Document:

<PAGE>

                                                                     Exhibit 4.7

                          NET-tel COMMUNICATIONS, INC.

                                 Washington, DC

                         -------------------------------

                              COMMON STOCK WARRANT
                               PURCHASE AGREEMENT

                                 August 2, 1999

                    In connection with financing provided by

                           ALLIED CAPITAL CORPORATION

                    ----------------------------------------

                    ----------------------------------------
<PAGE>

                                TABLE OF CONTENTS

         PREAMBLE
         --------
         Parties
         Recitals

ARTICLE...................................................................1
   Equity ................................................................1
         Section 1.1 Warrants ............................................1
                     --------
         Section 1.2 Valuation of Warrants ...............................2
ARTICLE 2 ................................................................2
   Registration and Investor Rights ......................................2
ARTICLE 3.................................................................2
   Representations and Warranties ........................................2
ARTICLE 4.................................................................3
   Covenants .............................................................3
         Section 4.1 [Intentionally Omitted] .............................3
         Section 4.2 Further Assurance ...................................3
ARTICLE 5 ................................................................3
         Section 5.1 Survival of Representations .........................3
         Section 5.2 Agreement of the Company to Indemnify ...............3
         Section 5.3 Conditions of Indemnification .......................4
         Section 5.4 Specific Performance ................................5
         Section 5.5 Exclusive Remedies ..................................5
ARTICLE 5
         Section 6.1 No Implied Waiver....................................6
ARTICLE 7.................................................................6
   Parties................................................................6
ARTICLE 8.................................................................6
   Notice.................................................................7
ARTICLE 9.................................................................7
   Controlling Law; Venue and jurisdiction; Service of Process ...........8
ARTICLE 10................................................................8
   Captions; Severance....................................................8
ARTICLE 11................................................................8
   Counterparts; Entire Agreement
ARTICLE 12 ...............................................................8
   Definitions and Rules of Construction .................................8
         Section 12.1 Definitions ........................................8
         Section 12.2 Rules of Construction .............................10

                                        i
<PAGE>

         THIS COMMON STOCK WARRANT PURCHASE AGREEMENT is made as of August 2,
1999, by and among (i) NET-tel Communications, Inc., a Delaware corporation
(collectively with successors and assigns, the "Parent"); and NET-tel
Corporation. a Florida corporation (collectively with successors and assigns,
the "Borrower"; the Parent and the Borrower being hereinafter sometimes together
referred to as the "Company"); and (ii) Allied Capital Corporation, a Maryland
corporation (collectively with successors and assigns, "Holders").

                                    RECITALS

                  A. Under terms of a credit agreement dated July 28, 1999,
Nortel Networks Inc., as administrative agent for itself and for other Lenders,
("Senior Lender") is providing to Borrower certain term loans and a revolving
credit facility in the aggregate principal amount of One Hundred Forty Million
Dollars ($140,000,000) pursuant to a Credit Agreement dated July 28, 1999 (the
"Credit Agreement") in the form of Exhibit A.
                                   ---------

                  B. Parent proposes to issue to Holders certain warrants to
purchase shares of the common stock of Parent, in consideration for Holders'
entry into in the Credit Agreement as a lender of the principal amount of Ten
Million Dollars ($10,000,000).

                  C. Under terms of a certain Securities Purchase Agreement,
Parent has issued and/or proposes to issue to Holders and other investors Series
B Convertible Preferred Stock ("Series B Stock") for an aggregate purchase price
of approximately Fifty Million Dollars ($50,000,000) ("Securities Purchase
Agreement") in the form of Exhibit B.
                           ---------

                                  PROVISIONS

         In consideration of the premises and the covenants herein, Holders and
the Company agree as set forth below.

                                   ARTICLE 1

                                    Equity
                                    ------

Section 1.1 Warrants. At Closing, Parent will issue and sell, and each Holder
            --------
will purchase, a Warrant (collectively with all modifications, extensions,
renewals and replacements thereof and therefor, the "Warrants"), to acquire
shares of Parent's common stock, par value $.0001 ("Shares"), which will entitle
Holders to receive that number of Parent's authorized but unissued shares that
will provide Holder with One and Eight Tenths Percent (1.8%) of Parent's capital
stock on a Fully Diluted Basis immediately after Closing, with such percentage
being subject to certain anti-dilution provisions set forth in the Warrants. The
aggregate purchase price for the Warrants shall be One Hundred Dollars ($100),
which Holders shall pay to Parent at Closing.
<PAGE>

Section 1.2 Valuation of Warrants. The Holders and Parent hereby agree that as
            ---------------------
of the Closing, the fair market value of the Warrants shall be as set out in
Exhibit 1.03 hereto, and that they shall prepare and maintain their books of
------------
account, financial statements and tax returns in a manner consistent therewith.

                                    ARTICLE 2

                        Registration and Investor Rights
                        --------------------------------

         Holders are hereby made parties to the Investor Rights Agreement and
the Registration Rights Agreement attached hereto as Exhibits C and D,
                                                     ----------     -
respectively, as Purchasers, as defined therein, and shall, with respect to
Shares issued or issuable under the Warrant, be bound by and entitled to the
benefits of all terms therein applicable to Purchasers. For purposes of the
Registration Rights Agreement the Warrant Shares shall be deemed to be
Registrable Securities. With respect to the Investor Rights Agreement, the
Warrant and Warrant Shares shall be deemed to be that number of shares of Series
B Preferred Stock convertible into the number of shares of Common Stock
corresponding to the number of Warrant Shares; provided, however, that the
Warrant and Warrant Shares shall not be deemed to be Series B Preferred Stock
for purposes of Section 2.7 or the second sentence of Section 6.2 of such
Agreement, except with respect to consents to amendments to Section 1 of such
Agreement.

                                    ARTICLE 3

                         Representations and Warranties
                         ------------------------------

         To induce Holders to enter into the Credit Agreement and the other
transactions contemplated herein and to purchase the Warrants, Parent hereby
provides the same representations and warranties to Holders as it provided in
Article III of the Securities Purchase Agreement attached hereto as Exhibit C.
                                                                    ---------
All representations and warranties in this Article shall refer to facts as they
exist at Closing, shall be deemed to have been modified by the Compliance
Certificate set out as Exhibit E hereto, and shall survive the Closing.
                       ---------

                                    ARTICLE 4

                                    Covenants
                                    ---------

         So long as a Holder owns a Warrant or any equity security of the
Company issued directly or indirectly in exchange for, or pursuant to provisions
of a Warrant, the Company shall comply with the following covenants.

