Any balance after
payment of the Unpaid Series C Dividends shall be paid ten percent (10%) to the
Series B Shareholders, to be paid among such Shareholders in proportion to
<PAGE>

their respective percentages of ownership of Series B Stock, and ninety percent
(90%) to the Series C Shareholder.

          5.02  Events Causing Liquidation.  The Company shall be liquidated
                ---------------------------
upon the first to occur of the following events (a "Liquidation Event"):
                                                    -----------------

                (a)  The sale or disposition of all or substantially all of the
assets (other than cash or cash equivalents) of the Company in a single
transaction or a series of related transactions, and the determination to
distribute all proceeds of any such transaction(s) in accordance with the terms
of this Agreement;

                (b)  The majority consent of the Series C Shareholder; provided,
                                                                       --------
that prior to any such liquidation, written notice thereof must be given to the
Series A and Series B Shareholders in accordance with the provisions of Section
6.02, and such Series A and Series B Shareholders must be granted thirty (30)
days from the date of receipt of the written notice to exercise any put rights
available to them under this Agreement; or

                (c)  The entry of a decree of judicial dissolution of the
Company by a court of competent jurisdiction.

          5.03  Liquidation.  Upon the occurrence of a Liquidation Event, the
                -----------
Board of Directors shall act as liquidator or may appoint another Person to act
as liquidator in the Board of Directors' sole discretion, which liquidator shall
be subject to the Board of Directors' direction and control.  The liquidator
shall proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and under Delaware law.  The costs of
liquidation shall be borne as a Company expense.  Until such distribution, the
liquidator shall continue to operate the Company, subject to the direction and
control of the Board of Directors.  The liquidator shall undertake the
following:

                (a)  as promptly as possible after dissolution and again after
final liquidation, the liquidator shall cause a proper accounting to be made, by
the Company's independent accountants, of the Company's assets, liabilities and
operations through the last day of the calendar month in which the liquidation
occurs or the final liquidation is completed, as applicable;

                (b)  the liquidator shall pay, satisfy or discharge from Company
funds all of the debts, liabilities and obligations of the Company or otherwise
make adequate provision for payment and discharge thereof (including, without
limitation, the establishment of a cash fund for contingent liabilities in such
amount and for such term as the liquidator may reasonably determine); and

                (c)  upon the payment of the debts, liabilities and obligations
of the Company, the liquidator shall distribute any balance to and among the
Shareholders as follows: so long as each Series of Stock shall be outstanding,
(1) 10% to the Series A Shareholders; (2) 20% to the Series B Shareholders; and
(3) 70% to the Series C Shareholder; provided, however, if any Series of Stock
                                     --------  -------
is not outstanding, then such balance shall be proportionately recalculated and
distributed among the remaining Series of Stock.  By way of example and not
limitation, if at the time of liquidation, the Series B Put Right has been
exercised, then the Series A Shareholders
<PAGE>

would be entitled to one-eighth of the balance that would have been paid to the
Series B Shareholder, with the Series A Shareholders receiving 12.5% and the
Series C Shareholder receiving 87.5%.

          5.04  Reasonable Time for Winding Up.  A reasonable time shall be
                ------------------------------
allowed for the orderly winding up of the business and affairs of the Company
and the liquidation of its assets pursuant to Section 5.03 in order to minimize
any losses otherwise attendant upon such winding up.

                                  ARTICLE VI
                                 Miscellaneous

          6.01  Term.  This Agreement shall continue as long as at least two (2)
                ----
of the Shareholders are living, organized and/or existing and own shares of
Stock.

          This Agreement shall terminate upon the occurrence of:

               (a)  The bankruptcy, receivership or dissolution of the Company;

               (b)  The sale of all the Stock covered by this Agreement to the
                    Company;

               (c)  Upon the written agreement of the Company and the
                    Shareholders holding at least sixty-six and two-thirds
                    percent (66-2/3%) of each Series of Stock to that effect; or

               (d)  The effective date of a Company firm commitment IPO (which,
                    as provided in Section 1.20, shall be a Risk Changing
                    Event); provided that prior to any such IPO, written notice
                            --------
                    thereof must be given to all Shareholders in accordance with
                    the provisions of Section 6.02, and the Shareholders shall
                    have thirty (30) days from the date of receipt of the
                    written notice to exercise any put or call rights available
                    to them under this Agreement.

          If and when all the Stock of a Shareholder shall have been transferred
in accordance with the terms and conditions of this Agreement, he or it shall
cease to be a party to this Agreement.

          6.02  Notices.  Any notice, offer, payment, demand, or other
                -------
communication required or permitted to be given by any provision of this
Agreement shall be deemed to have been delivered and given for all purposes (i)
if delivered personally to the party or to an officer of the party to whom the
same is directed or (ii) whether or not the same is actually received, if sent
by confirmed telecopy or telex or by registered or certified mail, return
receipt requested, postage and charges prepaid, or sent by Federal Express or
similar overnight national courier, addressed as follows:
<PAGE>

          If to the Company or MRC, at:

               103 South Fifth Street
               Mebane, North Carolina 27302
               Telecopy No.:  (919) 563-4993

          With a copy to:

               Madison River Capital, LLC
               103 South Fifth Street
               Mebane, North Carolina 27302
               Attention: Vice President and General Counsel
               Telecopy No.: (919) 563-4993

          If to any other Shareholder, as follows:

Daniel M. Bryant                                  G. Allan Bryant
P.O. Box 280                                      P.O. Box 899
Hinesville, Georgia 31310                         Allenhurst, Georgia 31301
Telecopy No.:______________                       Telecopy No.:_______________

The Michael E. Bryant Life Trust
c/o Thomas J. Ratcliffe, Jr.
P.O. Box 969
Hinesville, Georgia 31313
Telecopy No.:______________

     Notices shall be deemed to have been given as of the date delivered or
sent, if delivered personally or sent by telecopy or telex, or the first
business day following deposit with Federal Express or similar overnight
courier, or seven (7) days after the date on which the same was deposited in a
regularly maintained receptacle for the deposit of mail, addressed and sent as
set forth above.  Each party may change the address set forth above for notices
upon written notice to all other parties hereto.

     6.03 Waiver of Breach.  The waiver by any party hereto of a breach of any
          ----------------
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party.

     6.04 Delegation; Assignment.  Except as set forth in this Section, no party
          ----------------------
to this Agreement shall delegate or assign any duties or rights under this
Agreement without the prior written consent of all parties to this Agreement.
Any such delegation or assignment without the prior written consent of all
parties to this Agreement shall be void.  No such consent of the parties to this
Agreement shall release the party delegating or assigning duties or rights from
his duties hereunder and such party shall continue to be jointly and severally
liable with the person to whom he has delegated duties for all defaults and
breaches of this Agreement by either of them.  Notwithstanding the foregoing, if
a right arises in the Company to purchase any Stock, the Company may assign such
right to another person or entity, who need not be a Shareholder, and such
assignee may exercise the right of the Company hereunder with respect to such
purchase option as fully as the Company, subject to compliance with Section
4.03.
<PAGE>

     6.05 Binding Effect.  This Agreement shall inure to the benefit of, and be
          --------------
binding upon, the parties hereto, their heirs, personal representatives,
successors and permitted assigns, and said parties agree to execute any
instrument in writing that may be necessary or proper in the carrying out of the
purposes and intent of this Agreement.

     6.06 State Law.  This Agreement shall be subject to and shall be construed
          ---------
under the Delaware General Corporation Law and other laws of the State of
Delaware, without regard to conflicts of law provisions.

     6.07 Disputes; Deadlock; Arbitration.  If a dispute should arise under this
          -------------------------------
Agreement between two (2) or more parties, or if a Shareholder reasonably
determines that the Company is unable to act on any material matter due to an
irreconcilable conflict among the Shareholders having equal voting power, then
any such party may make a demand for binding arbitration before the American
Arbitration Association in accordance with its then applicable rules by filing a
demand, in writing, with the other party or parties.  Any such arbitration shall
take place in Atlanta, Georgia, and the hearing before the arbitrator(s) of the
matter to be arbitrated shall be at the time and place within such county as is
selected by the arbitrator(s).  A judgment confirming the award of the
arbitrator(s) may be rendered by any court having jurisdiction.  Except as
otherwise specifically allocated under this Agreement, the costs of such
arbitration shall be borne by the party whose last position prior to the
commencement of the arbitration is farthest away from the decision of the
arbitrator(s), or in such proportions as the arbitrator(s) shall determine.

     6.08 Specific Performance.  The parties acknowledge that the actual damage
          --------------------
that would be sustained upon breach of the stock transfer restrictions of this
Agreement by any of the parties hereto cannot be expressed in monetary terms
and, therefore, any party aggrieved by the breach or threatened breach of any
such provision shall be entitled to seek from any court of competent
jurisdiction an order for specific performance of all the terms and conditions
of this Agreement.

     6.09 Effect of Noncompliance.  In the event of any purported or attempted
          -----------------------
transfer of Stock that does not comply with the provisions of this Agreement,
the attempted transfer shall be null and void and the purported transferee shall
not be deemed to be a shareholder of the Company and shall not be entitled to
receive a new stock certificate or any dividends or other distributions on or
with respect to the Stock.  However, any such purported or attempted transfer of
Stock shall, in addition, be deemed to be an irrevocable offer to sell such
Stock to the Company and/or remaining Shareholders, which the Company and/or
remaining Shareholders may accept pursuant to and in accordance with the terms
of Section 4.01 hereof, except that such Shareholder attempting any such
transfer shall not be permitted to sell, assign, pledge, dispose or transfer
such Stock to any other person in the event the Company and/or remaining
Shareholders do not accept such offer except in accordance with Section 4.01
hereof.

     6.10 Entire Agreement.  This Agreement contains the entire understanding
          ----------------
among the parties with respect to the subject matter hereof and supersedes any
prior agreement between the parties hereto concerning the sale or exchange of
Stock of the Company and any prior agreement shall be rendered null and void
upon the execution of this Agreement.

     6.11 Additional Securities.   Except as otherwise provided herein, this
          ---------------------
Agreement shall apply with equal force to all shares of capital stock of the
Company that may be subsequently issued
<PAGE>

to the Shareholders, and furthermore, shall continue to apply to shares now
issued, notwithstanding any transfer of shares as contemplated herein.

     6.12 Severability.  The invalidity or unenforceability of any particular
          ------------
provision of this Agreement shall not affect the other provisions hereof, and
the Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.

     6.13 Purchase by the Company.  Notwithstanding any provision set forth in
          -----------------------
this Agreement to the contrary, in the event the Company purchases any stock
hereunder, all certificates evidencing the Stock so purchased shall be canceled
of record.

     6.14 Construction.  In the construction of this Agreement, the masculine
          ------------
gender shall include the feminine or the neuter in all cases where such meanings
would be appropriate. Any reference contained in this Agreement to specific
statutory or regulatory provisions or to specific governmental agencies or
entities shall include any successor statute or regulation, or agency or entity,
as the case may be. Unless otherwise specified, the references to "Section" and
"Article" in this Agreement are to the Sections and Articles of this Agreement.
When used in this Agreement, words such as "herein", "hereinafter", "hereof",
"hereto", and "hereunder" shall refer to this Agreement as a whole, unless the
context clearly requires otherwise. The use of the words "include" or
"including" in this Agreement shall be by way of example rather than by
limitation.

     6.15 Amendment.  This Agreement shall not be modified or amended, nor shall
          ---------
the operation of any provision hereof be waived, except (a) by a writing signed
by the party against whom enforcement is sought, or (b) by a writing signed by
the Shareholders holding at least sixty-six and two-thirds percent (66-2/3%) of
each Series of Stock, which modification or amendment shall be binding upon and
is hereby consented to by all Shareholders; provided, however, that no amendment
                                            --------  -------
shall affect the Put/Call Rights contained in Article III of this Agreement
without the written consent of the Shareholders.

     6.16 Counterparts.  This Agreement may be executed in counterparts, each of
          ------------
which shall be deemed an original hereof but all of which together constitute
one and the same instrument.

     6.17 Debt to Equity Ratio and Prohibition on Transfer of Stock of Coastal
          --------------------------------------------------------------------
Utilities, Inc.  The Company shall not increase the debt/equity ratio of Coastal
---------------
Utilities, Inc. ("CUI") above such ratio as existed on the Closing Date without
                  ---
the majority consent of each Series of Stock.  For purposes of calculating
debt/equity ratio as of the Closing Date, debt shall include all of CUI?s
committed long- and short-term debt, whether or not advanced as of the Closing
Date.  Except for existing pledges of the CUI stock to the Rural Telephone
Finance Cooperative (and pledges contemplated in connection with the closing of
the Company's purchase of all of the outstanding stock of CUI), for a period of
two (2) years from the Closing Date, the Company shall not create or permit any
lien, encumbrance, charge or security interest of any kind to exist on any of
the issued and outstanding stock of CUI.

