Document:

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                                                                  CONFORMED COPY

                            STOCK EXCHANGE AGREEMENT

                                  BY AND AMONG

                              IDT INVESTMENTS INC.,

                                IDT CORPORATION,

                               IDT AMERICA, CORP.,

                               IDT VENTURES INC.,

                        HM4 TELIGENT QUALIFIED FUND, LLC,

                         HM4 TELIGENT PRIVATE FUND, LLC,

                       HM 4-SBS TELIGENT COINVESTORS, LLC,

                             HM PG-IV TELIGENT, LLC,

                       HM 4-EQ TELIGENT COINVESTORS, LLC,

                          HM4 ICG QUALIFIED FUND, LLC,

                           HM4 ICG PRIVATE FUND, LLC,

                               HM PG-IV ICG, LLC,

                       HM 4-SBS ICG COINVESTORS, LLC, AND

                          HM 4-EQ ICG COINVESTORS, LLC

                                DATED MAY 2, 2001

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                            STOCK EXCHANGE AGREEMENT

                  THIS STOCK EXCHANGE AGREEMENT, dated as of May 2, 2001 (as the
same may be amended or modified from time to time, this "Agreement"), by and
among IDT Investments Inc., a Nevada corporation (the "Company"), IDT
Corporation, a Delaware corporation ("IDTC"), IDT America Corp., a New Jersey
corporation ("IDTA"), IDT Ventures Inc., a Delaware corporation ("IDTV"), HM4
Teligent Qualified Fund, LLC, a Delaware limited liability company, HM4 Teligent
Private Fund, LLC, a Delaware limited liability company, HM 4-SBS Teligent
Coinvestors, LLC, a Delaware limited liability company, HM PG-IV Teligent, LLC,
a Delaware limited liability company, HM 4-EQ Teligent Coinvestors, LLC, a
Delaware limited liability company (collectively, the "HMTF Teligent Entities")
and HM4 ICG Qualified Fund, LLC, a Delaware limited liability company, HM4 ICG
Private Fund, LLC, a Delaware limited liability company, HM PG-IV ICG, LLC, a
Delaware limited liability company, HM 4-SBS ICG Coinvestors, LLC, a Delaware
limited liability company, and HM 4-EQ ICG Coinvestors, LLC, a Delaware limited
liability company (collectively, the "HMTF ICG Entities" and, together with the
HMTF Teligent Entities, the "HMTF Entities").

                                   WITNESSETH:

                  WHEREAS, the HMTF Teligent Entities are the beneficial and
record owners of 219,998 shares (the "Teligent Shares") of Series A 7-3/4%
Convertible Preferred Stock due 2014, par value $0.01 per share (the "Teligent
Preferred Stock"), of Teligent, Inc. ("Teligent"), a Delaware corporation;

                  WHEREAS, the HMTF ICG Entities are the beneficial and record
owners of (a) 23,000 shares (the "ICG Shares") of the 8% Series A-2 Convertible
Preferred Stock, par value $0.01 per share (the "Series A-2 ICG Preferred
Stock"), of ICG Communications, Inc., a Delaware corporation ("ICG"), and (b)
warrants (the "ICG Warrants") to purchase an aggregate of 3,066,667 shares of
common stock, par value $0.01 per share, of ICG (the "ICG Common Stock");

                  WHEREAS, the HMTF Entities desire to exchange the Teligent
Preferred Stock, in the case of HMTF Teligent Entities, and the ICG Shares and
ICG Warrants, in the case of the HMTF ICG Entities, for 10,007 and 8,188 shares,
respectively, of Series B Convertible Preferred Stock, par value $0.01 per
share, of the Company to be issued pursuant to the Certificate of Designation
substantially in the form attached hereto as Exhibit B (the "Series B Preferred
Stock");