Section 4.1   [Intentionally Omitted]
              -----------------------

                                       2
<PAGE>

Section 4.2 Further Assurance. The Company and the Holders shall from time to
            -----------------
time promptly execute and deliver to each other such additional documents, and
take such other reasonable steps, as they may reasonably require to carry out
the purposes hereof.

                                    ARTICLE 5

             Survival of Representations, Indemnification; Remedies
             ------------------------------------------------------

Section 5.1 Survival of Representations. All representations and warranties (as
            ---------------------------
modified by Exhibit E), covenants, agreements and indemnities made by a party to
            ---------
this Agreement herein or pursuant hereto shall also be deemed made on and as of
the Closing Date as though such representations, warranties, covenants,
agreements and indemnities were made on and as of such date, and all such
representations, warranties, covenants, agreements and indemnities shall survive
the Closing Date and remain in full force and effect as follows: (a) unless
otherwise specified hereinbelow, representations, warranties, covenants and
agreements shall survive for a period of one (1) year after the Closing Date;
(b) the representations and warranties of the Company set forth in Section 3.13
of the Securities Purchase Agreement shall survive until the expiration of the
applicable statute of limitations; (c) the covenants and agreements in this
Article 5 shall continue in full force and effect until fully discharged; and
(d) any representation, warranty, covenant, indemnity or agreement that is the
subject of a claim which is asserted in writing prior to the expiration of the
applicable survival period set forth above shall survive with respect to such
claim until the final resolution thereof.

Section 5.2 Agreement of the Company to Indemnify. Subject to the conditions and
            -------------------------------------
provisions of this Article 5, the Company hereby agrees to indemnify, defend and
hold harmless the Holders and their directors, officers, employees, agents, and
controlling persons (the "Indemnified Persons") from and against and in respect
of all demands, claims, actions or causes of action, assessments, losses,
damages (including, without limitation, diminution in value), liabilities, costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and disbursements ("Claims") asserted against, resulting to,
imposed upon or incurred by the indemnified Persons (whether such Claims are by,
against or relate to the Company, or any other party, including, without
limitation, a governmental entity), directly or indirectly, by reason of or
resulting from any misrepresentation or breach of any representation or
warranty, or noncompliance with covenants or agreements given or made by the
Company in this Agreement, the Investor Rights Agreement, the Registration
Rights Agreement or in any document furnished by or on behalf of the Company
pursuant to this Agreement.

Section 5.3 Conditions of Indemnification. The obligations and liabilities of
            -----------------------------
the Company hereunder with respect to its indemnities pursuant to this Article
5, resulting from any Claim shall be subject to the following terms and
conditions:

                  (a) The indemnified party shall give prompt written notice to
the indemnifying party of any Claim which is asserted against, resulting to,
imposed upon or incurred by such

                                       3
<PAGE>

indemnified party and which may give rise to liability of the indemnifying party
pursuant to this Article 5, stating (to the extent known or reasonably
anticipated) the nature and basis of such Claim and the amount thereof.

                  (b) The indemnifying party shall engage counsel with respect
to any such Claim, such representation (including the compromise or settlement
of any Claim) to be undertaken on behalf of and for the account and risk of the
indemnified party, and the indemnified party shall have the right to approve
such counsel (such approval shall not be unreasonably withheld). No settlement
or compromise of any Claim may be made without the consent of the indemnified
party (such consent shall not be unreasonably withheld). In the event the
indemnifying party elects not to undertake such defense by its own counsel, the
indemnifying party shall give prompt written notice of such election to the
indemnified party, and the indemnified party will undertake the defense thereof
by counsel or other representatives designated by it, at the cost and expense of
the indemnifying party (such costs and expenses of such defense to be advanced
by the indemnifying party as incurred by the indemnified party). Notwithstanding
the foregoing, the indemnified party shall have the right to retain its own
counsel and to participate or assume its own defense in any proceeding where (i)
the indemnifying party and the indemnified party have mutually agreed to the
retention of counsel by, and the participation of, the indemnified party or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them.

                  (c) In the event that any Claim shall arise out of a
transaction or cover any period or periods wherein the Company on the one hand,
and the Investors on the other hand, shall each be liable hereunder for part of
the liability or obligation arising therefrom, then the parties shall, each
choosing its or his own counsel and bearing its or his own expense, defend such
Claim, and no settlement or compromise of such Claim may be made without the
Joint consent or approval of the Company and the Holders (which consent shall
not be unreasonably withheld), except where the respective liabilities and
obligations of the Company and the Investors are clearly allocable or
attributable on the basis of objective facts.

                  (d) The Company shall not be required to indemnify the
Indemnified Persons with respect to any claim for indemnification pursuant to
Section 5.2 unless and until the aggregate amount of all Claims asserted
against, resulting to, imposed upon or incurred by the Indemnified Persons
exceeds One Hundred Fifty Thousand Dollars ($150,000), and then only to the
extent such aggregate amount exceeds One Hundred Fifty Thousand Dollars
($150,000). Claims thereafter may be asserted regardless of amount. The
Company's maximum liability to the Indemnified Persons for claims for
indemnification pursuant to Section 5.2 shall not exceed, in the aggregate, Two
Million Seven Hundred Thousand Dollars ($2,700,000). The limitations on
indemnification provided for in this Section 5.3(d) shall not apply to any
Claims asserted against, resulting to, imposed upon or incurred by the
Indemnified Persons related to fraud.

                                       4
<PAGE>

Section 5.4 Specific Performance. In addition to any other remedies which the
            --------------------
Indemnified Persons may have at law or in equity, the Company hereby
acknowledges that the Shares and the Company are unique, and that the harm to
the Indemnified Persons resulting from breaches by the Company of its
obligations cannot be adequately compensated by damages. Accordingly, the
Company agrees that the Indemnified Persons shall have the right to have all
obligations, undertakings, covenants, agreements and other provisions of this
Agreement specifically performed by the Company, and that the Indemnified
Persons shall have the right to obtain an order or decree of such specific
performance in any of the courts of the United States of America or of any state
or other political subdivision thereof.