                     [The next page is the signature page]
<PAGE>

     IN WITNESS WHEREOF, the Company and the Shareholders have executed this
Shareholders Agreement effective as of the day and year first above written.

                             COMPANY:
                             -------

                             COASTAL COMMUNICATIONS, INC.

                             By: /s/ PAUL H. SUNU
                                 --------------------------------
                             Name:   Paul H. Sunu
                                   ------------------------------
                             Title:  Chairman/CEO
                                    -----------------------------

                             SHAREHOLDERS:
                             ------------

                             MADISON RIVER CAPITAL, LLC

                             By: /s/ J. STEPHEN VANDERWOUDE
                                 --------------------------------
                             Name:   J. Stephen Vanderwoude
                                   ------------------------------
                             Title:  Manager
                                    -----------------------------

                              DANIEL M. BRYANT             (SEAL)
                             ------------------------------
                             Daniel M. Bryant

                              G. ALLAN BRYANT              (SEAL)
                             ------------------------------
                             G. Allan Bryant

                             MICHAEL E. BRYANT LIFE TRUST

                         By:  G. ALLAN BRYANT
                             --------------------------------------
                             Co-Trustee for Michael E. Bryant

                         By:  DANIEL M. BRYANT
                             --------------------------------------
                             Co-Trustee for Michael E. Bryant

                         By:  THOMAS J. RATCLIFFE, JR
                             --------------------------------------
                             Co-Trustee for Michael E. Bryant
<PAGE>

                                   Exhibit A
                                   ---------

                            SHAREHOLDERS AGREEMENT

                     ISSUED AND OUTSTANDING CAPITAL STOCK

                                     AS OF

                                March 30, 2000

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
    Name of Shareholder                   Address                       Number of Shares           Series of Stock
    -------------------                   -------                       ----------------           ---------------
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                            <C>                       <C>
Daniel M. Bryant                       P.O. Box 280                          100 Shares                  Series A
                                                                      ------------------------------------------------
                                       Hinesville, Georgia 31310             100 Shares                  Series B
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
G. Allan Bryant                        P.O. Box 899                          100 Shares                  Series A
                                                                      ------------------------------------------------
                                       Allenhurst, Georgia 31301             100 Shares                  Series B
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
The Michael E. Bryant                  c/o Thomas J. Ratcliffe, Jr.          100 Shares                  Series A
Life Trust                             P.O. Box 969
                                                                      ------------------------------------------------
                                       Hinesville, Georgia  31313            100 Shares                  Series B
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Madison River Capital,                 103 South Fifth Street               2,700 Shares                 Series C
LLC                                    Mebane, NC  27302
----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                                   Exhibit B
                                   ---------

                            SHAREHOLDERS AGREEMENT

                            SERIES A EXERCISE PRICE

     In the event the Company exercises the Series A Call Right pursuant to
Section 3.06 of the Agreement, the Company shall pay the Series A Shareholders
as follows: (i) on or before the first anniversary of the execution of the
Agreement, $11,000,000; (ii) after the first anniversary, and on or before the
second anniversary of the execution of the Agreement, $12,100,000; (iii) after
the second anniversary, and on or before the third anniversary of the execution
of the Agreement, $13,300,000; (iv) after the third anniversary, and on or
before the fourth anniversary of the execution of the Agreement, $14,600,000;
(v) after the fourth anniversary, and on or before the fifth anniversary of the
execution of the Agreement, $16,100,000; and (vi) anytime after the fifth
anniversary of the execution of the Agreement, $17,700,000.

     In the event the Series A Shareholders exercise the Series A Put Right
pursuant to Section 3.07 of the Agreement, the Company shall pay the Series A
Shareholders $17,700,000.<PAGE>

                                                                    EXHIBIT 10.2

                         AGREEMENT AND PLAN OF MERGER

                                BY AND BETWEEN

                     MADISON RIVER TELEPHONE COMPANY, LLC

                                      AND

                           GULF COAST SERVICES, INC.

                                  May 9, 1999
<PAGE>

                         AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER is made and entered into this 9th day of May,
1999 (the "Agreement Date"), by and between MADISON RIVER TELEPHONE COMPANY,
LLC, a Delaware limited liability company ("Buyer"), and GULF COAST SERVICES.
INC., an Alabama corporation ("GCSI"). Buyer and GCSI are hereinafter sometimes
referred to, collectively, as the "Parties".

     This Agreement contemplates a transaction in which Buyer will acquire for
cash all of the outstanding capital stock of GCSI through a reverse subsidiary
merger of Transitory Subsidiary (as defined below) with and into GCSI.

     NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.

                                   ARTICLE I
                                  DEFINITIONS

     "1999 Capital Budget" means GCSI and its Subsidiaries' 1999 Capital Budget
      -------------------
attached hereto as Exhibit A.

     "1999 Operating Budget" means GCSI and its Subsidiaries' 1999 Operating
      ---------------------
Budget attached hereto as Exhibit B.

     "Additional Merger Consideration" means the sum of (i) the Capital
      -------------------------------
Expenditures of GCSI made after the Agreement Date and on or prior to the
Effective Time not to exceed $10,000,000 and (ii) the Incentive Payment.

     "Adjusted Long Term Debt" means Long Term Debt less (i) the Employee Stock
      -----------------------
Ownership Plan loan guarantee, and (ii) cash and cash equivalents of GCSI and
its Subsidiaries in excess of $1,500, 000, determined on a consolidated basis
and in accordance with GAAP, consistently applied, as of the Effective Time.

     "Agreement" means this Agreement and Plan of Merger.
      ---------

     "Agreement Date" has the meaning set forth in the preface above.
      --------------

     "Alabama Business Corporation Act" means the Alabama Business Corporation
      --------------------------------
 Act, as codified at ALA. CODE (S) 10-2B- 1.01 et seq. (1994 Repl.).

     "Articles of Merger" has the meaning set forth in Section 2.4.
      ------------------

     "Audited Financial Statements" has the meaning set forth in Section 3.5.
      ----------------------------

     "Benefit Plans" has the meaning set forth in Section 3.20.
      -------------
<PAGE>

     "Business" means all telecommunications related businesses conducted by
      --------
GCSI and its Subsidiaries.

     "Buyer" has the meaning set forth in the preface above.
      ----

     "Capital Expenditures of GCSI" means amounts paid or disbursed by GCSI or
      ----------------------------
any of its Subsidiaries in connection with or for use in fiber projects.

     "Closing" has the meaning set forth in Section 2.3.
      -------

     "Closing Date" has the meaning set forth in Section 2.3.
      ------------

     "Code" means the Internal Revenue Code of 1986, as amended.
      ----

     "Confidential Information" means any information concerning the Business,
      ------------------------
GCSI or its Subsidiaries that is not already generally available to the public.

     "Contracts" has the meaning set forth in Section 3.16.
      ---------

     "Co-Trustees" 'has the meaning set forth in Sect on 7.2(a).
      -----------

     "Court Confirmation" has the meaning set forth in Section 7.2(a).
      ------------------

     "DigiPH" the meaning set forth in Article IM The Parties acknowledge that
      ------
DigiPH is not a Subsidiary of GCSI as defined in this Agreement.

     "DigiPH" Stock" has the meaning set forth in Article IX.
      ------

     "Disclosure Schedules" has the meaning, set forth in Article HI.
      --------------------

     "Dissenting Share" means any GCSI Share with respect to which the GCSI
      ----------------
Stockholder of record has exercised his or her or its appraisal rights under the
Alabama Business Corporation Act.

     "Effective Time" has the meaning set forth in Section 2.5(a).
      --------------

     "Environmental Law" means any federal, state or local law (including
      -----------------
statutes, regulations, ordinances, codes, rules, judicial opinions and other
governmental restrictions and requirements) relating to the discharge of air
pollutants, water pollutants, noise or odors, the processing of waste water or
otherwise relating to the environment or hazardous or toxic substances.

     "Equipment" has the meaning set forth in Section 3.9.
      ---------

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended.

                                       2
<PAGE>

     "ESOP" means the Gulf Telephone Company Employee Stock Ownership Plan.
      ----

     "ESOP Trustees" has the meaning set forth in Section 7.2(a).
      -------------

     "Financial Statements" has the meaning set forth in Section 3.5.
      --------------------

     "FCC" means the Federal Communications Commission.
      ---

     "Financing Commitments" has the meaning set forth in Section 4.2.
      ---------------------

     "GAAP" means United States generally accepted accounting principles as in
      ----
effect from time to time, subject to adjustments customary for the
telecommunications industry and, with respect to Interim Financial Statements,
year end and other consolidating adjustments.

     "GCSI" has the meaning set forth in the preface above.
      ----

     "GCSI Share" means a share of the issued and outstanding common stock,
      ----------
$1.00 par value per share, of GCSI.

     "GCSI Stockholder" means any Person who or which is the holder of record of
      ----------------
any GCSI Shares.

     "Governmental Entity" means any government or subdivision thereof, whether
      -------------------
domestic or foreign, or any administrative, governmental or regulatory
authority, agency, department, division, commission, court, tribunal or body,
whether domestic, foreign or multinational.

     "Hart-Scott-Rodino Act" means the Hart- Scott-Rodino Antitrust Improvements
      ---------------------
Act of 1976, as amended.

     "Hazardous Substance" means any toxic or hazardous, substance that is
      -------------------
regulated by or under the authority of any Environmental Law, including any
petroleum products, asbestos or polychlorinated biphenyls.

     "Incentive Plan" means a sum of up to $5,000,000 computed according to the
      --------------
following schedule:

<TABLE>
<CAPTION>
           Lighted Sheath Miles                             Amount of Incentive
           at the Effective Time                                  Payment
<S>                                                         <C>
                   0-900                                             -$0
                 901-1033                                         $3,500,000
                 1034-1149                                        $4,000,000
                 1150-1278                                        $4,500,000
              1279 and above                                      $5,000,000
</TABLE>

                                       3
<PAGE>

     For the purpose of this definition of Incentive Payment, a Lighted Sheath
Mile shall mean a mile of fiber optic cable owned by, or subject to an IRU in
the name of, GCSI or one of its Subsidiaries with respect to which all of the
components listed on Exhibit C have been installed with respect to two or more
strands and said strands are capable of transmitting and receiving data or other
information at an OC 48 rate.

     "Insurance Policies" has the meaning set forth in Section 3.26.
      ------------------

     "Intellectual Property" has the meaning set forth in Section 3.12(a)-
      ---------------------

     "Interim Financial Statements" has the meaning set forth in Section 3.5.
      ----------------------------

     "Inventory" has the meaning set forth in Section 3-11.
      ---------

     "Knowledge of Buyer" means the actual knowledge, without independent
      ------------------
investigation, of the officers of Buyer listed on Exhibit D.

     "Knowledge of GCSI" means the actual knowledge, without independent
      -----------------
investigation, of the officers of GCSI listed on Exhibit E.

     "Leases" has the meaning forth in Section 3.15.
      ------

     "Liens" mean mortgages, deeds of trust, pledges, liens, encumbrances,
      -----
charges or other security interests, other than (i) purchase money Liens and
Liens securing rental payments under capital lease arrangements and CH) other
Liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.

     "Long Term Debt" means Long Term Debt and Capital Lease Obligations,
      --------------
including the current portion, as reflected on the books and records of GCSI and
its Subsidiaries, determined on a consolidated basis and in accordance with
GAAP, consistently applied, as of the Effective Time; provided that Long Term
Debt shall include the outstanding principal balance owed pursuant to lines of
credit however reflected on said books, and records.

     "Material Adverse Effect" means, with respect to Buyer or Transitory
      -----------------------
Subsidiary or GCSI, as the case may be, a material adverse effect on (i) the
business, results of operations or financial condition of such party and its
Subsidiaries taken as a whole, other than any such effect attributable to or
resulting from (A) any change in law or any change in the rules or regulations
of or interpretations of law by the FCC, state public utility commissions or
other Governmental Entities, (B) any change in GAAP or regulatory accounting
principles, (C) any action or omission of GCSI or Buyer or any Subsidiary of
either of them taken with the express prior written consent of the other party
hereto, or (D) any expenses incurred by such party where such expenses are
contemplated by or reasonably incurred in connection with this Agreement or the
transactions contemplated hereby, or (ii) the ability of such party and its
Subsidiaries to consummate the transactions contemplated hereby.

