Document:

<PAGE>

                                                                   Exhibit 10.62

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                            STOCKHOLDERS  AGREEMENT

                                     among

                             CAIS INTERNET, INC.,

                               CII VENTURES LLC

                                      and

                       THE STOCKHOLDERS SIGNATORY HERETO

                       dated as of __________ ___, 2000

================================================================================
<PAGE>

                               TABLE OF CONTENTS

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                                                                            Page
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RECITALS..................................................................     1

ARTICLE I           DEFINITIONS...........................................     1
     SECTION 1.1  Certain Defined Terms...................................     1
     SECTION 1.2  Other Definitional Provisions...........................    11

ARTICLE II          CORPORATE GOVERNANCE..................................    11
     SECTION 2.1  Board Representation....................................    11
     SECTION 2.2  Committees..............................................    12
     SECTION 2.3  Consents Rights.........................................    12
     SECTION 2.4  Available Financial Information.........................    14
     SECTION 2.5  Access..................................................    15
     SECTION 2.6  Board Procedures........................................    15
     SECTION 2.7  Termination of Rights...................................    16

ARTICLE III         TRANSFERS.............................................    17
     SECTION 3.1  Investor Stockholder Transferees........................    17
     SECTION 3.2  Transfer Restrictions...................................    18

ARTICLE IV          REGISTRATION RIGHTS...................................    20
     SECTION 4.1  Incidental Registrations................................    20
     SECTION 4.2  Registration on Request.................................    21
     SECTION 4.3  Registration Procedures.................................    23
     SECTION 4.4  Information Supplied....................................    26
     SECTION 4.5  Restrictions on Disposition.............................    26
     SECTION 4.6  Indemnification.........................................    27
     SECTION 4.7  Required Reports........................................    29
     SECTION 4.8  Selection of Counsel....................................    30
     SECTION 4.9  Holdback Agreement......................................    30
     SECTION 4.10 No Inconsistent Agreements..............................    30

ARTICLE V           EQUITY PURCHASE RIGHTS................................    30
     SECTION 5.1 Equity Purchase Rights...................................    30

ARTICLE VI          STANDSTILL............................................    31
     SECTION 6.1  Acquisition of Additional Voting Securities.............    31

ARTICLE VII         MISCELLANEOUS.........................................    33
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     SECTION 7.1  Investor Stockholder Indemnification; Reimbursement
                  of Expenses.............................................    33
     SECTION 7.2  Termination.............................................    33
     SECTION 7.3  Amendments and Waivers..................................    33
     SECTION 7.4  Successors, Assigns and Transferees.....................    34
     SECTION 7.5  Notices.................................................    34
     SECTION 7.6  Further Assurances......................................    34
     SECTION 7.7  Entire Agreement........................................    34
     SECTION 7.8  Delays or Omissions.....................................    34
     SECTION 7.9  Governing Law; Jurisdiction; Waiver of Jury Trial.......    35
     SECTION 7.10 Severability............................................    35
     SECTION 7.11 Effective Date..........................................    35
     SECTION 7.12 Enforcement.............................................    35
     SECTION 7.13 Titles and Subtitles....................................    35
     SECTION 7.14 No Recourse.............................................    35
     SECTION 7.15 Counterparts; Facsimile Signatures......................    36
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                                     -ii-
<PAGE>

                              CAIS INTERNET, INC.

                            STOCKHOLDERS AGREEMENT

          THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered as of
                                             ---------
__________ ___, 2000, among CAIS INTERNET, INC., a Delaware corporation (the
"Company"), CII VENTURES LLC, a Delaware limited liability company (the
 -------
"Investor Stockholder"), and each of the stockholders of the Company whose name
 --------------------
appears on the signature pages hereof.

                                   RECITALS
                                   --------

          WHEREAS, the Company and the Investor Stockholder have entered into a
Preferred Stock Purchase Agreement, dated as of December 20, 1999 (the "Stock
                                                                        -----
Purchase Agreement"), pursuant to which the Investor Stockholder will purchase
------------------
7,142,857 newly issued shares of Series D Preferred Stock (as defined below),
for a purchase price of $14.00 per share and will have an option to purchase up
to 7,142,857 newly issued shares of Series E Preferred Stock (as defined below),
for a purchase price of $14.00 per share; and

          WHEREAS, the parties hereto desire to enter into certain arrangements
relating to the Company, to be effective as of the First Closing (as defined
below).

          NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:

                            ARTICLE I   DEFINITIONS
                                        -----------

          SECTION I.1   Certain Defined Terms.  As used herein, the following
                        ---------------------
terms shall have the following meanings:

          "Acquisition" has the meaning assigned to such term in Section 6.1(a).
           -----------

          "Acquisition Restrictions" has the meaning assigned to such term in
           ------------------------
Section 6.1(a).

          "Additional Purchase Closing" has the meaning assigned to such term in
           ---------------------------
the Stock Purchase Agreement.

          "Affiliate" means, with respect to any Person, any other Person that
           ---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
<PAGE>

                                                                               2

          "as converted" has the meaning assigned to such term in Section
           ------------
2.7(a)(i).

          "beneficial owner" or "beneficially own" has the meaning given such
           ----------------      ----------------
term in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership of
Common Stock or Preferred Stock or other Voting Securities of the Company shall
be calculated in accordance with the provisions of such Rule; provided, however,
                                                              --------  -------
that for purposes of determining beneficial ownership, (i) a Person shall be
deemed to be the beneficial owner of any security which may be acquired by such
Person whether within 60 days or thereafter, upon the conversion, exchange or
exercise of any warrants, options, rights or other securities and (ii) no Person
shall be deemed to beneficially own any security solely as a result of such
Person's execution of this Agreement.

          "Board" means the Board of Directors of the Company.
           -----

          "Business Day" means any day that is not a Saturday, a Sunday or other
           ------------
day on which banks are required or authorized by law to be closed in The City of
New York.

          "Bylaws" means the Bylaws of the Company, as in effect on the date
           ------
hereof and as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof, the terms of the Restated
Certificate and the terms of this Agreement.

          "Capital Stock" means, with respect to any Person at any time, any and
           -------------
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
Person, and with respect to the Company includes, without limitation, any and
all shares of Common Stock and Preferred Stock.

          "Certificate of Designation" has the meaning assigned to such term in
           --------------------------
the Stock Purchase Agreement.

          "Change of Control" means (i) during any period of two consecutive
           -----------------
years, individuals who at the beginning of such period constituted the Directors
(together with any new Directors whose election by such Directors or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the Directors then still in office who were either
Directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Directors then in office, (ii) any merger or consolidation with
or into any other entity or any other similar transaction, whether in a single
transaction or series of related transactions where (A) the stockholders of the
Company immediately prior to such transaction in the aggregate cease to own at
least 50% of the voting securities of the entity surviving or resulting from
such transaction (or the ultimate parent thereof) or (B) any Person becomes the
beneficial owner of more than 50% of the voting securities of the entity
surviving or resulting from such transaction (or the ultimate parent thereof),
(iii) any transaction or series of related transactions in which in excess of
50% of the Company's voting power is transferred to any Person or Group, (iv)
the sale, transfer, lease, assignment, conveyance, exchange, mortgage or other
disposition of all or substantially all of the
<PAGE>

                                                                               3

assets of the Company and its Subsidiaries, or (v) any liquidation, dissolution
or winding-up of the Company.

          "Claims" has the meaning assigned to such term in Section 4.6(a).
           ------

          "Common Stock" means the common stock, par value $0.01 per share, of
           ------------
the Company and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.

          "control" (including the terms "controlled by" and "under common
           -------                        -------------       ------------
control with"), with respect to the relationship between or among two or more
------------
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.

          "Conversion Shares" has the meaning assigned to such term in the Stock
           -----------------
Purchase Agreement.

          "Demand Party" has the meaning assigned to such term in Section
           ------------
4.2(a).

          "Director" means any member of the Board.
           --------

          "Equity Purchase Shares" has the meaning assigned to such term in
           ----------------------
Section 5.1(a).

          "Equity Securities" means any and all shares of Capital Stock of the
           -----------------
Company, securities of the Company convertible into, or exchangeable or
exercisable for, such shares, and options, warrants or other rights to acquire
such shares (including the Option).

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

          "Exempt Acquisition" means any acquisition (whether through merger,
           ------------------
consolidation or otherwise) (i) which has a purchase price (including any
assumed indebtedness and valuing any non-cash consideration at its Fair Market
Value) of less than 5% of the market capitalization (as reflected by the
aggregate Fair Market Value of the outstanding Common Stock) of the Company as
of the date of the execution of the definitive agreement relating thereto and
(ii) which, together with all other Exempt Acquisitions, has an aggregate
purchase price (including any assumed indebtedness and valuing any non-cash
consideration at its Fair Market Value) of not more than $50.0 million (which
amount, for the purposes of Section 2.3(vii)(A) shall be measured from December
21, 1999).

          "Fair Market Value" has the meaning assigned to such term in Section
           -----------------
3(c) of the Certificate of Designation.
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                                                                               4

          "Fifth Transfer Period" means the period from and including the fourth
           ---------------------
anniversary of the First Closing to, but excluding, the fifth anniversary of the
First Closing  (and collectively with the First Transfer Period, the Second
Transfer Period, the Third Transfer Period and the Fourth Transfer Period, each
a "Transfer Period").
   ---------------

          "First Closing" has the meaning assigned to such term in the Stock
           -------------
Purchase Agreement.

          "First Transfer Period" means the period from and including December
           ---------------------
21, 1999, to, but excluding, the first anniversary of the First Closing.

          "Fourth Transfer Period" means the period from and including the third
           ----------------------
anniversary of the First Closing to, but excluding, the fourth anniversary of
the First Closing.

          "Fully-Diluted Basis" with respect to Voting Securities means the
           -------------------
number of shares of Voting Securities which are issued and outstanding or owned
or held, as applicable, at the date of determination plus the number of shares
of Voting Securities issuable pursuant to any securities (other than Voting
Securities), warrants, rights or options then outstanding, convertible into or
exchangeable or exercisable for (whether or not subject to contingencies or
passage of time, or both), Voting Securities (including the Preferred Stock and
the Option).

          "GAAP" means generally accepted accounting principles, as in effect in
           ----
the United States of America from time to time.

          "Group" has the meaning assigned to such term in Section 13(d)(3) of
           -----
the Exchange Act.

          "Group A Stockholders" means each of Ulysses G. Auger, II, William M.
           --------------------
Caldwell, IV, Evans K. Anderson, Gary H. Rabin and Kevin Brand.

          "Group B Stockholders" means each of Ulysses G. Auger, Sr. and
           --------------------
Chancery Lane, L.P.

          "Hilton Warrant" has the meaning assigned to such term under the
           --------------
definition of "New Securities".

          "Holder" means the Investor Stockholder and any other holder of
           ------
Registrable Securities (including any direct or indirect Transferees of the
Investor Stockholder or its Affiliates) entitled to the rights, and bound by the
obligations, under this Agreement in accordance with Section 3.1(b)(ii).

          "Indemnified Parties" has the meaning assigned to such term in Section
           -------------------
4.6(a).

          "Initial Interest" has the meaning assigned to such term under the
           ----------------
definition of "Permitted Ownership Percentage".

<PAGE>

                                                                               5

          "Investor Director" means any Director designated by the Investor
           -----------------
Stockholder pursuant to Section 2.1 of this Agreement.

          "Investor Stockholder Indemnitee" has the meaning assigned to such
           -------------------------------
term in Section 7.1.

          "Investor Stockholder Transfer" has the meaning assigned to such term
           -----------------------------
in Section 3.2(b).

          "Issuance Notice" has the meaning assigned to such term in Section
           ---------------
5.1(b).

          "Law" has the meaning assigned to such term in the Stock Purchase
           ---
Agreement.

          "Losses" has the meaning assigned to such term in Section 7.1.
           ------

          "NASD" means the National Association of Securities Dealers, Inc.
           ----

          "Nasdaq" means the NASD Automated Quotation System.
           ------

          "New Securities" means shares of Equity Securities of the Company
           --------------
(other than (i) any securities of the Company offered pursuant to a registration
statement which has been declared effective under the Securities Act, whereby
such securities shall be publicly traded on a national securities exchange or
quoted on the Nasdaq National Market System, (ii) 5,601,825 shares of Common
Stock (subject to appropriate adjustment for stock splits or combinations)
issued upon exercise of employee stock options outstanding on the date hereof,
(iii) employee stock options to purchase 947,671 shares of Common Stock (subject
to appropriate adjustment for stock splits or combinations) authorized for
issuance under the Company's 1998 Amended and Restated 1998 Equity Incentive
Plan as in effect on December 20, 1999 (the "Plan"), and the shares of Common
                                             ----
Stock issued upon the exercise of such options, (iv) shares of Preferred Stock
issued to the Investor Stockholder upon exercise of the Option, (v) Conversion
Shares issued upon conversion of the Preferred Stock, (vi) shares of Common
Stock issued upon the exercise of warrants issued by the Company pursuant to (A)
the Common Stock Warrant dated as of October 27, 1999 and the Series C Preferred
Stock Purchase Agreement, dated as of September 29, 1999 between the Company and
U.S. Telesource, Inc., (B) the Warrant Agreement dated as of September 4, 1998
among the Company, Cleartel Communications, Inc., CAIS, Inc. and ING (U.S.)
Capital Corporation, Inc., (C) the Series A Preferred Stock and Warrant Purchase
Agreement dated as of February 19, 1999 among the Company and the several
purchasers set forth therein and (D) the warrant to purchase Common Stock issued
pursuant to the First Amendment to the Master License Agreement dated as of
April 23, 1999, among the Company, CAIS Inc. and Hilton Hotels Corporation (the
"Hilton Warrant"), (vii) Rights issued or sold to strategic partners after the
 --------------
date hereof which are exercisable, exchangeable or convertible into shares of
Common Stock and shares of Common Stock issued upon the exercise, exchange or
conversion thereof, (viii) shares of Common Stock issued as additional
consideration for the acquisitions of Atcom, Inc. and Business Anywhere USA,
Inc, pursuant to the terms of the Amended and Restated Agreement and Plan of
Merger, dated as of August 4, 1999, among the Company, CIAM Corp. and Atcom,
Inc., as amended by Amendment No. 1, dated as of
<PAGE>

                                                                               6

September 1, 1999, and as further amended by Amendment No. 2, dated as of
November 19, 1999, and the Agreement and Plan of Merger, dated as of September
7, 1999, among the Company, Business Anywhere USA, Inc., CIBA Merger Corp., Kim
Kao and Amy Hsiao, (ix) shares of Common Stock issued upon the conversion of the
Series C Convertible Preferred Stock of the Company and (x) Equity Securities
issued pursuant to the acquisition of any other Person, whether by merger,
consolidation or otherwise).

          "Option" has the meaning assigned to such term in the Stock Purchase
           ------
Agreement.

          "Option Closing" has the meaning assigned to such term in the Stock
           --------------
Purchase Agreement.

          "Option Shares" has the meaning assigned to such term in the Stock
           -------------
Purchase Agreement.

          "Other Holders" means Persons other than Holders who, by virtue of
           -------------
agreements with the Company, are entitled to include their securities in certain
registrations hereunder.

          "Other Securities" means securities of the Company, other than
           ----------------
Registrable Securities which, by virtue of agreements between Other Holders and
the Company, are entitled to be included in certain registrations hereunder.

          "Ownership Percentage" means, at any time, the ratio, expressed as a
           --------------------
percentage, (i) of the total shares of Voting Securities beneficially owned by
the Investor Stockholder and its Affiliates to (ii) the total number of
outstanding shares of Voting Securities on a Fully-Diluted Basis, in each case
excluding any unexercised portion of the Option.

          "Period Ownership" means, with respect to any Transfer Period, a
           ----------------
number of Equity Securities equal to the greater of (A) the number of Equity
Securities (including with respect to stock options, (i) with respect to Ulysses
G. Auger, II and William M. Caldwell, IV, only those stock options vested as of
December 21, 1999 and (ii) with respect to Evans K. Anderson, Gary H. Rabin and
Kevin Brand, all stock options owned by such stockholder, whether or not vested,
as of December 21, 1999) owned by the applicable stockholder as of December 21,
1999, and (B) the sum of (x) the number of Equity Securities (including with
respect to stock options, (i) with respect to Ulysses G. Auger, II and William
M. Caldwell, IV, only those stock options vested as of the first day of the
applicable Transfer Period and (ii) with respect to Evans K. Anderson, Gary H.
Rabin and Kevin Brand, all stock options owned by such stockholder, whether or
not vested, as of the first day of the applicable Transfer Period) owned by the
applicable stockholder as of the first day of the applicable Transfer Period
plus (y) solely with respect to Ulysses G. Auger, II and William M. Caldwell,
IV, the number of stock options of the Company held by such stockholder that
vest during the applicable Transfer Period.

          "Permitted Ownership Percentage" means
           ------------------------------
<PAGE>

                                                                               7

          (1)  following the First Closing and prior to any Additional Purchase
Closing or Option Closing, the sum of (i) the ratio, expressed as a percentage,
of (A) the total number of shares of Voting Securities owned on a Fully-Diluted
Basis by the Investor Stockholder and its Affiliates as of the First Closing
(the "Initial Interest") to (B) the total number of outstanding shares of Voting
      ----------------
Securities on a Fully-Diluted Basis as of the First Closing plus (ii) 5%,

          (2)  following any Additional Purchase Closing, the sum of (i) the
ratio, expressed as a percentage, of (A) the total number of shares of Voting
Securities owned on a Fully-Diluted Basis by the Investor Stockholder and its
Affiliates as of such Additional Purchase Closing to (B) the total number of
outstanding shares of Voting Securities on a Fully-Diluted Basis as of such
Additional Purchase Closing plus (ii) 5% and

          (3)  following any Option Closing, the sum of (i) the ratio, expressed
as a percentage, of (A) the total number of shares of Voting Securities owned on
a Fully-Diluted Basis by the Investor Stockholder and its Affiliates as of such
Option Closing to (B) the total number of outstanding Shares of Voting
Securities on a Fully-Diluted Basis as of such Option Closing plus (ii) 5%.

          For the purposes of this definition, (i) all measurements of share
numbers exclude any unexercised portion of the Option and (ii) to the extent the
Ownership Percentage following any exercise by the Investor Stockholder of its
rights under Section 5.1 is greater than the amounts set forth in clause (1)(A)
or (2)(A) of the first sentence of this definition, the Permitted Ownership
Percentage shall be equal to such greater number plus, in each case, 5%.

          For the purposes of the definition of "Initial Interest" and of
clauses (1)(A) and (1)(B) above, all measurements of share numbers as of the
First Closing include all Subsequent Firm Shares to be purchased at the Second
Closing.

          "Permitted Pledgee" means any Person to which a Group A Stockholder or
           -----------------
Group B Stockholder has pledged any Equity Securities in accordance with Section
3.2(d) and which has agreed to be bound in writing by the provisions of this
Agreement and the Voting Agreement.  Upon the foreclosure of a Pledge, the
applicable Permitted Pledgee of a Group A Stockholder will be deemed a Group A
Stockholder for the purposes of this Agreement and the applicable Permitted
Pledgee of a Group B Stockholder will be deemed a Group B Stockholder for the
purposes of this Agreement.

          "Permitted Pledge Amount" for any Group A Stockholder or Group B
           -----------------------
Stockholder means, as of the date of any Pledge, the number of Equity Securities
equal to the product of (i) two and (ii) the difference between (A) the number
of Equity Securities which may be Transferred by such stockholder during the
applicable Transfer Period in accordance with the second proviso of Section
3.2(b) or (c), as applicable, minus (B) the sum of (x) the number of Equity
Securities which, as of the date of such Pledge, have been Transferred during
such Transfer Period and (y) one-half of the number of Equity Securities which,
as of the date of such Pledge, have been Pledged during such Transfer Period.
<PAGE>

                                                                               8

          "Permitted Transfer Amount" for any Group A Stockholder or Group B
           -------------------------
Stockholder means the number of Equity Securities equal to the product of (x)
the Period Ownership for such stockholder with respect to the Transfer Period
during which an Investor Stockholder Transfer is consummated, and (y) a fraction
(A) the numerator of which is the total number of Equity Securities actually
sold by the Investor Stockholder and its Affiliates in the Investor Stockholder
Transfer and (B) the denominator of which is the total number of Equity
Securities beneficially owned by the Investor Stockholder and its Affiliates
immediately prior to the consummation of such Investor Stockholder Transfer.

          "Person" means any individual, corporation, limited liability company,
           ------
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivisions thereof or any Group comprised of two or more of the foregoing.

          "Plan" has the meaning assigned to such term under the definition of
           ----
"New Securities".

          "Pledge" has the meaning assigned to such term in Section 3.2(d).
           ------

          "Preferred Stock" means, collectively, the Series D Preferred Stock
           ---------------
and the Series E Preferred Stock.

          "Pro Rata Portion" means, on any issuance date for New Securities, the
           ----------------
number or amount of New Securities equal to the product of (i) the total number
or amount of New Securities to be issued by the Company on such date and (ii)
the fraction determined by dividing (A) the number of Conversion Shares into
which all of the shares of Preferred Stock held by the Investor Stockholder and
its Affiliates are then convertible by (B) the total number of shares of Common
Stock outstanding on such date on a Fully-Diluted Basis (assuming, for the
purposes of clauses (A) and (B), that prior to the expiration of the Option
pursuant to the Stock Purchase Agreement, the Option has been exercised in full
and all shares of Preferred Stock issuable upon exercise of the Option are held
by the Investor Stockholder).

          "Qualified Option Closing" means one or more Option Closings and/or
           ------------------------
Additional Purchase Closings in which the Investor Stockholder and its
Affiliates purchase a number of Option Shares which, together with all other
Option Shares previously purchased by the Investor Stockholder and its
Affiliates, have an aggregate purchase price equal to at least $50.0 million.