Section 5.5 Exclusive Remedies. Except for any remedies that the Indemnified
            ------------------
Persons might have based on fraud, the remedies provided in this Article 5 shall
be the exclusive remedies available to each party hereto for any breach of the
representations, warranties, covenants and agreements of the other party under
this Agreement; provided, however, that the foregoing shall not limit or
diminish the rights and remedies afforded to the parties under the Investor
Rights Agreement or Registration Rights Agreement.

                                    ARTICLE 6

                                     Waiver
                                     ------

Section 6.1 No Implied Waiver. No course of dealing between a Holder and any
            -----------------
other party hereto, or any failure or delay on the part of a Holder in
exercising any rights or remedies hereunder, shall operate as a waiver of any
rights or remedies of any Holder under this or any other applicable agreement.
No single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.

                                    ARTICLE 7

                                     Parties
                                     -------

        This Agreement will bind and accrue to the benefit of the Company, the
Holders, any holders of the Warrants, and their successors and permitted
assigns. Any purchaser, assignee, transferee or pledgee of the Warrants, or any
document arising in connection with the transaction subject to this Agreement
(or any of them), sold, assigned, transferred, pledged or repledged by a Holder
shall forthwith become vested with and entitled to exercise all rights and
remedies provided herein to Holders, as if said purchaser, assignee, transferee
or pledgee were originally named in this Agreement in place of the Holders.

                                       5
<PAGE>

                                   ARTICLE 8

                                    Notice

        All notices or communications under this Agreement or the Warrants shall
be in writing and mailed, postage prepaid, or delivered as follows:

                To Holders:  1919 Pennsylvania Avenue, N.W., 3rd Floor
                             Washington, D.C. 20006
                             Attn:  Scott S. Binder, Principal
                                    Thoma H. Aiken

                             and to

                             Dickstein Shapiro Morin & Oshinsky LLP
                             2101 L Street, N.W.
                             Washington, D.C. 20037
                             Attn: David P. Parker, Esquire

                To the Borrower.

                             NET-tel Corporation
                             1023 31st Street, N.W.
                             Washington, D.C. 20007
                             Attn: Craig R. Bandes
                             Senior Vice President

                To the Parent:

                             NET-tel Communications Inc.
                             1023 31st Street, N.W.
                             Washington, D.C. 20007
                             Attn: Craig R. Bandes
                             Senior Vice President

                             and to

                             Swidler Berlin Shereff Friedman LLP
                             3000 K Street, N.W., Suite 300
                             Washington, D.C. 20007
                             Attn: Andrew M. Ray, Esquire

                                       6
<PAGE>

or, to such subsequent addresses as may hereafter be specified by the parties.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions. Each such notice,
request or other communication shall be deemed sufficiently given, served, sent
and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of the messenger
or the answer back being deemed conclusive evidence of such delivery), or at
such time as delivery is refused by addressee upon presentation.

                                    ARTICLE 9

         Controlling Law; Venue and Jurisdiction; Service of Process.
         -----------------------------------------------------------

        This Agreement shall be interpreted, and the rights and liabilities of
the parties hereto determined, in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in such District, to the jurisdiction of which courts all
undersigned parties hereby submit as the agreement of such parties, as not
inconvenient, and as not subject to review by any court other than such courts
in the District of Columbia. All parties intend and agree that the courts of
jurisdictions in which the Company is incorporated and conducts its business
shall afford full faith and credit to any judgment rendered by a court of the
District of Columbia against the Company or other obligees hereunder, and that
such District of Columbia and federal courts shall have in personam jurisdiction
to enter a valid judgment against the Company or other obligees hereunder.
Service of any summons and/or complaint and any other process which may be
served on the Company in any action in respect hereto, may be made by mailing
via registered mail, or delivering a copy of such process to the Company at its
address specified above. The parties hereto agree that this submission to and
consent to service of process are reasonable and made for the express benefit of
Holders.

                                   ARTICLE 10

                              Captions; Severance.
                              -------------------

        The captions in this Agreement and the Warrants are inserted for
convenience of reference only and shall be construed neither to limit nor
amplify the meaning of the other text of such documents. To the extent any
provision herein violates any applicable law, such provision shall be void and
the balance of this Agreement shall remain unchanged.

                                   ARTICLE 11

                        Counterparts; Entire Agreement
                        ------------------------------

        This Agreement may be executed in as many counterpart copies and with as
many counterpart signature pages as may be convenient. It shall not be necessary
that the signature of, or

                                       7
<PAGE>

on behalf of, each party appear on each counterpart, but it shall be sufficient
that the signature of, or on behalf of, each party appear on one or more of the
counterparts. An counterparts shall collectively constitute a single agreement;
it shall not be necessary in any proof of this Agreement to produce or account
for more than a number of counterparts containing the respective signatures of,
or on behalf of, all of the parties. This Agreement and the Warrants, and the
documents mentioned herein set forth the entire agreements and understandings of
the parties hereto in respect of this transaction. Any verbal agreements in
respect of this transaction are hereby terminated. The terms herein may not be
changed verbally but only by a writing signed by the party against which
enforcement of the change is sought.

                                   ARTICLE 12

                      Definitions and Rules of Construction
                      -------------------------------------

Section 12.1 Definitions. As used in this Agreement, and unless the context
             -----------
requires a different meaning, the following terms shall have the meanings as
follow:

                  (a) "Affiliate" shall have the meaning ascribed to it under
                       ---------
Rule 13e-3 promulgated under the Securities Exchange Act of 1934, as amended;

                  (b) "Affiliated Person" shall have the definition for such
                       -----------------
term set out in section 2(a)(3) of the Investment Company Act of 1940, as
amended;

                  (c) "Agreement" is defined as this Common Stock Warrant
                       ---------
Purchase Agreement and the exhibits and schedules hereto, as the same may be
amended, supplemented, extended, modified or replaced in accordance with the
terms hereof;

                  (d) "Borrower" shall have the definition set out in the
                       --------
Preamble hereof.