     "Merger" has the meaning set forth in Section 2.2.
      ------

                                       4
<PAGE>

     "Merger Consideration" means the sum of (i) $310,000,000 reduced by (A)
      --------------------
Adjusted Long Term Debt as of the Closing Date and (B) unexpended and unincurred
capital budgeted items for fiber projects described in the 1999 Capital Budget
as of the Closing Date, (ii) the sales price of the Non-Business Real Estate as
provided in Section 6.10, and (iii) the sales price of the DigiPH Stock as
provided in Article IX.

     "Millry" has the meaning set forth in Article IX
      ------

     "Non-Business Real Estate" has the meaning set forth in Section 6. 10.
      ------------------------

     "Ordinary Course of Business" means the ordinary course of business
      ---------------------------
consistent with past custom and practice (including with respect to quantity and
frequency).

     "Party" has the meaning set forth in the preface above.
      -----

     "Paving Agent" has the meaning set forth in Section 2.6(a).
      ------------

     "Payment Fund" has the meaning set forth in Section 2.6(b).
      ------------

     "Permits" has the meaning set forth in Section 3.23.
      -------

     "Permitted Liens," means (i) Liens for taxes, assessments or other
      ---------------
governmental charges or levies not yet due, (ii) statutory Liens of landlords
and Liens of carriers, warehousemen, mechanics, materialsmen and other liens
imposed by law and created in the Ordinary Course of Business, (iii) Liens
(other than any Lien imposed by ERISA) incurred or deposits made in the Ordinary
Course of Business in connection with worker's compensation, unemployment
insurance or other types of social security, (iv) minor defects of title,
easements, rights-of-way, restrictions and other similar charges or encumbrances
not materially detracting from the value of the Real Property or interfering
with the ordinary conduct of the Business, (v) Liens arising out of liabilities
reflected on the Financial Statements, and (vi) those Liens, if any, listed on
Schedule 3.8.
------------

     "Person" means an individual, partnership, corporation, limited liability
      ------
company, association, joint stock company, trust, joint venture, unincorporated
organization or Governmental Entity.

     "Real Property" means any interest of whatever nature or kind, in real
      -------------
property owned by GCSI or its Subsidiaries or leased by GCSI or its Subsidiaries
as lessee, other than the Non-Business Real Estate.

     "Requisite Stockholder Approval" means the affirmative vote of the holders
      ------------------------------
of two-thirds (2/3) of the GCSI Shares in favor of this Agreement and the
Merger.

     "SEC" means the Securities and Exchange Commission.
      ---

                                       5
<PAGE>

     "Securities Act" means the Securities Act of 1933, as amended.
      --------------

     "Securities Exchange Act" means the Securities Exchange Act of 1934, as
      -----------------------
amended.

     "Software" means all material computer software used by GCSI or its
      --------
Subsidiaries in the conduct of the Business.

     "Official Meeting" has the meaning set forth in Section 6.3(a).
      ----------------

     "Stockholder Materials" has the meaning set forth in Section 6.3 (a).
      ---------------------

     "Subsidiary" means any corporation, partnership, limited liability company
      ----------
or other business entity with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the ownership interests therein or has
the power to vote or direct the voting of sufficient securities thereof to elect
a majority of its directors or other persons performing similar functions.

     "Surviving Corporation" has the meaning set forth in Section 2.2.
      ---------------------

     "Surviving Obligations" has the meaning set forth in Section 8.4.
      ---------------------

     "Third-Party Consideration" has the meaning set forth in Section 6.8.
      -------------------------

     "Topping Fee" the meaning set forth in Section 6.8.
      -----------

     "Trademarks" has the meaning set forth in Section .3.12(a).
      ----------

     "Transitory Subsidiary" mean an Alabama corporation to be formed by Buyer
      ---------------------
as provided in Section 2.1 which shall be merged with and into GCSI on and
subject to the terms and conditions of this Agreement.

                                  ARTICLE II
                                PLAN OF MERGER

     2.1  Formation of Transitory Subsidiary. Buyer shall organize a wholly
owned subsidiary corporation under the Alabama Business Corporation Act
"Transitory Subsidiary") to be merged with and into GCSI as set forth in
-----------------------
Section 2.2. Transitory Subsidiary will be formed solely to facilitate solely
the Merger and will conduct no business or activity it other than in connection
with the Merger.

     2.2  Merger. On and subject to the terms and conditions of this Agreement,
Transitory Subsidiary will merge with and into GCSI (the "Merger") at the
Effective Time. GCSI shall be the corporation surviving the Merger (the
"Surviving Corporation").

     2.3  Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the Magnolia Hotel, Foley,
Alabama, or such other place as the

                                       6
<PAGE>

Parties may mutually determine, commencing at 9:00 a.m. local time on such day
as shall be mutually agreed to by the Parties following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself (the "Closing Date");
provided, however, that the Closing Date shall be no later than September 30,
                            ------------
1999.

     2.4  Actions at Closing. At the Closing, (i) GCSI will deliver to Buyer the
various certificates, instruments and documents referred to in Section 7.1, (ii)
Buyer will deliver to GCSI the various certificates, instruments and documents
referred to in Section 7.2, (iii) Buyer will cause Transitory Subsidiary to
transfer the fun6 identified in clause (i)(A) of Section 2.6(b) to Paying Agent,
(iv) GCSI shall transfer the funds identified in clause (i)(B) of Section 2.6(b)
to Paying Agent, and (v) GCSI and Transitory Subsidiary shall cause Articles of
Merger in form and substance reasonably satisfactory the Parties (the "Articles
                                                                       --------
of Merger") to be filed with the Secretary of State of the State of Alabama.
---------

     2.5  Effect of Merger.

          (a)  General.  The Merger shall become effective at the time (the
               -------
"Effective Time") the Articles of Merger filed by GCSI and Transitory Subsidiary
with the Secretary of State of the State of Alabama become effective. The Merger
shall have the effect set forth in the Alabama Business Corporation Act. The
Surviving Corporation may, at any time after the Effective Time, take any action
(including executing and delivering any document) in the name and on behalf of
either GCSI or Transitory Subsidiary in order to carry out and effectuate the
transactions contemplated by this Agreement.

          (b)  Articles of Incorporation.  The Articles of Incorporation of GCSI
               -------------------------
as in effect at the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation.

          (c)  Bylaws.  The Bylaws of GCSI as in effect at the Effective Time
               ------
shall be the Bylaws of the Surviving Corporation.

          (d)  Directors and Officers.  The directors and officers of Transitory
               ----------------------
Subsidiary holding office at and as of the Effective Time shall be the directors
and officers of the Surviving Corporation (retaining their respective positions
and terms of office).

          (e)  Conversion of QQSI Shares.  At and as of the Effective Time, (i)
               -------------------------
each GCSI Share (other than any Dissenting Share) shall be converted into the
right to receive a prorata share (based on the number of issued and outstanding
GCSI Shares immediately before the Effective Time) of the Merger Consideration
and the Additional Merger Consideration and (ii) each Dissenting Share shall be
converted into the right to receive payment from the Surviving Corporation with
respect thereto in accordance with the provisions of the Alabama Business
Corporation Act. No GCSI Share shall be deemed to be outstanding or to have any
rights other than those set forth above in this Section 2.5(e) after the
Effective Time.

                                       7
<PAGE>

          (f)  Conversion of Capital Stock of Transitory Subsidiary.  At and
               ----------------------------------------------------
as of the Effective Time, each share of common stock, $0.01 par value per share,
of Transitory Subsidiary shall be converted into one share of common stock,
$1.00 par value per share, of the Surviving Corporation.

     2.6  Procedure for Payment

          (a)  Letter of Transmittal.  Prior to the Closing, Buyer will cause
               ---------------------
Regions Bank ("Paying Agent") to mail or otherwise deliver a letter of
               ------------
transmittal (with instructions for its use) in form and substance reasonably
satisfactory to the Parties to each GCSI Stockholder for such GCSI Stockholder
to use in surrendering the certificates which represented his, her or its GCSI
Shares against payment of the Merger Consideration and the right to receive
Additional Merger Consideration.

          (b)  Establishment of Payment Fund. Immediately prior to the Effective
Time, (i) Buyer will cause Transitory Subsidiary transfer to Paying Agent
pursuant to a paying agent agreement in form and substance reasonably
satisfactory to the Parties, immediately available funds in amounts equal to (A)
the Merger Consideration, less the portion thereof to be paid by GCSI pursuant
to subclause (B) of this clause (i), and (B) the Additional Merger Consideration
as estimated by GCSI, the computation of which has been reported to Buyer in
writing at least two (2) business days prior to the Closing, and (ii) GCSI shall
transfer to Paying Agent immediately available funds in an amount equal to the
aggregate sales prices of the Non-Business Real Estate and the DigiPH Stock
(collectively, the "Payment Fund").

          (c)  Investment of Payment Fund.  Buyer may cause Paying Agent to
               --------------------------
invest the cash included in the Payment Fund in one or more permitted
Investments reasonably satisfactory to the Parties; provided, however, that the
terms and conditions of the investments shall be such as to permit Paying Agent
to make prompt payment of the Merger Consideration and the Additional Merger
Consideration as necessary. Buyer may cause

     Paying Agent to pay over to the Surviving Corporation any net earnings with
respect to the investments, and Buyer will cause the Surviving Corporation to
replace promptly any portion of the Payment Fund which Paying Agent loses
through investments. No interest will accrue or be paid to any holder of GCSI
Shares.

          (d)  Payment of Merger Consideration.  (i) Upon surrender to Paying
               -------------------------------
Agent of the certificate(s) representing GCSI Shares (other than Dissenting
Shares), Paying Agent shall pay to the GCSI Stockholder surrendering such
certificate(s) a prorata share (based on the number of issued and outstanding
GCSI Shares immediately prior to The Effective Time) of the sum of (A) the
Merger Consideration and (B) the estimated Capital Expenditures of GCSI made
after the Agreement Date and on or prior to the Effective Time not to exceed
$10,000,000.00, for each GCSI Share represented by the surrendered
certificate(s), which amount shall be paid by Paying Agent within one (1)
business day of its receipt of the surrendered certificate(s) by bank check or
other immediately available funds, and (ii) upon receipt of a disbursement
notice signed by Buyer and Marjorie Y. Snook, anticipated to be not later than
fifteen (15) days after the Closing, the Paying Agent shall pay to each GCSI
Stockholder that has previously surrendered,

                                       8
<PAGE>

or subsequently surrenders, such certificate(s) (other than certificates
representing Dissenting Shares) a prorata share (based on the number of issued
and outstanding GCSI Shares immediately prior To the Effective Time) of the
estimated Incentive Payment, reduced by any overestimate, or increased by any
underestimate, of Capital Expenditures of GCSI made after the Agreement Date and
on or prior to The Effective Time, as reflected in said joint disbursement
notice, for each GCSI Share represented by the surrendered certificate(s), which
amount shall be paid by Paying Agent within one (1) business day of receipt of
the joint disbursement notice or, in the case of a subsequently surrendered
certificate, within one (1) business day of its receipt of the subsequently
surrendered certificate, by bank check or other immediately available funds.

          (e)  Return of Unpaid Payment Fund.  Buyer may cause Paying Agent to
               -----------------------------
pay over to the Surviving Corporation any portion of the Payment Fund (including
any earnings thereon) remaining unpaid one hundred eighty (180) days after the
Effective Time, and thereafter all former GCSI Stockholders shall look to the
Surviving Corporation for payment of the Merger Consideration and the Additional
Merger Consideration (subject to abandoned property, escheat and other similar
laws).

          (f)  Expenses of Paving Agent.  Buyer shall cause the Surviving
               ------------------------
Corporation to pay all charges and expenses of Paying Agent.

     2.7  Closing of Transfer Records.  After the Effective Time, transfers of
GCSI Shares outstanding prior to the Effective Time shall riot be made on the
stock transfer books of the Surviving Corporation.

                                  ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF GCSI

     GCSI represents and warrants to Buyer that the statements contained in this
Article III are correct and complete as of the Agreement Date and will be
correct and complete as of the Closing Date (as though made them and as though
the Closing Date were substituted for the Agreement Date throughout this Article
III), except as set forth in the disclosure schedules identified in this Article
III and to be delivered by GCSI to Buyer within thirty (30) days after the
Agreement Date (the "Disclosure Schedules"). The numbering of the Disclosure
                     --------------------
Schedules will correspond to the numbered paragraphs contained in this Article
III.