          "Registrable Securities" means any Equity Security of the Company held
           ----------------------
by any Holder (including the Conversion Shares and the Preferred Stock).  As to
any particular Registrable Securities, once issued, such Registrable Securities
shall cease to be Registrable Securities when (a) a registration statement with
respect to the sale by the Holder of such securities shall have become effective
under the Securities Act and such securities shall have been disposed of in
accordance with such registration statement, (b) such securities shall have been
distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, or (c) such securities shall have ceased to be
outstanding.  For purposes of this
<PAGE>

                                                                               9

Agreement, any required calculation of the amount of, or percentage of,
Registrable Securities shall be based on the number of shares of Common Stock
which are Registrable Securities, including shares issuable upon the conversion,
exchange or exercise of any security convertible, exchangeable or exercisable
into Common Stock (including the Preferred Stock and the Option, to the extent
the Option is unexercised and unexpired).

          "Registration Expenses" means any and all expenses incident to
           ---------------------
performance of or compliance with Article IV of this Agreement, including (a)
all SEC and securities exchange or NASD registration and filing fees (including,
if applicable, the fees and expenses of any "qualified independent underwriter,"
as such term is defined in Schedule E to the bylaws of the NASD, and of its
counsel), (b) all fees and expenses of complying with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities), (c) all
printing, messenger and delivery expenses, (d) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any securities
exchange or NASD pursuant to Section 4.3(h)(i) and all rating agency fees, (e)
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and compliance, (f)
the reasonable fees and disbursements of counsel selected pursuant to Section
4.8, (g) any fees and disbursements of underwriters customarily paid by the
issuers or sellers of securities, including liability insurance if the Company
so desires or if the underwriters so require, and the reasonable fees and
expenses of any special experts retained in connection with the requested
registration, but excluding underwriting discounts and commissions and transfer
taxes, if any, and (h) expenses incurred in connection with any road show
(including the reasonable out-of-pocket expenses of the Investor Stockholder).

          "Restated Certificate" means the Amended and Restated Certificate of
           --------------------
Incorporation of the Company, as in effect on the date hereof and as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and the terms of this Agreement.

          "Rights" means all rights issued by the Company to acquire Common
           ------
Stock whether by exercise of a warrant, option or similar call, or conversion of
any existing instruments, in either case for consideration fixed, in amount or
by formula, as of the date of issuance.

          "SEC" means the U.S. Securities and Exchange Commission or any other
           ---
federal agency then administering the Securities Act or the Exchange Act and
other federal securities laws.

          "Second Closing" has the meaning assigned to such term in the Stock
           --------------
Purchase Agreement.

          "Second Transfer Period" means the period from and including the first
           ----------------------
anniversary of the First Closing to, but excluding, the second anniversary of
the First Closing.
<PAGE>

                                                                              10

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

          "Series D Preferred Stock" has the meaning assigned to such term in
           ------------------------
the Stock Purchase Agreement.

          "Series E Preferred Stock" has the meaning assigned to such term in
           ------------------------
the Stock Purchase Agreement.

          "Standstill Period" means the period commencing on the First Closing
           -----------------
and continuing until the fifth anniversary of the First Closing.

          "Stockholder Approval" has the meaning assigned to such term in the
           --------------------
Stock Purchase Agreement.

          "Stock Option Plans" has the meaning assigned to such term in the
           ------------------
Stock Purchase Agreement.

          "Subsequent Firm Shares" has the meaning assigned to such term in the
           ----------------------
Stock Purchase Agreement.

          "Subsidiary" means (i) any corporation of which a majority of the
           ----------
securities entitled to vote generally in the election of directors thereof, at
the time as of which any determination is being made, are owned by another
entity, either directly or indirectly, and (ii) any joint venture, general or
limited partnership, limited liability company or other legal entity in which an
entity is the record or beneficial owner, directly or indirectly, of a majority
of the voting interests or the general partner.

          "Third Party" has the meaning assigned to such term in Section 6.1(b).
           -----------

          "Third Transfer Period" means the period from and including the second
           ---------------------
anniversary of the First Closing to, but excluding, the third anniversary of the
First Closing.

          "Transfer" means, directly or indirectly, to sell, transfer, assign,
           --------
pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any shares of Equity
Securities beneficially owned by a Person or any interest in any shares of
Equity Securities beneficially owned by a Person.

          "Transferee" means any Person to whom the Investor Stockholder or any
           ----------
of its Affiliates or any Transferee thereof Transfers Equity Securities of the
Company in accordance with the terms hereof.

          "Transfer Period" has the meaning assigned to such term under the
           ---------------
definition of "Fifth Transfer Period".
<PAGE>

                                                                              11

          "Voting Agreement" means the Voting Agreement, dated as of December
           ----------------
20, 1999, among the Investor Stockholder, the Group A Stockholders and the Group
B Stockholders.

          "Voting Securities" means, at any time, shares of any class of Equity
           -----------------
Securities of the Company which are then entitled to vote generally in the
election of Directors.

          SECTION I.2   Other Definitional Provisions.  (a) The words "hereof",
                        -----------------------------
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article and Section references are to this Agreement unless
otherwise specified.

          (b)  The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

                       ARTICLE II  CORPORATE GOVERNANCE
                                   --------------------

          SECTION II.1  Board Representation.  (a) Effective as of the First
                        --------------------
Closing, the Board shall be comprised of eight (8) Directors of whom two (2)
shall be designees of the Investor Stockholder.

          (b)  If the Investor Stockholder exercises the Option, effective as of
the Qualified Option Closing, the Board shall be comprised of nine (9) Directors
of whom three (3) shall be designees of the Investor Stockholder.

          (c)  The Company shall take such action as may be required under
applicable law to cause the Board to consist of the number of Directors
specified in clause (a) or (b), as applicable and to include in the slate of
nominees recommended by the Board the designees of the Investor Stockholder.
The Company shall also take such action as may be required under applicable law
to cause the Investor Directors to be divided as equally as practicable among
each class of Directors.

          (d)  The Company agrees to use its best efforts to cause the election
of each designee of the Investor Stockholder to the Board, including nominating
such individuals to be elected as Directors as provided herein.

          (e)  In the event that a vacancy is created at any time by the death,
disability, retirement, resignation or removal (with or without cause) of any
Investor Director, the remaining Directors and the Company shall cause the
vacancy created thereby to be filled by a new designee of the Investor
Stockholder as soon as possible, who is designated in the manner specified in
this Section 2.1, and the Company hereby agrees to take, at any time and from
time to time, all actions necessary to accomplish the same.

          (f)  Without the written consent of the Investor Stockholder, the
Company agrees not to take any action that would cause the number of Directors
constituting the entire Board to
<PAGE>

                                                                              12

be other than eight (8) from and after the First Closing or nine (9) from and
after the Qualified Option Closing.

          SECTION II.2  Committees.  The Company shall cause any executive
                        ----------
committee, compensation committee, audit committee, investment committee,
nominating committee or other committee of the Board to include at least one
Investor Director.

          SECTION II.3  Consents Rights.  In addition to any vote or consent of
                        ---------------
the Board or the stockholders of the Company required by law or the Restated
Certificate, the consent in writing of at least one Investor Director (or, if no
Investor Directors are then serving on the Board, the Investor Stockholder)
shall be necessary for authorizing, effecting or validating the following
actions by the Company:

          a.   entering into any direct or indirect transaction by the Company
     or any of its Subsidiaries with an Affiliate of the Company or a family
     member or an Affiliate thereof or any entity in which an Affiliate has an
     interest as a director, officer, or greater than 5% stockholder (including
     without limitation, the purchase, sale, lease or exchange of any property,
     or rendering of any service or modification or amendment of any existing
     agreement or arrangement);

          b.   (A) the removal of the chief executive officer or president (or,
     if there are no officers with such titles, the officers whose
     responsibility is executive oversight of the Company's and its
     Subsidiaries' operations) or any executive vice president, and the
     appointment of any person to fill a vacancy in any such office, or (B)
     approval of any new, or modification of any existing (x) material
     executive, officer and director compensation plans or agreements (other
     than employment agreements with employees at the executive vice president
     level or below) or (y) other material employee compensation or benefit
     plan, agreement or arrangement, offered by the Company or any of its
     Subsidiaries, including without limitation, any stock option plan;

          c.   any change in the number of Directors or the composition or
     structure of the Board or any Board committee or the establishment of any
     Board committees and appointments thereto;

          d.   any amendment, alteration or change to the rights, preferences,
     privileges or powers of any Preferred Stock in any manner that adversely
     affects the shares of such series;

          e.   any increase or decrease in the total number of authorized or
     issued shares of Preferred Stock;

          f.   any authorization, creation (by way of reclassification or
     otherwise) or issuance of any Senior Securities, Parity Securities or
     Junior Securities (as each such term is defined in the Certificate of
     Designation), other than (1) the issuance of additional shares of Preferred
     Stock pursuant to Section 2 of each Certificate of Designation, (2) the
     issuance of Parity Securities or Junior Securities with a total aggregate
     value of not more
<PAGE>

                                                                              13

     than $30 million (in addition to the Parity Securities and Junior
     Securities described in clauses (1), (3), (4) and (5) and in addition to
     any Parity Securities and Junior Securities the issuance of which has been
     approved by at least one Investor Director (or Investor Stockholder, if
     applicable)), (3) the issuance of Parity Securities or Junior Securities as
     consideration in any transaction of the type described in clause (vii) of
     this Section 2.3 which does not require the consent of an Investor Director
     (or Investor Stockholder, if applicable) or to which an Investor Director
     (or Investor Stockholder, if applicable) has consented, (4) employee stock
     options to purchase 947,671 shares of Common Stock (subject to appropriate
     adjustment for stock splits or combinations) authorized for issuance under
     the Plan and the shares of Common Stock issued upon the exercise of such
     options and (5) Common Stock issued upon the conversion or exercise of the
     Equity Securities described in clauses (2), (3) and (4) of Section
     3.3(a)(i) of the Stock Purchase Agreement in accordance with the terms of
     such Equity Securities;

          g.   (A) any merger or consolidation with or into any other Person, or
     any acquisition of another Person, whether in a single transaction or
     series of related transactions, other than Exempt Acquisitions or (B) any
     proposed transaction or series of related transactions involving a Change
     of Control of the Company;

          h.   any redemption, acquisition or other purchase of any share of
     Common Stock or preferred stock of the Company with an aggregate redemption
     or purchase price in excess of $10 million, other than, (A) in the case of
     any preferred stock, to the extent required by the terms of such preferred
     stock, and, (B) in the case of the Hilton Warrant, to the extent required
     by the terms thereof;

          i.   any sale of a Subsidiary's securities to any third party (other
     than the Company or any other wholly owned Subsidiary of the Company);

          j.   any amendment, repeal or alteration of  the Company's Restated
     Certificate of Incorporation or Amended and Restated By-laws in a manner
     that adversely affects the holders of the Preferred Stock; provided, that
                                                                --------
     no increase in the number of authorized shares of Common Stock or Preferred
     Stock shall, per se, be deemed to adversely affect such holders;
                  --- --

          k.   any sale or transfer of any of the technology or other
     intellectual property, to any other Person, other than in the ordinary
     course of business; or

          l.   any arrangement or contract to do any of the foregoing.

          Notwithstanding and in addition to the foregoing, without the consent
in writing of at least one Investor Director, the Company shall not issue any
Equity Securities prior to obtaining the Stockholder Approval other than shares
of Common Stock issued upon the conversion or exercise of the Equity Securities
described in clauses (2), (3) and (4) of Section 3.3(a)(i) of the Stock Purchase
Agreement in accordance with the terms of such Equity Securities.
<PAGE>

                                                                              14

          SECTION II.4  Available Financial Information.  (a) The Company will
                        -------------------------------
deliver, or will cause to be delivered, the following to each Investor Director
(or, if no Investor Directors are then serving on the Board, to the Investor
Stockholder):

           (i) as soon as practical after the end of each month and in any event
     within thirty (30) days thereafter, a consolidated balance sheet of the
     Company and its Subsidiaries as of the end of such month and consolidated
     statements of income and cash flows of the Company and its Subsidiaries,
     for each month and for the current fiscal year of the Company to date, all
     subject to normal year-end audit adjustments, prepared in accordance with
     GAAP and certified by the principal financial or accounting officer of the
     Company, together with a comparison of such statements to the corresponding
     periods of the prior fiscal year and to the Company's business plan then in
     effect and approved by the Board; and

          (ii) an annual budget, a business plan and financial forecasts for the
     Company for the next fiscal year of the Company, no later than thirty (30)
     days before the beginning of the Company's next fiscal year, in such manner
     and form as approved by the Board, which shall include at least a
     projection of income and a projected cash flow statement for each fiscal
     quarter in such fiscal year and a projected balance sheet as of the end of
     each fiscal quarter in such fiscal year. Any material changes in such
     business plan shall be delivered to the Investor Directors or the Investor
     Stockholder, as the case may be, as promptly as practicable after such
     changes have been approved by the Board.

          (b)  The Company will promptly deliver to the Investor Stockholder
when available one copy of each annual report on Form 10-K and quarterly report
on Form 10-Q of the Company, as filed with the SEC. In the event an annual
report on Form 10-K or quarterly report on Form 10-Q is unavailable, the Company
may, in lieu of the requirements of the preceding sentence, deliver, or cause to
be delivered, the following to the Investor Directors or the Investor
Stockholder, as the case may be:

          (i)  as soon as practicable after the end of each fiscal year of the
     Company, and in any event within ninety (90) days thereafter, a
     consolidated balance sheet of the Company and its Subsidiaries as of the
     end of such fiscal year, and consolidated statements of income and cash
     flows of the Company and its Subsidiaries for such year, prepared in
     accordance with GAAP and setting forth in each case in comparative form the
     figures for the previous fiscal year, all in reasonable detail and followed
     promptly thereafter (to the extent not available) such financial statements
     accompanied by the opinion of independent public accountants of recognized
     national standing selected by the Company, and a Company-prepared
     comparison to the Company's business plan for such year as approved by the
     Board; and

          (ii) as soon as practicable after the end of the first, second and
     third quarterly accounting periods in each fiscal year of the Company, and
     in any event within forty-five (45) days thereafter, a consolidated balance
     sheet of the Company and its Subsidiaries as of the end of each such
     quarterly period, and consolidated statements of income and cash flows of
     the Company and its Subsidiaries for such period and for the current fiscal
     year
<PAGE>

                                                                              15

     to date, prepared in accordance with GAAP and setting forth in comparative
     form the figures for the corresponding periods of the previous fiscal year
     and to the Company's business plan then in effect and approved by the
     Board, subject to changes resulting from normal year-end audit adjustments,
     all in reasonable detail and certified by the principal financial or
     accounting officer of the Company, except that such financial statements
     need not contain the notes required by GAAP.

          SECTION II.5  Access.  The Company shall, and shall cause its
                        ------
Subsidiaries,  officers, directors, employees, auditors and other agents to, (a)
afford the officers, employees, auditors and other agents of the Investor
Stockholder, during normal business hours reasonable access at all reasonable
times to its officers, employees, auditors, legal counsel, properties, offices,
plants and other facilities and to all books and records, (b) furnish the
Investor Stockholder with all financial, operating and other data and
information as the Investor Stockholder, through its officers, employees, agents
or representatives, may from time to time reasonably request and (c) afford the
Investor Stockholder the opportunity to discuss the Company's affairs, finances
and accounts with the Company's officers from time to time as the Investor
Stockholder may reasonably request.

          SECTION II.6  Board Procedures.  Unless otherwise agreed by the
                        ----------------
parties hereto or approved by the Board with the consent of at least one
Investor Director, the Board shall follow the following procedures:

          (a)  Meetings.  Special Meetings of the Board may be held at any time
               --------
permitted pursuant to the Bylaws, by oral, telephonic, telegraphic or facsimile
notice duly given or sent, or by written notice sent by two-day courier, in each
case to be received at least two days before any actions to be taken by written
resolution, at least three days before any telephonic meeting and at least seven
days before any in-person meeting to each director.  Reasonable efforts shall be
made to ensure that each Director actually receives timely notice of any
meeting.

          (b)  Agenda.  A reasonably detailed agenda shall be supplied to each
               ------
Director reasonably in advance of each meeting of the Board, together with other
appropriate documentation with respect to agenda items calling for Board action,
to inform adequately Directors regarding matters to come before the Board.  Any
Director wishing to place a matter on the agenda for any meeting of the Board
may do so by communicating with the chairman of the Board sufficiently in
advance of the meeting of the Board so as to permit timely dissemination to all
directors of information with respect to the agenda.

          (c)  Reimbursement of Expenses.  The Company shall reimburse the
               -------------------------
Investor Directors for their reasonable out-of-pocket expenses incurred by them
for the purpose of attending meetings of the Board or committees thereof.

          SECTION II.7  Termination of Rights.
                        ---------------------

          (a)  Director Designee and Related Rights.  Notwithstanding Section
               ------------------------------------
2.1 and subject to Section 3.1(b)(i), at such time as the Investor Stockholder,
together with its Affiliates:
<PAGE>

                                                                              16

          a.   shall cease to own at least 10% of the outstanding Common Stock
     (determined with respect to the Preferred Stock and any other Equity
     Securities owned by the Investor Stockholder and its Affiliates that are
     convertible into, or exchangeable or exercisable for Common Stock, on an
     as-converted, exchanged or exercised basis (any determination made in
     accordance with the foregoing shall hereinafter be referred to as "as
                                                                        --
     converted")), the Investor Stockholder and its Affiliates shall cease to
     ---------
     have the right to designate more than two (2) Directors pursuant to Section
     2.1;

          b.   shall cease to own at least 5% of the outstanding Common Stock as
     converted, the Investor Stockholder and its Affiliates shall cease to have
     the right to designate more than one (1) Director pursuant to Section 2.1;
     and

          c.   shall cease to own at least the lesser of (A) 5% of the
     outstanding Common Stock as converted and (B) 20% of the Investor
     Stockholder's Initial Interest, the Investor Stockholder and its Affiliates
     shall cease to have the right to designate any Directors pursuant to
     Section 2.1 and all other rights of the Investor Stockholder under this
     Article II shall terminate except as provided in Section 2.7(b);

provided, however, that, notwithstanding any other provision of this Section
--------  -------
2.7(a), in the event the Investor Stockholder or any of its Affiliates shall
have Transferred the right to designate one or more Directors to a Third Party
Transferee pursuant to Section 3.1(b)(i), so long as such Transferee (or any
subsequent Transferee thereof) shall be entitled to retain such right pursuant
to Section 3.1(b)(i), any measurement of the percentage ownership of the
outstanding Common Stock by the Investor Stockholder and its Affiliates pursuant
to this Section 2.7(a) shall include all Equity Securities Transferred to such
Transferee.

          (b)  Consent Rights.  Notwithstanding Section 2.3, at such time as the
               --------------
Investor Stockholder, together with its Affiliates:

          a.   shall cease to own at least 10% of the outstanding Common Stock
     as converted, the Investor Stockholder and its Affiliates shall cease to
     have the consent rights set forth in clauses (i), (ii), (vi), (vii) (except
     with respect to clause (B) thereof), (ix) (except where such a sale would
     constitute a Change of Control) and (xi) of Section 2.3;

          b.   shall either (A) cease to own at least 5% of the outstanding
     Common Stock as converted or (B) cease to have the right to designate an
     Investor Director pursuant to Section 2.1 as a result of a Transfer of such
     rights in accordance with Section 3.1(b)(i) or in accordance with Section
     2.7(a), the Investor Stockholder and its Affiliates shall cease to have the
     consent rights set forth in Section 2.3 except for those set forth in
     clauses (iv), (v), (x) and (xii) (in the case of clause (xii), however,
     only as it relates to clauses (iv), (v) and (x)) thereof; and

          c.   shall cease to own any shares of Preferred Stock, the Investor
     Stockholder and its Affiliates shall cease to have any of the consent
     rights set forth in clauses (iv), (v) and (x) of Section 2.3.
<PAGE>

                                                                              17

                            ARTICLE III   TRANSFERS
                                          ---------

          SECTION III.1 Investor Stockholder Transferees.  (a) Subject to
                        --------------------------------
Section 3.1(b), no Transferee of the Investor Stockholder shall be obligated, or
entitled to rights, under this Agreement.

          (b)  No Transferee shall have any rights or obligations under this
Agreement, except that:

          (i)  if a Transferee of the Investor Stockholder together with its
     Affiliates acquires from the Investor Stockholder and its Affiliates Equity
     Securities representing at least 50% of the Investor Stockholder's Initial
     Interest then, in the sole discretion of the Investor Stockholder, the
     Investor Stockholder may assign all or a portion of the rights and
     obligations of the Investor Stockholder under Sections 2.1, 2.2, 2.4, 2.5,
     2.6, 5.1 and 7.6 to such Transferee (and such rights shall be further
     transferable to any further Transferee subject to this Section 3.1(b)(i));
     provided, that (and notwithstanding Section 2.7) any such Transferee or
     --------
     subsequent Transferee shall cease to have the rights and obligations
     provided for in this Section 3(b)(i) at such time as such Transferee or
     subsequent Transferee shall own, together with its Affiliates, less than
     25% of the Investor Stockholder's Initial Interest.

          (ii) if a Transferee of the Investor Stockholder together with its
     Affiliates acquires from the Investor Stockholder and its Affiliates at
     least five hundred thousand (500,000) shares of Equity Securities then, in
     the sole discretion of the Investor Stockholder, the Investor Stockholder
     may assign all or a portion of the rights and obligations of the Investor
     Stockholder under Section 7.6 and Article IV (and such rights shall be
     further transferable to any further Transferee subject to this Section
     3.1(b)(ii)).

          (c)  Prior to the consummation of a Transfer from the Investor
Stockholder, to the extent rights and obligations are to be assigned, and as a
condition thereto, the applicable Transferee shall (i) agree in writing with the
other parties hereto to be bound by the terms and conditions of this Agreement
to the extent described in Section 3.1(b) and (ii) provide the Company and the
other parties to this Agreement at such time complete information for notices
under this Agreement.

          SECTION III.2 Transfer Restrictions.
                        ---------------------

          (a)  Transfers by the Investor Stockholder.  Notwithstanding Section
               -------------------------------------
3.1, each Investor Stockholder hereby agrees that neither the Investor
Stockholder nor any of its Affiliates shall Transfer any of their respective
Equity Securities to a Person that is principally engaged in the business of
providing high-speed internet connections specifically targeting hotels and
multi-dwelling unit buildings, unless (i) such Transfer is approved by a
majority of the Directors, excluding for the purposes of such approval any
Investor Directors, or (ii) such Transfer is effected through (x) a bona fide
public offering pursuant to the exercise of the registration rights
<PAGE>

                                                                              18

provided under this Agreement or (y) sales made pursuant to Rule 144 or 145
under the Securities Act or any successor provisions.