                  WHEREAS, pursuant to a plan among the parties to this
Agreement, each of IDTC, IDTA and IDTV will transfer to the Company on or prior
to the Closing Date (as defined below), in exchange for an aggregate of 45,488
shares of Class A Common Stock, par value $0.01 per share, of the Company (the
"Class A Common Stock"), certain assets which the Company desires to acquire and
which are described in Section 5.03 hereof;

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                  WHEREAS, for Federal income tax purposes, it is intended that
the Exchange (as defined below) will qualify as an exchange under the provisions
of section 351(a) of the Code (as defined below);

                  WHEREAS, the Company desires to acquire all of the interests
currently held by the HMTF Teligent Entities in Teligent and by the HMTF ICG
Entities in ICG; and

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto hereby agree as follows:

                                   ARTICLE I

                           DEFINITIONS; INTERPRETATION

                  SECTION 1.01 Definitions.

                  For the purposes of this Agreement, the following terms shall
have the following respective meanings:

                  "Affiliate" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls, is controlled by or is under common
control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. For avoidance of any
doubt, the limited partners of the HMTF "funds" - the partnerships in which
outside investors are partners, and that are the ultimate beneficial owners of
the HMTF Entities - shall not be deemed to be "Affiliates" of any HMTF Entity.

                  "Acquisition" shall have the meaning ascribed to such term in
Section 2.01 hereof.

                  "Applicable Law" shall mean any foreign, United States
federal, state or local law, statute, rule, regulation, common law, order, writ,
injunction, judgment, decree or permit of any Governmental Entity.

                  "Asset Transfers" shall have the meaning ascribed to such term
in Section 5.03 hereof.

                  "Bankruptcy Code" means the Bankruptcy Code of the United
States of America, as amended (11 U.S.C.A. section 101, et seq.), and any rules
or regulations promulgated by any Governmental Entity under such statute.

                  "Code" shall mean the Internal Revenue Code of 1986, as
amended. All citations to provisions of the Code, or to the Treasury regulations
promulgated

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thereunder, shall include any amendments thereto and any substitute or successor
provisions thereto.

                  "Commission" shall mean the Securities and Exchange Commission
or any other Governmental Entity at the time administering the Securities Act or
the Securities Exchange Act of 1934, as amended.

                  "Contract" shall mean any contract, lease, indenture,
agreement, commitment, and any other legally binding arrangement, whether oral
or in writing, including any amendment thereto.

         "Distribution" shall mean a distribution by the "funds" -i.e. the
partnerships in which outside investors are limited partners and which are the
ultimate beneficial owners of the HMTF Entities - to the partners of such funds,
and shall include any intermediate transfers required to move the assets to the
funds. The parties hereto acknowledge that partners, officers and employees of
the HMTF Entities and their Affiliates may be partners in such funds or
otherwise entitled in the ordinary course of business to participate in a
portion of any such Distribution and that to the extent that any such Persons
receive a portion of any such Distribution, they shall have the same status as
outside investors who receive such Distribution. In addition, a portion of the
funds or assets distributed in a Distribution may be used to pay transaction
fees and expenses.

                  "DGCL" shall mean the General Corporation Law of the State of
Delaware, in effect as of the date hereof, and any amendments or successor
statutes thereto.

                  "Encumbrance" shall mean any mortgage, claim, charge, lien,
security interest, easement, right of way, pledge, covenant, restriction or
encumbrance of any nature whatsoever.

                  "Exchange" shall mean, collectively, the Acquisition and the
Asset Transfers, taken as a whole.

                  "Final Determination" shall mean a determination as defined in
section 1313(a) of the Code or any other event which finally and conclusively
establishes the amount of any liability for Taxes.

                  "Governmental Entity" shall mean any court, administrative
agency or commission or other governmental authority or instrumentality, whether
domestic or foreign.

                  "Person" shall mean an individual, corporation, trust,
partnership, limited liability company, joint venture, unincorporated
organization, Governmental Entity or any agency or political subdivision
thereof, or other entity.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended, and any similar or successor Federal statute, and the rules and
regulations of the Commission thereunder, all as the same may be in effect at
the time.