     3.1  Organization, Qualification, and Corporate Power.  GCSI is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Alabama. Schedule 3.1 shall contain a list of GCSI's
Subsidiaries. Each Subsidiary of GCSI is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization. GCSI and
each of its Subsidiaries are duly authorized to conduct business and are in good
standing under the laws of each jurisdiction in which the character and location
of their respective properties or the nature of their respective businesses
require qualification, except where the lack of such qualification would not
have a Material Adverse Effect. GCSI and each of its Subsidiaries have full
corporate power and authority to own their respective properties and to carry on
that portion of the Business they presently are conducting.

                                       9
<PAGE>

     3.2  Capitalization; Constituent Documents.  The entire authorized capital
of GCSI consists of 100,000 shares of common stock, S1.00 par value per share,
92,410 shares of which are issued and outstanding and constitute the GCSI
Shares. All of the GCSI Shares have been duly authorized and are validly issued,
fully paid and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other contracts or commitments that could require GCSI or any of its
Subsidiaries to issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to GCSI or
any of its Subsidiaries. True and complete copies of the Articles of
Incorporation and all amendments thereto, the bylaws as amended and currently in
force, all stock records and all corporate minute books and records of GCSI and
each of its Subsidiaries have been furnished for inspection by Buyer. Such stock
records accurately reflect all share transactions and the current stock
ownership of GCSI and each of its Subsidiaries. The corporate minute books and
records of GCSI and its Subsidiaries contain true and complete copies of all
resolutions adopted by the stockholders or the board of directors of GCSI and
its Subsidiaries, and any other action formally taken by GCSI and its
Subsidiaries.

     3.3  Authorization of Transaction.  The execution, delivery and performance
of this Agreement by GCSI has been duly authorized and approved by GCSI's board
of directors. GCSI has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to perform its
obligations hereunder, provided, however, that GCSI cannot consummate the Merger
unless and until it receives the Requisite Stockholder Approval. This Agreement
constitutes the valid and legally binding obligation of GCSI, enforceable in
accordance with its terms and conditions.

     3.4  Noncontravention.  Except as shall be set forth on Schedule 3.4, to
the Knowledge of GCSI, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge or other restriction of any Governmental Entity to which
any of GCSI or its Subsidiaries is subject or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice or consent under any agreement, contract, lease, license, instrument or
other arrangement to which GCSI or any of its Subsidiaries is a party, by which
GCSI or any of its Subsidiaries is bound or to which any of their assets are
subject (or result in the imposition of any Lien upon any of their assets),
except where the violation, conflict, breach, default acceleration, termination,
modification, cancellation, failure to give notice or Lien would not have a
Material Adverse Effect. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will violate any
provision of the charter or bylaws (or similar governing documents) of GCSI or
any of its Subsidiaries. To the Knowledge of GCSI, and other than in connection
with (i) the provisions of the Hart-Scott-Rodino Act, the Alabama Business
Corporation Act, the Securities Act, the Securities Exchange Act and state
securities laws, (ii) the necessary notices to and approvals or consents, if
any, of the FCC, and (iii) the necessary notices to and approvals and consents,
if any, of state public utility commissions or similar state regulatory bodies
pursuant to applicable state laws regulating the telephone, commercial mobile
radio service or other telecommunications business, none of GCSI or its
Subsidiaries are required

                                       10
<PAGE>

to give notice to, file with or obtain authorization, consent or approval of any
Governmental Entity in order for GCSI to perform its obligations under this
Agreement, except where the failure to give such notice, to file or to obtain
such authorization, consent or approval would not have a Material Adverse
Effect.

     3.5  Financial Statements.  GCSI has heretofore furnished or shall furnish
Buyer with true and complete copies of (i) the audited, consolidated financial
statements of GCSI and its Subsidiaries for fiscal years ended December 31,
1996, 1997 and 1998, consisting of the balance sheet at such dates and the
related statements of income, stockholders' equity and cash flow for said
periods, opined upon by Ernst & Young, LLP, GCSI's independent public
accountants (the "Audited Financial Statement"), and (ii) the unaudited
                  ---------------------------
financial statements of GCSI and its Subsidiaries for the two month period ended
February 28, 1999 (the "Interim Financial Statements") (the Audited Financial
                        ----------------------------
Statements and the Interim Financial Statements are hereinafter referred to,
collectively, as the "Financial Statements"). Except as disclosed therein, the
                      --------------------
Financial Statements present fairly, in all material respects, the financial
position and operating results of GCSI and its Subsidiaries as of the dates, and
during the periods, indicated therein, and were prepared in accordance with GAAP
consistently applied during such periods. Notwithstanding the foregoing, the
occurrence of any event or action, or the incurring of any claim or liability,
that adversely affects the financial position or operating results of GCSI or
its Subsidiaries as of the dates, and during the periods, covered by, and as
presented in, the Financial Statements shall not constitute a breach of or an
inaccuracy in this Section 3.5 if said event, action, claim or liability is the
subject of or is covered by another Section within this Article III (e.g.,
litigation is the subject of and is covered by Section 3.19) and the occurrence
or incurring thereof does not constitute a breach of or inaccuracy in such other
Section.

     3.6  Absence of Changes.  Except as shall be set forth on Schedule 3.6 and
                                                               ------------
as contemplated hereby, since February 28, 1999, (i) none of GCSI or its
Subsidiaries have entered into any transaction that was not in the Ordinary
Course of Business; (ii) except for sales of goods and services in the Ordinary
Course of Business, the sale, or proposed sale, of the Non-Business Real. Estate
and the sale or otherwise transfer, or proposed sale or other transfer, of the
DigiPH Stock, there has been no sale, assignment, transfer, mortgage, pledge,
encumbrance or lease of any material asset or property of GCSI or any of its
Subsidiaries; (iii) there has been no declaration or payment of a dividend, or
any other declaration, payment or distribution of any type or nature to GCSI
Stockholders in respect of their GCSI Shares, whether in cash or property, and
no purchase or redemption of any GCSI Share; (iv) there has been no declaration,
payment or commitment for the payment, by GCSI or any of its Subsidiaries, of a
bonus or other additional salary, compensation or benefit to any employee of
GCSI or any of its Subsidiaries that was not in the Ordinary Course of Business;
(v) there has been no release, compromise, waiver or cancellation of any
material debt to, claim by, or right of GCSI or any of its Subsidiaries that was
not in the Ordinary Course of Business; (vi) there have been no capital
expenditures by GCSI or any of its Subsidiaries in excess of $100,000 for any
single item, or $500,000 in the aggregate, that were not included in the 1999
GCSI capital or operating budgets; (vii) there has been no change in accounting
methods or practices or revaluation of any asset of GCSI or any of its
Subsidiaries (other than accounts receivable written down in the Ordinary Course
of Business); (viii) there has been no material damage, destruction to or loss
of, physical property adversely affecting the Business taken as a whole; (ix)
there has been no material loan

                                       11
<PAGE>

by GCSI or any of its Subsidiaries, or guaranty by GCSI or any of its
Subsidiaries of any loan, to any employee of GCSI or any of its Subsidiaries;
(x) none of GCSI or its Subsidiaries have ceased to transact business with any
customer that, as of the date of such cessation, represented more than five
percent (5%) of the annual gross revenues of GCSI; (xi) to the Knowledge of
GCSI, there has been no amendment or termination of any material oral or written
contract, agreement or license to which GCSI or any of its Subsidiaries is a
party or by which any of them are bound, except in the Ordinary Course of
Business, or except as expressly contemplated hereby; (xii) none of GCSI or its
Subsidiaries have failed to satisfy any of its debts, obligations or liabilities
related to the assets of GCSI as the same became due and payable (except for
accounts payable which are paid in accordance with past practices and in the
Ordinary Course of Business); and (xiii) there has been no agreement or
commitment by GCSI or any of its Subsidiaries to do any of the foregoing.

     3.7  Undisclosed Liabilities.  To the Knowledge of GCSI, none of GCSI or
its Subsidiaries has any debt, liability or obligation, whether accrued,
absolute or otherwise, including any liability or obligation on account of taxes
or any governmental charge or penalty, interest or fine, except (i) as shall be
set forth on Schedule 3.7, (ii) debts, liabilities and obligations incurred in
             ------------
the Ordinary Course of Business after February 28, 1999, that would not have a
Material Adverse Effect, (iii) liabilities reflected on the Financial
Statements, and (iv) those debts, liabilities or obligations incurred as a
result of the transactions contemplated hereby. Notwithstanding the foregoing,
no debt, liability or obligation shall constitute a breach of or an inaccuracy
in this Section 3.7 if said debt, liability or obligation is the subject of or
is covered by another Section within this Article III (e.g., litigation is the
subject of and is covered by Section 3.19) and the existence of said debt,
liability or obligation does not constitute a breach of or inaccuracy in such
other Section.

     3.8  Title to Properties.  Except as shall be set forth on Schedule 318,
GCSI and each of its Subsidiaries has good and marketable title to all its real
and tangible personal property and assets used in the Business, and good and
valid title to its leasehold interests, in each case free and clear of any and
all Liens other than Permitted Liens. The existence of mortgages, encumbrances
and other Liens, other than those expressly set forth in this Agreement, shall
not be objections to title, provided that properly executed instruments, in
recordable form, necessary to satisfy the same are delivered to Buyer at
Closing.

     3.9  Equipment, etc.  GCSI has heretofore furnished Buyer with a list of
all items of tangible personal property (including computer hardware) used in
the operation of the Business in the manner in which it is now operated by GCSI
and its Subsidiaries (the "Equipment"), except for items of personal property
                           ---------
having a net book value of less than $1,000. Except as shall be set forth on
Schedule 3.9, the Equipment, in the aggregate, is in satisfactory condition and
-------------
repair, ordinary wear and tear excepted, so as to operate the Business in the
manner in which it is now operated by GCSI and its Subsidiaries.

     3.10 Receivables.  All of the trade receivables and notes receivable which
are reflected on the Financial Statements or which arose subsequent to the date
of the Interim Financial Statements, arose out of bona fide, arms-length
transactions and, to the Knowledge of GCSI, all such receivables are good and
collectible (or have been collected) in the Ordinary Course of

                                       12
<PAGE>

Business in accordance with their terms, and at the aggregate recorded amounts
thereof using normal collection practices, less the amount of applicable
reserves for doubtful accounts and for allowances and discounts. To the
Knowledge of GCSI, all such reserves, allowances and discounts were and are
adequate.

     3.11 Inventory.  To the Knowledge of GCSI, all inventory of GCSI and its
Subsidiaries which is held for sale or resale (the "Inventory") consists of
                                                    ---------
items of a quantity and quality historically useable and/or saleable in the
Ordinary Course of Business, except for items of obsolete and slow-moving
material and materials which are below standard quality, all of which have been
written down on the Financial Statements to estimated net realizable value in
accordance with GAAP.

     3.11 Intellectual Property.

          (a)  List of Intellectual Property.  Schedule 3.12 shall identify all
               ------------------------------  -------------
of the following which are used in the Business or in which GCSI or any of its
Subsidiaries claims any ownership rights: (i) all trademarks, service marks,
trade names, trade dress and the like, including all common law marks
(collectively, together with the associated goodwill of each, "Trademarks")
                                                               ----------
together with the information regarding all registrations and pending,
applications to register any such rights; (ii) all patents or the pending
applications to patent any technology or design; (iii) all copyrights and all
registrations of and applications to register copyrights; and (iv) all licenses
of rights in Trademarks, patents, copyrights and other intellectual property,
whether to or by GCSI or any of its Subsidiaries. The rights required to be so
identified, together with all licenses of rights in computer software and all
proprietary know how and trade secrets which are material to GCSI, any of its
Subsidiaries or the Business, are referred to herein collectively as the
"Intellectual Property."
-----------------------

          (b)  Ownership of Intellectual Property.  GCSI or one of its
               ----------------------------------
Subsidiaries is the owner of, or duly licensed to use the Intellectual Property,
and the Intellectual Property exists and has been maintained in good standing.
No third party has asserted ownership rights in any of the Intellectual Property
(except to the extent that such Intellectual Property has been properly licensed
to or by GCSI or one of its Subsidiaries). To the Knowledge of GCSI none of
GCSI's or its Subsidiaries' use of the Intellectual Property infringes any right
of any third party, nor is any third party infringing on GCSI's or its
Subsidiaries' tights in the Intellectual Property.