          (b)  Transfers by the Group A Stockholders.  Each Group A Stockholder
               -------------------------------------
hereby agrees that such Group A Stockholder shall not Transfer any of its Equity
Securities at any time prior to the fifth anniversary of the First Closing,
unless the Investor Stockholder shall agree to such Transfer in writing;
provided, however, that in the event the Investor Stockholder or any of its
--------  -------
Affiliates Transfers (an "Investor Stockholder Transfer") any of its Equity
                          -----------------------------
Securities to a Third Party (as defined below), subject to Section 3.2(d), each
Group A Stockholder shall be permitted to Transfer (to the extent not
Transferred pursuant to the immediately succeeding proviso) a number of Equity
Securities equal to such Group A Stockholder's Permitted Transfer Amount within
one month after notice has been provided to such Group A Stockholder of the
applicable Investor Stockholder Transfer, which notice shall be provided within
20 days of the consummation of the Investor Stockholder Transfer; provided,
                                                                  --------
further, however, that notwithstanding any other provision in this Section
-------  -------
3.2(b) and subject to Section 3.2(d), each Group A Stockholder shall be
permitted to Transfer (to the extent not Transferred pursuant to the immediately
preceding proviso) (i) during the First Transfer Period, a number of Equity
Securities equal to 10% of its Period Ownership for the First Transfer Period,
(ii) during the Second Transfer Period, a number of Equity Securities equal to
10% of its Period Ownership for the Second Transfer Period, (iii) during the
Third Transfer Period, a number of Equity Securities equal to 10% of its Period
Ownership for the Third Transfer Period, (iv) during the Fourth Transfer Period,
a number of Equity Securities equal to 10% of its Period Ownership for the
Fourth Transfer Period and (v) during the Fifth Transfer Period, a number of
Equity Securities equal to 10% of its Period Ownership for the Fifth Transfer
Period; provided, further, however, that nothing in this Section 3.2(b) shall
        --------  -------  -------
prevent a Transfer by a Group A Stockholder during his lifetime or on death by
gift, will or intestacy to his immediate family or to a trust, partnership or
other entity, the beneficiaries, partners or equityholders of which are
exclusively such Group A Stockholder and/or members of his immediate family,
provided that it is expressly understood that any such Transferee shall be, and
shall agree in a writing reasonably satisfactory to the Investor Stockholder to
be, bound by the provisions of this Agreement. Each Group A Stockholder shall as
promptly as practicable provide the Investor Stockholder with written notice of
any Transfer made in accordance with this Section 3.2(b).

          (c)  Transfers by the Group B Stockholders.  Each Group B Stockholder
               -------------------------------------
hereby agrees that it shall not Transfer any of its Equity Securities at any
time prior to the third anniversary of the First Closing, unless the Investor
Stockholder shall agree to such Transfer in writing; provided, however, that in
                                                     --------  -------
the event of an Investor Stockholder Transfer, subject to Section 3.2(d), each
Group B Stockholder shall be permitted to Transfer (to the extent not
Transferred pursuant to the immediately succeeding proviso) a number of Equity
Securities equal to such Group B Stockholder's Permitted Transfer Amount within
one month after notice has been provided to such Group B Stockholder of the
applicable Investor Stockholder Transfer, which notice shall be provided within
20 days of the consummation of the Investor Stockholder Transfer; provided,
                                                                  --------
further, however, that notwithstanding any other provision in this Section
-------  -------
3.2(c) and subject to Section 3.2(d), each Group B Stockholder shall be
permitted to Transfer (to the extent not Transferred pursuant to the immediately
preceding proviso) (i) during the First Transfer Period, a number of Equity
Securities equal to 15% of its Period Ownership for the First
<PAGE>

                                                                              19

Transfer Period, (ii) during the Second Transfer Period, a number of Equity
Securities equal to 15% of its Period Ownership for the Second Transfer Period
and (iii) during the Third Transfer Period, a number of Equity Securities equal
to 15% of its Period Ownership for the Third Transfer Period; provided, further,
                                                              --------  -------
however, that nothing in this Section 3.2(c) shall prevent a Transfer by a Group
-------
B Stockholder during his lifetime or on death by gift, will or intestacy to his
immediate family or to a trust, partnership or other entity, the beneficiaries,
partners or equityholders of which are exclusively such Group B Stockholder
and/or members of his immediate family, provided that it is expressly understood
that any such Transferee shall be, and shall agree in a writing reasonably
satisfactory to the Investor Stockholder to be, bound by the provisions of this
Agreement. Each Group B Stockholder shall as promptly as practicable provide the
Investor Stockholder with written notice of any Transfer made in accordance with
this Section 3.2(c).

          (d)  Pledges.  During such time as the Group A Stockholders and the
               -------
Group B Stockholders shall be bound by the provisions of Sections 3.2(b) and
(c), respectively, each such stockholder shall be permitted to pledge (a
"Pledge") a number of Equity Securities equal to such stockholder's Permitted
 ------
Pledge Amount on such date to one or more Permitted Pledgees. Upon any Pledge
made by any Group A Stockholder or Group B Stockholder in accordance with this
Section 3.2(d), the aggregate number of Equity Securities which may be
Transferred by such stockholder during the applicable Transfer Period in
accordance with the first and second provisos of each of Sections 3.2(b) and
(c), as applicable, shall be reduced by a number of Equity Securities equal to
one-half of the number of Equity Securities which have been so Pledged. Any
foreclosure or sale of Pledged Equity Securities shall be deemed a Transfer with
respect to all such Pledged Equity Securities.

          (e)  Carry Forwards.  If any Group A Stockholder or Group B
               --------------
Stockholder does not Transfer all of the Equity Securities it is permitted to
Transfer during any Transfer Period in accordance with the second proviso of
Section 3.2(b) or (c) (after taking into account Transfers pursuant to the first
proviso of each such Section), as applicable, such stockholder shall be
permitted to carry forward to subsequent Transfer Periods that percentage of
unsold Equity Securities that such stockholder would have otherwise been
entitled to Transfer during the applicable Transfer Period in accordance with
such proviso. If, due to a foreclosure or sale of Pledged Equity Securities, any
Group A Stockholder or Group B Stockholder Transfers any Equity Securities in
excess of the Permitted Transfer Amount for such Transfer Period, such excess
shall reduce the Permitted Transfer Amounts for such stockholder for the
subsequent Transfer Periods.

                       ARTICLE IV    REGISTRATION RIGHTS
                                     -------------------
<PAGE>

                                                                              20

          SECTION IV.1  Incidental Registrations.  (a) If the Company at any
                        ------------------------
time after the date hereof proposes to register Equity Securities under the
Securities Act (other than a registration on Form S-4 or S-8, or any successor
or other forms promulgated for similar purposes), whether or not for sale for
its own account, in a manner which would permit registration of Registrable
Securities for sale to the public under the Securities Act, it will, at each
such time, give prompt written notice to all Holders of its intention to do so
and of such Holders' rights under this Article IV. Upon the written request of
any such Holder made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such Holder), the Company will use its commercially reasonable best efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by the Holders thereof;
provided, that (a) if, at any time after giving written notice of its intention
--------
to register any securities, the Company shall determine for any reason not to
proceed with the proposed registration of the securities to be sold by it, the
Company may, at its election, give written notice of such determination to each
Holder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith), and (b) if
such registration involves an underwritten offering, all Holders requesting to
be included in the Company's registration must sell their Registrable Securities
to the underwriters selected by the Company on the same terms and conditions as
apply to the Company, with such differences, including any with respect to
indemnification and liability insurance, as may be customary or appropriate in
combined primary and secondary offerings. If a registration requested pursuant
to this Section involves an underwritten public offering, any Holder requesting
to be included in such registration may elect, in writing prior to the effective
date of the registration statement filed in connection with such registration,
not to register all or any part of such securities in connection with such
registration. Nothing in this Section shall operate to limit the right of any
Holder to request the registration of Common Stock issuable upon conversion,
exchange or exercise of securities held by such Holder notwithstanding the fact
that at the time of request such Holder does not hold the Common Stock
underlying such securities. The registrations provided for in this Section 4.1
are in addition to, and not in lieu of, registrations made upon the request of
the Investor Stockholder in accordance with Section 4.2.

          (b)  Expenses.  The Company will pay all Registration Expenses in
               --------
connection with each registration of Registrable Securities requested pursuant
to this Section 4.1.

          (c)  Priority in Incidental Registrations.  If a registration pursuant
               ------------------------------------
to this Section 4.1 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
Registrable Securities requested to be included in such registration would be
likely to have an adverse effect on the price, timing or distribution of the
securities to be offered in such offering as contemplated by the Company (other
than the Registrable Securities), then the Company shall include in such
registration (a) first, 100% of the securities the Company proposes to sell, (b)
                 -----
second, any Other Securities requested to be registered by any Other Holders
------
exercising a demand registration right, and (c) third, to the extent of the
                                                -----
amount of Registrable Securities and Other Securities requested to be included
in such registration which, in the opinion of such managing underwriter, can be
sold without having the adverse effect referred to above, the amount of
Registrable Securities and Other Securities which the Holders and the Other
Holders have requested to be included in such registration, such
<PAGE>

                                                                              21

amount to be allocated pro rata among all requesting Holders and the Other
Holders on the basis of the relative amount of Registrable Securities and Other
Securities then held by each such Holder and Other Holder (provided, that any
                                                           --------
such amount thereby allocated to any such Holder or Other Holder that exceeds
such Holder's or Other Holder's request shall be reallocated among the remaining
requesting Holders and Other Holders in like manner).

          SECTION IV.2  Registration on Request.  (a)  At any time after the
                        -----------------------
date hereof, upon the written request of the Investor Stockholder (and any other
Holder; provided that no Transferee of any Investor Stockholder or its
        --------
Affiliates or of any Transferee shall be permitted to request a registration
pursuant to this Section 4.2 unless the right to make such a request was
transferred to such Transferee pursuant to Section 3.1(b)(ii)) (the "Demand
                                                                     ------
Party") requesting that the Company effect the registration under the Securities
-----
Act of all or part of such Demand Party's Registrable Securities and specifying
the amount and intended method of disposition thereof, the Company will promptly
give written notice of such requested registration to all other Holders, and
thereupon will, as expeditiously as possible, use its commercially reasonable
best efforts to effect the registration under the Securities Act of:

          (i)  the Registrable Securities which the Company has been so
     requested to register by the Demand Party; and

          (ii) all other Registrable Securities of the same class(es) or series
     as are to be registered at the request of a Demand Party and which the
     Company has been requested to register by any other Holder thereof by
     written request given to the Company within 15 days after the giving of
     such written notice by the Company (which request shall specify the amount
     and intended method of disposition of such Registrable Securities), all to
     the extent necessary to permit the disposition (in accordance with the
     intended method thereof as aforesaid) of the Registrable Securities so to
     be registered; provided, that in no event shall the Company be required to
                    --------
     effect more than three registrations pursuant to this Section 4.2 (which
     number shall be increased to four in the event a Qualified Option Closing
     occurs); and provided, further, that, the Company shall not be obligated to
                  --------  -------
     file a registration statement relating to any registration request under
     this Section 4.2 (other than a registration statement on Form S-3 or any
     successor or similar short-form registration statement) within a period of
     90 days after the effective date of any other registration statement
     relating to any registration request under this Section 4.2 or to any
     registration effected under Section 4.1, in either case which was not
     effected on Form S-3 (or any successor or similar short-form registration
     statement). Nothing in this Section 4.2 shall operate to limit the right of
     any Holder to request the registration of Common Stock issuable upon
     conversion of the Preferred Stock or the conversion, exchange or exercise
     of any other securities held by such Holder notwithstanding the fact that
     at the time of request such Holder does not hold the Common Stock
     underlying such securities.

          (b)  Registration Statement Form.  The Company shall select the
               ---------------------------
registration statement form for any registration pursuant to this Section 4.2;

provided, that if any registration requested pursuant to this Section 4.2 which
--------
is proposed by the Company to be effected by the filing of a registration
statement on Form S-3 (or any successor or similar short-form registration
<PAGE>

                                                                              22

statement) shall be in connection with an underwritten public offering, and if
the managing underwriter shall advise the Company in writing that, in its
opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering, then such registration
shall be effected on such other form.

          (c)  Expenses.  The Company will pay all Registration Expenses in
               --------
connection with registrations of each class or series of Registrable Securities
pursuant to this Section 4.2.

          (d)  Effective Registration Statement.  A registration requested
               --------------------------------
pursuant to this Section 4.2 will not be deemed to have been effected unless it
has become effective and all of the Registrable Securities registered thereunder
have been sold.

          (e)  Selection of Underwriters.  If a requested registration pursuant
               -------------------------
to this Section 4.2 involves an underwritten offering, the investment banker(s),
underwriter(s) and manager(s) for such registration shall be selected by the
Holders of a majority of the Registrable Securities which the Company has been
requested to register; provided, however, that such investment banker(s),
                       --------  -------
underwriter(s) and manager(s) shall be reasonably satisfactory to the Company.

          (f)  Priority in Requested Registrations.  If a requested registration
               -----------------------------------
pursuant to this Section 4.2 involves an underwritten offering and the managing
underwriter advises the Company in writing that, in its opinion, the number of
securities to be included in such registration (including securities of the
Company which are not Registrable Securities) would be likely to have an adverse
effect on the price, timing or distribution of the securities to be offered in
such offering as contemplated by the Holders (an "Adverse Effect"), then the
                                                  --------------
Company shall include in such registration (a) first, 100% of the Registrable
                                               -----
Securities requested to be included in such registration by the Demand Party and
all other Holders of Registrable Securities pursuant to this Section 4.2 (to the
extent that the managing underwriter believes that all such Registrable
Securities can be sold in such offering without having an Adverse Effect;

provided, that if they cannot and the Demand Party does not exercise its right
--------
set forth in the second succeeding sentence of this clause (f), such lesser
number of Registrable Securities as specified by the Demand Party) and (b)

second, to the extent the managing underwriter believes additional securities
------
can be sold in the offering without having an Adverse Effect, the amount of
Other Securities requested to be included by Other Holders in such registration,
allocated pro rata among all requesting Other Holders on the basis of the
relative amount of all Other Securities then held by each such Other Holder
(provided, that any such amount thereby allocated to any such Other Holder that
---------
exceeds such Other Holder's request shall be reallocated among the remaining
requesting Other Holders in like manner).  In the event that the number of
Registrable Securities and Other Securities to be included in such registration
is less than the number which, in the opinion of the managing underwriter, can
be sold without having an Adverse Effect, the Company may include in such
registration the securities the Company proposes to sell up to the number of
securities that, in the opinion of such managing underwriter, can be sold
without having an Adverse Effect.  If the managing underwriter of any
underwritten offering shall advise the Holders participating in a registration
pursuant to this Section 4.2 that the Registrable Securities covered by the
registration statement cannot be sold in such offering within a price range
acceptable to the Demand Party, then the Demand Party shall have the right to
notify the
<PAGE>

                                                                              23

Company that it has determined that the registration statement be abandoned or
withdrawn, in which event the Company shall abandon or withdraw such
registration statement.

          (g) Postponements in Requested Registrations.  Notwithstanding Section
              ----------------------------------------
4.2(f), (i) if the Board determines, in its good faith judgment, that the
registration and offering otherwise required by this Section 4.2 would have an
adverse effect on a then contemplated public offering of the Company's Equity
Securities, the Company may postpone the filing (but not the preparation) of a
registration statement required by this Section 4.2, during the period starting
with the 30/th/ day immediately preceding the date of the anticipated filing of,
and ending on a date 60 days following the effective date of, the registration
statement relating to such other public offering and (ii) if the Company shall
at any time furnish to the Holders a certificate signed by its chairman of the
board, chief executive officer, president or any other of its authorized
officers stating that the Company has pending or in process a material
transaction, the disclosure of which would, in the good faith judgment of the
Board, after consultation with its outside securities counsel, materially and
adversely affect the Company, the Company may postpone the filing (but not the
preparation) of a registration statement required by this Section 4.2 for up to
90 days; provided, that, the Company shall at all times in good faith use its
         --------
commercially reasonable best efforts to cause any registration statement
required by this Section 4.2 to be filed as soon as possible and; provided,
                                                                  --------
further, that, the Company shall not be permitted to postpone registration
-------
pursuant to this Section 4.2(g) more than once in any 360-day period. The
Company shall promptly give the Holders requesting registration thereof pursuant
to this Section 4.2 written notice of any postponement made in accordance with
the preceding sentence. If the Company gives the Holders such a notice, the
Holders shall have the right, within 15 days after receipt thereof, to withdraw
their request in which case, such request will not be counted for purposes of
this Section 4.2.

          SECTION IV.3  Registration Procedures.  If and whenever the Company is
                        -----------------------
required to use its commercially reasonable best efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as provided
in this Agreement, the Company will promptly:

          (a)  prepare and, in any event within 45 days after the end of the
period within which a request for registration may be given to the Company, file
with the SEC a registration statement with respect to such Registrable
Securities and use its commercially reasonable best efforts to cause such
registration statement to become effective within 90 days of the initial filing;

          (b)  prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period not
in excess of 180 days and to comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such registration statement; provided, that before filing a registration
                             --------
statement or prospectus, or any amendments or supplements thereto in accordance
with Sections 4.3(a) or (b), the Company will furnish to
<PAGE>

                                                                              24

counsel selected pursuant to Section 4.8 hereof copies of all documents proposed
to be filed, which documents will be subject to the review of such counsel;

          (c)  furnish to each seller of such Registrable Securities such number
of copies of such registration statement and of each amendment and supplement
thereto (in each case including all exhibits filed therewith, including any
documents incorporated by reference), such number of copies of the prospectus
included in such registration statement (including each preliminary prospectus
and summary prospectus), in conformity with the requirements of the Securities
Act, and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities by such seller;

          (d)  use its commercially reasonable best efforts to register or
qualify such Registrable Securities covered by such registration in such
jurisdictions as each seller shall reasonably request, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction where, but for the requirements of this subsection (d), it
would not be obligated to be so qualified, to subject itself to taxation in any
such jurisdiction or to consent to general service of process in any such
jurisdiction;

          (e)  use its commercially reasonable best efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental authorities as may be necessary to
enable the seller or sellers thereof to consummate the disposition of such
Registrable Securities;

          (f)  notify each seller of any such Registrable Securities covered by
such registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the Company's becoming
aware that the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of any such seller, prepare and furnish to such seller a reasonable
number of copies of an amended or supplemental prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;

          (g)  otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security holders, as
soon as reasonably practicable (but not more than 18 months) after the effective
date of the registration statement, an earnings statement which shall satisfy
the provisions of Section 11(a) of the Securities Act;

          (h)  (i)  if such Registrable Securities are Common Stock (including
Common Stock issuable upon conversion, exchange or exercise of another
security), use its commercially reasonable best efforts to list such Registrable
Securities on any securities exchange on which the
<PAGE>

                                                                              25

Common Stock is then listed if such Registrable Securities are not already so
listed and if such listing is then permitted under the rules of such exchange;
and (ii) use its best efforts to provide a transfer agent and registrar for such
Registrable Securities covered by such registration statement not later than the
effective date of such registration statement;

          (i)  enter into such customary agreements (including an underwriting
agreement in customary form), which may include indemnification provisions in
favor of underwriters and other Persons in addition to, or in substitution for
the provisions of Section 4.6 hereof, and take such other actions as sellers of
a majority of shares of such Registrable Securities or the underwriters, if any,
reasonably requested in order to expedite or facilitate the disposition of such
Registrable Securities;

          (j)  obtain a "cold comfort" letter or letters from the Company's
independent public accounts in customary form and covering matters of the type
customarily covered by "cold comfort" letters as the seller or sellers of a
majority of shares of such Registrable Securities shall reasonably request;

          (k)  make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter, all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;

          (l)  notify counsel (selected pursuant to Section 4.8 hereof) for the
Holders of Registrable Securities included in such registration statement and
the managing underwriter or agent, immediately, and confirm the notice in
writing (i) when the registration statement, or any post-effective amendment to
the registration statement, shall have become effective, or any supplement to
the prospectus or any amendment to the prospectus shall have been filed, (ii) of
the receipt of any comments from the SEC, (iii) of any request of the SEC to
amend the registration statement or amend or supplement the prospectus or for
additional information, and (iv) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the registration statement for offering or
sale in any jurisdiction, or of the institution or threatening of any
proceedings for any of such purposes;

          (m)  make every reasonable effort to prevent the issuance of any stop
order suspending the effectiveness of the registration statement or of any order
preventing or suspending the use of any preliminary prospectus and, if any such
order is issued, to obtain the withdrawal of any such order as soon as
practicable;

          (n)  if requested by the managing underwriter or agent or any Holder
of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, with respect to the number
<PAGE>

                                                                              26

of Registrable Securities being sold by such Holder to such underwriter or
agent, the purchase price being paid therefor by such underwriter or agent and
with respect to any other terms of the underwritten offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement or
post-effective amendment;

          (o)  cooperate with the Holders of Registrable Securities covered by
the registration statement and the managing underwriter or agent, if any, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legends) representing securities to be sold under the registration
statement, and enable such securities to be in such denominations and registered
in such names as the managing underwriter or agent, if any, or such Holders may
request;

          (p)  obtain for delivery to the Holders of Registrable Securities
being registered and to the underwriter or agent an opinion or opinions from
counsel for the Company in customary form and in form, substance and scope
reasonably satisfactory to such Holders, underwriters or agents and their
counsel;

          (q)  cooperate with each seller of Registrable Securities and each
underwriter or agent participating in the disposition of such Registrable
Securities and their respective counsel in connection with any filings required
to be made with the NASD; and

          (r)  use its commercially reasonable best efforts to make available
the executive officers of the Company to participate with the Holders of
Registrable Securities and any underwriters in any "road shows" or other selling
efforts that may be reasonably requested by the Holders in connection with the
methods of distribution for the Registrable Securities.

          SECTION IV.4  Information Supplied.  The Company may require each
                        --------------------
seller of Registrable Securities as to which any registration is being effected
to furnish the Company with such information regarding such seller and pertinent
to the disclosure requirements relating to the registration and the distribution
of such securities as the Company may from time to time reasonably request.