                  (e) "Closing" is defined as the consummation of this
                       -------
Agreement;

                  (f) "Closing Date" shall mean the day on which the Closing
                       ------------
occurs;

                  (g) "Company" shall have the definition set out in the
                       -------
Preamble hereof;

                  (h) "Fully Diluted Basis" shall mean as of a particular date,
                       -------------------
in respect to a corporation or other legal entity, the condition wherein all
options, warrants and other securities of such entity outstanding on such date
which are then or later exercisable or exchangeable for capital stock or other
equity interests in the entity, are, for the purpose of calculating relative
ownership rights, presumed to have been exercised or exchanged in full;

                                       8
<PAGE>

                  (i) "Gold & Appel" means Gold & Appel Transfer S.A., a
                       ------------
corporation organized under the laws of The British Virgin Islands, and a
wholly-owned subsidiary of Iceberg Transport, S.A., a corporation organized
under the laws of Panama;

                  (j) "Holders" shall have the definition set out in the
                       -------
Preamble hereof;

                  (k) "Parent" shall have the definition set forth in the
                       ------
Preamble hereof;

                  (l) "The Securities Act" is defined as the Securities Act of
                       ------------------
1933, as amended;

                  (m) "Securities Purchase Agreement" shall have the definition
                       -----------------------------
set forth in Recital C hereof;

                  (n) "Credit Agreement" shall have the definition set forth in
                       ----------------
Recital A hereof;

                  (o) "Senior Lender" shall have the definition set forth in
                       -------------
Recital A hereof;

                  (p) "Series B Stock" shall have the definition set forth in
                       --------------
Recital C hereof;

                  (q) "Shares" shall have the meaning set forth in Section 1.1
                       ------
hereof;

                                       9
<PAGE>

                  (r) "Warrants" shall have the meaning set forth in Section 1.1
                       --------
hereof; and

                  (s) "Warrant Shares" is defined as the Shares issued or
                       --------------
issuable pursuant to the warrants.

Section 12.2 Rules of Construction. The rule of ejusdem generis shall not be
             ---------------------              ------- -------
applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned. Unless the context otherwise requires:

                  (a)  A term has the meaning assigned to it;

                  (b)  "Or" is not exclusive;

                  (c)  Provisions apply to successive events and transactions;

                  (d) "Herein", "Hereof", "Hereto", "Hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision unless otherwise so provided,

                  (e) The word "person" shall mean any natural person,
partnership, corporation, nation, state, government, union, association, agency,
tribunal, board, bureau and any other form of business or legal entity;

                  (f) All words or terms used in this Agreement, regardless of
the number or gender in which they are used, shall be deemed to include any
other number and any other gender; and

                  (g) All financial terms used herein and not capitalized shall
have the meaning accorded them under GAAP.

                                      10
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written

Parent:

[Seal]

Attest:  /s/ Thomas Lera                       By: /s/ James F. Kenefick
        -------------------------------            -----------------------------
        Thomas Lera, Secretary                     James F. Kenefick, President

Borrower:                                       NET-tel Corporation

[Seal]

Attest:  /s/ Thomas Lera                        By: /s/ James F. Kenefick
        -------------------------------            -----------------------------
        Thomas Lera, Secretary                     James P. Kenefick, President

Holders:                                        Allied Capital Corporation

[Seal]

                                                By: /s/ Thomas H. Aiken
                                                    ----------------------------
                                                    Thomas H. Aiken, Associate

                                      11
<PAGE>

Agreed to and Accepted for purposes Gold & Appel Transfer, S.A.
of Article II only

                                         By: /s/ Walter Anderson
                                             -----------------------------------
                                             Walter Anderson

                                         James Kenefick

                                         By: /s/ James Kenefick
                                             -----------------------------------
                                             James Kenefick

                                         Williams Communications, Inc.

                                         By: /s/ James W. Dutton
                                             -----------------------------------
                                             James W. Dutton
                                             Vice President

                                         Nortel Networks, Inc.

                                         By: /s/ Jay R. Prestipino
                                             -----------------------------------
                                             Jay R. Prestipino
                                             Director, Customer Finance

                                      12<PAGE>

                                                                     Exhibit 4.8

                         REGISTRATION RIGHTS AGREEMENT

          THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of July
23, 1999 (the "Effective Date"), by and among NET-TEL COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), JAMES F. KENEFICK ("Kenefick"), WILLIAMS
COMMUNICATIONS, INC., a Delaware corporation ("Williams,"and together with
Kenefick, the "Existing Stockholders") and certain persons and entities listed
on Schedule 1 of the Purchase Agreement, as defined below (each a "Purchaser"
   ----------
and collectively, the "Purchasers").

          WHEREAS, the Company has agreed to provide the Existing Stockholders
certain registration rights with respect to the Common Stock of the Company in
order to induce them to invest in the Company and to keep them as investors of
the Company;

          WHEREAS, the Company is simultaneously entering into the Securities
Purchase Agreement dated as of the Effective Date by and among the Company and
the Purchasers (as amended from time to time,the "Purchase Agreement"), which
provides for the Company's issuance of shares of the Company's Series B
Convertible Preferred Stock (the "Preferred Stock").  As an inducement to the
Purchasers to enter into the Purchase Agreement, the Company agreed to provide
to the Purchasers certain registration rights with respect to the Common Stock
of the Company which may be acquired by the conversion of the Preferred Stock
subject to the terms and conditions of this Agreement.

          NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the parties hereto agree as follows:

     1.   Registration Rights.
          -------------------

          1.1  (a)  Certain Definitions.  As used in this Agreement, the
                    -------------------
following terms shall have the following respective meanings:

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

          "Common Stock" means the Common Stock, par value $0.0001 per share, of
the Company.

          "Holders" means the Existing Stockholders, the Purchasers and any
Person who acquires any Registrable Shares in accordance with Section 2.1
                                                              -----------
hereof.

          "Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.

          "Public Offering" means a public offering registered under the
Securities Act, other than a registration relating solely to a transaction under
Rule 145 under the Securities Act (or any successor provision) or to an employee
benefit plan of the Company.
<PAGE>

          "Registrable Shares" means all shares of Common Stock held by the
Holders and all shares of Common Stock issued or issuable to the Holders upon
the conversion of the Preferred Stock, options or warrants; provided, however,
                                                            --------  -------
that Registrable Shares shall cease to be Registrable Shares (1) when they have
been sold to the public pursuant to a public offering registered under the
Securities Act (or any successor provision) or (2) when they may be sold
pursuant to Rule 144 under the Securities Act, based on the written opinion of
counsel for the Company that, without compliance with the registration and
prospectus delivery requirements of the Securities Act, no transfer restrictions
or restrictive legends will appear upon the shares following the consummation of
such sale.