          (c)  Computer Software.  GCSI bas heretofore furnished Buyer with a
               -----------------
list of all Software. GCSI or one of its Subsidiaries currently licenses, or
otherwise has the legal right to use, all of the Software (including any upgrade
alteration or enhancement with respect thereto), and to the Knowledge of GCSI,
all of the Software is being used in compliance with applicable licenses or
other agreements.

     3.13 Year 2000.  G-CSI has developed a Year 2000 readiness assessment and
remediation plan consisting of the following three (3) phases: (i) developing an
inventory of systems and equipment that may be affected by the Year 2000 date
change, (ii) assessment and (iii) remediation. The first phase has been
completed and involved developing an inventory of all information technologies
and non-information technologies systems, software and business

                                       13
<PAGE>

infrastructure systems and equipment that may be affected by the Year 2000 date
change. External parties, including customers, suppliers and service providers,
with which GTCS1 interacts and which may have Year 2000 readiness issues were
also identified. The second phase has also been completed and involved risk and
impact assessment, selection of appropriate remediation methods and
resource/cost assessment for compliance. This phase included contacting
suppliers or manufacturers for information regarding their Year 2000 readiness,
technical review of systems and compliance testing. The necessary actions to
bring each item into compliance were determined and remediation costs were
estimated. The third phase involves remediation for items found to be non-Year
2000 compliant. This phase includes replacement of equipment or upgrading
software or hardware and communications with GCSI's customers, suppliers and
service providers to determine Year 2000 issues as appropriate. Verification
testing has been, or will be, done to ensure the effectiveness of the
remediation efforts. Capital assets found to be non-compliant have been, or will
be, replaced or remediated in this phase. This phase is expected to be completed
by October, 1999. GCSI has estimated that the total cost of upgrading, replacing
and remediating its information technologies and non-information technologies
systems, software and business infrastructure systems and equipment is
approximately $7,500,000. These costs include Year 2000 remediation, integration
of business processes between operating companies and increasing capacity due to
projected growth of GCSI's services GCSI believes that these costs result from
adding additional system capacity and functionality, and that they are
capitalizable under GAAP. GCSI believes, based on currently available
information, that it will be able to properly manage its total Year 2000
exposure. There can be no assurance, however, that GCSI will be successful in
its effort or that the computer systems of other Persons on which GCSI relies
will be modified in a timely manner. Additionally, there can be no assurance
that a failure to modify such systems by another Person, or modifications that
are incompatible with GCSI's systems, would not have a Material Adverse Effect.
As a contingency plan to the Year 2000 plan, GCSI is investigating outsourcing
to third parties critical business functions.

     3.14 Real Property.

          (a)  Schedule 3.14 shall contain a description of all Real Property.

          (b)  Except as shall be set forth on Schedule 3-14, there are no
parties in possession of any portion of the Real Property other than GCSI or its
Subsidiaries, whether as lessees, sublessees, tenants at will or trespassers.

          (c)  To the Knowledge of GCSI, there is no law, ordinance, order,
regulation or requirement now in existence or under active consideration by any
Governmental Entity, that would require, any material expenditure by GCSI or its
Subsidiaries to modify or improve any of the Real Property to bring it into
compliance therewith that would have a Material Adverse Effect.

          (d)  To the Knowledge of GCSI, the current uses of all buildings
and other structures utilized in the Business and located on the Real Property
substantially conform with an applicable federal, state and local governmental
building, zoning, health, safety, platting. subdivision or other laws,
ordinances or regulations, and no restrictive covenants to which the

                                       14
<PAGE>

Real Property is subject are being violated by GCSI or its Subsidiaries, except
for nonconformities or violations which would not have a Material Adverse Effect

     3.15 Leases.  Schedule 3.15 shall contain a list of all material leases
                   -------------
pursuant to which GCSI or any of its Subsidiaries leases to or from a Person
other than GCSI or any of its Subsidiaries, as lessor or lessee, real or
tangible personal property used in operating: the Business or otherwise (the
"Leases"), true and complete copies of which have previously been provided to
Buyer.  To the Knowledge of GCSI, all of the Leases are valid, binding and
enforceable against GCSI or its Subsidiaries and against the other parties
thereto, in accordance with their respective terms, and there is not under any
such Lease, any existing default by GCSI or its Subsidiaries, or by any other
party thereto, or any condition or event that, with notice or lapse of time or
both, would constitute a default.  GCSI has not received notice that the lessor
of any of the Leases intends to cancel, suspend or terminate such Lease or to
exercise or not exercise any option thereunder.  For purposes of inclusion on
Schedule 3.15, a Lease shall be deemed material if it is a lease for real
property or if it requires the payment by, or to, GCSI or its Subsidiaries of
$25,000 or more during any 12-month period for tangible personal property.

     3.16 Contracts.  Schedule 1.16 shall contain a list of all material
                      -------------
contracts, agreements and commitments (whether written or oral) to which GCSI or
any of its Subsidiaries is, directly or indirectly, a party (in its own name or
as a successor in interest), or by which it or any of its properties or assets
is otherwise bound, including any service agreements, customer agreements,
supplier agreements, agreements to lend or borrow money, shareholder agreements,
employment agreements, agreements relating to GCSI Intellectual Property and the
like (collectively, the "Contracts").  True and complete copies of the Contracts
                         ---------
(or a true and complete narrative description of any oral Contract) previously
have been provided to Buyer.  Neither GCSI or its Subsidiaries nor, to the
Knowledge of GCSI any other party to any of the Contracts (i) is in material
default under (nor does there exist any condition that, with notice or lapse of
time or both, would cause such a material default under) any of the Contracts,
or (ii) has waived any right it may have under any of the Contracts, the waiver
of which would have a Material Adverse Effect.  To the Knowledge of GCSI, all of
the Contracts constitute the valid and binding obligations of GCSI or its
Subsidiaries, enforceable in accordance with their respective terms, and of the
other parties thereto. For purposes of inclusion on Schedule 3.16, a Contract
                                                    -------------
shall be deemed material if it requires payment by, or to, GCSI or its
Subsidiaries of $25,000 or more during any 12-month period.

     3.17 Directors and Officers.  Schedule 3.17 shall contain a list as of the
                                   -------------
Agreement Date of the directors and officers of GCSI and its Subsidiaries.

     3.18 Bank Accounts.  Schedule 18 shall contain a list of each bank or other
                          -----------
financial institution in which GCSI or any of its Subsidiaries have an account,
safe deposit box or lock box arrangement, the name of GCSI or its Subsidiary in
whose name such account, box or arrangement is held, the identifying numbers or
symbols of the account, box or arrangement, and the name of each person
authorized to draw thereon or to have access thereto.

     3.19 Litigation.  Except as shall be set forth on Schedule 3.1.9 there is
no suit, action, claim, investigation or proceeding pending, or, to the
Knowledge of GCSI, threatened, against

                                       15
<PAGE>

GCSI, any of its Subsidiaries or the Business, nor is there any judgment,
decree, injunction or order of any applicable Governmental Entity or arbitrator
outstanding against GCSI or any of its Subsidiaries which could have a Material
Adverse Effect

     3.20 Employee Benefit Plans; Labor Relations.

          (a)  Benefit II Plans.  Except as shall be set forth on Schedule 3.20
them are no employee benefit plan, agreements or arrangements maintained by GCSI
or its Subsidiaries, including (i) "employee benefit plans" within the meaning
of Section 3(3) of ERISA, (ii) current or deferred compensation, pension, profit
sharing, vacation or severance plans or programs, or (iii) medical, hospital,
accident, disability or death benefit plans (collectively "Benefit Plans").  All
                                                           -------------
Benefit Plans are administered in accordance with, and are in material
compliance with, all applicable laws and regulations.  No material default
exists with respect to the obligations of GCSI or its Subsidiaries under any
Benefit Plan.

          (b)  Labor Relations.  None of GCSI or its Subsidiaries are a party to
               ---------------
any collective bargaining agreement; no collective bargaining agent has been
certified as a representative of any of the employees of GCSI or any of its
Subsidiaries; no representation campaign or election is now in progress with
respect to any employee of GCSI or any of its Subsidiaries; and there are no
labor disputes, grievances, controversies, strikes or requests for union
representation pending, or, to the Knowledge of GCSL threatened, relating to or
affecting the Business.  To the Knowledge of GCSI, no event has occurred that
could give rise to any such dispute, controversy, strike or request for
representation.

     3.21 ERISA.

          (a)  Compliance of Benefit Plans.  All Benefit Plans that are subject
               ---------------------------
to ERISA have been administered in accordance with, and are in material
compliance with, the applicable provisions of ERISA.  Each of the Benefit Plans
that is intended to meet the requirements of Section 401(a) of the Code meets
the requirements of Section 401 (a) of the Code.  As of June 8, 1994, the ESOP
has been determined by the Internal Revenue Service to meet such requirements
within the meaning of such provision and such determination has not been revoked
or withdrawn.  No Benefit Plan is subject to Title IV of ERISA or Section 412 of
the Code.  GCSI and its Subsidiaries have not engaged in any nonexempt
"prohibited transactions", as such term is defined in Section 4975 of the Code
or Section 406 of ERISA, involving the Benefit Plans that would subject GCSI or
its Subsidiaries to the penalty or tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code, GCSI and its Subsidiaries have not engaged in any
transaction described in Section 4069 of ERISA within the last five (5) years.
Except as shall be set forth on Schedule 3.21 or pursuant to the terms of the
Benefit Plans, neither the execution and delivery hereof nor the consummation of
the transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation or golden parachute) becoming due to any
director, officer or other employee of GCSI, or (ii) increase any benefit
otherwise payable under any Benefit Plan or result in the acceleration of the
time of payment or vesting of any such benefit, which would require the
Surviving Corporation to make additional contributions to any Benefit Plan.

                                       16
<PAGE>

          (b)  No Reportable Event.  No notice of a "reportable event", within
               -------------------
the meaning of Section 4043 of ERISA, for which the 30-day reporting requirement
has riot been waived, has been required to be filed for any Benefit Plan that is
an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA
and that is intended to meet the requirements of Section 401(a) of the Code, or
by GCSI or any entity that is considered one employer with GCSI under Section
4001 of ERISA or Section 414 of the Code, within the 12-month period ending on
the Closing Date.  GCSI and its Subsidiaries have not incurred any liability to
the Pension Benefit Guaranty Corporation in respect of any Benefit Plan that
remains unpaid.

     3.22 Taxes.  Except as shall be set forth on Schedule 3.22, GCSI and its
Subsidiaries have duly and timely filed all federal, state and local income,
franchise, excise, real and personal property and other tax returns and reports,
including extensions, required to have been filed by GCSI or its Subsidiaries on
or prior to the Closing Date.  All of such tax returns and reports are true,
complete and accurate in all material respects.  GCSI and its Subsidiaries have
duly and timely paid all taxes and other governmental charges, and all interest
and penalties with respect thereto, shown on said returns or reports (whether by
way of withholding or otherwise) to any federal, state, local or other taxing
authority (except to the extent the same are being contested in good faith and
adequate reserves therefor have been provided in the Financial Statements).  As
of the Closing Date, all deficiencies proposed as a result of any audit have
been paid or settled.  GCSI and its Subsidiaries are not parties to, or bound
by, or otherwise in any way obligated under, any tax sharing or similar
agreement GCSI and its Subsidiaries have not consented to have the provisions of
Section 341(f)(2) of the Code (or comparable state law provisions) apply to it
and GCSI and its Subsidiaries have not agreed or been requested to make any
adjustment under Section 481(c) of the Code by reason of a change in accounting
method or otherwise.

     3.23 Compliance with Applicable Laws.  To the Knowledge of GCSI, GCSI and
its Subsidiaries hold all material permits, licenses, variances, exemptions,
orders and approvals of all Governmental Entities necessary to own, lease or
operate all of the assets and properties of GCSI and its Subsidiaries, as
appropriate, and to carry on the Business as presently conducted (the
"Permits"). To the Knowledge of GCSI, GCSI and its Subsidiaries are in material
compliance with (i) all applicable laws, ordinances and regulations applicable
to the Business, (ii) any court or administrative order or process applicable to
the Business, including, without limitation, those of the FCC, Occupational
Safety and Health Administration, Equal Employment Opportunity Commission, and
National Labor Relations Board, and (iii) the terms of the Permits. Except as
shall be set forth on Schedule 3.23. To the Knowledge of GCSI, none of the
Permits will be adversely impacted or affected by or as a result of the Merger.
The Permits shall be listed on Schedule 3.23; however, true and complete copies
of all Permits previously have been provided to Buyer.