          SECTION IV.5  Restrictions on Disposition.  Each Holder agrees that,
                        ---------------------------
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 4.3(f), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 4.3(f), and,
if so directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.  In the event the Company shall
give any such notice, the period mentioned in Section 4.3(b) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 4.3(f) and to and including the date
when each seller of
<PAGE>

                                                                              27

Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 4.3(f).

          SECTION IV.6  Indemnification.  (a)  In the event of any registration
                        ---------------
of any securities of the Company under the Securities Act pursuant to Section
4.1 or 4.2, the Company shall, and it hereby does, indemnify and hold harmless,
to the extent permitted by law, the seller of any Registrable Securities covered
by such registration statement, each Affiliate of such seller and their
respective directors, officers, members or general and limited partners (and any
director, officer, and controlling Person of any of the foregoing), each Person
who participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act (collectively, the "Indemnified
                                                             -----------
Parties"), against any and all losses, claims, damages or liabilities, joint or
-------
several, actions or proceedings (whether commenced or threatened) in respect
thereof ("Claims") and expenses (including reasonable attorney's fees and
          ------
reasonable expenses of investigation) to which such Indemnified Party may become
subject under the Securities Act, common law or otherwise, insofar as such
Claims or expenses arise out of, relate to or are based upon (a) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereto, or (b) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading; provided, that the
                                                          --------
Company shall not be liable to any Indemnified Party in any such case to the
extent that any such Claim or expense arises out of, relates to or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such preliminary, final or summary prospectus in reliance upon and in conformity
with written information furnished to the Company by or behalf of such seller
specifically stating that it is for use in the preparation thereof.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any Indemnified Party and shall survive the transfer of
securities by any seller.

          (b)  The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 4.2 or 4.3 herein, that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable
Securities or any underwriter to indemnify and hold harmless (in the same manner
and to the same extent as set forth in Section 4.6(a)) the Company and all other
prospective sellers or any underwriter, as the case may be, with respect to any
untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto, if such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller or underwriter specifically stating that
it is for use in the preparation of such registration statement, preliminary,
final or summary prospectus or amendment or supplement, or a document
incorporated by reference into any of the foregoing.  Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any of the prospective sellers, or any of their
respective Affiliates,
<PAGE>

                                                                              28

directors, officers or controlling Persons and shall survive the transfer of
securities by any seller. In no event shall the liability of any selling Holder
of Registrable Securities hereunder be greater in amount than the dollar amount
of the proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.

          (c)  Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 4.6, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, that the failure of the indemnified party
                           --------
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under Section 4.6, except to the extent that the indemnifying
party is materially prejudiced by such failure to give notice.  In case any such
action or proceeding is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such action or
proceeding (in which case the indemnified party shall have the right to assume
or continue its own defense and the indemnifying party shall be liable for any
reasonable expenses therefor, but in no event will bear the expenses for more
than one firm of counsel for all indemnified parties in each jurisdiction who
shall be approved by the majority of the participating Holders in the
registration in respect of which such indemnification is sought), the
indemnifying party will be entitled to participate in and to assume the defense
thereof (at its expense), jointly with any other indemnifying party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation and shall have no
liability for any settlement made by the indemnified party without the consent
of the indemnifying party, such consent not to be unreasonably withheld.  No
indemnifying party will settle any action or proceeding or consent to the entry
of any judgment without the prior written consent of the indemnified party,
unless such settlement or judgment (i) includes as an unconditional term thereof
the giving by the claimant or plaintiff of a release to such indemnified party
from all liability in respect of such action or proceeding and (ii) does not
involve the imposition of equitable remedies or the imposition of any
obligations on such indemnified party and does not otherwise adversely affect
such indemnified party, other than as a result of the imposition of financial
obligations for which such indemnified party will be indemnified hereunder.

          (d)  (i) If the indemnification provided for in this Section 4.6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any Claim or expenses referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such Claim or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified party in connection with the actions
which resulted in such Claim or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of
<PAGE>

                                                                              29

a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 4.6(d) as a result of the Claim and
expenses referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with any action or
proceeding.

          (ii) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 4.6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in Section 4.6(d)(i).  No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

          (e)  Indemnification similar to that specified in this Section 4.6
(with appropriate modifications) shall be given by the Company and each seller
of Registrable Securities with respect to any required registration or other
qualification of securities under any Law or with any governmental authority
other than as required by the Securities Act.

          (f)  The obligations of the parties under this Section 4.6 shall be in
addition to any liability which any party may otherwise have to any other party.

          SECTION IV.7  Required Reports.  The Company covenants that it will
                        ----------------
file the reports required to be filed by it under the Securities Act and the
Exchange Act (or, if the Company is not required to file such reports, it will,
upon the request of any Holder, make publicly available such information), and
it will take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell shares of
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.  Upon the request of any Holder, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.

          SECTION IV.8  Selection of Counsel.  In connection with any
                        --------------------
registration of Registrable Securities pursuant to Sections 4.1 and 4.2 hereof,
the Holders of a majority of the Registrable Securities covered by any such
registration may select one counsel to represent all Holders of Registrable
Securities covered by such registration; provided, however, that in the event
                                         --------  -------
that the counsel selected as provided above is also acting as counsel to the
Company in connection with such registration, the remaining Holders shall be
entitled to select one additional counsel to represent all such remaining
Holders.

          SECTION IV.9  Holdback Agreement.  If any registration hereunder shall
                        ------------------
be in connection with an underwritten public offering, each Holder agrees not to
effect any public sale or distribution, including any sale pursuant to Rule 144
under the Securities Act, of any Equity Securities of the Company (in each case,
other than as part of such underwritten public offering), within 7 days before,
or subject to Section 4.2(g) in the case of a requested registration that has
been postponed pursuant to clause (i) thereof, 180 days (or such lesser period
as the managing
<PAGE>

                                                                              30

underwriters may permit) after, the effective date of such registration (except
as part of such registration), and the Company hereby also agrees and agrees to
use its commercially reasonable efforts to have each other holder of any Equity
Security of the Company purchased from the Company (at any time other than in a
public offering) to so agree.

          SECTION IV.10  No Inconsistent Agreements.  The Company represents and
                         --------------------------
warrants that it will not enter into, or cause or permit any of its Subsidiaries
to enter into, any agreement which conflicts with or limits or prohibits the
exercise of the rights granted to the Holders of Registrable Securities in this
Article IV.

                       ARTICLE V           EQUITY PURCHASE RIGHTS
                                           ----------------------

          SECTION V.1    Equity Purchase Rights. (a) The Company hereby grants
                         ----------------------
to the Investor Stockholder, so long as any shares of Preferred Stock are
outstanding, the right to purchase its Pro Rata Portion of all or any part of
New Securities which the Company may, from time to time, propose to sell or
issue. The number or amount of New Securities which the Investor Stockholder may
purchase pursuant to this Section 5.1(a) shall be referred to as the "Equity
                                                                      ------
Purchase Shares". The equity purchase right provided in this Section 5.1(a)
---------------
shall apply at the time of issuance of any right, warrant or option or
convertible or exchangeable security and not to the conversion, exchange or
exercise thereof; provided, that with respect to any such right, warrant, option
                  --------
or convertible or exchangeable security, the Investor Stockholder shall have the
right to purchase its Pro Rata Portion of a series of preferred stock of the
Company with terms identical to the Preferred Stock except that the conversion
price shall be the exercise, conversion or exchange price of such right,
warrant, option or convertible or exchangeable security.

          (b)  The Company shall give written notice of a proposed issuance or
sale described in Section 5.1(a) to the Investor Stockholder within two Business
Days following any meeting of the Board at which any such issuance or sale is
approved. Such notice (the "Issuance Notice") shall set forth the material
                            ---------------
terms and conditions of such proposed transaction, including the name of any
proposed purchaser(s), the proposed manner of disposition, the number or amount
and description of the shares proposed to be issued and the proposed purchase
price per share, including a description of any non-cash consideration
sufficiently detailed to permit valuation thereof. Such notice shall also be
accompanied by any written offer from the prospective purchaser to purchase such
New Securities. The Issuance Notice shall be received by the Investor
Stockholder at least 20 days prior to the proposed issuance or sale.

          (c)  At any time during the 20-day period following the receipt of an
Issuance Notice, the Investor Stockholder shall have the right to irrevocably
elect to purchase up to the number of the Equity Purchase Shares at the purchase
price set forth in the Issuance Notice (or if such price includes property other
than cash, the amount in cash equal to the Fair Market Value of such other
property) and upon the other terms and conditions specified in the Issuance
Notice by delivering a written notice to the Company.  Except as provided in the
following sentence, such purchase shall be consummated concurrently with the
consummation of the issuance or sale described in the Issuance Notice.  The
closing of any purchase by the Investor Stockholder may
<PAGE>

                                                                              31

be extended beyond the closing of the transaction described in the Issuance
Notice to the extent necessary to obtain required governmental approvals and
other required approvals and the Company and the Investor Stockholder shall use
their respective best efforts to obtain such approvals.

          (d   If the Investor Stockholder does not elect pursuant to Section
5.1(c) to purchase any of the Equity Purchase Shares, the Company shall be free
to complete the proposed issuance or sale described in the Issuance Notice on
terms no less favorable to the Company than those set forth in the Issuance
Notice; provided, that (x) such issuance or sale is closed within 90 days after
        --------
the expiration of the 20-day period described in Section 5.1(c) and (y) the
price at which the New Securities are transferred must be equal to or higher
than the purchase price described in the Issuance Notice. Such periods within
which such issuance or sale must be closed shall be extended to the extent
necessary to obtain required governmental approvals and other required approvals
and the Company shall use its commercially reasonable efforts to obtain such
approvals.

                           ARTICLE VI    STANDSTILL
                                         ----------

          SECTION VI.1  Acquisition of Additional Voting Securities.  (a)
                        -------------------------------------------
During the Standstill Period, except as provided below in this Section 6.1, the
Investor Stockholder covenants and agrees with the Company that it shall not,
and shall cause each of its Affiliates not to, directly or indirectly, acquire,
offer or propose to acquire or agree to acquire, whether by purchase, tender or
exchange offer, through the acquisition of control of another Person (including
by way of merger or consolidation), by joining a partnership, syndicate or other
Group or otherwise, the beneficial ownership of any additional Voting Securities
if following such proposed acquisition (an "Acquisition") the Investor
                                            -----------
Stockholder together with its Affiliates would beneficially own a number of
Voting Securities exceeding the Permitted Ownership Percentage (except (i) by
way of stock dividends, stock reclassifications or other distributions or
offerings made available and, if applicable, exercised on a pro rata basis, to
holders of Equity Securities of the Company generally, (ii) Equity Securities
acquired from the Company (including Conversion Shares and shares of Series E
Preferred Stock subject to the Option), and (iii) Voting Securities acquired
upon the exercise of the Investor Stockholder's rights under Article V) (the
"Acquisition Restrictions"); provided, however, that the foregoing Acquisition
 ------------------------    --------  -------
Restrictions shall not apply to any Acquisition that is approved by a majority
of the Directors, excluding for the purposes of such approval any Investor
Directors.

          (b   The foregoing Acquisition Restrictions will not apply if either
(i) a third party who is not an Affiliate of the Investor Stockholder or any of
its Affiliates (a "Third Party", which term shall include any Group, other than
                   -----------
a Group which includes the Investor Stockholder or any of its Affiliates as a
member) commences a tender or exchange offer for more than 50% of the
outstanding Voting Securities and the Board does not recommend against the
tender or exchange offer within ten Business Days after the commencement thereof
(which, in the case of an exchange offer, shall be deemed to be the effective
date of the registration statement relating to the securities offered in such
exchange offer or, if permitted under the Exchange Act, such earlier date
selected by the offeror for commencement of the exchange offer) or such longer
<PAGE>

                                                                              32

period as shall then be permitted under SEC rules, or (ii) a Third Party
acquires beneficial ownership of 15% of the outstanding Voting Securities (other
than as a result of purchases of such securities from the Company) and publicly
discloses a possible intention to seek control of the Company or to engage in a
transaction that would result in a Change of Control of the Company.

          (c   Upon a repurchase or redemption of Equity Securities by the
Company that, by reducing the number of outstanding Equity Securities, increases
the Ownership Percentage to an amount in excess of the then-applicable Permitted
Ownership Percentage, none of the Investor Stockholder or its Affiliates shall
be required to dispose of Equity Securities beneficially owned by them;
provided, however, that in such event, none of the Investor Stockholder or its
--------  -------
Affiliates may purchase additional Equity Securities until such time as the
Ownership Percentage is less than the then-applicable Permitted Ownership
Percentage.

          (d   If at any time the Investor Stockholder or any of its Affiliates
become aware that the Investor Stockholder and its Affiliates beneficially own
in the aggregate more than the Permitted Ownership Percentage, then the Investor
Stockholder shall, as soon as is reasonably practicable (but in no manner that
would require the Investor Stockholder or any such Affiliate to incur liability
under Section 16(b) of the Exchange Act) take all action necessary to reduce the
amount of Equity Securities beneficially owned by it and its Affiliates to an
amount not greater than the Permitted Ownership Percentage in effect at such
time.
<PAGE>

                                                                              33

                         ARTICLE VII    MISCELLANEOUS
                                        -------------

          SECTION VII.1 Investor Stockholder Indemnification; Reimbursement of
                        ------------------------------------------------------
Expenses.  The Company agrees to indemnify and hold harmless the Investor
--------
Stockholder, its respective directors and officers and its Affiliates (and the
directors, officers, partners, Affiliates and controlling persons thereof, each,
an "Investor Stockholder Indemnitee") from and against any and all liability,
    -------------------------------
including, without limitation, all obligations, costs, fines, claims, actions,
injuries, demands, suits, judgments, proceedings, investigations, arbitrations
(including stockholder claims, actions, injuries, demands, suits, judgments,
proceedings, investigations or arbitrations) and expenses, including, without
limitation, accountant's and attorney's fees and expenses (together the
"Losses"), incurred by the Investor Stockholder or an Investor Stockholder
 ------
Indemnitee before or after the date of this Agreement and arising out of,
resulting from, or relating to (i) the Investor Stockholder's purchase and/or
ownership of the Equity Securities, (ii) the transactions contemplated by the
Stock Purchase Agreement, the Stockholders Agreement, the Certificate of
Designation and the Voting Agreement, dated as of December 20, 1999, among the
Investor Stockholder and certain stockholders of the Company, (iii) any
litigation to which the Investor Stockholder or a Stockholder Indemnitee is made
a party in its capacity as a stockholder or owner of securities (or a partner,
director, officer, Affiliate or controlling person of the Investor Stockholder)
of the Company or (iv) any franchise taxes imposed on the Investor Stockholder.
The Company also agrees to reimburse each Investor Stockholder Indemnitee for
any reasonable expenses incurred by such Investor Stockholder Indemnitee in
connection with the maintenance of its books and records, preparation of tax
returns and delivery of tax information to its partners in connection with the
Investor Stockholder's investment in the Company.

          SECTION VII.2 Termination.  Subject to Section 3.1(b)(i), (x) the
                        -----------
provisions of this Agreement (other than Articles II, IV and VII) shall
terminate at such time as the Investor Stockholder shall own, together with its
Affiliates, less than 5% of the outstanding Common Stock as converted and (y)
the provisions of Article II shall terminate as provided in Section 2.7.
Article IV of this Agreement (other than Section 4.6 thereof) shall terminate at
such time as there shall be no Registrable Securities outstanding.  Section 7.1
of this Agreement shall not terminate.  Nothing herein shall relieve any party
from any liability for the breach of any of the agreements set forth in this
Agreement.

          SECTION VII.3 Amendments and Waivers.  Except as otherwise provided
                        ----------------------
herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or any Holder unless such modification,
amendment or waiver is approved in writing by the Company and each such Holder.
The failure of any party to enforce any of the provisions of this Agreement
shall in no way be construed as a waiver of such provisions and shall not affect
the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.

          SECTION VII.4 Successors, Assigns and Transferees.  This Agreement
                        -----------------------------------
shall bind and inure to the benefit of and be enforceable by the parties hereto
and their respective successors and permitted assigns. This Agreement may not be
assigned by any party hereto (except as described in the next sentence) without
the prior written consent of the other parties.
<PAGE>

                                                                              34

Purchaser and its Affiliates may assign their respective rights and obligations
hereunder to any Affiliate or Affiliates thereof and, subject to the Transfer
provisions herein, to any other third party.

          SECTION VII.5 Notices.  All notices required or permitted hereunder
                        -------
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified; (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day; (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one (1)
business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent, with respect to the Company and the Investor
Stockholder, to their respective addresses specified in the Stock Purchase
Agreement (or at such other address as any such party may specify by like
notice) and, with respect to any other Holder, to the address of such Holder as
shown in the stock record books of the Company (or at such other address as any
such Holder may specify to all of the above by like notice).

          SECTION VII.6 Further Assurances.  At any time or from time to time
                        ------------------
after the date hereof, the parties agree to cooperate with each other, and at
the request of any other party, to execute and deliver any further instruments
or documents and to take all such further action as the other party may
reasonably request in order to evidence or effectuate the consummation of the
transactions contemplated hereby and to otherwise carry out the intent of the
parties hereunder.

          SECTION VII.7 Entire Agreement.  Except as otherwise expressly set
                        ----------------
forth herein, this document and the Stock Purchase Agreement embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way.

          SECTION VII.8 Delays or Omissions.  It is agreed that no delay or
                        -------------------
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach, default or
noncompliance under this Agreement or any waiver on such party's part of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, by law, or otherwise afforded to any
party, shall be cumulative and not alternative.

          SECTION VII.9 Governing Law; Jurisdiction; Waiver of Jury Trial.
                        -------------------------------------------------
This Agreement shall be governed in all respects by the laws of the State of New
York. No suit, action or proceeding with respect to this Agreement may be
brought in any court or before any similar authority other than in a court of
competent jurisdiction in the State of New York, and the
<PAGE>

                                                                              35

parties hereto hereby submit to the exclusive jurisdiction of such courts for
the purpose of such suit, proceeding or judgment. The parties hereto hereby
irrevocably waives any right which they may have had to bring such an action in
any other court, domestic or foreign, or before any similar domestic or foreign
authority. Each of the parties hereto hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding in relation to this
Agreement and for any counterclaim therein.

          SECTION VII.10 Severability.  Whenever possible, each provision of
                         ------------
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

          SECTION VII.11 Effective Date.  This Agreement shall become effective
                         --------------
immediately upon the First Closing.

          SECTION VII.12 Enforcement.  Each party hereto acknowledges that money
                         -----------
damages would not be an adequate remedy in the event that any of the covenants
or agreements in this Agreement are not performed in accordance with its terms,
and it is therefore agreed that in addition to and without limiting any other
remedy or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.

          SECTION VII.13 Titles and Subtitles.  The titles of the sections and
                         --------------------
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

          SECTION VII.14 No Recourse.  Notwithstanding anything that may be
                         -----------
expressed or implied in this Agreement, the Company and each Holder covenant,
agree and acknowledge that no recourse under this Agreement or any documents or
instruments delivered in connection with this Agreement shall be had against any
current or future director, officer, employee, general or limited partner or
member of the Investor Stockholder or of any Affiliate or assignee thereof,
whether by the enforcement of any assessment or by any legal or equitable
proceeding, or by virtue of any statute, regulation or other applicable law, it
being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by any current or future
officer, agent or employee of the Investor Stockholder or any current or future
member of the Investor Stockholder or any current or future director, officer,
employee, partner or member of the Investor Stockholder or of any Affiliate or
assignee thereof, as such for any obligation of the Investor Stockholder under
this Agreement or any documents or instruments delivered in connection with this
Agreement for any claim based on, in respect of or by reason of such obligations
or their creation.
<PAGE>

                                                                              36

          SECTION VII.15 Counterparts; Facsimile Signatures.  This Agreement may
                         ----------------------------------
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. This Agreement may be
executed by facsimile signature(s).
<PAGE>

                                                                              37

          IN WITNESS WHEREOF, the parties hereto have executed the STOCKHOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.

                                        CAIS INTERNET, INC.

                                        By:__________________________________
                                           Name:
                                           Title:

                                        CII VENTURES LLC

                                        By:__________________________________
                                           Name:
                                           Title:

                                        _____________________________________
                                        ULYSSES G. AUGER, SR.

                                        _____________________________________
                                        ULYSSES G. AUGER, II

                                        _____________________________________
                                        WILLIAM M. CALDWELL, IV

                                        _____________________________________
                                        EVANS K. ANDERSON

                                        _____________________________________
                                        GARY H. RABIN

                                        _____________________________________
                                        KEVIN BRAND
<PAGE>

                                                                              38

                                        CHANCERY LANE, L.P.

                                        By:  ________________________________
                                             General Partner

                                        By:  ________________________________
                                             Name:
                                             Title:<PAGE>

                                                                   Exhibit 10.63

                            ASSET PURCHASE AGREEMENT
                            ------------------------

                           dated as of March 15, 2000

                                  by and among

                  CAIS INTERNET, INC., a Delaware corporation

            CAIS SOFTWARE SOLUTIONS, INC.,  a California corporation

                                      and

             QUICKATM, LLC, a California limited liability company
<PAGE>

                            ASSET PURCHASE AGREEMENT
                            ------------------------

     This Asset Purchase Agreement (this "Agreement") is made as of March __,
2000, by and among QuickATM, LLC, a California limited liability company
("Seller"), CAIS Software Solutions, Inc., a California corporation ("Buyer")
and CAIS Internet, Inc., a Delaware corporation ("CAIS").

                                R E C I T A L S
                                ---------------

          A.  Seller conducts the business of, among other things, the
development, manufacture, lease, sale and operation of multi-media information
and Internet kiosks (the "Business").  The Business is conducted by Seller
primarily at its facility at 2437 Durant Avenue, Suite 207, Berkeley, California
(the "Facility").

          B.  Buyer is a wholly owned subsidiary of CAIS.

          C.  Subject to the terms and conditions of this Agreement, Buyer
desires to purchase, and Seller desires to sell, certain of the assets, rights
and tangible and intangible properties of the Business as currently conducted.
Buyer is willing to assume certain of the liabilities and obligations of Seller
specified herein related to the Business, upon the terms and conditions set
forth in this Agreement.