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                  "Taxes" shall mean any and all Federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions,
levies and liabilities, including, without limitation, taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, gains, franchise, withholding, payroll,
recapture, employment, excise, unemployment, insurance, social security,
business license, occupation, business organization, stamp, environmental and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts.

                  "Tax Return" means any report, return, election, notice,
estimate, declaration, information statement and other forms and documents
(including, without limitation, all amendments thereof and schedules, exhibits
and other attachments thereto) relating to and filed or required to be filed
with a taxing authority in connection with any Taxes (including, without
limitation, estimated Taxes).

                  SECTION 1.02 Interpretation(a) . (a) When used in this
Agreement the words "include", "includes" and "including" shall be deemed to be
followed by the words "without limitation."

                  (b) Any terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.

                  (c) When used in this Agreement, the word "or" is not
exclusive.

                  (d) All references to recitals, Articles, Sections, Exhibits
and Schedules shall be deemed references to recitals, Articles, Sections,
Exhibits and Schedules to this Agreement.

                  (e) This Agreement shall be deemed drafted jointly by all the
parties hereto and shall not be specifically construed against any party hereto
based on any claim that such party or its counsel drafted this Agreement.

                                   ARTICLE II

                        ACQUISITION OF THE COMPANY STOCK

                  SECTION 2.01 Acquisition of Acquired Securities. Upon the
terms and subject to the conditions of this Agreement (a) the Company hereby
agrees to issue to the HMTF Teligent Entities, and the HMTF Teligent Entities
severally hereby agree to acquire from the Company, 10,007 shares of Series B
Preferred Stock and (b) the Company hereby agrees to issue to the HMTF ICG
Entities, and the HMTF ICG Entities severally hereby agree to acquire from the
Company, 8,188 shares of Series B Preferred Stock (the securities to be issued
to the HMTF Teligent Entities and the HMTF ICG Entities pursuant to this Section
2.01 are referred to herein collectively as the "Acquired Securities" and the
acquisition of the Acquired Securities by the HMTF Teligent Entities and the
HMTF ICG Entities pursuant to this Section 2.01 in exchange for the Transferred
Interests is referred to herein as the "Acquisition"). The specific number of
shares of Series B Preferred Stock to be acquired by each respective HMTF Entity
is set forth on

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Schedule 2.01 hereto. The parties are entering into this transaction on the
basis that, as of the date hereof, the total equity value of the Company is
$348,771,000 and the common equity value of the Company is $308,771,000.

                  SECTION 2.02 Consideration. In consideration of the issuance
of the Acquired Securities to be issued to it, (a) each of the HMTF Teligent
Entities shall transfer to the Company its Teligent Shares and (b) each of the
HMTF ICG Entities shall transfer to the Company its ICG Shares and the ICG
Warrants (the interests to be transferred by the respective HMTF Entities
referred to herein as the "Transferred Interests").

                  SECTION 2.03 The Closing. Upon the terms and subject to the
conditions contained in this Agreement, the closing of the Acquisition (the
"Closing") shall take place immediately following the satisfaction or waiver of
the conditions set forth in Articles VI and VII hereof (other than conditions
which, by their nature, are to be satisfied at the Closing, but subject to such
conditions), at 10:00 A.M., Reno, Nevada time, at the offices of Woodburn and
Wedge, 6100 Neil Road, Suite 500, Reno, Nevada 89511, or at such other time or
at such other place as shall be mutually agreed upon by the parties hereto. The
date on which the Closing occurs is herein referred to as the "Closing Date."
Any share transfer taxes payable to the State of Nevada as a result of the
Closing taking place there shall be the responsibility of the Company.

                                  ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company hereby represents, warrants and acknowledges to
the HMTF Entities as follows:

                  SECTION 3.01 Organization, Good Standing and Qualification.

                  (a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as currently conducted.

                  (b) The Company has delivered to the HMTF Entities true and
complete copies of the Articles of Incorporation, as amended to date, and
By-laws, as in effect on the date hereof, of the Company.