     3.24 Environmental Matters.  Except as shall be set forth on Schedule 3.24,
                                                                  -------------
to the Knowledge of GCSI, no Real.  Property is contaminated with any Hazardous
Substance.  GCSI and its Subsidiaries are not parties to any litigation or
administrative proceeding nor, to the Knowledge of GCSI, is any litigation or
administrative proceeding threatened against them, that, in either case, asserts
or alleges that GCSI or its Subsidiaries (i) violated any Environmental Law,
(ii) is required to clean up, remove or take remedial or other responsive action
due to the disposal, deposit, discharge, leak or other release of any Hazardous
Substance, or (iii) is required

                                       17
<PAGE>

to pay all or a portion of the cost of any past, present or future cleanup,
removal or remedial or other action that arises out of or is related to the
disposal, deposit, discharge, leak or other release of any Hazardous Substance.
Except as shall be set forth on Schedule 3.24, to the Knowledge of GCSI, (i)
them am not any tanks or other facilities on, under or at any Real Property
containing materials that, if known to be present in soil or ground water, would
require cleanup, removal or other remedial action under any Environmental Law,
and (ii) GCSI and its Subsidiaries are not subject to any judgment, order or
citation related to or arising out of any Environmental Law and have not been
named or listed as potentially responsible parties by any Governmental Entity in
a matter related to or arising out of any Environmental Law.

     3.25 Interest in Customers, Suppliers and Competitors.  Except as shall be
set forth on Schedule 3.25, no officer or director of GCSI or its Subsidiaries,
             -------------
no GCSI Stockholder owning five percent (.5%) or more of the GCSI Shares and, to
the Knowledge of GCSI, no spouse, parent, sibling or lineal descendent of any of
the foregoing, has any direct or indirect material interest in any material
customer, supplier or competitor of GCSI or its Subsidiaries, or in any Person
from whom or to whom GCSI or its Subsidiaries lease any real or personal
property, or in any other Person with whom GCSI or its Subsidiaries are doing
business, directly or indirectly (including as a debtor or creditor), whether in
existence as of the Closing Date or proposed, other than the ownership of stock
of publicly traded corporations and other entities,

     3.26 Insurance.  To the Knowledge of GCSI, GCSI or one of its Subsidiaries
currently maintains, in full force and effect a insurance policies that are
required or customarily maintained for the conduct of the Business or the
ownership of GCSI's and its Subsidiaries' property (both real and personal),
including, without limitation, workers compensation, and property and casualty
insurance (the "The Insurance Policies").  The Insurance Policies shall be
listed on Schedule 3.26, and true and complete copies of all Insurance Policies
          -------------
previously have been provided to Buyer.  GCSI or its Subsidiaries have paid all
premiums due thereunder and, to the Knowledge of GCSI, (i) are not in default
regarding any material provision of any Insurance Policy, and (ii) have not
failed to present any notice or material claim thereunder in a due and timely
fashion.

     3.27 Bankruptcy.  None of GCSI or its Subsidiaries have filed a petition or
request for reorganization or protection or relief under the bankruptcy laws of
the United States or any state or territory thereof, made any general assignment
for the benefit of creditors, or consented to the appointment of a receiver or
trustee, including a custodian under the United States bankruptcy laws, whether
such receiver or trustee was appointed in a voluntary or involuntary proceeding.

     3.28 Brokers' Fees.  None of GCSI or its Subsidiaries have any liability or
obligation to pay any fees or commissions to any broker, finder or agent, with
respect to the transactions contemplated by this Agreement; provided that Joseph
DeCosimo and Company, certified public accountants, have served as financial
consultants to GCSI and various of the GCSI Stockholders and the fees of Joseph
DeCosimo and Company have been, and will be, paid by GCSI as provided in Section
8.3.

                                       18
<PAGE>

     3.29 Absence of Other Warranties.  Except as and to the extent expressly
set forth in this Agreement, GCSI does not make any representation or warranty
whatsoever, and disclaims any liability and responsibility for any statement or
information not contained in this Agreement or any Disclosure Schedule or any
document contemplated hereby made or communicated, by oversight or otherwise
(orally or in writing), to Buyer (including, without limitation, any opinion,
information, projection, statement or advice provided by any employee, officer,
agent, stockholder or other representative of GCSI or its Subsidiaries in
connection with the transactions contemplated hereby).  Without limiting the
foregoing, Buyer acknowledges that any estimates of future profitability of the
Business based upon any financial statements or other financial information
provided to Buyer by GCSI or its Subsidiaries are inherently uncertain and
subject to a variety of variables which are difficult or impossible to predict.

                                  ARTICLE IV
                        REPRESENTATIONS AND WARRANTIES
                                   OF BUYER

     Buyer represents and warrants to GCSI that the statements contained in this
Article IV are correct and complete as of the Agreement Date and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the Agreement Date throughout this Article
IV).

     4.1  Organization, Qualification, and Corporate Power.  Buyer is a limited
liability company, and prior to the Closing Buyer shall cause Transitory
Subsidiary to be a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization or
incorporation.  Buyer is, and prior to the Closing Buyer shall cause Transitory
Subsidiary to be, duly authorized to conduct business and in good standing under
the laws of each jurisdiction in which the character and location of its
properties or the nature of its business requires qualification, except where
the lack of such qualification would not have a Material Adverse Effect.  Buyer
has, and Buyer shall cause Transitory Subsidiary to have, full power and
authority to own its properties and to carry on its business as presently
conducted.

     4.2  Financing.  Buyer possesses, and has furnished to GCSI, true and
complete copies of binding written commitments from financially responsible
lenders (the "Financial Commitments") to provide Buyer and Transitory Subsidiary
with all of the financing they will require in order to perform their
obligations under this Agreement, to consummate the Merger and to fund the
working capital needs of the Surviving Corporation and its Subsidiaries after
the Closing.

     4.3  Authorization of Transaction.  The execution, delivery and performance
of this Agreement by Buyer has been duly authorized and approved by Buyer's
board of directors.  Buyer has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.  This Agreement
constitutes the valid and legally binding obligation of Buyer, enforceable in
accordance with its terms and conditions.

     4.4  Noncontravention.  To the Knowledge of Buyer, neither the execution
and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will

                                       19
<PAGE>

(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any Governmental Entity to
which either Buyer is or Transitory Subsidiary will be, subject or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice of consent under any agreement, contract,
lease, license, instrument or other arrangement to which either Buyer is, or
Transitory Subsidiary will be, a party or by which they are or will be bound or
to which any of their assets are or will be subject (or result in the imposition
of any Lien upon any of their assets), except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice or Lien would not have a Material Adverse Effect. Neither the
execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any provision of the articles of
organization, operating agreement, charter or bylaws of Buyer or Transitory
Subsidiary. To the Knowledge of Buyer and other than in connection with (i) the
provisions of the Hart-Scott-Rodino Act, the Alabama Business Corporation Ac4
the Securities Act, the Securities Exchange Act and state securities laws, (ii)
the necessary notices to and consents and approvals, if any, of the FCC, and
(iii) the necessary notices to and consents and approval if any, of state public
utility commissions or similar state regulatory bodies pursuant to applicable
state laws regulating the telephone, commercial mobile radio service or other
telecommunications business, Buyer is not, and Transitory Subsidiary will not
be, required to give any notice to, file with or obtain authorization, consent
or approval of any Governmental Entity in order for Buyer to perform its
obligations under this Agreement except where the failure to give such notice,
to file or to obtain such authorization, consent or approval would not have a
Material Adverse Effect

     4.5  Investment  The GCSI Shares are being acquired by Buyer in a private
transaction for its own account and not with a view to, or for offer or resale
in connection with, any distribution within the meaning of Section 2(l1) of the
Securities Act.  Buyer hereby acknowledges that the GCSI Shares arc unregistered
and must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.  Buyer
acknowledges and agrees that it will not make any disposition of the GCSI Shares
which will or may involve GCSI or the GCSI Stockholders in a violation of the
Securities Act, the Securities Exchange Act or of any state securities laws.

     4.6  Brokers' Fees.  Buyer has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which GCSI or its Subsidiaries could become
liable or obligated.

     4.7  Evaluation of Business.  Buyer has made its ohm evaluation of the
Business and the GCSI Shares based upon information determined by Buyer to be
sufficiently complete and reliable for such purposes.

                                   ARTICLE V
                        DISCLOSURE SCHEDULES; STANDARDS
                      FOR REPRESENTATIONS AND WARRANTIES

     5.1  Disclosure Schedules.  The parties acknowledge that as of the date of
this

                                       20
<PAGE>

Agreement, GCSI has not delivered the Disclosure Schedules. GCSI covenants and
agrees to deliver the Disclosure Schedules to Buyer no later than the close of
business on the date that is thirty (30) days after the Agreement Date, and that
the Disclosure Schedules are subject to the reasonable review of, and acceptance
by, Buyer, provided, that Buyer shall be deemed to have accepted the items or
matters identified on the Disclosure Schedules unless Buyer gives GCSI written
notice of its objection to any such item or matter within fifteen (15) days
after Buyer's receipt of the Disclosure Schedules. Notwithstanding anything in
this Agreement to the contrary, the mere inclusion of an item in the Disclosure
Schedules as an exception to a representation or warranty shall not be deemed an
admission by GCSI that such item represents a material exception or material
fact, event or circumstance or that such item has had or could be reasonably
expected to have a Material Adverse Effect.

     5.2  Standards.  No representation or warranty of GCSI contained in
Article III or of Buyer contained in Article IV shall be deemed untrue or
incorrect for any purpose under this Agreement as a consequence of the existence
or absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or when taken together with all other facts, circumstances
or events inconsistent with such representation or warranty contained in Article
III, in the case of GCSI, or Article IV, in the case of Buyer, has had or could
be reasonably expected to have a Material Adverse Effect with respect to GCSI or
Buyer, respectively.

                                  ARTICLE VI
                                   COVENANTS

     The Parties agree as follows with respect to the period commencing on the
Agreement Date and ending as of the Effective Time.

     6.1  General.  Each of the Parties will use its best efforts to take all
action and to do all things necessary in order to consummate and make effective
the transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Article VII).

     6.2  Notices and Consents.  GCSI will give any notices (and will cause each
of its Subsidiaries to give any notices) to third parties, and will use its
reasonable best efforts to obtain (and will cause each of its Subsidiaries to
use its reasonable best efforts to obtain) any third party consents, that Buyer
reasonably may request in connection with the matters referred to in Section
3.4.  Buyer will give any notices (and will cause Transitory Subsidiary to give
any notices.) to third parties, and will use its reasonable best efforts to
obtain (and will cause Transitory Subsidiary to use its reasonable best efforts
to obtain) any third party consents, that GCSI reasonably may request in
connection with the matters referred to in Section 4.4.

     6.3  Regulatory Matters and Approvals.  Each of the Parties will (and will
cause each of its Subsidiaries to) give any notices to, make any filings with,
and use its reasonable best efforts to obtain any authorizations, consents and
approvals of Governmental Entities in connection with the matters referred to in
Section 3.4 and Section 4.4.  Without limiting the generality of the foregoing:

                                       21
<PAGE>

          (a)  Alabama Business Corporation.  GCSI will call a special meeting
               ----------------------------
     of the GCSI Stockholders (the "Special Meeting") in order that the GCSI
     Stockholders may consider and vote upon the adoption of this Agreement and
     the approval of the Merger in accordance with the Alabama Business
     Corporation Act. Within seven (7) days after entry of the Court
     Confirmation, GCSI will mail or otherwise deliver to the GCSI Stockholders
     (i) notice of the Special Meeting, (ii) a copy of this Agreement, (iii) a
     certified copy of the resolutions of the board of directors of GCSI
     approving this Agreement and the Merger and recommending the adoption of
     this Agreement and the approval of the Merger to the GCSI Stockholders, and
     (iv) such other documents as the board of directors of GCSI shall deem,
     appropriate (the "Stockholder Materials").

          (b)  Hart-Scott-Rodino Act.  Within fourteen (14) days after the
               ---------------------
     Agreement Date, each of the Parties will file any Notification and Report
     Forms and related material required to be filed with the Federal Trade
     Commission and the Antitrust Division of the United States Department of
     Justice under the Hart-Scott-Rodino Act, will use its reasonable best
     efforts to obtain an early termination of the applicable waiting period,
     and will make any further filings pursuant thereto that may be necessary,
     proper or advisable.