          "Registration Expenses" means all expenses to be incurred by the
Company in connection with the Existing Stockholders' and Purchasers' exercise
of their registration rights under this Agreement, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company).

          "Registration Statement" means a registration statement on Form S-1 or
other appropriate form.

          "Required Holders" means the Holders of at least eighty percent
(80%)of the Registrable Shares.

          "Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated under such Act, as they may,
from time to time, be in effect.

          "Selling Expenses" means all underwriting discounts and selling
commissions and transfer taxes applicable to the sale of Registrable Shares and
all fees and disbursements of counsel for the Holders.

          "Subscription Price" means the amount payable to the Company in
consideration of the initial issuance of the Registrable Shares or the
securities from which the Registrable Shares were issued, whether by way of
conversion, exercise, stock dividend, stock-split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.

               (b) Registration and Offering Rights.  The Company hereby grants
                   --------------------------------
to the Holders the applicable demand and piggyback rights with respect to the
Registrable Shares set forth in this Article 1.  The Company covenants that,
                                     ---------
upon a Demand (as hereinafter defined), the Company, at its expense, will use
its best efforts to prepare or cause to be prepared financial statements
(including financial statements reconciled to United States generally accepted
accounting principles in accordance with the applicable requirements of the
Securities Act, as may be appropriate for the intended method of disposition
specified in the Demand) and disclosure documents (prepared in accordance with
the applicable requirements of the Securities Act for a Public Offering) and
otherwise take all necessary steps with a view to filing a registration
statement with the Commission with respect to a Public Offering as soon as
possible but in any event no later than specified below.

                                       2
<PAGE>

          1.2  Demand Registration.  At any time one hundred eighty (180) or
               -------------------
more days after the closing of the Company's initial firm commitment,
underwritten Public Offering, the Holders of an aggregate of at least fifty
percent (50%) of the then outstanding Registrable Shares may request that the
Company effect the registration under the Securities Act of all or part of such
Registrable Shares (a "Demand").  Upon receipt of such request, the Company
shall promptly (but in any event within ten (10) days) give written notice of
such proposed registration to all Holders.  Such Holders shall have the right,
by giving written notice to the Company within twenty (20) days after the
receipt of notice from the Company, to elect to have included in such
registration such of their Registrable Shares as such Holders may request in
such notice of election.  Upon receipt of the Demand and all such elections, the
Company shall (subject to Section 1.3 hereof), as expeditiously as possible, use
                          -----------
its best efforts to effect the registration, on the appropriate form of
Registration Statement, of all of the Registrable Shares submitted by the
Holders electing to participate in the proposed registration; provided, however,
                                                              --------  -------
that nothing in this Section 1.2 shall obligate the Company to effect a
                     -----------
Registration Statement to register a number of Registrable Shares that would
have an aggregate offering price to the public of less than Five Million Dollars
($5,000,000).  The Holders shall have the right to have the Company effect (a)
two (2) Demands of Registrable Shares pursuant to this Section 1.2; provided
                                                       -----------  --------
that such Demands shall be at least twelve (12) months apart or (b) if the
Company is eligible to register its securities on Form S-3 (or any successor
form), an unlimited number of Demands pursuant to this Section 1.2; provided
that such Demands shall be at least one hundred twenty (120) days apart.

          1.3  Registration Process.
               --------------------

               (a) Notwithstanding any provision in this Agreement to the
contrary, if the Board of Directors of the Company determines in its reasonable
judgment, at the time it receives a request to register Registrable Shares
pursuant to Section 1.2, that (i) there shall be an adverse effect on a then
            -----------
contemplated Public Offering of the Company's securities, (ii) the registration
and offering would interfere with any material financing, acquisition, corporate
reorganization or other material corporate transaction or development involving
the Company that is pending or imminent, (iii) the disclosures that would be
required to be made by the Company in connection with such registration would be
materially harmful to the Company because of transactions then being considered
by, or other events then concerning, the Company, or (iv) registration at the
time would require the inclusion of pro forma or other information, which
requirement the Company is reasonably unable to comply with without incurring
material expense, and the Company promptly gives each Holder, in the case of any
registration statement referred to in Section 1.2, notice of that determination
                                      -----------
(it being understood, however, that in any such event, the Company shall use
best efforts to minimize the length of the postponement), then the Company may
defer the filing of the registration statement which is required to effect any
registration pursuant to Section 1.2 for a reasonable period of time, but not in
                         -----------
excess of ninety (90) calendar days.  If the Company shall so postpone the
filing of a registration statement, the Holders, in the case of any registration
statement referred to in Section 1.2, shall have the right to withdraw their
                         -----------
request to register the Registrable Shares by giving written notice to the
Company within thirty (30) days after the receipt of the notice of the
postponement and, in the event of the withdrawal, the demand that was withdrawn
shall not be deemed to have been made.

               (b) An offering or filing of a registration statement will not
count as a Demand until the registration statement has become effective (for
Public Offerings only) and the firm commitment underwriting or purchase
agreement with respect to the Demand has been

                                       3
<PAGE>

executed and delivered by all parties thereto, and such registration statement
remains continuously effective for the lesser of (i) the period during which all
Registrable Shares registered in the Demand are sold, and (ii) one hundred
eighty (180) days; provided that if, after a Registration Statement for a
                   --------
Public Offering has become effective or after the firm commitment underwriting
or purchase agreement with respect to the Demand has been executed and delivered
by all parties thereto, (A) an offering of Registrable Shares is interfered with
by any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court, or (B) the conditions to closing specified
in the underwriting or purchase agreement are not satisfied or waived, then, in
either case, such offering will be deemed not to have been effected and shall
not count as a Demand. The requesting Holders may abandon the Demand at any time
before the filing of the related registration statement with the Commission
without it counting as a Demand and shall retain the demand rights hereunder.

               (c) The requesting Holders holding a majority of the Registrable
Shares to be included in the Demand offering (the "Majority Requesting Holders")
shall have the right to select the managing underwriters for the Demand offering
so long as such underwriter is a firm of nationally recognized standing and
reasonably acceptable to the Company.

               (d) No securities to be sold for the account of any Person
(including the Company) other than a Requesting Holder shall be included in a
Demand offering unless the managing underwriters shall advise the Requesting
Holders in writing that the inclusion of such securities will not materially and
adversely affect the price (based on a price range acceptable to the Majority
Requesting Holders) or success of the Demand offering (a "Material Adverse
Effect").