                        TERMS, COVENANTS AND CONDITIONS
                        -------------------------------
     1. DEFINITIONS.
        -----------

          For the purposes of this Agreement, in addition to any other terms
defined in this Agreement, the definitions cross-referenced below shall be
applicable:

        1.1  Accounts Receivable: shall be as defined in Section 2.2(b).
             -------------------

        1.2  Acquired Intellectual Property: shall be as defined in
             ------------------------------
             Section 2.1(d).

        1.3  Agreement: shall be as defined in the preamble.
             ---------

        1.4  Approval: shall be as defined in Section 2.4.1
             --------

        1.5  Assets: shall be as defined in Section 2.1.
             ------

        1.6  Assumed Liabilities: shall be as defined in Section 2.5.1.
             -------------------

        1.7  Books and Records: shall be as defined in Section 2.2(h).
             -----------------

        1.8  Broker:  shall be as defined in Section 3.13.
             ------

        1.9  Business: shall be as defined in the recitals.
             --------

        1.10  Buyer: shall be as defined in the preamble.
              -----
<PAGE>

        1.11  Buyer/CAIS Closing Documents: shall be as defined in
              ----------------------------
              Section 2.6.3.

        1.12  Buyer's Damages: shall be as defined in Section 9.2.
              ---------------

        1.13  CAIS:  shall be as defined in the preamble.
              ----

        1.14  CAIS Common Stock:  shall be as defined in Section 2.3.2.
              -----------------

        1.15  CAIS SEC Reports:  shall be as defined in Section 4.6.
              ----------------

        1.16  Cash Consideration:  shall be as defined in Section 2.3.2.
              ------------------

        1.17  Closing: shall be as defined in Section 2.6.1.
              -------

        1.18  Closing Date:  shall be as defined in Section 2.6.1
              ------------

        1.19  Confidential Information: shall be as defined in Sections 6.5
              ------------------------
              and 7.4.

        1.20  Confidentiality Agreement:  shall be as defined in Sections 6.5
              -------------------------
              and 7.4.

        1.21  Closing Date: shall be as defined in Section 2.6.1.
              ------------

        1.22  Consideration Shares:  shall be as defined in Section 2.3.2.
              --------------------

        1.23  Contracts: shall be as defined in Section 2.1(f).
              ---------

        1.24  Corporate Documents: shall be as defined in Section 2.2(c)
              -------------------

        1.25  Damages: shall be as defined in Section 9.3.
              -------

        1.26  Employee Plan: shall be as defined in Section 8.2.
              -------------

        1.27  ERISA: shall be as defined in Section 8.2.
              -----

        1.28  Escrow Agreement: shall be as defined in Section 2.3.3.
              ----------------

        1.29  Escrow Amount: shall be as defined in Section 2.3.3.
              -------------

        1.30  Excluded Assets: shall be as defined in Section 2.2.
              ---------------

        1.31  Facility: shall be as defined in the recitals.
              --------

        1.32  Facility Improvements: shall be as defined in Section 2.1(c).
              ---------------------

        1.33  Financial Statements: shall be as defined in Section 4.6.
              --------------------

        1.34  First Anniversary Date:  shall be as defined in Section 2.3.3.
              ----------------------

        1.35  Full Integration Date:  shall be as defined in Section 6.1.
              ---------------------

                                       2
<PAGE>

        1.36  GAAP: shall be as defined in Section 4.6.
              ----

        1.37  Incentive Compensation: shall be as defined in Section 2.3.2
              ----------------------

        1.38  Incentive Date: shall be as defined in Section 2.3.2.
              --------------

        1.39  Intangible Personal Property: shall be as defined in
              ----------------------------
              Section 2.1(e).

        1.40  Intellectual Property: shall be as defined in Section 2.1(d).
              ---------------------

        1.41  Inventory: shall be as defined in Section 2.1(a).
              ---------

        1.42  IRC: shall be as defined in Section 8.2.
              ---

        1.43  Lease:  shall be as defined in Section 2.1(g).
              -----

        1.44  Liens: shall be as defined in Section 3.3.
              -----

        1.45  Machinery and Equipment: shall be as defined in Section 2.1(b).
              -------------------------------------------------

        1.46  Material Adverse Effect: shall be as defined in Section 3.
              -------------------------------------------------

        1.47  Permitted Liens: shall be as defined in Section 3.3.
              -------------------------------------------------

        1.48  Purchase Price:  shall be as defined in Section 2.3.1
              -------------------------------------------------

        1.49  Registration Rights Agreement: shall be as defined in
              -------------------------------------------------
              Section 2.3.5.

        1.50  Seller: shall be as defined in the preamble.
              -------------------------------------------------

        1.51  Seller's Closing Documents: shall be as defined in Section 2.6.2.
              -------------------------------------------------

        1.52  Seller's Damages: shall be as defined in Section 9.3.
              -------------------------------------------------

        1.53  Seller's Key Officer: shall be as defined in Section 3.
              -------------------------------------------------

        1.54  Seller Names: shall be as defined in Section 7.3.1.
              -------------------------------------------------

        1.55  Subsidiary: shall be as defined in Section 2.1.
              -------------------------------------------------

        1.56  Taxes: shall be as defined in Section 2.2(f).
              -------------------------------------------------

        1.57  Used in the Business: shall be as defined in Section 2.1
              -------------------------------------------------

        1.58  Warranty Obligations: shall be as defined in Section 2.5.1(b).
              -------------------------------------------------

                                       3
<PAGE>

     2. SALE AND PURCHASE OF ASSETS.
        ---------------------------

        2.1  Sale of Assets.
             --------------

        Subject to the terms and conditions of this Agreement and for the
consideration set forth herein, Seller shall, at the Closing, sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from
Seller, all of the right, title and interest of Seller in and to the assets,
rights and tangible and intangible property Used in the Business (other than the
Excluded Assets), including, without limitation, the assets, rights, tangible
and intangible property specifically described in Sections 2.1(a)-(h) below, as
the same may exist at the Closing (the "Assets").  As used in this Agreement,
the term "Used in the Business" with respect to any asset, right, tangible and
intangible property, liability or obligation, shall mean (1) the use or accrual
of such item primarily relates to or primarily derives from the Business, and
(2) the item is reasonably necessary for the operation of the Business as
presently conducted and as conducted on the Closing Date.  As used herein,
"Subsidiary" shall mean, with respect to a specified company, an entity
controlled, directly or indirectly by such company, including, without
limitation, by such company's beneficial ownership of fifty percent (50%) or
more of such entity's outstanding voting stock or other equity interests.
Without limiting the generality of the foregoing, the Assets shall include,
without duplication, the right, title and interest of Seller in and to the
following as the same may exist at the Closing:

          (a) Inventory.  All inventories of raw materials, work-in-process,
              ---------
finished goods (including installation tooling), supplies and repair materials
owned by Seller Used in the Business existing as of the Closing Date, whether on
or within the Facility, en route thereto or elsewhere (the "Inventory").

          (b) Fixed Assets and Tangible Personal Property. All fixed assets and
              -------------------------------------------
tangible personal property owned or leased by Seller Used in the Business,
including, without limitation, all machinery (including replacement parts),
computers, computer auxiliary equipment and supplies,  equipment (including demo
equipment and replacement parts), supplies, tools, tooling, furniture, fixtures,
hardware, dies and spare parts Used in the Business ("Machinery and Equipment"),
including, but not limited to, the Machinery and Equipment set forth in Schedule
                                                                        --------
2.1(b) of Exhibit A hereto.
------    ---------

          (c) Facility Improvements.  All leasehold improvements and fixtures
              ---------------------
located at the Facility (the "Facility Improvements").

          (d) Intellectual Property.  All patents, trademarks and trademark
              ---------------------
applications listed on Schedule 2.1(d) of Exhibit A attached hereto, all patent
                       ---------------    ---------
applications and invention disclosures set forth in such schedule, and all
service marks, service mark applications, trade and other names (either
registered, common law or registration applied for), copyrights, copyright
applications, trade secrets, know-how, processes, proprietary computer software,
manufacturing or marketing procedures, recipes, formulae, drawings, schematics
and patterns (collectively, "Intellectual Property") owned by Seller that are
Used in the Business, including, but not limited to, the Intellectual Property
listed on Schedule 2.1(d) of Exhibit A hereto (all such Intellectual Property,
          ---------------    ---------
collectively, the "Acquired Intellectual Property").  Without limitation of the
foregoing, the Acquired Intellectual Property shall be deemed to further include
any drawings,

                                       4
<PAGE>

documentation, schematics, manuals or other materials, whether in written or
magnetic form to the extent that the same describe, disclose or otherwise set
forth any of the Acquired Intellectual Property.

          (e) Intangible Personal Property.  All warranties, guaranties, vendor
              ----------------------------
lists, customer lists, customer files, customer records, trade and other
association memberships and rights, licenses and permits susceptible of transfer
under regulatory agency or other applicable rules, and which are Used in the
Business (the "Intangible Personal Property").

          (f) Contracts.  All contracts of Seller Used in the Business,
              ---------
including, without limitation, all patent, technology, software and other
Intellectual Property license agreements, assignment agreements, purchase
contracts, purchase orders, sales contracts, sales orders, rights to discounts,
maintenance agreements, installation agreements, sales representative
agreements, Internet service agreements, distribution agreements, joint
development contracts and agreements related to equipment leased from Seller or
third parties Used in the Business (collectively, the "Contracts"), including,
but not limited to, those Contracts listed on Schedule 2.1(f) of Schedule A
                                              --------------     ----------
hereto.

          (g) Facility.  All of Seller's right, title and interest as tenant in
              --------
and to the lease for the Facility ("Lease").  Buyer and CAIS acknowledge that
the Facility lease is a month-to-month tenancy.  Further, Buyer may assume the
Seller's insurance policies relating to the Facility or the Business listed on

Schedule 2.1(g) of Schedule A hereto, provided that the insurer, in each case,
-----------------------------
consents to such assignment and assumption and Buyer (or CAIS) agrees to
reimburse Seller for prepaid policy premiums, deductible and other amounts.

          (h) Books and Records.  All books, records, logs, plans,
              ------------------
specifications, blueprints, data, operating manuals, drawings, sketches,
diagrams, marketing materials, and other reports or documents Used in the
Business but excluding any Corporate Documents, or any documents or records
pertaining to Excluded Assets or to any liabilities other than the Assumed
Liabilities (collectively, "Books and Records").

        2.2  Assets Not Purchased.
             --------------------

          Notwithstanding Section 2.1, Seller shall not sell, and Buyer shall
not acquire any interest in, any of the following (collectively, the "Excluded
Assets"):

          (a)  Cash.  Any cash, cash deposits, securities, other cash
               ----
equivalents, cash refunds, insurance policies (including, but not limited to,
any pre-payments and any rights thereunder), security bonds or deposits, or bank
accounts.

          (b)  Accounts Receivable.  All accounts receivable or notes receivable
               -------------------
of Seller accrued in the Business and outstanding as of the Closing Date (the
"Accounts Receivable").

          (c)  Corporate Documents. All organizational documents, financial or
               -------------------
tax information, minute books, stock ledgers, or similar corporate documents and
records pertaining to Seller and its affiliates, including, but not limited to,
Seller's name and identity ("Corporate Documents").

                                       5
<PAGE>

          (d)  Royalty Bearing Licenses.  Any agreements by Seller to license or
               ------------------------
assign patent, technology, software or other Intellectual Property license
agreements to other parties where royalties (or claims with respect thereto)
accrue to the licensor.

          (e)  Other Real Property.  Real property or real property interests
               -------------------
other than the Lease.

          (f)  Tax Refunds.  Any refund of the following: any federal, state,
               -----------
local, or foreign income, gross receipts, license, payroll, parking, employment,
excise, severance, stamp, occupation, premium, windfall profits, environmental
(including, without limitation, taxes under IRC Code Sec. 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, documentary, value added, alternative or add-on minimum,
estimated tax or other tax of any kind whatsoever (collectively, "Taxes"), or
any claim for a refund of Taxes for periods before the Closing. Notwithstanding
the foregoing, or anything else to the contrary set forth in this Agreement,
neither Buyer nor Seller shall have any obligation to apply for, pursue or
otherwise seek to obtain any refund for Taxes for periods prior to or after the
Closing.

          (g)  Contingent Benefits. Any claims or rights against third parties
               -------------------
arising from the ownership of the Assets or the conduct of the Business before
the Closing Date, other than rights described in clause (f) of Section 2.1 with
respect to Contracts that remain executory.

          (h)  Intercompany Agreements. Any distributor, representative or
               -----------------------
service agreements, contracts or commitments exclusively between Seller and any
affiliate of Seller.

          (i)  Property Not Specifically Included. Any assets, property, rights,
title or other interests not specifically included in the definition of "Assets"
and set forth in Section 2.1. Such assets shall remain the property of Seller
and Buyer shall have no liability or other responsibility with respect thereto.

        2.3  Purchase Price.
             --------------

          2.3.1  Total Consideration.  Subject to the terms and conditions of
                 -------------------
this Agreement (including, without limitations, Section 11.3 below), as
consideration for Buyer's purchase of the Business and the Assets: (a) Buyer and
CAIS shall pay total consideration equal to $1,750,000 as set forth in Section
2.3.2 below (the "Purchase Price") and (b) Buyer (but not CAIS) shall assume the
Assumed Liabilities.

          2.3.2  Payment of Consideration.  The Purchase Price shall consist of:
(i) a number of shares of CAIS Common Stock, par value $.01 per share ("CAIS
Common Stock"), equal to (x) One Million Two Hundred and Fifty Thousand Dollars
($1,250,000) divided by (y) the average closing price of the CAIS Common Stock
on the Nasdaq Stock Market for the ten (10) trading days immediately preceding
the Closing Date (the "Consideration Shares"), (ii) cash in an aggregate amount
of Five Hundred Thousand dollars ($500,000) (the "Cash Consideration"), and
(iii) at the "Incentive Date," cash incentive compensation equal to (x) One
Thousand Five Hundred Dollars ($1,500) for each information-only kiosk acquired
by Buyer that Buyer agrees to convert to an Internet access kiosk, and (y) Two
Thousand Five Hundred Dollars ($2,500) for each new Internet kiosk location that
Buyer agrees to establish upon a referral from

                                       6
<PAGE>

Clifford S. Orloff (collectively, the "Incentive Compensation"). The Incentive
Compensation shall be paid on the Incentive Date, which shall be the date which
is the later of ten weeks after August 29, 2000 or ten weeks after the
termination of the Consulting Agreement dated as of the date hereof by and
between Clifford S. Orloff and Buyer, and the Incentive Compensation shall be
paid with respect only to kiosks converted or established prior to or on the
Incentive Date. Without limiting the generality of the foregoing, Buyer shall
have no obligations with respect to Incentive Compensation for kiosks converted
or established after the Incentive Date.

          2.3.3  Escrow.  Prior to the Closing, shares of CAIS Common Stock
                 ------
equal to ten percent (10%) of the Consideration Shares shall be delivered to and
held in escrow (the "Escrow Amount") until the first anniversary date of the
Closing Date (the "First Anniversary Date") (subject to any pending claims for
indemnification which exist on such date) pursuant to an Escrow Agreement in the
form attached hereto as Exhibit 2.6.2(e) (the "Escrow Agreement") to secure
                        ----------------
claims by indemnified parties for indemnification pursuant to Section 9 of this
Agreement. As set forth in Section 9.7, Seller's liability arising out of, or in
connection with, this Agreement shall be limited to the Escrow Amount; provided,
however, that none of the provisions of this Agreement, the Escrow Agreement, or
any other agreements entered into by the parties in furtherance of this
Agreement shall in any manner limit the liability of Seller, or any person who
is or was an officer, employee, member or agent of Seller, with respect to (i)
fraud; (ii) intentional misrepresentation; or (iii) criminal conduct.

          2.3.4  No Fractional Shares.  No fraction of a share of CAIS Common
                 --------------------
Stock shall be issued pursuant to this Agreement. In lieu of fractional shares,
the Seller shall be paid an amount in cash, without interest, rounded to the
nearest cent, determined by multiplying the fractional interest to which Seller
would otherwise be entitled by the average closing price of CAIS Common Stock
computed pursuant to clause (i) of Section 2.3.2.

          2.3.5  Restricted Stock.  The shares of CAIS Common Stock issued
                 ----------------
pursuant to this Agreement will not be registered under the Securities Act of
1933, as amended ("Securities Act"), except as provided in the Registration
Rights Agreement attached hereto as Exhibit 2.6.2(d) (the "Registration Rights
                                    ----------------
Agreement").  Such shares may not be transferred or resold thereafter, except in
compliance with the terms of this Agreement and the Registration Rights
Agreement and following registration under the Securities Act or in reliance on
an exemption from registration under the Securities Act.  Notwithstanding the
foregoing, the parties each acknowledge and agree that it is the intention of
the members of Seller to dissolve Seller and to distribute the assets of Seller,
including the shares of CAIS Common Stock purchased hereunder, to the members of
Seller as well as to a certain non-employee director, to certain employees and
to the Broker (as defined herein) as compensation for Broker's services in
connection with this Agreement.  Accordingly, the parties will take all
necessary steps to enable the transfer of CAIS Common Stock to the above
mentioned parties, provided that the recipients of CAIS Common Stock cooperate
fully with the parties and otherwise abide by all applicable state and federal
securities laws.

        2.4  No Assignment in Certain Circumstances.
             -----------------------------------------

          2.4.1  Consents.  Notwithstanding anything else contained in this
                 --------
Agreement to the contrary, this Agreement shall not constitute an agreement to
sell, convey, assign, transfer or

                                       7
<PAGE>

deliver any interest in any instrument, commitment, contract, lease, permit or
other agreement or arrangement or any claim, right or benefit arising thereunder
or resulting therefrom if such a transfer or an attempt to make such a transfer
without the authorization, approval, consent or waiver (collectively,
"Approval") of a third party would constitute a breach or violation thereof, or
affect adversely the rights of Buyer, CAIS or Seller thereunder, or constitute a
Material Adverse Effect; and any such transfer to Buyer that requires the
Approval of a third party shall be made subject only to such Approval being
obtained. Prior to the Closing Date, Seller and Buyer shall reasonably
cooperate, at Seller's cost, and shall use commercially reasonable efforts to
obtain all Approvals required hereunder. In the event that any such Approval is
not obtained on or prior to the Closing Date, Seller shall continue to use
commercially reasonably efforts to obtain any such Approval and cooperate with
Buyer and CAIS in any reasonable and lawful arrangement to provide that Buyer
shall receive all of Seller's right, title and interest in any Asset with
respect to which such Approval is required, including, without limitation,
performance by Seller, as agent; provided, however, that, in connection with the
foregoing, Seller shall not be obligated to commence or prosecute any proceeding
of any nature before any governmental entity or pay any amount to any third
party other than at the sole expense of Buyer; provided further, however, that
any and all consent and assignment costs or charges expressly set forth in the
Contracts, including, without limitation, payments stated to be due in
connection with the sale, transfer, or other disposition of the Business by
Seller, shall be paid by Seller. Except as provided in Section 2.4.2 below, no
such Approval shall be a condition to Closing.

          2.4.2  Required Consents.  Seller shall obtain, at or prior to the
                 -----------------
Closing, the consent of Mark Daoud to the assignment, to Buyer, of the contracts
listed on Exhibit 2.4.2, in substantially the form of consent set forth in
          -------------
Exhibit 2.4.2. Seller shall also obtain, at or prior to Closing, from the
-------------
landlord to the Lease, such landlord's consent to assign the Lease to either
Buyer or CAIS.

        2.5  Assumed Liabilities.  __
             --------------------

          2.5.1  Assumption of Liabilities.  In connection with the purchase and
                 -------------------------
sale of the Assets pursuant to this Agreement, Buyer shall assume in writing at
the Closing pursuant to the Bill of Sale, Assignment and Assumption Agreement
attached hereto as Exhibit 2.6.2(a) (the "Transfer Agreement") only those
                   ----------------
liabilities and obligations of Seller set forth below (collectively, the
"Assumed Liabilities"):

                (a)  Contract Obligations.  Any obligation remaining to be
                     --------------------
performed under the Contracts, including, without limitation, installation and
maintenance obligations.

                (b)  Warranty Obligations.  Any continuing obligation of Seller
with respect to the performance of warranty and/or service obligations with
respect to the products and/or services related to the Assets ("Warranty
Obligations").

                (c)  Assets.  Any obligations or liabilities relating to the
Assets for which the event giving rise to each such obligation or liability, or
the claim relating to each such obligation or liability, arose after the Closing
Date.

                                       8
<PAGE>

          Except as provided in this Section 2.5, no other liabilities or
obligations of any nature, whether known or unknown, foreseen or unforeseen,
fixed or contingent, liquidated or unliquidated, accrued or unaccrued, shall be
assumed by Buyer in connection with the purchase and sale of the Assets
hereunder, and any such liabilities and obligations of any nature of Seller not
expressly assumed by Buyer pursuant to this Section 2.5 shall remain the sole
and absolute responsibility of Seller (collectively, the "Retained
Liabilities").

        2.6  Closing.
             -------

          2.6.1  Closing Date.  Subject to Sections 5 and 6, the closing of the
                 ------------
purchase and sale of the Assets and the assumption of the Assumed Liabilities
(the "Closing") shall take place at the offices of Morrison & Foerster LLP, 2000
Pennsylvania Avenue, N.W., Washington, DC, at 10:00 a.m. on March 10, 2000, or
at such other place, date or time as Buyer, CAIS and Seller may agree in
writing. The date of the Closing shall constitute the "Closing Date."

          2.6.2  Seller's Deliveries at Closing.  At the Closing, Seller shall
                 ------------------------------
deliver or cause to be delivered to Buyer:

                (a)  An executed counterpart of the Bill of Sale, Assignment and
Assumption Agreement in the form of Exhibit 2.6.2(a);
                                    ----------------
                (b)  Secretary's Certificates certifying the resolutions of the
members or managers, as the case may be, of Seller authorizing consummation of
the transactions contemplated by this Agreement substantially in the form of
Exhibit 2.6.2(b);
----------------

                (c)  Compliance Certificates substantially in the form of
Exhibit 2.6.2(c);
----------------

                (d)  An executed counterpart of the Registration Rights
Agreement in the form of Exhibit 2.6.2(d);
                         ----------------

                (e)  An executed counterpart of the Escrow Agreement in the form
of Exhibit 2.6.2(e); and
   ----------------

                (f)  An executed counterpart of the Consulting Agreement in the
form of Exhibit 2.6.2(f).
        ----------------

The documents referred to in Sections 2.6.2(a) through (f) above are hereinafter
referred to, collectively, as the "Seller's Closing Documents."