          (c)  FCC and State Public Utility Commissions.  Within fourteen (14)
               ----------------------------------------
     days after the Agreement Date, the Parties shall file such individual or
     joint applications which may be required, with the FCC and state public
     utility commissions or similar state regulatory bodies in Alabama, Florida,
     Louisiana and Mississippi to reflect the change of control of various
     operating certificates, permits or other licenses held by GCSI or its
     Subsidiaries.  The Parties shall also file any post transaction notices as
     may be required by such Governmental Entities within the time periods
     prescribed by law.

          6.4  Operation of Business.  GCSI will not (and will not cause or
permit any of its Subsidiaries to) engage in any practice, take any action or
enter into any transaction outside the Ordinary Course of Business.  Without
limiting the generality of the foregoing:

               (a)  none of GCSI or its Subsidiaries will authorize or effect
          any change in its charter or bylaws;

               (b)  none of GCSI or its Subsidiaries will grant any options,
          warrants or other rights to purchase: or obtain any of its capital
          stock or issue, sell or otherwise dispose of any of its capital stock;

               (c)  none of GCSI or its Subsidiaries will declare, set aside or
          pay any dividend or distribution with respect to its capital stock
          (whether in cash or in kind), or redeem, repurchase or otherwise
          acquire any of its capital stock;

               (d)  GCSI or its Subsidiaries will issue any note, bond or other
          debt security or create, incur, assume or guarantee any indebtedness
          for borrowed money or capitalized lease obligation outside the
          Ordinary Course of Business, except as issued, created, incurred,
          assumed or guaranteed (i) in a transaction

                                       22
<PAGE>

          provided for in 1999 Operating Budget or the 1999 Capital Budget, or
          (ii) with respect to intercompany loans or transfers among GCSI and
          its Subsidiaries;

               (e)  none of GCSI or its Subsidiaries will sell, transfer, convey
          or impose any Lien on any material assets outside the Ordinary Course
          of Business, except for Liens imposed pursuant to a transaction
          permitted by paragraph (d) of this Section 6.4;

               (f)  none of GCSI or its Subsidiaries will make any capital
          investment in, make any loan to or acquire the securities or assets of
          any other Person outside the Ordinary Course of Business, except with
          respect to intercompany loans or transfers among GCSI and its
          Subsidiaries;

               (g)  none of GCSI or its Subsidiaries will make any change in the
          terms of employment applicable to any of its directors, officers or
          employees outside the Ordinary Course of Business; and

               (h)  none of GCSI or its Subsidiaries will commit to any of the
          foregoing.

     6.5  Full Access.  GCSI will (and will cause each of its Subsidiaries to)
permit representatives of Buyer to have full access, at all reasonable times and
in a manner so as not to interfere with the normal business operations of GCSI
and its Subsidiaries, to all premises, properties, personnel, books, records
(including tax records), contracts and documents of or pertaining to GCSI and
its Subsidiaries.  Buyer will treat and hold as such any Confidential
Information it receives from GCSI or its Subsidiaries in the course of the
reviews contemplated by this Section 6.5, will not use any of the Confidential
Information except in connection with this Agreement and, if this Agreement is
terminated for any reason whatsoever, agrees to return to GCSI all tangible
embodiments (and all copies) thereof regardless of by whom generated which are
in its possession or the possession of its advisers, consultants, accountants or
attorneys.

     6.6  Notice of Developments.  Each Party will give prompt written notice to
the other of any breach of or inaccuracy in any of its own representations and
warranties in Article III or Article IV.  Unless the other party has the right
to terminate this Agreement pursuant to Section 8.1 by reason thereof and
exercises such right within the earlier of ten (10) days after receipt of such
written notice or the Closing Date, the written notice shall be deemed to have
amended and qualified the representations and warranties in Article III or
Article IV, and to have cured any breach of or inaccuracy in a representation or
warranty that otherwise might have existed.

     6.7  Exclusivity.  GCSI will not (and will not cause or permit any of its
Subsidiaries to) initiate the submission of any proposal or offer from any
Person relating to the acquisition of all or substantially all of the capital
stock or assets of GCSI or its Subsidiaries (including any acquisition
structured as a merger, consolidation or share exchange); provided, however,
should (i) any Person other than Buyer submit a new proposal or offer for the
acquisition of all of the GCSI Shares (including merger, consolidation or share
exchange) prior to the Requisite

                                       23
<PAGE>

Shareholder Approval, (ii) at the Special Meeting the GCSI Stockholders do not
vote a sufficient number of the GCSI Shares in favor of this Agreement and the
Merger in order to achieve the Requisite Shareholder Approval and (iii) within
six (6) months after the date of the Special Meeting, said Person agrees to
acquire all of the GCSI Shares for aggregate consideration (the "Third-Party
                                                                 -----------
Consideration") greater than the aggregate of the Merger Consideration and the
-------------
Additional Merger Consideration, GCSI shall pay to Buyer $10,000,000 (the
"Topping Fee").

     6.8  Insurance and Indemnification.

          (a)  Director and Officer Insurance.  Buyer shall provide each
               ------------------------------
      individual serving as a director or officer of GCSI or any of its
      Subsidiaries immediately prior to the Effective Time, or who had served in
      any such capacity at any time during the period commencing three (3) years
      prior to the Effective Time, with liability insurance for a period of
      forty-eight (48) months after the Effective Time no less favorable in
      coverage and amount than any comparable insurance GCSI maintained in
      effect immediately prior to the Effective Time.

          (b)  Maintenance of Exculpatory and Indemnity Clause.  Buyer will not
               -----------------------------------------------
      take any action to alter or impair any exculpatory or indemnification
      provisions now existing in the charter or bylaws of GCSI or its
      Subsidiaries for the benefit of any individual who served as a director or
      officer of GCSI or any of its Subsidiaries at any time prior to the
      Effective Time.

          (c)  Indemnity.  Buyer will indemnify each individual who served as a
               ---------
     director or officer of GCSI or any of its Subsidiaries at any time prior to
     the Effective Time from and against any and all actions, suits,
     proceedings, hearings, investigations, charges, complaints, claims,
     demands, injunctions, judgments, orders, decrees, rulings, damages, dues,
     penalties, fines, costs, amounts paid in settlement, liabilities,
     obligations, liens, losses, expenses and fees, including, without
     limitation, all court costs and attorneys' fees and expenses, resulting
     from, arising out of, relating to, in the nature of or caused by this
     Agreement or any of the transactions contemplated herein.

          6.9  Real Estate Sale. On or before the Closing Date, GCSI shall
               convey, or cause to be conveyed, to Marjorie Y. Snook,
               individually, the real property Commonly known as the Magnolia
               Hotel and the County Road 55 Farm Property, including all (i)
               furniture, furnishings and other personal property situated on or
               within such real property (collectively, the "Non-Business Real
                                                             -----------------
               Estate") in accordance with the terms and conditions of the Real
               ------
               Estate Sales Contract in form and substance reasonably
               satisfactory to the Parties, and the proceeds of such sale
               received by GCSI shall be transferred to Paying Agent for payment
               to the GCSI Stockholders as part of the Merger Consideration.

          6.10 Board Approval.  The Board of Directors of GCSI shall recommend
               that the GCSI Stockholders approve the Merger, and will not
               terminate that

                                       24
<PAGE>

               recommendation unless there is a failure of a condition to
               Closing set forth in Section 7.2.

                                  ARTICLE VII
                       CONDITIONS TO OBLIGATION TO CLOSE

     7.1  Conditions to Obligation of Buyer.  The obligation of Buyer to
consummate the transaction to be performed by it in connection with the Closing
is subject to the satisfaction of the following conditions:

          (a)  this Agreement and the Merger shall have received the Requisite
     Stockholder Approval;

          (b)  the representations and warranties of GCSI set forth in Article
     III shall be true and correct in all material respects at and as of the
     Closing Date;

          (c)  GCSI shall have performed and complied with all of its covenants
     hereunder in all material respects through the Closing;

          (d)  there shall not be any judgment, order, decree, stipulation,
     injunction or charge in effect preventing consummation of any of the
     transactions contemplated by this Agreement;

          (e)  GCSI shall have delivered to Buyer (i) a Certificate of Existence
     of GCSI issued by the Alabama Secretary of State, (ii) a Certificate of
     Good Standing of GCSI issued by the Alabama Department of Revenue, (iii)
     certified copies of the resolutions of the board of directors of GCSI and
     the GCSI Stockholders approving the Merger and (iv) a noncompetition
     agreement of Marjorie Y. Snook, Woodard S. Setzer, Harold Killian, Robert
     H. Younce and Dale E. Younce in form and substance reasonably acceptable to
     Buyer;

          (f)  all applicable waiting periods (and any extensions thereof) under
     the Hart-Scott-Rodino Act shall have expired or otherwise been terminated
     and the Parties shall have received all other authorizations, consents and
     approvals of Governmental Entities referred to in Section 3.4 and Section
     4.4 above;

          (g)  Buyer shall have received from counsel to GCSI an opinion in form
     and substance reasonably satisfactory to Buyer, addressed to Buyer and
     dated as of the Closing Date; and

          (h)  all actions to be taken by GCSI in connection with the
     consummation of the transactions contemplated hereby and all certificates,
     opinions, instruments and other documents required to effect the
     transactions contemplated hereby will be reasonably satisfactory in form
     and substance to Buyer.

                                       25
<PAGE>

Buyer may waive any condition specified in this Section 7.1 by a writing so
stating delivered to GCSI at or prior to the Closing.

     7.2  Conditions to Obligation of GCSI.  The obligation of GCSI to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

          (a.) this Agreement and the Merger shall have received the Requisite
     Stockholder Approval, The Parties acknowledge that Marjorie Y. Snook and
     Lyman F. Holland. Jr., as co-trustees (the "Co-Trustees") of the John
                                                 -----------
     McClure Snook Irrevocable Trust dated December 23, 1993, and the John
     McClure Snook Testamentary Trust, under the Last Will and Testament of John
     McClure Snook, deceased, intend to file a petition with the Circuit Court
     of Baldwin County, Alabama within fourteen (14) days of the Agreement Date
     requesting the Court to confirm the sale of the GCSI Shares held by such
     trusts pursuant to the terms of this Agreement and the Merger (the "Court
                                                                         -----
     Confirmation"), and that if the Court fails to confirm said sale, the Co-
     ------------
     Trustees will vote said GCSI Shares against this Agreement and the Merger,
     and GCSI will not receive the Requisite Stockholder Approval;

          (b)  the trustees of the ESOP (the "ESOP Trustees') shall have
     received from ESOP participants or former participants instructions, that
     have not been revoked, to sell to Buyer a number of GCSI Shares greater
     than fifty percent (50%) of the GCSI Shares allocated to the accounts of
     ESOP participants or former participants;

          (c)  the ESOP Trustees shall have received a fairness opinion
     reasonably acceptable to the ESOP Trustees with respect to the transactions
     contemplated by this Agreement;

          (d)  the representations and warranties of Buyer set forth in Article
     IV shall be true and correct in all material respects at and as of the
     Closing Date;

          (e)  Buyer shall have performed and complied with all of its covenants
     hereunder in all material respects through the Closing.

          (f)  there shall not be any judgment, order, decree, stipulation,
     injunction or charge in effect preventing consummation of any of the
     transactions contemplated by this Agreement-,

          (g)  Buyer shall have delivered to GCSI (i) a Certificate of Existence
     of Buyer issued by the Delaware Secretary of State and of Transitory
     Subsidiary issued by the Alabama Secretary of State, (ii) Certificates of
     Good Standing of Buyer issued by the Delaware Secretary of State and of
     Transitory Subsidiary issued by the Alabama Department of Revenue, and
     (iii) certified copies of the resolutions of the board of directors of
     Buyer and of the board of directors and shareholder of Transitory
     Subsidiary approving the Merger,

                                       26
<PAGE>

          (h)  all applicable waiting periods (and any extensions thereof) under
     the Hart-Scott-Rodino Act shall have expired or otherwise been terminated
     and the Parties shall have received all other authorizations, consents and
     approvals of Governmental Entities referred to in Section 3.4 and Section
     4.4;

          (i)  GCSI shall have received from counsel to Buyer an opinion in form
      and substance reasonably satisfactory to GCSI, addressed to GCSI and dated
      as of the Closing Date;

          (j)  In the event Buyer contemplates refinancing all or any portion of
      the Long Term Debt immediately following the Effective Time, GCSI shall
      have received written evidence that all requirements of and conditions to
      said refinancing have been satisfied; and

          (k)  all actions to be taken by Buyer in connection with the
      consummation of the transactions contemplated hereby and all certificates.
      opinions, instruments and other documents required to effect the
      transactions contemplated hereby will be reasonably satisfactory in form
      and substance to GCSI.