                  SECTION 3.02 Corporate Authority. The Company has all
requisite corporate power and authority and has taken all corporate and
shareholder action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby. The Company has duly executed and delivered this Agreement. This
Agreement is a valid and binding agreement of the Company enforceable against
the Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium

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and similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.

                  SECTION 3.03 Capital Structure. (a) Immediately prior to the
Closing, the authorized capital stock of the Company shall consist of (i)
500,000 shares of Class A Common Stock, $0.01 par value, of which 316,399 shares
will be outstanding, (ii) 200,000 shares of Class B Common Stock, $0.01 par
value ("Class B Common Stock"), of which 10,000 shares will be outstanding,
(iii) 75,000 shares of Series A Preferred Stock, $0.01 par value, ("Series A
Preferred Stock") of which 40,000 shares will be outstanding and (iv) 20,000
shares of Series B Preferred Stock, $0.01 par value, of which no shares will be
outstanding. Immediately prior to the Closing, all of the outstanding shares of
Class A Common Stock, Class B Common Stock and Series A Preferred Stock will
have been duly authorized and will be validly issued, fully paid and
nonassessable. The ownership of Class A Common Stock, the Class B Common Stock
and the Series A Preferred immediately prior to the transactions contemplated
hereby is as set forth on Schedule 3.03(a) hereto. The Acquired Securities have
been duly authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable, and the
issuance thereof will not have been subject to any preemptive rights or made in
violation of any Applicable Law.

                  (b) Immediately prior to the Closing, except for the Series A
Preferred Stock, there will be (i) no outstanding options, warrants, agreements,
conversion rights, exchange rights, preemptive rights or other rights (whether
contingent or not) to subscribe for, purchase or acquire any issued or unissued
shares of capital stock of the Company or any subsidiary of the Company, and
(ii) no restrictions upon, or Contracts or understandings of the Company or any
subsidiary of the Company, or, to the knowledge of the Company, Contracts or
understandings of any other Person with respect to the voting or transfer of any
shares of capital stock of the Company or any subsidiary.

                  (c) The shares of Class B Common Stock to be issued upon
conversion of the Acquired Securities have been duly authorized and adequately
reserved in contemplation of the conversion of the Series B Preferred Stock and,
when issued and delivered in accordance with the terms of the Certificate of
Designation of the Series B Preferred Stock, will be validly issued, and will be
fully paid and nonassessable, and the issuance thereof will not have been
subject to any preemptive rights or made in violation of Applicable Law which
would likely have a material adverse effect on such issuance.

                  (d) The holders of the Series B Preferred Stock will, upon the
issuance thereof, have the rights set forth in the Certificate of Designation of
the Series B Preferred Stock (subject to the limitations and qualifications set
forth therein and under the Nevada Revised Statutes).

                  (e) The issuance of the Series B Preferred Stock contemplated
by this Agreement will not cause any anti-dilution provisions contained in any
outstanding securities of the Company to become applicable to such issuance.

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                  SECTION 3.04 Actions and Proceedings. As of the date of this
Agreement, there are no actions, suits, claims, proceedings or investigations
pending or, to the knowledge of the Company, threatened against the Company, nor
any outstanding judgments, orders, writs, injunctions or decrees of any
Governmental Entity against the Company that (i) seek to prevent or materially
restrict or delay the consummation of the transactions contemplated hereby or
(ii) would likely have a material adverse effect on the Company and its
subsidiaries taken as a whole or the transactions contemplated by this
Agreement.