          2.6.3  Buyer's and CAIS' Deliveries at Closing. At the Closing, Buyer
                 ---------------------------------------
and/or CAIS, as the case may be, shall deliver or cause to be delivered to
Seller the following instruments and documents against delivery of the items
specified in Section 2.6.2:

                (a)  (1)  From Buyer, the Cash Consideration, subject to any
                          adjustment thereto pursuant to Section 11.3 below, by
                          wire transfer of immediately available funds to an
                          account, and in accordance with instructions,
                          designated by Seller; and (2) from CAIS, the
                          Consideration Shares;

                                       9
<PAGE>

                (b)  Secretary's Certificates certifying the resolutions of the
                     Boards of Directors of Buyer and of CAIS authorizing
                     consummation of the transactions contemplated by this
                     Agreement substantially in the form of Exhibit 2.6.3(b);
                                                            ----------------

                (c)  Compliance Certificates substantially in the form of
                     Exhibit 2.6.3(c);
                     ----------------

                (d)  An executed counterpart of the Bill of Sale, Assignment and
                     Assumption Agreement;

                (e)  An executed counterpart of the Registration Rights
                     Agreement;

                (f)  An executed counterpart of the Escrow Agreement; and

                (g)  An executed counterpart of the Consulting Agreement.

The documents referred to in Section 2.6.3(b) through (g) above, are hereinafter
referred to collectively, as the "Buyer/CAIS Closing Documents."  The Incentive
Compensation shall not be due at Closing, but rather, shall be payable, if at
all, from Buyer to Seller on the Incentive Date.

        2.7  Consent of Third Parties.  At the Closing, Seller shall provide
             ------------------------
Buyer with copies of such third party consents and Approvals as may have been
actually obtained by Seller through the Closing Date.

     3.  REPRESENTATIONS AND WARRANTIES OF SELLER.
         ----------------------------------------

          Seller hereby represents and warrants to Buyer and CAIS that, except
as otherwise disclosed in the Disclosure Schedule attached hereto as Schedule 3
                                                                     ---------
of Exhibit A, the following statements set forth in this Section 3 are true and
   ---------
correct, as of the Closing Date.  Whenever the term "to Seller's knowledge" or
"to the best of Seller's knowledge" or similar expression appears in any
representation or warranty in this Section 3, it means to the actual knowledge
(after reasonable investigation or inquiry) of Clifford Orloff, Seller's
President and Chief Executive Officer ("Seller's Key Officer").  Whenever the
term "Seller has received no notice" or like expression appears in any
representation or warranty in this Section 3, it means that Seller's Key Officer
has not received actual oral or written notice of the matter to which such term
is applied.  Whenever the term "Material Adverse Effect" or similar expression
appears in this Agreement, it means, an effect, on the Assets or the Business,
which is or is reasonably likely to be materially adverse to (a) the results of
operations or financial condition of the Business, taken as a whole, or (b)
Buyer's ability to operate the Business, after the Closing Date, substantially
in the form as it was conducted immediately prior to the Closing Date.

          3.1  Organization and Authority.  Seller: (i) is a duly organized and
               --------------------------
validly existing limited liability company and is in good standing under the
laws of the State of California; (ii) has all necessary power and authority to
own and lease its properties and to carry

                                       10
<PAGE>

on its business as and where it is now being conducted and to enter into and
perform this Agreement; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a Material Adverse
Effect.

        3.2  Authority Relating to this Agreement and Other Agreements;
             ---------------------------------------------------------
             No Violation of Other Instruments.
             ---------------------------------

          3.2.1  The execution and delivery of this Agreement and the Seller's
Closing Documents and the performance by Seller of its obligations hereunder and
thereunder have been duly authorized by all necessary limited liability company
action on the part of Seller and, assuming execution of this Agreement by Buyer
and CAIS, this Agreement and each of the Seller's Closing Documents will
constitute legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms, subject as to enforcement
only: (i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights generally; and (ii) to general principles of equity.

          3.2.2  Neither execution of this Agreement nor any of the Seller's
Closing Documents, nor the performance hereof or thereof by Seller, will to
Seller's knowledge: (i) conflict with or result in any breach or violation of
the terms of any decree, judgment, order, law or regulation of any court or
other governmental body now in effect applicable to Seller; (ii) conflict with,
or result in, with or without the passage of time or the giving of notice (or
both), any breach of any of the terms, conditions and provisions of, or
constitute a default under, or result in the creation of, any Lien (as defined
herein) upon any of the Assets pursuant to, any indenture, mortgage, lease,
agreement or other instrument to which Seller is a party or by which it or any
of the Assets are bound; or (iii) violate or conflict with any provision of
Seller's organizational instruments.

          3.2.3  To Seller's knowledge, and except as provided in Section 2.4.2,
no consent from any third party and no consent, approval or authorization of, or
declaration, filing or registration with, any government or regulatory authority
is required to be made or obtained by Seller in order to (i) assign and transfer
the Acquired Intellectual Property to Buyer, except for such consents which the
failure to obtain would not have, in the aggregate, a Material Adverse Effect;
or (ii) permit the execution, delivery or performance of this Agreement or any
of the Seller's Closing Documents by Seller, or the consummation by Seller of
any of the other transactions contemplated by this Agreement.

        3.3  Ownership and Delivery of Assets.  Except with respect to Assets
             --------------------------------
which are leased by or licensed to Seller, Seller has, or immediately prior to
the Closing will have, good and marketable title to all of the Assets consisting
of personal property and Seller has all necessary power and authority to
transfer such Assets to Buyer, free and clear of all liens, charges, security
interests, easements, covenants, mortgages, restrictions or other encumbrances,
rights of others or limitations (collectively, "Liens") other than any (a)
mechanics', carriers', workers' and other similar Liens arising in the ordinary
course of business; (b) Liens for real property Taxes and assessments not yet
due and payable; (c) non-monetary real property encumbrances that do not
materially interfere with the operation of that portion of the Business
conducted on such property; (d) Liens securing purchase money obligations or
obligations under

                                       11
<PAGE>

equipment leases which, in the aggregate, are not material in amount and have
not arisen other than in the ordinary course of business; and (e) with respect
to patents, patent applications, trademarks, trademark applications, software
and other Intellectual Property, any licenses which may have been granted by
Seller to third parties (collectively, "Permitted Liens").

        3.4  Compliance with Law.  To Seller's knowledge, Seller holds all
             -------------------
licenses, permits, authorizations and other Approvals necessary for the lawful
conduct of the Business whenever and wherever conducted pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all foreign and
domestic governmental and quasi-governmental bodies, agencies and subdivisions
having, asserting or claiming jurisdiction over Seller, the Assets or any part
of Seller's operations, and to Seller's knowledge, there is no violation thereof
or default thereunder. To Seller's knowledge, Seller is not in violation of any
decree, judgment, order, law or regulation of any court or other foreign or
domestic governmental and quasi-governmental body (including, without
limitation, applicable equal employment and civil rights regulations, wages,
hours and the payment of social security taxes and occupational health and
safety legislation).

        3.5  Absence of Certain Changes or Events.
             ------------------------------------

          (a)  Since December 31, 1999, to Seller's knowledge, there have been
no material changes in the condition, financial or otherwise, of any of the
assets, liabilities, business, or operations of the Business, other than changes
in the ordinary course of business which in the aggregate would not have a
Material Adverse Effect.

          (b)  Without limiting the foregoing, since December 31, 1999, (i)
Seller has not entered into any transaction other than in the ordinary course of
business relating to or affecting the Assets or the Business, other than this
Agreement; (ii) to Seller's knowledge, there have been no losses or damage to
any of the Assets due to fire or other casualty, whether or not insured,
amounting to more than Five Thousand Dollars ($5,000) in the aggregate; (iii) to
Seller's knowledge, Seller has not executed, created, amended or terminated any
Contract except in the ordinary course of business; (iv) there has been no
waiver or compromise by Seller of a material right or of a material debt owed to
it; (v) there has been no revaluation by Seller of any of the Assets; and (vi)
there has been no revocation of any license, permit, Approval or right to do
business granted to Seller relating to or affecting the Business.

        3.6  Inventory.  All of the Inventory is of the type used in the
             ---------
ordinary course of the business, and, except for excess, defective, obsolete and
slow-moving items, is in good operating condition, reasonable wear and tear
excepted. Except as set forth herein and subject to any other disclaimers of
warranties and limitations on liability expressly set forth in this Agreement,
the Inventory is being sold to Buyer on an "as is" basis without warranty of any
kind.

        3.7  Personal Property.  To Seller's knowledge, the Machinery and
             -----------------
Equipment is in good operating condition, reasonable wear and tear excepted, and
the leases to personal property utilized in the Business are valid and
enforceable and are not, with or without the passage of time, the delivery of
notice (or both), in material default by any party thereto.

                                       12
<PAGE>

        3.8  Lease.  To Seller's knowledge, the Lease is a valid and binding
             -----
obligation of Seller and the landlord thereunder, and is enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity) and is not, with or without the passage of time or the
delivery of notice (or both), in material default by any party thereto.

        3.9  Intellectual Property.  To Seller's knowledge, all of the Acquired
             ---------------------
Intellectual Property is owned by Seller free and clear of all Liens (other than
Permitted Liens) and the use of any of the Acquired Intellectual Property in the
conduct of the Business does not violate any license agreement between Seller
and any third party with respect to any of the Acquired Intellectual Property.
Seller has received no written notice of any alleged infringement on the rights
of any third party.  Seller has the right to transfer and assign the Acquired
Intellectual Property to Buyer hereunder.  Seller has received no written notice
of any action or proceeding pending or threatened, contesting the validity,
ownership or right to use, sell, license or dispose of the Acquired Intellectual
Property.  To Seller's knowledge, there has been no infringement or unauthorized
use by any other person or entity of any of the Acquired Intellectual Property.

        1.10  Product Warranties and Returns.  Seller has not made any
              ------------------------------
warranties or guarantees relating to its products or services that will be in
effect as of the Closing Date, except for warranties and guarantees given in the
ordinary course of business, including, without limitation, (i) warranties and
guarantees made in connection with Seller's established "Satisfaction
Guaranteed -- No Questions Asked" policy; and (ii) any warranties and guarantees
made in any of the Contracts.

        1.11  Litigation.  None of Seller nor any officer, director, employee or
              ----------
agent of Seller is a party to any pending or, to Seller's knowledge, threatened
action, suit, proceeding or investigation, at law or in equity or otherwise in,
for or by any court or other governmental or quasi-governmental body which would
have a Material Adverse Effect. Seller is not subject to any pending or, to
Seller's knowledge, threatened product liability claim relating to the Assets or
the Business. Seller is not subject to any decree, judgment, order, law or
regulation of any court or other governmental or quasi-governmental body which
would have a Material Adverse Effect.

        1.12  Personnel.  Seller has no union contracts or collective bargaining
              ---------
agreements with, or any other obligations to, employee organizations or groups
relating to the Business, nor is Seller currently engaged in any labor
negotiations, except in minor grievances not involving any employee organization
or group, nor, to the knowledge of Seller, is Seller the subject of any union
organization affecting its Business.  There is no pending or, to Seller's
knowledge, threatened labor dispute, strike or work stoppage affecting the
Business.  No employees of the Business are parties to any employment agreement
or other arrangement with Seller providing for such employees to receive any
bonus or other payment (in cash or otherwise) upon such employees' termination
of employment, other than ordinary accrued but unpaid salary, vacation pay
and/or severance pay under Seller's policies or law.

                                       13
<PAGE>

        1.13  Brokers and Finders.  Except as set forth herein, neither Seller
              -------------------
nor any member, manager, officer, employee or agent of Seller has retained any
broker or finder in connection with the transactions contemplated by this
Agreement. Notwithstanding the foregoing, Seller has retained Barman Capital,
LLC ("Broker") to represent Seller in connection with this Agreement and the
transactions contemplated thereby and Seller agrees, as between Seller and
Buyer, to pay and have full responsibility for Broker's fees and charges.

        1.14  Contracts.  Neither Seller nor, to Seller's knowledge, any other
              ---------
party to any Contract is, with or without the passage of time or the giving of
notice (or both), in default in the performance of, or not in compliance with,
any provisions of such Contract, other than any such default or non-compliance
which would not have a Material Adverse Effect. Seller has no knowledge of any
intent by any other party not to perform its obligations under any Contract.

        1.15  Major Customers.    Seller has not received any notice or other
              ---------------
communication (in writing or otherwise), and has not received any other
information, indicating that any recipient of any products or services under any
Contracts listed in Schedule 2.1(f) may terminate any Contract or cease dealing
                    ---------------
with Seller, or may otherwise reduce the volume of business transacted by such
Contract  party in any significant respect below historical levels.

     4.  REPRESENTATIONS AND WARRANTIES OF BUYER AND CAIS  .
         ------------------------------------------------

         Buyer hereby represents and warrants to Seller that the following
statements (Sections 4.1 through 4.3) are true and correct as of the Closing
Date.

        4.1  Organization and Authority. Buyer (i) is a corporation duly
             --------------------------
organized, validly existing and in good standing under the laws of the State of
California; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, results of operations or financial condition of Buyer
taken as a whole.

        4.2  Authority Relating to this Agreement; No Violation of Other
             -----------------------------------------------------------
Instruments.
-----------

          4.2.1  The execution and delivery of this Agreement and the Buyer/CAIS
Closing Documents and the performance hereunder and thereunder by Buyer have
been duly authorized by all necessary corporate action on the part of Buyer and,
assuming execution of this Agreement by Seller, this Agreement and each of the
Buyer/CAIS Closing Documents will constitute a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, subject as to enforcement only: (i) to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally; and (ii) to
general principles of equity.

          4.2.2  To Buyer's knowledge, neither the execution of this Agreement
or any of the Buyer/CAIS Closing Documents, nor the performance hereof or
thereof by Buyer will: (i) conflict with or result in the breach or violation of
the terms of any decree, judgment, order, law or regulation of any court or
other governmental body now in effect applicable to Buyer; (ii) conflict with,
or result in, with or without the passage of time or the giving of notice, any

                                       14
<PAGE>

breach of any of the terms, conditions and provisions of, or constitute a
default under, any indenture, mortgage, lease, agreement or other instrument to
which Buyer is a party or by which it is bound; or (iii) violate or conflict
with any provisions of Buyer's Articles of Incorporation, Bylaws, or similar
organizational instruments.

          4.2.3  No consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required to be made or obtained by Buyer in order to
permit the execution, delivery or performance of this Agreement by Buyer, or the
consummation by Buyer of its obligations contemplated by this Agreement, except
for such consents (i) where the failure to obtain the same would not have a
material adverse effect on the business, results of operations or financial
condition of Buyer taken as a whole, or (ii) which have not been received by
Buyer and may be necessary for Buyer to execute, deliver and perform this
Agreement and to consummate the transactions set forth herein, and all of which
shall be obtained by Buyer on or prior to the Closing Date.

        4.3  Sufficient Funds.  Buyer will have on the Closing Date sufficient
             ----------------
funds available to pay the Cash Consideration.

        CAIS hereby represents and warrants to Seller that the following
statements (Sections 4.4 through 4.7) are true and correct as of the Closing
Date.

        4.4  Organization and Authority. CAIS (i) is a corporation duly
             --------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, results of operations or financial condition of CAIS and
its Subsidiaries taken as a whole.

        4.5  Authority Relating to this Agreement; No Violation of Other
             -----------------------------------------------------------
Instruments.
-----------

          4.5.1  The execution and delivery of this Agreement and the Buyer/CAIS
Closing Documents and the performance hereunder and thereunder by CAIS have been
duly authorized by all necessary corporate action on the part of CAIS and,
assuming execution of this Agreement by Sellers, this Agreement and each of the
Buyer/CAIS Closing Documents will constitute a legal, valid and binding
obligation of CAIS, enforceable against CAIS in accordance with their respective
terms, subject as to enforcement only: (i) to bankruptcy, insolvency,
reorganization, arrangement, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally; and (ii) to
general principles of equity.

          4.5.2  To CAIS' knowledge, neither the execution of this Agreement or
any of the Buyer/CAIS Closing Documents, nor the performance hereof or thereof
by CAIS will: (i) conflict with or result in the breach or violation of the
terms of any decree, judgment, order, law or regulation of any court or other
governmental body now in effect applicable to CAIS; (ii) conflict with, or
result in, with or without the passage of time or the giving of notice, any
breach of any of the terms, conditions and provisions of, or constitute a
default under, any

                                       15
<PAGE>

material indenture, mortgage, lease, agreement or other instrument to which CAIS
is a party or by which it is bound; or (iii) violate or conflict with any
provisions of CAIS' Certificate of Incorporation or Bylaws.

          4.5.3  No consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required to be made or obtained by CAIS in order to
permit the execution, delivery or performance of this Agreement by CAIS, or the
consummation by CAIS of its obligations contemplated by this Agreement, except
for such consents (i) where the failure to obtain the same would not have a
material adverse effect on the business, results of operations or financial
condition of CAIS and its Subsidiaries taken as a whole, or (ii) which have not
been received by CAIS and may be necessary for CAIS to execute, deliver and
perform this Agreement and to consummate the transactions set forth herein, and
all of which shall be obtained by CAIS on or prior to the Closing Date.

        4.6  Reports and Financial Statements.  CAIS has filed all reports
             --------------------------------
required to be filed with the U.S. Securities Exchange Commission ("SEC")
pursuant to the Securities Act and the Securities Exchange Act of 1934, as
amended ("Exchange Act"), since its initial public offering on May 20, 1999 (all
such reports, including those to be filed prior to the Closing Date and all
registration statements and prospectuses filed by CAIS with the SEC in
connection with the Company's initial public offering, are collectively referred
to as the "CAIS SEC Reports"). All of such CAIS SEC Reports complied at the time
they were filed and declared effective, if applicable, in all material respects
with applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder. None of such CAIS SEC Reports, as of their
respective dates (as amended through the date hereof), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any financial
statements ("Financial Statements") included in the SEC Filings are complete and
correct in all material respects and present fairly the financial position and
results of operations as of and for the dates indicated in conformance with
generally accepted accounting principles ("GAAP") applied on a consistent basis,
except that the unaudited financial statements do not contain footnotes and are
subject to normal year-end audit adjustments. To the extent applicable, if any,
Buyer shall have made all required reports, disclosures or other filings as may
be required of it with respect to applicable state and federal laws. The
foregoing representations and warranties shall also be deemed to be made with
respect to all filings made with the SEC on or before the Closing Date.

        4.7  Capitalization.  The authorized capital stock of CAIS on the
             --------------
Closing Date will consist of: (i) 100,000,000 shares of CAIS Common Stock (as
defined herein); and (ii) 25,000,000 shares of preferred stock ("Preferred
Stock"), of which 125,000 shares are designated as Series C Preferred Stock
("Series C Stock") and which 9,620,393 shares are designated as Series D
Participating Preferred Stock ("Series D Stock"). As of the Closing Date,
22,498,161 shares of CAIS Common Stock, 125,000 shares of Series C Stock and
5,276,622 shares of Series D Stock are issued and outstanding. Prior to the
Closing, CAIS will have reserved sufficient shares of CAIS Common Stock for
issuance hereunder as the Consideration Shares. The Consideration Shares, when
issued in accordance with this Agreement, will be duly authorized, validly
issued, fully paid, and nonassessable, and will have the rights, preferences,
privileges,

                                       16
<PAGE>

and restrictions as set forth in CAIS' Certificate of Incorporation. The
Consideration Shares, when issued, will be free of any liens or encumbrances
created by CAIS; provided, however, that the Consideration Shares will be
subject to restrictions on transfer under federal and state securities laws and
as set forth herein, and ten percent (10%) of the Consideration Shares shall be
subject to the Escrow Agreement.

        Each of Buyer and CAIS hereby jointly and severally represent and
warrant to Seller that the following statements (Sections 4.8 through 4.12) are
true and correct as of the Closing Date.

        4.8  Brokers and Finders.  Except as set forth herein, neither Buyer,
             -------------------
CAIS nor any shareholder, director, officer, employee or agent of either Buyer
or CAIS has retained any broker or finder in connection with the transactions
contemplated by this Agreement.

        4.9  Changes.  Since December 31, 1999, there have not been any changes
             -------
in the assets, liabilities, financial condition, or operations of either Buyer
or CAIS, which would be required under GAAP to be reflected in financial
statements, except changes in the ordinary course of business which have not
had, individually or in the aggregate, a Materially Adverse Effect.

        4.10  Compliance.  Neither CAIS nor Buyer is in violation in any
              ----------
material respect of any provision of: (i) such party's certificate or articles
of incorporation, bylaws or similar organizational document; (ii) any mortgage,
indenture, contract, agreement, or instrument to which such party is subject; or
(iii) any judgment, decree, or order issued against such party. To the best of
each party's knowledge, neither CAIS nor Buyer is in violation in any material
respect of any law, rule, or regulation applicable to such party. The execution,
delivery and performance of and compliance with this Agreement, and the issuance
of the Consideration Shares, have not resulted and will not result: (i) in any
violation of or constitute a default under any such provision; or (ii) in the
creation of any mortgage, pledge, lien, encumbrance, or charge upon any of the
properties or assets of either CAIS or Buyer, in either case, which would result
in a Material Adverse Effect. There is no such undisclosed provision which would
have, or be likely to have, a Material Adverse Effect on the business of either
CAIS or Buyer.

        4.11  Litigation.  There are no actions, suits, proceedings, or
              ----------
investigations pending against either CAIS or Buyer, or its properties, before
any court or governmental agency (nor, to the best of each party's knowledge, is
there any threat thereof nor any factual or legal basis therefor), which, if
decided or resolved against CAIS or Buyer would result in a Material Adverse
Effect with respect to CAIS or Buyer.