          1.4  Piggy-Back Registration Rights.
               ------------------------------

               (a) If at any time or from time to time after the Company's
initial Public Offering, the Company shall determine to register any of its
securities for its own account or for any other holder of securities of the
Company (except for registration on Form S-4 or S-8 or any successor or similar
forms), the Company will: (i) promptly (and at least thirty (30) days prior to
the anticipated filing date) give the Holders written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and (ii) include in such registration (and any related
qualification under blue sky laws or other compliance solely in such
jurisdictions) and in any underwriting involved therein, all the Registrable
Shares specified in a written request or requests made by the Holders within
thirty (30) days after receipt of such written notice from the Company, except
as set forth in Section 1.4(b) below.
                --------------

               (b) The right of the Holders to registration pursuant to Section
                                                                   -------
1.4(a) shall be conditioned upon the Holders' participation in the underwriting
------
and the inclusion of the Holders' Registrable Shares in the underwriting to the
extent provided herein.  The Holders electing to have Registrable Shares
included in the offering and the Company shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company.  The Company shall, and shall use its best
efforts to cause the underwriters to, permit each Holder who has requested to
participate in the offering to include such Holder's Registrable Shares in such
offering on the same terms and conditions as the securities of the Company
included therein.  Notwithstanding any other provision of this Section 1.4, if,
                                                               -----------
in the opinion of the underwriter, the underwriter determines in good faith that

                                       4
<PAGE>

marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of Registrable Shares to be
included in the registration and underwriting. The Company shall so advise all
Holders and the Company will include in such registration, to the extent of the
number which the Company is so advised can reasonably be expected to be sold in
(or during the time of) such offering, (i) first, all securities proposed by the
Company to be sold for its own account, (ii) then, shares requested to be
included in such registration by shareholders with piggyback registration rights
which (x) by their terms take priority over the piggyback registration rights
granted hereunder and (y) have been granted with the prior written consent of
the Required Holders, (iii) then, the Registrable Shares requested to be
included in such registration by the Holders pursuant to this Agreement and
shares requested to be included in such registration by shareholders with
piggyback registration rights which by their terms are pari pasu with the rights
granted hereunder, pro rata among all such selling shareholders on the basis of
the estimated aggregate gross proceeds from the sale thereof, and (iv) finally,
other securities to be sold by holders, pro rata among all sellers on the basis
of the estimated aggregate gross proceeds from the sale thereof. To facilitate
the allocation of shares in accordance with the foregoing provision, the Company
may round the number of shares allocated to any Holder or other shareholder to
the nearest ten (10) shares. If any of the Holders disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the underwriter.

          1.5  Holdback.
               --------

               (a) If any Holder or Holders shall have declined to include any
of their Registrable Shares in a Registration Statement filed pursuant to
Section 1.2 or Section 1.4 and in any event with respect to  the Company's
-----------    -----------
initial Public Offering, such Holder or Holders agree now, and agree to sign
such supplemental agreements as the managing underwriter shall request, that
they will not effect any public sale or distribution of any shares of Common
Stock (other than those, if any, being sold pursuant to the Registration
Statement) until one hundred twenty (120) days after the effective date of such
Registration Statement, or such longer period, not to exceed one hundred eighty
(180) days, as may be requested by the managing underwriter.

               (b) The Company agrees not to effect any sale or distribution of
any securities similar to those being offered, or any securities convertible
into or exchangeable or exercisable for such securities, during the fourteen
(14) days prior to, and during the ninety (90) day period beginning on, the date
of any final offering circular or other offering material which includes
Registrable Shares (unless such sale or distribution is pursuant to such
Registration Statement or the Holders of a majority of the shares of Registrable
Shares to be included in such offering consent).

          1.6  Registration Procedures.  In connection with the offering of
               -----------------------
Registrable Shares pursuant to Section 1.2 or Section 1.4 hereof, the Company
                               -----------    -----------
shall keep each Holder advised in writing as to the initiation of such
registration and as to the completion thereof.  At its expense, the Company
will:

               (a) prepare and file with the Commission the requisite
Registration Statement to effect such registration and thereafter keep the
Registration Statement effective for a period of one hundred eighty (180) days
or until the Holder or Holders have completed the distribution described in the
Registration Statement relating thereto, which first occurs;

                                       5
<PAGE>

               (b) furnish such number of prospectuses and other documents
incident thereto as a Holder from time to time may reasonably request;

               (c) furnish at least five (5) business days before filing a
registration statement that registers such Registrable Shares, a prospectus
relating thereto and any amendments or supplements relating to such a
registration statement or prospectus, to one counsel selected by the holders of
a majority of Registrable Shares to be included in such registration (the
"Investor Counsel"), and copies of all such documents proposed to be filed (it
being understood that such five (5) business day period need not apply to
successive drafts of the same document proposed to be filed so long as such
successive drafts are supplied to such counsel in advance of the proposed filing
by a period of time that is customary and reasonable under the circumstances);

               (d) prepare and file with the Commission 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 of up to one hundred eighty (180) days and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement;

               (e) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Shares;

               (f) notify each Holder of Registrable Shares covered by such
registration at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which 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;

               (g) use best efforts to obtain the withdrawal of any order
suspending or withdrawing the authorization for an offering, the effectiveness
of a registration statement, or the lifting of any suspension of the
qualification (or exemption from qualification) of any of the Registrable Shares
for sale in any jurisdiction, at the earliest practicable moment;

               (h) use best efforts to register or qualify such Registrable
Shares as promptly as practicable under such other securities or blue sky law of
such jurisdictions as the Holders or managing underwriters reasonably (in light
of the intended plan of distribution) request and do any and all other acts and
things which may be reasonably necessary or advisable to enable such selling
Holders or managing underwriters to complete the disposition in such
jurisdiction of the Registrable Shares owned by such selling Holders; provided
                                                                      --------
that the Company will not be required to (i) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 1.6(h), (ii) subject itself to taxation in any such jurisdiction,
     --------------
(iii) consent to service of process in any such jurisdiction (other than with
respect to matters relating to the registration), or (iv) undertake compliance
with substantive requirements of the blue sky law or regulations (other than the
primary jurisdiction in which the

                                       6
<PAGE>

Demand offering is requested to be made) that are unreasonably burdensome or
onerous, including escrow requirements;