Except for the conditions contained in paragraphs (a), (b), (c) and (h) of this
Section 7.2, GCSI may waive any condition specified in this Section 7.2 by a
writing so stating delivered to Buyer at or prior to the Closing.

     7.3  Deemed Waiver.  If either Party is not obligated a. Closing to perform
pursuant to this Agreement, the Party not so obligated may terminate this
Agreement by delivering to the other Party notice of termination in writing in
accordance with Article VIII.  Provided, however, if either Party is not
obligated to perform pursuant to this Agreement but nevertheless elects to
perform, and the other Party is obligated to perform, the Parties shall proceed
with the consummation of this Agreement as if all Parties were obligated to do
so, and the Party who is not obligated to proceed but elects to do so shall be
deemed to have specifically waived in writing, as provided in Section 7.1 and
Section 7.2, as the case may be, the fulfillment of the condition or conditions,
the nonfulfillment of which excused the obligation of said Party to perform
pursuant to this Agreement as contemplated by Section 7.1 and Section 7.2, as
the case may be.

                                 ARTICLE VIII
                                  TERMINATION

     8.1  Termination of Agreement.  Either Party may terminate this Agreement
with the prior authorization of its board of directors (whether before or after
stockholder approval) as provided below:

          (a)  the Parties may terminate this Agreement by mutual written
     consent at any time prior to the Effective Time;

                                       27
<PAGE>

          (b)  Buyer may terminate this Agreement by giving written notice to
     GCSI at any time prior to Closing (i) in the event GCSI has breached any
     material representation, warranty or covenant contained in this Agreement
     in any material respect, Buyer has notified GCSI of the breach, and the
     breach has continued without cure for a period of thirty (30) days after
     the notice of breach, or (ii) if the Closing shall not have occurred on or
     before September 30, 1999, by reason of the failure of any condition
     precedent under Section 7.1 (unless the failure results primarily from
     Buyer breaching any representation, warranty or covenant contained in this
     Agreement);

          (c)  GCSI may terminate this Agreement by giving written notice to
     Buyer at any time prior to Closing (i) in the event Buyer has breached any
     material representation, warranty or covenant contained in this Agreement
     in any material respect, GCSI has notified Buyer of the breach, and the
     breach has continued 'without cure for a period of thirty (30) days after
     the notice of breach or (ii) if the Closing shall not have occurred on or
     before September 30, 1999, by reason of the failure of any condition
     precedent under Section 7.2 (unless the failure, results primarily from
     GCSI breaching any representation, warranty or covenant contained in this
     Agreement); or

          (d)  either Party may terminate this Agreement by giving written
     notice to the other Party at any time after the Special Meeting in the
     event this Agreement and the Merger fail to receive the Requisite
     Stockholder Approval.

     8.2  Effect of Termination.  Except as hereinafter provided, if either
Party terminates this Agreement pursuant to Section 8.1, all rights and
obligations of the Parties hereunder shall terminate without any liability of
either Party; provided, however, that the confidentiality provisions contained
in Section 6.5 and the provisions of Section 6.7 concerning the Topping Fee
shall survive any such termination.  In the event either Party terminates this
Agreement because the other Party has materially breached or materially failed
to perform its agreements and covenants contained in Article II, VI or IX of
this Agreement, the nonbreaching Party shall be entitled to pursue all legal and
equitable remedies against the breaching Party for such breach or failure to
perform, including specific performance.  All costs, fees and expenses
(including reasonable attorneys' fees and expenses) incurred by the nonbreaching
Party in connection with enforcing its rights hereunder with respect to such
breach or failure to perform shall be paid by the breaching Party.

     8.3  Fees and Expenses.  Except as otherwise provided herein, the
reasonable costs, fees and expenses incurred in connection with the negotiation,
drafting and execution of this Agreement, and the consummation of the
transactions contemplated hereby (including the reasonable fees and expenses of
counsel, accountants and appraisers) shall be paid by the Party incurring such
fees or expenses; provided that up to $1,500,000 of such costs, fees and
expenses incurred by the GCSI Stockholders and the ESOP shall be paid by GCSI at
the Closing, which payment shall not be deemed a reduction in the cash or cash
equivalents of GSLI as of the Effective Time.

     8.4  Survival.  Except for the provisions of Article II concerning payment
of the Merger Consideration and the Additional Merger Consideration, and the
provisions of Section

                                       28
<PAGE>

6.8 concerning insurance and indemnification (the "Surviving Obligations"), none
                                                   ---------------------
of the representations, warranties, agreements and covenants of the Parties
contained herein or in any Disclosure Schedule, certificate or other instrument
or writing delivered in connection herewith, shall survive the Closing. Except
as provided in Section 8-2, each Party's sole remedy on account of a breach
hereof by the other Party is the right to terminate this Agreement pursuant to
this Article VIE. After the Closing, neither Party shall have any liability or
obligation to the other except with respect to the Surviving Obligations and
each of GCSI and Buyer covenant never to institute, directly or indirectly, any
action or proceeding of any kind against the other or against any GCSI
Stockholder based on or arising out of, or in any manner related to, the breach
of a representation, warranty, agreement or covenant contained in this
Agreement, except with respect to the Surviving Obligations.

                                  ARTICLE IX
                                    DigiPH

Prior to Closing, GCSI shall sell or otherwise transfer the stock it owns (the
"DigiPH Stock") in DigiPH Holding Company, Inc., an Alabama corporation
 ------------
("DigiPH") which owns all of the issued and outstanding stock of DigiPH
  ------
Communications, Inc, a Delaware corporation which in turn owns all of the issued
and outstanding stock of DigiPH PCS, Inc., an Alabama corporation which holds
eight (8) FCC licenses to provide broadband PCS services in portions of the
States of Alabama, Florida and Mississippi, either to Millry Management
Corporation, an Alabama corporation ("Millry"), or another Person, consistent
                                      ------
with the terms of that certain Stockholder's Agreement dated March 13,1997 by
and among DigiPH, GCSI and Millry, and the proceeds of such sale or other
transfer received by GCSI shall be transferred to Paying Agent for payment to
the GCSI Stockholders as part of the Merger Consideration.

                                   ARTICLE X
                                 MISCELLANEOUS

     10.1 Press Releases and Public Announcements.  Neither Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Party;
provided, however, that either Party may make any public disclosure it believes
in good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Party prior to making the
disclosure).

     10.2 No Third-Party Beneficiaries.  This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions in
Article 11 concerning payment of the Merger Consideration and the Additional
Merger Consideration are intended for the benefit of the GCSI Stockholders and
(ii) the provisions in Section 6.9 concerning insurance and indemnification are
intended for the benefit of the individuals specified therein and their
respective legal representatives.

     10.3 Entire Agreement.  This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings,

                                       29
<PAGE>

agreements or representations by or among the Parties, written or oral, to the
extent they relate in anyway to the subject matter hereof.

     10.4 Succession and Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns.  Upon prior written notice to GCSI, Buyer may assign its
rights and obligations under this Agreement to a wholly-owned Subsidiary of
Buyer, provided that Buyer remains principally liable hereunder for the
performance of said obligations.  Except as provided in the preceding sentence,
no Party may assign either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other Parties.

     10.5 Counterparts.  This Agreement May be executed in one or more
counterparts, each of which shall be deemed an original but an of which together
will constitute one and the same instrument.

     10.6 Readings.  The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

     10.7 Notices.  All notices, requests, demands, claims and other
communications hereunder will be in writing.  Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given if (and then two (2)
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:

                    If to GCSI:

                    Gulf Coast Services, Inc.
                    P.O. Drawer 670
                    Foley, Alabama 36535
                    Attention: Marjorie Y. Snook, Chief Executive Officer
                    (334) 952-3350
                    (3-34) 943-7254 fax

                    With a copy to:

                    Marjorie Y. Snook, as a Trustee of the John McClure Snook
                    Irrevocable Trust and the John McClure Snook Testamentary
                    Trust
                    c/o M. Mort Swaim, Esq.
                    235 West Laurel Avenue
                    Foley, Alabama 36535
                    (334) 943-3999
                    (334) 943-3137 fax
                    swaimlaw@gulftcl.com e-mail

                    Lyman F. Holland, Jr., as a Trustee of the John McClure
                    Snook

                                       30
<PAGE>

                    Irrevocable Trust and the John McClure Snook Testamentary
                    Trust
                    Hand Arendall, L.L.C.
                    Suite 3000
                    10 National Bank Building
                    P.O. Box 123
                    Mobile, Alabama 36601
                    (334) 432-5511
                    (334) 361-6375 fax
                    lymanh@handarendall.com e-mail

                    Mark D. Wilkerson, Esq.
                    Brantley & Wilkerson, P.C.
                    P.O. Box 830
                    Montgomery, Alabama 36101-0830
                    (334) 265-1500
                    (334) 265-0319 fax
                    mark@brantleywilkerson.com e-mail

                    C. Fred Daniels, Esq.
                    Cabaniss, Johnston, Gardner, Dumas & O'Neal
                    2001 Park Place North
                    Suite 700
                    Birmingham, Alabama 35203
                    (205) 716-5200
                    (205) 716-5389 fax
                    cfd@cabaniss.com e-mail

                    H. William Wasden, Esq.
                    Pierce, Ledyard, Lata & Wasdan P.C.
                    Suite 400
                    41 North Beltline Highway
                    P.O. Box 16046
                    Mobile, Alabama 36616
                    (334) 344-5151
                    (334) 344-9696 fax
                    hww@pllaw.com e-mail

                    If to Buyer:

                    Madison River Telephone Company, LLC
                    6330 Quadrangle Drive, Suite 325
                    Chapel Hill, North Carolina 27514
                    Attention: Donald K. Roberton
                    (919) 563-0012
                    (919) 402-0151 fax
                    ________________ e-mail

                                       31
<PAGE>

                    With a copy to:

                    Bruce F. Metge, Vice Pres - General Counsel
                    Madison River Communications
                    6330 Quadrangle Drive, Suite 325
                    Chapel Hill, North Carolina 27514
                    (919) 493-7030 ext. 47
                    (919) 402-0151 fax
                    metgeb@gallatinriver.com e-mail

                    Larry E. Robbins
                    Wyrick, Robbins, Yates & Ponton, LLP
                    Suite 300
                    4101 Lake Boone Trail
                    Post Office Drawer 17803
                    Raleigh, North Carolina 27607
                    (919) 781-4000
                    Fax (919) 781-4865
                    lrobbins@wyrick.com e-mail

                    David Ackerman
                    McBride, Baker & Coles
                    500 West Madison Street
                    40th Floor
                    Chicago, Illinois 60661-2511
                    (312) 715-5700
                    (312) 993-9650 fax
                    ackerman@MBC.com. e-mail

Either Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient.  Either
Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set fort

     10.8 Governing Law.  This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Alabama without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Alabama or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Alabama.

     10.9 Amendments and Waivers.  The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time; provided, however,
that any amendment effected subsequent to the Requisite Stockholder Approval
will be subject to the restrictions

                                       32
<PAGE>

contained in the Alabama Business Corporation Act. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by each of the Parties. No waiver by either Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent occurrence.

     10.10 Severability.  Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

     10.11 Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring either Party by virtue of the authorship of any of
the provisions of this Agreement.  Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.  The
word "including" shall mean including without limitation.
      ---------

     10.12 Incorporation of Exhibits and Disclosure Schedules.  The Exhibits
and Disclosure Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.

                                       33
<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement and
Plan of Merger on the date first above written.

ATTEST:                             MADISON RIVER TELEPHONE
                                    COMPANY, LLC

BRUCE F. METGE                  By: DONALD K. ROBERTON
--------------                      ---------------------------------
Its Secretary                     Its: Managing Director-Corporate Development
-----------                           ----------------------------------------

ATTEST:                             GULF COAST SERVICES, INC.

________________________________    By: MARJORIE Y. SNOOK
                                        ----------------------------
Its Secretary                         Its: Chief Executive Officer
                                          --------------------------

                                       34

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