        4.12  Governmental Consent.  No consent, approval, or authorization of,
              --------------------
or designation, declaration, or filing with, any governmental authority on the
part of either CAIS or Buyer is required in connection with the valid execution
and delivery of this Agreement, the Buyer/CAIS Closing Documents, and any other
documents executed by each party pursuant to this Agreement, or the offer, sale,
or issuance of the Consideration Shares, or the consummation of any other
transaction contemplated hereby, except for the filing and qualification (or
taking such action as may be necessary to secure an exemption from
qualification, if available) of the offer and sale of the Consideration Shares
under applicable state and federal securities laws,

                                       17
<PAGE>

which filing and qualification, if required, will be accomplished in a timely
manner prior to or promptly after the Closing Date.

     5. CONDITIONS TO THE OBLIGATIONS OF SELLER, BUYER AND CAIS  .
        -------------------------------------------------------

        Except as otherwise specifically set forth herein or as contemplated by
this Agreement, all obligations of Seller, Buyer and CAIS under this Agreement
are subject to the fulfillment, satisfaction or waiver in writing, prior to or
at the Closing Date, of each of the following conditions:

        5.1  Required Consents.  Buyer and CAIS shall have received the consents
             -----------------
required by Section 2.4.2.

        5.2  No Orders.  There shall not have been issued any preliminary or
             ---------
permanent court order enjoining or restraining the transactions contemplated by
this Agreement; provided that, in the event of any such preliminary order, the
Closing shall be delayed pending the lifting of such order, subject to Seller's,
Buyer's and CAIS' rights pursuant to Sections 10.3 and 10.4 below.

        5.3  Delivery of Closing Documents.  Seller shall have delivered to
             -----------------------------
Buyer and CAIS the Seller's Closing Documents, and Buyer and CAIS shall have
delivered to Seller the Buyer/CAIS Closing Documents.

     6. COVENANTS OF SELLER
        -------------------

        Seller and, to the extent obligations of Buyer and CAIS are set forth in
this Section 6, Buyer and CAIS, as applicable, covenant as follows:

        6.1  Access to Properties and Records.  Throughout the period between
             --------------------------------
the Closing Date and the latter of: (i) the integration of the Business into the
Buyer after Closing to the reasonable satisfaction of Buyer or (ii) the receipt
by Buyer of all consents necessary for the transfer and assignment of all of the
Assets to Buyer (the "Full Integration Date"), Seller shall give to Buyer and
CAIS and their authorized representatives reasonable access, during reasonable
business hours, in such a manner as to not unduly disrupt the normal business
activities of Seller, to any and all documents, records, correspondence or other
relevant information relating to any unassigned Contracts which arise after the
Closing Date; provided that, notwithstanding anything herein to the contrary,
Seller shall not be required to disclose any documents or information subject to
any confidentiality obligation that would by the terms of such confidentiality
obligation prohibit such disclosure. Any unintentionally disclosed confidential
or privileged documents shall be kept confidential and returned immediately upon
request by Seller without further disclosure. Without limiting the foregoing,
Buyer and CAIS shall be permitted to interview during regular business hours all
employees of Seller reasonably determined by Buyer and CAIS to be important to
the Business. A representative of Seller shall have the right to be present at
all such interviews. Notwithstanding the foregoing, under no circumstances shall
the Full Integration Date be later than the earlier of (A) the termination by
CAIS or Buyer of the Lease, or (B) six (6) months after the Closing Date.

                                       18
<PAGE>

        6.2  Conduct of the Business Prior to the Closing Date.  Until the
             -------------------------------------------------
Closing Date, and except as otherwise consented to or approved by an officer of
Buyer and CAIS in writing or as required by this Agreement:

          (i) The Business shall be operated in the ordinary course consistent
with past practices and in a normal businesslike fashion (including, without
limitation, its normal accounts receivable practice), Seller shall use
commercially reasonable efforts to preserve and maintain its goodwill, including
relationships with employees, suppliers and customers. Seller shall maintain
quantities of Inventories in a manner consistent with prior practice. In
addition, Seller shall maintain records and books of account for the Business
consistent with past practice, and shall continue to carry all of the insurance
for the Business consistent with past practice.

          (ii) Seller shall not, without the prior written approval of Buyer,
take any action which would cause any material change in any of the items and
matters covered by the representations and warranties set forth in Section 3,
including, without limitation:

                (a)  incurring or becoming subject to, or agreeing to incur or
become subject to, any obligation or liability (absolute or contingent)
primarily related to the Business, except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with past practices;

                (b)  mortgaging, pledging or assuming any Lien (other than any
Permitted Lien), or agreeing to do so, in respect to any of the Assets, except
in each case in the ordinary course of business consistent with past practices;

                (c)  waiving or compromising any material rights or any material
debt owed to Seller with respect to the Business;

                (d)  entering into any transactions primarily related to the
Business, other than in the ordinary course of business consistent with past
practices;

                (e)  increasing the rate of compensation payable or to become
payable to any employees working primarily in the Business, other than in the
ordinary course of the business consistent with past practices, or in connection
with the Closing hereunder;

                (f)  terminating or amending any material Contract, unless
terminated or amended in the ordinary course of business consistent with past
practices;

                (g)  introducing any new method of accounting with respect to
the Business or any of the Assets or liabilities of the Business (assumed or not
assumed) (including, without limitation, any change in depreciation or
amortization policies or rates);

                (h)  making any capital expenditures or entering into
commitments for capital expenditures for the Business exceeding, in the
aggregate, Ten Thousand Dollars ($10,000);

                (i)  hire or terminate employees engaged in and primarily
dedicated to the Business;

                                       19
<PAGE>

                (j)  alter its practice for creating or accounting for
Inventory; or

                (k)  commencing any litigation relating to the Business, except
those related to insured claims or arising in the ordinary course of business
consistent with past practices.

        6.3  Acquisition, Merger or Similar Negotiations With Other Parties.
             --------------------------------------------------------------
From the date hereof until the earlier of termination of this Agreement or the
Closing Date, none of Seller or any of its members, managers, officers,
employees, representatives, agents or affiliates shall directly or indirectly
encourage, solicit, initiate or conduct discussions or negotiations with,
provide any information to, or enter into any agreement with, any corporation,
partnership, limited liability company, person or other entity or group
concerning any merger, combination, consolidation, sale of assets (other than in
the ordinary course of business) or other similar transaction involving the
Business or the Assets, but excluding the Excluded Assets.

        6.4  Non-Compete.
             -----------

          (i) Provided that nothing herein shall prevent Seller from owning, in
the aggregate, not more than two percent (2%) of the outstanding stock or other
equity interests in any company with shares or other equity interests registered
pursuant to Sections 12(b) or 12(g) of the Exchange Act, Seller agrees that, for
a period of two (2) years the Full Integration Date, Seller will not (1) make,
sell or service (whether directly, indirectly or through any Subsidiary or
affiliate), or (2) directly or indirectly engage or invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation or control of, any business that makes, sells or services products and
services that compete with any products or services included in the Business.

          (ii) Seller and Buyer each further agrees that, for a period of two
(2) years following the Full Integration Date, neither will, directly or
indirectly, either for itself, or any other person or entity, induce or attempt
to induce any employee of the other (including all employees of the Business) or
any entity under common control with the other to leave the employ of such other
(other than pursuant to advertisements of general circulation).

        6.5  Confidentiality.
             ---------------

          (a)  Seller acknowledges and agrees that it shall treat and hold as
confidential any information concerning the business and affairs of Buyer, CAIS
or any of their respective affiliates that is not already generally available to
the public (the "Confidential Information"), refrain from using any of the
Confidential Information except in connection with compliance with this
Agreement, and deliver promptly to CAIS or destroy, at the request and option of
CAIS, all tangible embodiments (and all copies) of the Confidential Information
which are in Seller's possession or under its control. In the event that Seller
is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, Seller
shall notify CAIS promptly of the request or requirement so that CAIS may seek
an appropriate protective order or waive compliance with the provisions of this
Section. If, in the absence of a protective order or the receipt of a waiver
hereunder, Seller is, on the advice

                                       20
<PAGE>

of counsel, compelled to disclose any Confidential Information to any tribunal,
Seller may disclose the Confidential Information to the tribunal; provided that
Seller shall use its reasonable best efforts to obtain, at the request of CAIS,
an order or other assurance that confidential treatment shall be accorded to
such portion of the Confidential Information required to be disclosed as CAIS
shall designate. All provisions relating to confidentiality in this Agreement
are in addition to and shall not supersede or in any way nullify the effect of
the Confidentiality Agreement (the "Confidentiality Agreement"), dated
________________, executed and delivered by Buyer and Seller in connection with
the preliminary discussions relating to this transaction. Notwithstanding the
foregoing, Seller shall not be in violation of the confidentiality obligations
of this Section for (i) attempting to secure any Approval, consents or other
third party agreements required or necessary under this Agreement, (ii) making
any disclosure, filing or other statement required or reasonably advisable under
applicable law, regulation or order, or (iii) publicizing the general fact that
Seller (or any of its members, employees, officers, directors, managers, agents
or affiliates) has engaged in the transactions contemplated by this Agreement,
provided that doing so does not publish or disclose any trade secrets or other
proprietary information belonging to CAIS or Buyer.

          (b)  Without in any way limiting the rights and remedies that CAIS,
Buyer, or any of their respective affiliates may have at law, in equity or
otherwise, Seller acknowledges and agrees that CAIS, Buyer or any of their
respective affiliates may proceed against Seller for indemnification of all or
any Losses suffered by CAIS, Buyer or any of their respective affiliates in
connection with the breach or other violation of Seller's confidentiality
obligations hereunder. Further, Seller acknowledges and agrees that the injury
CAIS, Buyer or any of their respective affiliates would suffer in the event of a
breach by Seller of the confidentiality obligations of this Section would be
irreparable injury, not adequately compensated by monetary damages alone. Thus,
in the event of a breach or threatened or intended breach of the confidentiality
obligations of this Section by Seller, CAIS, Buyer or any of their respective
affiliates shall be entitled to injunctions, both temporary and final, enjoining
and restraining such breach or threatened or intended breach, and Seller hereby
consents to the issuance thereof by any court of competent jurisdiction without
bond. CAIS, Buyer or any of their respective affiliates may further assert such
claims as any or all might have against Seller for actual, incidental,
consequential, and punitive damages resulting from the breach of this Section.
If CAIS, Buyer or any of their respective affiliates prevails in whole or in
part in any such action, Seller shall be liable to the prevailing party or
parties for all reasonable costs, expert witness fees, and actual reasonable
attorney fees the prevailing party or parties incur in connection with seeking
such legal or equitable relief.

        6.6  Satisfaction of Conditions. From the date hereof until the earlier
             --------------------------
of termination of this Agreement or the Full Integration Date, Seller shall in
good faith proceed to take or cause to be taken all actions within its power
necessary to satisfy all conditions to its obligations to close and consummate
the transactions contemplated by this Agreement, including, but not limited to,
assisting Buyer in obtaining all consents necessary to transfer and assign all
of the Assets to Buyer; provided that, Seller shall not be obligated to pay any
amount to any third party in connection with obtaining any such consents other
than at the sole expense of Buyer or CAIS.

                                       21
<PAGE>

     7. COVENANTS OF BUYER AND/OR CAIS  .
        ------------------------------

     Buyer and/or CAIS, as applicable, and to the extent obligations of Seller
are set forth in this Section 7, Seller, covenants as follows:

        7.1  Satisfaction of Conditions.  Buyer and CAIS shall in good faith
             --------------------------
proceed to take or cause to be taken all actions within its power necessary to
satisfy all conditions to its obligations to close and consummate the
transactions contemplated by this Agreement.

        7.2  Warranty Obligations.  Buyer shall perform the Warranty Obligations
             --------------------
following the Closing Date in a timely and workmanlike manner in accordance with
the obligations of Seller with respect thereto that are to be assumed by Buyer
as of the Closing pursuant to Section 2.5.1(d) hereof.

        7.3  Prohibition on Use of Names, Etc.
             ---------------------------------

          7.3.1  Seller grants to Buyer a paid up, exclusive, nontransferable
license (i) to use Seller's logos and Seller's names, marks, trade names,
trademarks and service marks (collectively, "Seller Names") affixed to products
of the Business manufactured before the Closing or manufactured by Buyer after
the Closing and meeting the same quality standards met by Seller's products
prior to the Closing, in either case for a period of time not to exceed twelve
(12) months from the Closing Date; and (ii) for a period of time not to exceed
twelve (12) months from the Closing Date, to include in a less conspicuous
manner on products of Buyer substantially similar to those which the Seller
marketed through the Business prior to the Closing Date, and in product
literature therefor, the legend "formerly made by QuickATM." Notwithstanding the
foregoing, Seller shall retain all rights not granted herein, including, without
limitation, the right to use the Seller's Names in connection with the winding
up or dissolution of its affairs or such other purposes as are necessary or
proper and in accordance with this Agreement.

          7.3.2  Buyer may use existing supplies of literature, packaging and
documentation of the Business which refer to or employ the Seller's logos and
Seller's Names until such supplies are expended, but in no event beyond twelve
(12) months following the Closing Date; provided that such supplies include a
statement that the Business is no longer affiliated with Seller and, with
respect to products referenced in such supplies, the legend "formerly made by
QuickATM."

        7.4  Confidentiality.
             ---------------

                (a)  Buyer and CAIS, jointly and severally, acknowledge and
agree that they shall each treat and hold as confidential any information
concerning the business and affairs of the Business and Seller that is not
already generally available to the public (the "Confidential Information"),
refrain from using any of the Confidential Information except in connection with
compliance with this Agreement, and deliver promptly to Seller or destroy, at
the request and option of the Seller, all tangible embodiments (and all copies)
of the Confidential Information which are in its possession or under its
control. In the event that either Buyer or CAIS is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose

                                       22
<PAGE>

any Confidential Information, such party shall notify Seller promptly of the
request or requirement so that Seller may seek an appropriate protective order
or waive compliance with the provisions of this Section. If, in the absence of a
protective order or the receipt of a waiver hereunder, Buyer or CAIS is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal, such party may disclose the Confidential Information to the tribunal;
provided that such party shall use its reasonable best efforts to obtain, at the
request of Seller, an order or other assurance that confidential treatment shall
be accorded to such portion of the Confidential Information required to be
disclosed as Seller shall designate. All provisions relating to confidentiality
in this Agreement are in addition to and shall not supersede or in any way
nullify the effect of the Confidentiality Agreement (the "Confidentiality
Agreement"), dated ________________, executed and delivered by Buyer and Seller
in connection with the preliminary discussions relating to this transaction.

                (b)  Without in any way limiting the rights and remedies that
Seller may have at law, in equity or otherwise, Seller may proceed against Buyer
or CAIS or both for indemnification of all or any Losses suffered by Seller in
connection with the breach or other violation of Buyer and/or CAIS'
confidentiality obligations hereunder. Further, Buyer and CAIS each acknowledges
and agrees that the injury Seller would suffer in the event of a breach by
either Buyer or CAIS of the confidentiality obligations of this Section would be
irreparable injury, not adequately compensated by monetary damages alone. Thus,
in the event of a breach or threatened or intended breach of the confidentiality
obligations of this Section by either Buyer or CAIS, Seller shall be entitled to
injunctions, both temporary and final, enjoining and restraining such breach or
threatened or intended breach, and Buyer and CAIS each hereby consents to the
issuance thereof by any court of competent jurisdiction without bond. Seller may
further assert such claims as it might have against Buyer and CAIS for actual,
incidental, consequential, and punitive damages resulting from the breach of
this Section. If Seller prevails in whole or in part in any such action, Buyer
and CAIS shall be jointly and severally liable to Seller for all reasonable
costs, expert witness fees, and actual reasonable attorney fees Seller incurs in
connection with seeking such legal or equitable relief.

        7.5  Termination of Lease Guaranty.  Following the Closing, Buyer shall
             -----------------------------   ---------
apply its best efforts to promptly assume the Lease and remove Clifford S.
Orloff as guarantor of Buyer's obligations under the Lease.

     8.  EMPLOYMENT MATTERS
         ------------------

        8.1  Employees. Prior to the Closing, Buyer shall offer employment to
all of the employees primarily dedicated to the Business except for Seller's Key
Officer, effective at the Closing, at the salary levels no less than those
currently in place with Seller as of the Closing Date, and will provide employee
benefits to such employees in accordance with Buyer's current policies and
practices, except that Buyer shall (i) grant prior service credit under Buyer's
employee benefit plans, programs and policies to each such employee based on the
service date used by Seller in determining his or her service credit under
Seller's employee benefit plans, programs and policies, (ii) waive any
preexisting condition limitations under Buyer's employee benefit plans, programs
and policies which otherwise would be applicable to such employees, and (iii)
offer such employees the right to transfer accrued vacation and sick leave.
Notwithstanding the foregoing, Buyer shall have no liability for accrued wages
(including

                                       23
<PAGE>

salaries, bonuses and commissions), severance pay, sick leave or other benefits
under or with respect to any of Seller's Employee Plans (as defined herein) of
any type or nature on account of Seller's employment or termination of such
employees prior to the Closing Date, except under clause (iii) above.

        8.2  Employee Plans.  Buyer is not assuming any of the Employee Plans of
             --------------
Seller.  Without limiting the foregoing, Buyer shall have no liability
whatsoever to employees of Seller with respect to accrued or future benefits
under any such Employee Plans, whether or not any of such employees accept
employment by or become employees of Buyer.  For the purposes of only this
Section 8.2, the term "Seller" also includes any controlled group (within the
meaning of Section 414(b) of the Internal Revenue Code of 1986, as amended
("IRC")) of which Seller or any of its Subsidiaries is a member, all trades or
businesses under common control (within the meaning of IRC Section 414(c)) of
which Seller is a member and all affiliated service groups (within the meaning
of IRC Section 414(m)) of which Seller is a member. The term "Employee Plan"
shall mean all present and prior (including terminated and transferred) plans,
programs, agreements, arrangements and methods of contributions or compensation
(including all amendments to and components of the same, such as a trust with
respect to a plan) providing any remuneration or benefits, other than current
cash compensation, to any current or former employee of Seller or to any other
person who provides services to Seller, whether or not such plan or plans,
programs, agreements, arrangements and methods of contribution or compensation
are subject to Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and whether or not such plan or plans, programs, agreements,
arrangements and methods of contribution or compensation are qualified under the
IRC, including, without limitation, pension, retirement, profit sharing,
percentage compensation, stock purchase, stock option, bonus and non-qualified
deferred compensation plans, disability plans, medical plans, dental plans,
workers compensation, health insurance, life insurance or other death benefits,
incentive, severance plans, vacation benefits and fringe benefits.  The term
"Employee Plan" also includes any employee plan that is a multi-employer plan as
defined in Section 3(37) of ERISA.  Notwithstanding the foregoing, the term
"Employee Plan" shall not include (and Buyer shall assume at the Closing) any
accrued vacation or sick leave transferred to Buyer pursuant to Section 8.1
above.

     9.  INDEMNITY.
         ---------

        9.1  Survival of Representations and Warranties.  The representations
             ------------------------------------------
and warranties of Seller in Section 3 and of Buyer and CAIS in Section 4 above
shall survive for a period of one (1) year from the Closing Date or the
expiration or termination of the Escrow Agreement, whichever occurs first;
provided, however, that the representations contained in Sections 3.1, 3.2, 4.1,
4.2, 4.4 and 4.5 shall survive until any liability thereunder is barred by all
applicable statutes of limitations, including waivers and extensions thereof. If
written notice of a claim has been given prior to the expiration of the
applicable representations and warranties by a party in whose favor such
representations and warranties have been made to the party that made such
representations and warranties, then the relevant representations and warranties
shall survive as to such claim until such claim has been finally resolved.

        9.2  Seller's Indemnity.  Seller shall indemnify, defend, protect and
             ------------------
hold harmless each of Buyer and CAIS (and their respective Subsidiaries,
officers, directors, employees and agents) from and against any and all losses,
costs, expenses, liabilities,

                                       24
<PAGE>

obligations, claims, demands, causes of action, suits, settlements and judgments
of every nature, including the costs and expenses associated therewith and
actual and reasonable attorneys', consultants' and witness fees incurred in
connection therewith ("Buyer's Damages"), which arise out of or relate to: (i)
the material breach of any representation or warranty made by Seller pursuant to
Section 3 of this Agreement; (ii) the material non-performance, partial or
total, of any covenant made by Seller pursuant to this Agreement or the Seller's
Closing Documents; or (iii) any Retained Liability; or (iv) Seller's hiring and
employment practices with respect to employment with Seller's of, or termination
with Seller of, all employees of the Business (except solely as provided in
Section 8.1 above).

        9.3  Buyer's Indemnity. Buyer shall indemnify, defend, protect and hold
             -----------------
harmless Seller (and its officers, directors, managers, members, employees and
agents) from and against any and all losses, costs, expenses, liabilities,
obligations, claims, demands, causes of action, suits, settlements and judgments
of every nature, including the costs and expenses associated therewith and
reasonable attorneys', consultants' and witness fees incurred in connection
therewith ("Seller's Damages"; and when used together with or in the alternative
to Buyer's Damages, "Damages"), which arise out of: (i) the material breach by
Buyer of any representation or warranty made by Buyer pursuant to Sections 4.1
through 4.3 and Sections 4.8 through 4.12 of this Agreement; (ii) the material
non-performance, partial or total, of any covenant made by Buyer pursuant to
this Agreement or the Buyer/CAIS Closing Documents; (iii) Buyer's hiring and
employment practices with respect to employment with Buyer of, or termination of
employment with Buyer of, the employees to be offered employment or hired by
Buyer for the Business; (iv) any Assumed Liability; and (v) any Damages incurred
by Seller or Clifford S. Orloff under that certain personal guarantee made in
connection with the Lease.

        9.4  CAIS' Indemnity. CAIS shall indemnify, defend, protect and hold
             ---------------
harmless Seller (and its officers, directors, managers, employees and agents)
from and against any and all Seller's Damages which arise out of: (i) the
material breach by CAIS of any representation or warranty made by CAIS pursuant
to Sections 4.4 through 4.12 of this Agreement; or (ii) the material non-
performance, partial or total, of any covenant made by CAIS pursuant to this
Agreement or the CAIS/Buyer Closing Documents.