                  SECTION 3.05 No Violation. The execution, delivery and
performance of this Agreement by the Company and the issuance and transfer of
the Acquired Securities by the Company hereunder do not and will not constitute
or result in (i) a breach or violation of, or a default under, the Articles of
Incorporation or By-laws of the Company, (ii) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of an
Encumbrance on the assets of the Company (with or without notice, lapse of time
or both) pursuant to any Contract binding upon the Company or any Applicable Law
or (iii) any change in the rights or obligations of any party under any Contract
binding upon the Company, except, in the case of clause (ii) or (iii) above, for
any breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, would not likely have a material adverse
effect on the transactions contemplated by this Agreement. No provision of any
Applicable Law, injunction, order or decree of any Governmental Entity is in
effect that has the effect of making the transactions contemplated by this
Agreement illegal or would likely have a material adverse effect on the
transactions contemplated by this Agreement.

                  SECTION 3.06 Consents and Approvals. Assuming the correctness
of the representations by each of the HMTF Entities in Article IV, all
authorizations, consents, approvals, licenses, qualifications or exemptions
from, or any filings, declarations or registrations with, any Governmental
Entity or any other Person required in connection with the execution, delivery
or performance by the Company of this Agreement have been made or obtained and
are in full force and effect as of the date hereof, other than authorizations,
consents, approvals, licenses or qualifications the absence of which would not
likely have a material adverse effect on the transactions contemplated by this
Agreement. The Company is not required to file a notification under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with this
Agreement.

                  SECTION 3.07 No Registration of Transferred Interests. The
Company is aware that the Transferred Interests have not been registered under
the Securities Act, that the transfer of the Transferred Interests is intended
to be exempt from registration under the Securities Act and the rules
promulgated thereunder by the Commission, and that the Transferred Interests
cannot be offered, sold, assigned, transferred, or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. The Company is also aware that sales or
transfers of the Transferred Interests are further restricted by state
securities laws and that the certificates for the Transferred Interests will
bear appropriate legends restricting their transfer pursuant to Applicable Laws.

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                  SECTION 3.08 Suitability of Investment. (a) The Company is an
"accredited investor" within the meaning of Rule 501 of Regulation D of the
Securities Act as presently in effect and is acquiring the Transferred Interests
for the Company's own account, or for the account of another "accredited
investor" that is one of the Company's Affiliates and that can make all of the
representations contained herein, for investment purposes only and not with a
view to the resale or distribution thereof;

                  (b) The Company will not, directly or indirectly, offer, sell,
transfer, assign, exchange or otherwise dispose of all or any part of the
Transferred Interests, except in accordance with applicable state and Federal
securities laws;

                  (c) The Company has been given the opportunity to obtain
information and documents relating to Teligent and ICG and to ask questions of
and receive answers from representatives of the HMTF Entities concerning
Teligent and ICG and the investment in the Transferred Interests;

                  (d) The Company has such knowledge and experience in
financial, business and Tax matters that the Company can, and the Company has,
adequately analyzed the risks of an investment in the Transferred Interests and
the Company has determined the Transferred Interests are a suitable investment
for the Company and that the Company is able at this time, and in the
foreseeable future, to bear the economic risk of a total loss of the Company's
investment in Teligent and ICG; and

                  (e) The Company is aware that there are substantial risks
incident to an investment in the Transferred Interests.

                  SECTION 3.09 Information. No information provided by the
Company to the HMTF Entities in connection with this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make such information, in light of the circumstances under which it was
given, not misleading; provided, however, that the Company makes no
representation or warranty with respect to the value of any individual asset of
the Company or any financial statement of the Company. Except as set forth on
Schedule 3.09 or as reflected in the information which is otherwise publicly
available, the Company and its subsidiaries, taken as a whole, do not have any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that individually or in the aggregate would reasonably be likely
to have a material adverse effect on the Company and its subsidiaries, taken as
a whole.