               (i) use its best efforts to furnish, on the date that such
Registrable Shares are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters and to the
Holders requesting registration of the Registrable Shares and (ii) a "comfort"
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
addressed to the underwriters and to the Holders requesting registration of the
Registrable Shares;

               (j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission;

               (k) provide and cause to be maintained a transfer agent and
registrar for all Registrable Shares covered by such registration statement from
and after a date not later than the effective date of such registration
statement;

               (l) list such Registrable Shares on any national securities
exchange or Nasdaq on which any shares of the Common Stock are listed or quoted
or, if the Common Stock is not listed on a national securities exchange or
quoted on Nasdaq, use its best efforts to qualify such Registrable Shares for
inclusion on such national securities exchange as the holders of a majority of
such Registrable Shares shall request;

               (m) use best efforts to cause such Registrable Shares and the
Demand offering to be registered with or approved by such other governmental
agencies, authorities, and board of directors and stockholders of the Company to
enable the selling Holders thereof to complete the disposition of such
Registrable Shares;

               (n) enter into customary agreements in customary form (including
an underwriting or purchase agreement) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Shares; and

               (o) make available for inspection by a representative Holder
designated in writing to the Company by the Majority Requesting Holders (the
"Representative"), any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other professional
designated by the Representative or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility; cause the Company's officers, directors, examiners, accountants,
attorneys, employees and subsidiaries to supply all information reasonably
requested by any such Inspectors in connection with such Registration Statement,
and cooperate and assist in the performance of any due diligence investigation
by any underwriter, including any qualified independent underwriter, or any
selling Holder (notwithstanding the forgoing, the Company shall have no
obligation to disclose a Record

                                       7
<PAGE>

to the Inspectors if the Company reasonably determines that such disclosure is
reasonably likely to have an adverse effect on the Company's ability to assert
the existence of any attorney-client privilege with respect thereto).

          1.7  Suspension of Dispositions.  Following the effectiveness of any
               --------------------------
Registration Statement pursuant to this Agreement, the Company may, at any time,
suspend the effectiveness of such Registration Statement and sales thereunder
for up to sixty (60) days, as appropriate (a "Suspension Period"), by giving
notice to each Holder (or underwriter, if any) selling thereunder, if the
Company shall have determined that the Company is required to disclose any
material corporate development which disclosure (i) could be reasonably expected
to have a material adverse effect on the Company, (ii) could be reasonably
expected to have a material adverse effect on the transaction or matter to be
disclosed, or (iii) would be detrimental to the Company or its stockholders.
Notwithstanding the foregoing, no more than two (2) Suspension Periods (i.e.,
                                                                        ----
one hundred and twenty (120) days) may occur in immediate succession, and the
Company shall use its best efforts to limit the duration and number of any
suspension periods.  The Holder agrees (and shall require that any underwriter
agree) that, upon receipt of any notice from the Company of any Suspension
Period, the Holder shall forthwith discontinue disposition of shares covered by
the Registration Statement or prospectus until such Holder (i) is advised in
writing by the Company that the use of the applicable prospectus may be resumed,
(ii) has received copies of a supplemental or omitted prospectus, if applicable,
and (iii) has received copies of any additional or supplemental filings which
are incorporated or deemed to be incorporated by reference in such prospectus.
No Registration Statement will be considered effective during any Suspension
Period for purposes of any provision of this Agreement that relates to the time
period for which a Registration Statement shall remain effective.

          1.8.  Registration Expenses.  All Registration Expenses incurred in
                ---------------------
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company, whether or not such
registration becomes effective, and all Selling Expenses shall be borne by the
Holder, whether or not such registration becomes effective.

                                       8
<PAGE>

          1.9. Indemnification; Contribution.
               -----------------------------

               (a) The Company will indemnify and hold harmless to the full
extent permitted by the law each Holder, each of its officers, directors,
agents, underwriters, attorneys, accountants and employees of each Holder, and
each person controlling the Holder, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, against all claims, losses, damages liabilities and expenses (or
actions in respect thereof) arising out of, based on or related to any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus or other offering materials, (including, without limitation, any
related Registration Statement, notification or the like) relating to any such
registration, qualification or compliance, or arising out of, based on or
related to any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act or any state
securities law or in either case, any rule or regulation thereunder applicable
to the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
reimburse each Holder, each of its officers, directors, agents, underwriters,
attorneys, accountants and employees of each Holder, and each person controlling
such Holder, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises out of, is based on or related to any untrue statement or omission based
upon written information furnished to the Company by the Holder and stated to be
specifically for use therein.

          (b) The Company may require, as a condition to including any
Registrable Shares in any registration statement filed pursuant to Section 1.2
                                                                   -----------
or Section 1.4, that the Company shall have received an undertaking reasonably
   -----------
satisfactory to the Company from the Holder of such Registrable Shares to
indemnify and hold harmless to the full extent permitted by the law the Company,
each of its directors, officers, agents, attorneys, accountants and Company
employees and each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act and the rules
and regulations thereunder, each other shareholder (if any), and each of their
officers, directors and partners, and each person controlling such other
shareholder against all claims, losses, damages, liabilities and expenses (or
actions in respect thereof) arising out of based on or related to any untrue
statement (or alleged untrue statement) of a material fact contained in any such
Registration Statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, and
will reimburse the Company and such other shareholders and their directors,
officers, agents, attorneys, accountants and Company employees and partners,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by the Holder and stated to be specifically for use
therein, and provided that the maximum amount for which the Holder shall be
liable under this indemnity shall not exceed the net proceeds received by the
Holder from the sale of the Registrable Shares.

                                       9
<PAGE>

          (c) Each party entitled to indemnification under this Section 1.9 (the
                                                                -----------
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim in any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article except to the extent
that the Indemnifying Party is materially and adversely affected by such failure
to provide notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.  Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.