        1.5  Procedure for Indemnification -- Third Party Claims.  Promptly
after receipt by an indemnified party under Section 9.2, 9.3 or 9.4 of written
notice of a claim or the commencement of any proceeding against it, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure so to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party, except to the extent the indemnifying party demonstrates that the defense
of such action is or has been materially prejudiced thereby. In case any such
proceeding shall be brought against an indemnified party and it shall give
notice to the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish (unless the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate) to assume the defense thereof with counsel which is reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any fees

                                       25
<PAGE>

of such counsel or any other expenses with respect to the defense of such
proceeding, in each case, subsequently incurred by such indemnified party in
connection with the defense thereof. If an indemnifying party assumes the
defense of such proceeding, (a) no compromise or settlement thereof may be
effected by the indemnifying party without the indemnified party's reasonable
consent unless (i) there is no finding or admission of any violation of law or
any violation of the rights of any person and no effect on any other claims that
may be made against the indemnified party, and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party; and (b) the
indemnifying party shall have no liability with respect to any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld or delayed). If notice is given to an indemnifying party of the
commencement of any proceeding and it does not, within fifteen (15) business
days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party, the indemnifying party shall
be bound by any determination made in such action or any compromise or
settlement thereof effected by the indemnified party. Notwithstanding the
foregoing, if an indemnified party determines in good faith that there is a
reasonable probability that a proceeding may adversely affect it or its
affiliates, other than as a result of monetary damages, such indemnified party
may, by notice to the indemnifying party, assume the exclusive right to defend,
compromise or settle such proceeding, but the indemnifying party shall not be
bound by any determination of a proceeding so defended or any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld or delayed).

        1.6  Bulk Sales Law.  Buyer and CAIS each waive any claim they may have
             --------------
against Seller or any of Seller's affiliates, members, managers, officers,
directors, employees or agents with respect to, or arising out of, Seller's non-
compliance with any provision of any bulk sales or bulk transfer law in
connection with this Agreement.

        1.7  Limitations on Indemnification.
             ------------------------------

          1.7.1  Any claim made against an indemnifying party for
indemnification pursuant to Section 9.2, Section 9.3 or Section 9.4, as the case
may be, shall not qualify for indemnification (either individually, or when
aggregated with other claims as set forth below) unless the Damages for such
claim exceeds One Thousand Dollars ($1,000). Any qualifying claim of greater
than One Thousand Dollars ($1,000) shall be referred to as a "Material Claim."
No claims which are not Material Claims shall give rise to any indemnification
obligation under this Agreement. Further, no Material Claim or Material Claims
may be made against an indemnifying party for indemnification pursuant to
Section 9.2, Section 9.3, or Section 9.4, as the case may be, unless the
aggregate Damages of the indemnified parties with respect to such Material
Claims shall exceed an aggregate amount equal to Twenty-Five Thousand Dollars
($25,000), in which case the indemnifying party shall be obligated to the
indemnified party for the full amount of the Damages, including, without
limitation, those Damages up to said $25,000 amount. Under no circumstances
shall Seller's liability under Section 9.2 exceed the Escrow Amount, and in no
circumstances shall Seller's liability thereunder be satisfied by any assets or
funds other than those contained in the Escrow Agreement. Upon the expiration or
termination of the Escrow Agreement, Seller's indemnification obligations under
this Agreement shall immediately cease and terminate.

                                       26
<PAGE>

          1.7.2  The liability of any indemnifying party with respect to any
Damages shall be determined on a basis that is net of the amount of any such
Damages covered by insurance (less any deductibles).

     Notwithstanding any provision in this Agreement, nothing shall limit the
rights and remedies of Buyer and CAIS, including but not limited to
indemnification in excess of the foregoing limitations, for any losses,
liabilities or claims related to (i) fraud; (ii) intentional misrepresentation;
or (iii) criminal conduct of Seller or any of its current or former officers,
directors, members or agents.

     10.  TERMINATION.
          -----------

        10.1  Mutual Agreement. This Agreement may be terminated at any time
              ----------------
prior to the Closing Date by the written agreement of Seller, CAIS and Buyer.

        10.2  Permanent Injunction.  This Agreement shall be terminated upon the
              --------------------
entry of a permanent order by a governmental entity having jurisdiction over
Buyer, CAIS, Seller or any of their respective Subsidiaries, affiliates or
assets, enjoining or restraining the transactions contemplated by this
Agreement.

        10.3  Termination by Buyer or CAIS. This Agreement may be terminated by
              ----------------------------
Buyer or CAIS if, on the Closing Date, the conditions set forth in Section 5 of
this Agreement shall not have been met by Seller or waived by Buyer and CAIS,
provided that, if on such date a preliminary injunction has been entered
preventing the Closing, such date shall automatically be extended until (i) such
injunction shall have been lifted, in which case the Closing shall thereupon
take place as soon as practicably possible, assuming that all other conditions
to Closing are satisfied, or (ii) a permanent injunction shall have been
entered, in which case this Agreement shall be terminated as provided in Section
10.2 above.

        10.4  Termination by Seller. This Agreement may be terminated by Seller
if, on the Closing Date, the conditions set forth in Section 5 of this Agreement
shall not have been met by Buyer or CAIS, as applicable, or waived by Seller,
provided that, if on such date a preliminary injunction has been entered
preventing the Closing, such date shall automatically be extended until (i) such
injunction shall have been lifted, in which case the Closing shall thereupon
take place as soon as practicably possible, assuming that all other conditions
to Closing are satisfied, or (ii) a permanent injunction shall have been
entered, in which case this Agreement shall be terminated as provided in Section
10.2 above.

        10.5  Confidentiality and Effect of Termination. In the event that this
              -----------------------------------------
Agreement is terminated, each of the parties shall return (without retaining
copies) all documents and papers containing Confidential Information of the
other party (including, without limitation, technical information, customer
lists, financial data and any similar information developed by another party
pursuant to this Agreement or in contemplation of the transactions contemplated
by this Agreement). The confidentiality obligations set forth in Sections 6.5
and 7.4 of this Agreement shall survive termination of this Agreement for any
reason for a period of three (3) years after the date of such termination.

                                       27
<PAGE>

     11.  MISCELLANEOUS.
          -------------

        11.1  Assignment. This Agreement shall be binding upon and inure to the
              ----------
benefit of the successors and permitted assigns of the parties, except that no
party hereto may assign its rights or obligations hereunder without the prior
written consent of the other parties. Any assignment in contravention of this
Section 11.1 shall be null and void.

        11.2  Allocation of Purchase Price.  No later than sixty (60) days after
              ----------------------------
the Closing Date, Buyer and Seller shall mutually agree upon the allocation of
the Purchase Price among the various items included in the Assets and the
Business being transferred by Seller to Buyer. Buyer and Seller have agreed that
the allocation to be provided hereby shall be determined by the appraisal report
of an independent, mutually agreed upon appraiser, if the parties cannot agree
on the allocation after good faith negotiations, and that Buyer shall solely
bear all of the costs of such appraisal. Buyer and Seller shall file all Tax
returns and reports in a manner consistent with the allocation provided for in
this Section 11.2, and cooperate with each other in connection therewith.

        11.3  Prorations.  All state and local real and personal property Taxes
              ----------
relating to the Assets which apply to periods commencing prior to and ending on
or after the Closing Date shall be prorated as between Seller and Buyer as of
the Closing Date. Seller shall receive a credit, at the Closing for the security
deposit, if any, held by the landlord under the Lease. Seller shall also receive
a credit for any fees paid in advance by Seller under the Contracts, which fees
represent prepayments for periods after the Closing Date. State and local real
and personal property Taxes relating to the Assets for the Tax period in which
the Closing occurs shall be prorated between Buyer and Seller on the following
basis: Seller shall be responsible for the payment of all such Taxes for the
period up to the Closing Date; and Buyer shall be responsible for payment of all
such Taxes for the period from and after the Closing Date. All such Taxes
assessed on an annual basis shall be prorated on the assumption that an equal
amount of Tax applies to each day of the year, regardless of how installment
payments are billed or made. Any supplemental property Taxes or assessments
which arise out of a revaluation of an Asset, which revaluation would not have
occurred except for the change in ownership of the Asset, shall be borne by
Buyer. Any payments of Taxes due from one party to another pursuant to this
Section 11.3 shall be paid at the Closing Date. If such Taxes and assessments
are not available as of the Closing Date, for purposes of apportionment between
Buyer and Seller and payment pursuant to this Section 11.3, the amount thereof
shall be estimated on the basis of the prior year's Taxes and assessments, and
any incremental payment shall be adjusted after receipt of the final Tax
statements, but in any event within fifteen (15) days after such statements are
provided by one party to another. Buyer shall not be responsible for any other
Tax (including but not limited to any business, occupation, unemployment
compensation, workers' compensation, withholding or similar Tax) attributable to
the operations of the Business for any period prior to the Closing. Seller shall
not be responsible for any other Tax (including but not limited to any business,
occupation, unemployment compensation, workers' compensation, withholding or
similar Tax) attributable to the operations of the Business for any period from
and after the Closing. The total estimated prorations, as reasonably determined
by Seller, shall be paid by Buyer at the Closing, with final complete prorations
to be determined as soon as practicable after the Closing.

                                       28
<PAGE>

        11.4  Publicity.  No party shall issue a press release or otherwise
              ---------
publicize the transactions contemplated by this Agreement or otherwise disclose
the nature or contents of this Agreement prior to the Full Integration Date,
except as otherwise required by applicable law (and any such press release shall
be mutually acceptable to Buyer, CAIS and Seller), regulation, stock exchange or
Nasdaq requirement or by the mutual consent of each of Buyer, CAIS and Seller.

        11.5  Transfer Taxes.  Any Taxes arising out of or incurred in
              --------------
connection with the transactions contemplated by this Agreement shall be paid by
Buyer.

        11.6  Expenses.  Except as otherwise expressly provided herein, each
              --------
party will pay its own costs and expenses, including legal and accounting
expenses, related to the transactions provided for herein, irrespective of when
incurred.

        11.7  Further Assurances.  It is the intention of the parties hereto
              ------------------
that all assets, rights, and tangible and intangible property constituting the
Assets be sold to Buyer. Accordingly, each party will from time to time prior to
or subsequent to the Closing Date, at another party's reasonable request and
without further consideration, execute and deliver such other instruments of
conveyance, assignment and transfer and take such other actions as the other
party may reasonably request in order to cause all of the Assets to be
transferred and assigned to Buyer and otherwise to more effectively consummate
the transactions contemplated hereby; provided that, in connection with the
foregoing, Seller shall not be obligated to pay any amount to any third party
other than at the sole expense of Buyer or CAIS.

        11.8  Dispute Resolution.  Any dispute, controversy or claim between or
              ------------------
among the parties relating to, or arising out of or in connection with, this
Agreement (or any subsequent agreements or amendments thereto), including as to
its existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, whether arising before or after the
termination of this Agreement, shall be settled only by binding arbitration
pursuant to the Commercial Arbitration Rules, as then amended and in effect, of
the American Arbitration Association (the "Rules"), subject to the following:

          11.8.1  The arbitration shall take place in Los Angeles, California,
or at some other location mutually agreed upon in writing by the parties.

          11.8.2  There shall be three arbitrators, who shall be selected under
the normal procedures prescribed in the Rules, except that one such arbitrator
shall be a certified public accountant and one (1) such arbitrator (who shall
chair the arbitration panel) shall be a member of the American Board of Trial
Advocates or the American College of Trial Lawyers.

          11.8.3  Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.

          11.8.4  At the arbitration hearing, each party may make written and
oral presentations to the arbitrator, present testimony and written evidence and
examine witnesses.

          11.8.5  The arbitrators' decision shall be in writing, shall be
binding and final and may be entered and enforced in any court of competent
jurisdiction.

                                       29
<PAGE>

          11.8.6  No party shall be eligible to receive, and the arbitrators
shall not have the authority to award, indirect, exemplary or punitive damages
or any other damages not directly related to compensating the damaged party for
damages directly incurred.

          11.8.7  Seller shall pay one-half of the fees and expenses of the
arbitrators and the American Arbitration Association and Buyer and/or CAIS shall
pay the other half of any such fees and expenses.

          11.8.8  The arbitrators shall not have the power to amend this
Agreement.

          11.8.9  Notwithstanding the provisions of this Section 11.8, the
parties shall not be obligated to commence arbitration when seeking injunctive
relief for any matter for which injunctive relief is specifically authorized in
this Agreement, but rather such party may petition a court of competent
jurisdiction for such injunctive relief.

        11.9  Notices. Any notice or other communication required or permitted
              -------
hereunder shall be in writing and shall be deemed to have been duly given on the
date of service if served personally or by facsimile, or five (5) days after the
date of mailing if mailed, by first class mail, registered or certified, postage
prepaid. Notices shall be addressed as follows:

           To Seller at:              QuickATM, LLC
                                      2437 Durant Avenue, Suite 207
                                      Berkeley, California  94704
                                      Attn:  Clifford S. Orloff
                                      Fax:   _____________________

           with a copy to:            Irell & Manella LLP
                                      1800 Avenue of the Stars, Suite 900
                                      Los Angeles, California  90067
                                      Attn:  Rob Zeitinger, Esq.
                                      Fax:  (310) 203-7199

           To Buyer or CAIS at:       CAIS Internet, Inc.
                                      1255 22nd Street, N.W.
                                      Washington, DC  20037
                                      Attn:  __________________________
                                      Fax:  (202) 463-7190

                                       30
<PAGE>

           with a copy to:            Morrison & Foerster LLP
                                      2000 Pennsylvania Avenue, N.W.
                                      Washington, DC  20006
                                      Attention: Morris F. DeFeo, Jr., Esq.
                                      Fax: (202) 887-0763

or to such other address as a party has designated by notice in writing to the
other parties in the manner provided by this Section.

        11.10  Entire Agreement and Modification. This Agreement constitutes and
               ---------------------------------
contains the entire agreement of the parties and supersedes any and all prior
negotiations, correspondence, understandings and agreements (other than the
Confidentiality Agreement) between the parties respecting the subject matter
hereof. This Agreement may only be amended by written instrument signed by the
parties.

        11.11  No Other Remedies.  Except with respect to Damages for (a) fraud,
               -----------------
(b) intentional misrepresentation or (c) criminal matters, in respect of which
the parties hereto shall be entitled to any and all remedies available
hereunder, under law and/or otherwise, any and all remedies herein expressly
conferred upon a party hereby are deemed exclusive of any other remedy conferred
hereby or by law or equity on such party. In particular, the remedies provided
by Section 9 for Damages shall be exclusive of any other rights or remedies
available to a party against another party, either at law or in equity, in
relation to any breach, default or nonperformance of any representation,
warranty, covenant, agreement or undertaking made or entered into by such other
party pursuant to this Agreement.

        11.12  Governing Law. This Agreement shall be governed by and construed
               -------------
in accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents, but without regard to California's conflict of laws principles.

        11.13  Brokers.  Each party hereby represents and warrants to the others
               -------
that, except as disclosed herein, neither it nor its representatives have taken,
nor will they take any action that would cause the other parties hereto to have
any obligation or liability to any person for the payment of any finders' fees,
brokerage fees, investment banking fees, consulting fees, agents' commissions,
or like payments in connection with the transactions contemplated hereby. Each
party shall indemnify and hold harmless the others from any claim that is
asserted by any person for such fees, commissions or like payments with respect
to this Agreement arising from any act, representation or promise of the
indemnifying party or its representative.

        11.14  Severability. If any provision of this Agreement is held to be
               ------------
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.

        11.15  Headings. The headings appearing at the beginning of several
               --------
sections contained herein have been inserted for the convenience of the parties
and shall not be used to determine the construction or interpretation of this
Agreement.

                                       31
<PAGE>

        11.16  Counterparts. This Agreement may be executed by facsimile and in
               ------------
counterparts, each of which shall be deemed an original, but both of which when
taken together shall constitute one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above set forth.

                                                CAIS SOFTWARE SOLUTIONS, INC.

                                                By: /s/ W. Stephen Nye
                                                    ---------------------------
                                                Name:
                                                Title:

                                                CAIS INTERNET, INC.

                                                By: /s/ William H. Caldwell IV
                                                    ---------------------------
                                                Name:
                                                Title:

                                                QUICKATM, LLC

                                                By: /s/ Clifford Orloff
                                                    ---------------------------
                                                Name:
                                                Title:

                                       32
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                            Page
<C>   <S>                                                                                                 <C>
1.    DEFINITIONS.........................................................................................   1
2.    SALE AND PURCHASE OF ASSETS.........................................................................   4
      2.1   Sale of Assets................................................................................   4
      2.2   Assets Not Purchased..........................................................................   5
      2.3   Purchase Price................................................................................   6
      2.4   No Assignment in Certain Circumstances........................................................   8
      2.5   Assumed Liabilities...........................................................................   8
      2.6   Closing.......................................................................................   9
      2.7   Consent of Third Parties......................................................................  10
3.    REPRESENTATIONS AND WARRANTIES OF SELLER............................................................  10
      3.1   Organization and Authority....................................................................  11
      3.2   Authority Relating to this Agreement and Other Agreements; No Violation of Other Instruments..  11
      3.3   Ownership and Delivery of Assets..............................................................  12
      3.4   Compliance with Law...........................................................................  12
      3.5   Absence of Certain Changes or Events..........................................................  12
      3.6   Inventory.....................................................................................  12
      3.7   Personal Property.............................................................................  13
      3.8   Lease                                                                                           13
      3.9   Intellectual Property.........................................................................  13
      3.10  Product Warranties and Returns................................................................  13
      3.11  Litigation....................................................................................  13
      3.12  Personnel.....................................................................................  13
      3.13  Brokers and Finders...........................................................................  14
      3.14  Contracts.....................................................................................  14
      3.15  Major Customers...............................................................................  14
4.    REPRESENTATIONS AND WARRANTIES OF BUYER AND CAIS....................................................  14
      4.1   Organization and Authority....................................................................  14
      4.2   Authority Relating to this Agreement; No Violation of Other Instruments.......................  14
      4.3   Sufficient Funds..............................................................................  15
      4.4   Organization and Authority....................................................................  15
      4.5   Authority Relating to this Agreement; No Violation of Other Instruments.......................  15
      4.6   Reports and Financial Statements..............................................................  16
      4.8   Capitalization................................................................................  17
      4.7   Brokers and Finders...........................................................................  17
      4.9   Changes.......................................................................................  17
      4.10  Compliance....................................................................................  17
</TABLE>

                                       i
<PAGE>

<TABLE>
<C>   <S>                                                                                                 <C>
      4.11  Litigation....................................................................................  18
      4.12  Governmental Consent..........................................................................  18
5.    CONDITIONS TO THE OBLIGATIONS OF SELLER, BUYER AND CAIS.............................................  18
      5.1   Required Consents.............................................................................  18
      5.2   No Orders.....................................................................................  18
      5.3   Delivery of Closing Documents.................................................................  18
6.    COVENANTS OF SELLER.................................................................................  18
      6.1   Access to Properties and Records..............................................................  18
      6.2   Conduct of the Business Prior to the Closing Date.............................................  19
      6.3.  Acquisition, Merger or Similar Negotiations With Other Parties................................  20
      6.4   Non-Compete...................................................................................  20
      6.5   Confidentiality...............................................................................  21
      6.6   Satisfaction of Conditions....................................................................  22
7.    COVENANTS OF BUYER AND/OR CAIS......................................................................  22
      7.1   Satisfaction of Conditions....................................................................  22
      7.2   Warranty Obligations..........................................................................  22
      7.3   Prohibition on Use of Names, Etc..............................................................  22
      7.4   Confidentiality...............................................................................  23
      7.5   Termination of Lease Guaranty.................................................................  24
8.    EMPLOYMENT MATTERS..................................................................................  24
      8.1   Employees.....................................................................................  24
      8.2   Employee Plans................................................................................  24
9.    INDEMNITY...........................................................................................  25
      9.1   Survival of Representations and Warranties....................................................  25
      9.2   Sellers' Indemnity............................................................................  25
      9.3   Buyer's Indemnity.............................................................................  25
      9.4   CAIS' Indemnity...............................................................................  26
      9.5   Procedure for Indemnification -- Third Party Claims...........................................  26
      9.6   Bulk Sales Law................................................................................  26
      9.7   Limitations on Indemnification................................................................  27
10.   TERMINATION.........................................................................................  27
      10.1  Mutual Agreement..............................................................................  27
      10.2  Permanent Injunction..........................................................................  27
      10.3  Termination by Buyer or CAIS..................................................................  27
      10.4  Termination by Seller.........................................................................  28
      10.5  Confidentiality and Effect of Termination.....................................................  28
11.   MISCELLANEOUS.......................................................................................  28
      11.1  Assignment....................................................................................  28
      11.2  Allocation of Purchase Price..................................................................  28
      11.2  [Intentionally Omitted].......................................................................  28
</TABLE>

                                      ii
<PAGE>

<TABLE>
<C>   <S>                                                                                                 <C>
      11.3  Prorations....................................................................................  28
      11.4  Publicity.....................................................................................  29
      11.5  Transfer Taxes................................................................................  29
      11.6  Expenses......................................................................................  29
      11.7  Further Assurances............................................................................  29
      11.8  Dispute Resolution............................................................................  30
      11.9  Notices.......................................................................................  30
     11.10  Entire Agreement and Modification.............................................................  31
     11.11  No Other Remedies.............................................................................  31
     12.12  Governing Law.................................................................................  32
     11.13  Brokers.......................................................................................  32
     11.14  Severability..................................................................................  32
     11.15  Headings......................................................................................  32
     11.16  Counterparts..................................................................................  32
</TABLE>

                                      iii
<PAGE>

                               TABLE OF EXHIBITS

Exhibit A:         Schedules

Exhibit 2.4.2:     Consent of Mark Daoud

Exhibit 2.6.2(a):  Bill of Sale, Assignment and Assumption Agreement

Exhibit 2.6.2(b):  Secretary's Certificates of Seller

Exhibit 2.6.2(c):  Compliance Certificates of Seller

Exhibit 2.6.2(d):  Registration Rights Agreement

Exhibit 2.6.2(e):  Escrow Agreement

Exhibit 2.6.2(f):  Consulting Agreement with Clifford D. Orloff

Exhibit 2.6.3(b):  Secretary's Certificates of Buyer and CAIS

Exhibit 2.6.3(c):  Compliance Certificates of Buyer and CAIS

Exhibit 8.1        List of Seller's Employees to be Hired by Buyer After Closing

                                       1

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