                                   ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES OF
              THE HMTF TELIGENT ENTITIES AND THE HMTF ICG ENTITIES

                  Each of the HMTF Entities, severally and not jointly, hereby
represents, warrants and acknowledges to the Company as follows:

                  SECTION 4.01 Ownership(a) . (a) Each of the HMTF Teligent
Entities represents and warrants that (i) it is a limited liability company duly
organized, validly

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existing and in good standing under the laws of the state of Delaware, (ii) it
is the beneficial and record holder of the number of shares of Teligent
Preferred Stock as is set forth opposite its name on Schedule 4.01(a) hereto,
(iii) it has the right, power and authority to transfer and deliver such number
of Teligent Shares as provided in this Agreement and (iv) upon delivery of such
number of Teligent Shares, there shall be vested in the Company good and valid
title to such Teligent Shares, free and clear of any Encumbrances other than
imposed or contemplated by (A) the Stock Purchase Agreement dated November 4,
1999 by and among Teligent, HMTF Acquisition Corp. and the other purchasers
listed on Schedule I thereto (the "Teligent Stock Purchase Agreement"), (B) the
terms and conditions set forth in the Certificate of Designation of Teligent
designating the Teligent Preferred Stock, (C) in the event Teligent is subject
to any proceeding under the Bankruptcy Code, the Bankruptcy Code or any
decisions or orders by any Governmental Entity pursuant to the Bankruptcy Code
of which the HMTF Teligent Entities do not have actual knowledge, it being
understood that no inquiry has been made by any such HMTF Entity and (D)
Encumbrances arising pursuant to the Securities Act or applicable state
securities or "Blue Sky" laws.

                  (b) Each of the HMTF ICG Entities represents and warrants that
(i) it is a limited liability company duly organized, validly existing and in
good standing under the laws of the state of Delaware, (ii) it is the beneficial
and record holder of the number of ICG Shares and the ICG Warrants as is set
forth opposite its name on Schedule 4.01(b) hereto, (iii) it has the right,
power and authority to transfer and deliver such number of ICG Shares and the
ICG Warrants as provided in this Agreement and (iv) upon delivery of such number
of ICG Shares and the ICG Warrants as provided in this Agreement, there shall be
vested in the Company good and valid title to such ICG Shares and the ICG
Warrants, free and clear of any Encumbrances other than as are imposed or
contemplated by (A) the Preferred Stock and Warrant Purchase Agreement, dated as
of February 27, 2000 by and between ICG, HMTF Bridge ICG, LLC, and the other
Purchasers listed on Schedule I thereto, as amended (the "ICG Preferred Stock
and Warrant Purchase Agreement"), (B) the terms and conditions set forth in the
Certificate of Designation of ICG designating the Series A-2 ICG Preferred
Stock, and (C) the Bankruptcy Code or any decisions or orders by any
Governmental Entity pursuant to the Bankruptcy Code of which the HMTF ICG
Entities do not have actual knowledge, it being understood that no inquiry has
been made by any such HMTF Entity and (D) Encumbrances arising pursuant to the
Securities Act or applicable state securities or "Blue Sky" laws.

                  SECTION 4.02 Authority. Each of the HMTF Entities has all
requisite power and authority and has taken all action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. Each of the HMTF Entities has
duly executed and delivered this Agreement. This Agreement is a valid and
binding agreement of such party enforceable against such party in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.

                  SECTION 4.03 No Other Agreement to Transfer the Transferred
Interests. The HMTF Entities do not have any binding obligation, absolute or
contingent,

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oral or written, to any other Person to transfer any of the Transferred
Interests (other than the transactions contemplated hereby).

                  SECTION 4.04 Actions and Proceedings. As of the date of this
Agreement, there are no actions, suits, claims, proceedings or investigations
pending or, to the actual knowledge of the HMTF Entities, threatened against
such party, nor any outstanding judgments, orders, writs, injunctions or decrees
of any Governmental Entity against such party that (i) seek to prevent or
materially restrict or delay the consummation of the transactions contemplated
by this Agreement or (ii) would likely have a material adverse effect on the
transactions contemplated by this Agreement.