          (d) Contributions.  If the indemnification provided for in this
              -------------
Agreement shall for any reason be unavailable or insufficient to an indemnified
party under this Section 1.9 in respect of any loss, claim, damage or liability,
                 -----------
or any action in respect thereof, or referred to therein, then each indemnifying
party shall, in lieu of indemnifying such party, contribute to the amount paid
or payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, in such proportion as shall be
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and the holders of the Registrable Shares included in the offering on
the other hand, from the offering of the Registrable Shares and (ii) the
relative fault of the Company on the one hand and the holders of the Registrable
Shares included in the offering on the other, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.  The
relative benefits received by the Company on the one hand and the holders of the
Registrable Shares on the other with respect to such offering shall be deemed to
be in the same proportion as the sum of the total Subscription Price paid to the
Company in respect of the Registrable Shares plus the total net proceeds from
the offering of the securities (before deducting expenses) received by the
Company bears to the amount by which the total net proceeds from the offering of
the securities (before deducting expenses) received by the holders of the
Registrable Shares with respect to such offering exceeds the Subscription Price
paid to the Company in respect of the Registrable Shares and in each case the
net proceeds received from such offering shall be determined as set forth on the
table of the cover page of the prospectus.  The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the holders of
the Registrable Shares the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission.  The Company and the holders of the Registrable Shares agree that it
would not be just and equitable if contribution pursuant to this Section 1.9
                                                                 -----------
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein.

                                       10
<PAGE>

The amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to in this
Section 1.9 shall be deemed to include, for purposes of this Section 1.9 any
-----------                                                  -----------
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. 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.

          1.10.  Survival.  The indemnity agreements contained in Section 1.9
                 --------                                         -----------
shall remain operative and in full force and effect regardless of (i) any
termination of the Agreement or any underwriting agreement, (ii) any
investigation made by or on behalf of any Indemnified Party or by or on behalf
of the Company and (iii) the consummation of the sale or successive resales of
the Registrable Shares.

          1.11.  Information by the Holder.  Each Holder shall furnish to the
                 -------------------------
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.

          1.12  Rule 144 Reporting.  With a view to making available the
                ------------------
benefits of certain rules and regulations of the Commission which may permit the
sale of the Common Stock to the public without registration, the Company agrees
to use its best efforts to:

                (a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
following the effective date of the initial Public Offering.

                (b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934 (the "1934 Act"); and

                (c) So long as any Holder owns any Common Stock, furnish to the
Holder, as appropriate, forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of the Securities
Act and the 1934 Act, a copy of the most recent annual or quarterly report of
the Company, and such other reports and documents so filed as any Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing the Holder to sell any such securities without registration.

     2.  Miscellaneous.
         -------------

          2.1  Transfer of Certain Rights.  The rights granted to the Holders
               --------------------------
under this Agreement to register the Registrable Shares may be transferred by
the Holders to a transferee of any of the Registrable Shares.  As a condition to
a transfer of the rights granted to the Holders under this Agreement, such
transferee shall deliver to the Company a written instrument by which such
transferee agrees to be bound by the applicable provisions of this Agreement.

                                       11
<PAGE>

          2.2  Amendments.  Except as otherwise provided in this Agreement, the
               ----------
terms and provisions of the Agreement may not be modified or amended except in a
writing executed by the Company and the Required Holders.  Waivers and
exceptions to the requirements and limitations of the covenants hereof may be
given, and shall be effective if given in writing by the Required Holders.
Notice of any waiver or amendment shall be promptly provided to any Holder not
consenting to such waiver or amendment.  No waivers of or exceptions of any
term, condition or provision of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.

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

          2.4  Headings.  The headings of the sections, subsections, and
               --------
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part of this Agreement.

          2.5  Notices.  All notices and other communications provided for or
               -------
permitted hereunder shall be made by hand delivery or registered first class
mail:

               (a) If to the Purchasers, to the address and numbers set forth
next to the name of each Purchaser on Schedule 1 of the Purchase Agreement.
                                      ----------

               (b) If to another Holder of Registrable Shares, at the most
current address or addresses provided to the Company by such Holder;

               (c)  If to the Company:

                    NET-tel Communications, Inc.
                    1023 31st Street, N.W.
                    Washington, D.C.  20007
                    Attention:  Craig Bandes
                                Senior Vice President
                    Tel:  (202) 295-6600
                    Fax:  (202) 965-4154

          2.6  Governing Law.  This Agreement shall be governed by and construed
               -------------
in accordance with the laws of the State of Delaware, without regard to
principles of conflicts of law.

          2.7  Entire Agreement; Severability.  This Agreement, the Purchase
               ------------------------------
Agreement and the other documents delivered pursuant thereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.  In the event one or more of the
provisions of this Agreement should, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.

                                       12
<PAGE>

                           [Signature page follows.]

                                       13
<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date set forth on the first page hereof.

                              COMPANY:

                              NET-TEL COMMUNICATIONS, INC.

                              By: /s/ James F. Kenefick
                                  ______________________________
                              Name: James F. Kenefick
                              Title: President

                              EXISTING STOCKHOLDERS:

                              /s/ James F. Kenefick
                              _________________________________
                              James F. Kenefick

                              WILLIAMS COMMUNICATIONS, INC.

                              By: /s/ James W. Dutton
                                  ______________________________
                              Name: James W. Dutton
                              Title: Vice President

                              GOLD & APPEL TRANSFER, S.A.

                              By: /s/ Walt Anderson
                                  ______________________________
                              Name: Walt Anderson
                              Title: Attorney-in-Fact

                                       14
<PAGE>

                              PURCHASERS:

                              GOLD & APPEL TRANSFER, S.A.

                              By: /s/ Walt Anderson
                                  ______________________________
                              Name: Walt Anderson
                              Title: Attorney-in-Fact

                              NORTEL NETWORKS INC.

                              By: /s/ Jay R. Prestipino
                                  ______________________________
                              Name: Jay R. Prestipino
                              Title: Director, Customer Finance

                              ALLIED CAPITAL CORPORATION

                              By: /s/ Thomas Aiken
                                  ______________________________
                              Name: Thomas Aiken
                              Title: Associate
                              August 2, 1999

                                       15
<PAGE>

                     SCHEDULE 1 (as amended August 2, 1999)
                     --------------------------------------

                                   PURCHASERS

1.      Gold & Appel Transfer, S.A.    1023 31st Street, N.W.
                                       Washington, D.C.  20007
                                       Attn:  Walter Anderson, Attorney in Fact

2.      Nortel Networks Inc.           GSM 991 15 A40
                                       2221 Lakeside Boulevard
                                       Richardson, TX 75082
                                       Attn: Vice President, Customer Finance

3.      Allied Capital Corporation     1919 Pennsylvania Avenue, N.W., 3rd Floor
                                       Washington, D.C.  20037
                                       Attn:  Scott S.  Binder, Principal
                                              Thomas H. Aiken

                                       16

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