                  SECTION 4.05 No Violation. Except as set forth on Schedule
4.05 hereto, the execution, delivery and performance of this Agreement by the
HMTF Entities does not and will not constitute or result in (i) a breach or
violation of, or a default under, the limited liability company agreement of
each such HMTF Entity, (ii) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of an Encumbrance on the
Transferred Interests (with or without notice, lapse of time or both) pursuant
to, any Contracts binding on such entity or the Transferred Interests or any
Applicable Law or (iii) any change in the rights or obligations of each such
entity under any Contracts binding on such entity except in the case of (ii) or
(iii) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, would not likely have a material
adverse effect on the transactions contemplated by this Agreement or the
Transferred Interests. Except as set forth on Schedule 4.05, no provision of any
Applicable Law, injunction, order or decree of any Governmental Entity is in
effect that has the effect of making the transactions contemplated by this
Agreement illegal or would otherwise likely have a material adverse effect on
the transactions contemplated by this Agreement.

                  SECTION 4.06 Consents and Approvals. Assuming the correctness
of the representations by the Company in Article III, all authorizations,
consents, approvals, licenses, qualifications or exemptions from, or any
filings, declarations or registrations with, any Governmental Entity or any
other Person required in connection with the execution, delivery or performance
by the HMTF Entities of this Agreement have been made or obtained and are in
full force and effect as of the date hereof, other than authorizations,
consents, approvals, licenses or qualifications the absence of which would not
likely have a material adverse effect on the transactions contemplated by this
Agreement.

                  SECTION 4.07 No Registration of Acquired Securities. Each of
the HMTF Entities is aware that the Acquired Securities have not been registered
under the Securities Act, that the offer and issuance of the Acquired Securities
are intended to be exempt from registration under the Securities Act and the
rules promulgated thereunder by the Commission, and that the Acquired Securities
cannot be offered, sold, assigned, transferred, or otherwise disposed of unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Each of the HMTF Entities is also aware that
sales or transfers of the Acquired Securities are further restricted by state
securities laws and that the certificates for the Acquired Securities will

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bear appropriate legends restricting their transfer pursuant to Applicable Laws
and this Agreement.

                  SECTION 4.08 Teligent Preferred Stock and ICG Common Stock
Rights; Consents and Acknowledgements. All the transferable rights, powers and
privileges that each of the HMTF Teligent Entities and the HMTF ICG Entities
currently enjoys with respect to the Transferred Interests, whether obtained
through Applicable Law, by Contract or otherwise (the "Stock Rights"), will be
transferred to the Company at the Closing, to the fullest extent that such Stock
Rights may be transferred to the Company without violation of Applicable Law or
the documents under which such rights were granted.

                  SECTION 4.09 Holding Period. As of the date hereof, each of
the HMTF Teligent Entities has held its shares of Teligent Preferred Stock for
such period of time as is set forth opposite such HMTF Teligent Entity's name on
Schedule 4.09 hereto and each of the HMTF ICG Entities has held its ICG Shares
and the ICG Warrants for such period of time as is set forth opposite such HMTF
ICG Entity's name on Schedule 4.09 hereto (such respective periods being
calculated in accordance with the provisions of Rule 144(d) promulgated pursuant
to the Securities Act).

                  SECTION 4.10 Suitability of Investment. (a) Each HMTF Entity
is acquiring the Acquired Securities for such entity's own account, for
investment purposes only and not with a view to the resale or distribution
thereof;

                  (b) Each HMTF Entity will not, directly or indirectly, offer,
sell, transfer, assign, exchange or otherwise dispose of all or any part of the
Acquired Securities, except in accordance with applicable state and Federal
securities laws and the provisions of this Agreement;

                  (c) Each HMTF Entity has been given the opportunity to obtain
information and documents relating to the Company and to ask questions of and
receive answers from representatives of the Company concerning the Company and
the investment in the Acquired Securities;

                  (d) Each HMTF Entity has such knowledge and experience in
financial, business and Tax matters that it can, and it has, adequately analyzed
the risks of an investment in the Acquired Securities and it has determined the
Acquired Securities are a suitable investment for it and that it is able at this
time, and in the foreseeable future, to bear the economic risk of a total loss
of its investment in the Company; and

                  (e) Each HMTF Entity is aware that there are substantial risks
incident to an investment in the Acquired Securities.

                  SECTION 4.11 Retention of Acquired Securities. It has no
current plan or intention, or obligation, to transfer, exchange or otherwise
dispose of any of the Acquired Securities other than as provided in Section 7A
of the Certificate of Designation relating thereto.

                                       11
<PAGE>   13

                  SECTION 4.12 Teligent. In the event Teligent is subject to any
proceeding under the Bankruptcy Code, no consent, authorization or filing with
the bankruptcy court would be required under the Bankruptcy Code for the HMTF
Teligent Entities to enter into the Agreement or consummate the transactions
contemplated hereby. The parties hereto agree that any injunction or other order
(other than an injunction or other order issued for failure to obtain a consent
or authorization of the bankruptcy court or make a filing therewith, in each
case, known by each such HMTF Teligent Entity to have been required, with
respect to the transactions contemplated hereby but not excluding an injunction
or other order issued for failure to obtain a consent or authorization required
under the Bankruptcy Code) by any court pursuant to the Bankruptcy Code with
respect to the transactions contemplated by this Agreement and issued after the
date hereof shall not constitute a breach of the representation contained in
this Section 4.12 of this Agreement, but in such event the parties shall make
such appropriate equitable adjustments, which shall include in appropriate
circumstances rescission of the transactions contemplated hereby, as are
necessary to reflect such injunction or order.

                  SECTION 4.13 ICG. No consent, authorization or filing with
the bankruptcy court is required under the Bankruptcy Code for the HMTF ICG
Entities to enter into the Agreement or consummate the transactions contemplated
hereby. The parties hereto agree that any injunction or other order (other than
an injunction or other order issued for failure to obtain a consent or
authorization of the bankruptcy court or make a filing therewith, in each case,
known by each such HMTF ICG Entity to have been required, with respect to the
transactions contemplated hereby but not excluding an injunction or other order
issued for failure to obtain a consent or authorization required under the
Bankruptcy Code) by any court pursuant to the Bankruptcy Code with respect to
the transactions contemplated by this Agreement and issued after the date hereof
shall not constitute a breach of the representation contained in this Section
4.13 of this Agreement, but in such event the parties shall make such
appropriate equitable adjustments, which shall include in appropriate
circumstances rescission of the transactions contemplated hereby, as are
necessary to reflect such injunction or order. The Company acknowledges that the
HMTF ICG Entities did not file a Proof of Claim in the ICG bankruptcy case.

                  SECTION 4.14 Tax Treatment. Each of the HMTF Entities and its
Tax Owner (as defined below), and their respective Affiliates, has not taken,
and will not take, and has not failed to take, and will not fail to take, any
action, and has no knowledge of any fact or circumstance relating to the
Acquisition that is unique to such HMTF Entity or Tax Owner and has not been
previously disclosed to the Company, that would be likely to prevent the
Exchange, or any portion thereof, from qualifying as a transfer of property to
the Company governed by Section 351(a) of the Code.

                  SECTION 4.15 Status. Each of the HMTF Entities is classified
as a disregarded entity for federal income tax purposes and is directly owned,
and has been directly owned at all times during its existence, by an entity that
is classified as a partnership for federal income tax purposes (each such
partnership referred to herein as a

                                       12
<PAGE>   14

"Tax Owner"). Not more than 49% of any such partnership is directly or
indirectly owned by entities that are treated as corporations for federal income
tax purposes.

                  SECTION 4.16 Taxes. Each of the HMTF Entities has timely paid
or caused to be paid all Taxes owed by or with respect to it, including Taxes
relating to the Transferred Interests, and has timely filed or caused to be
filed all Tax Returns required to be filed by or with respect to it, including
Tax Returns with respect thereto. All such Tax Returns are accurate and complete
in all material respects. All information set forth on Schedule 5.02 (c) is true
and correct in all material respects.

                                   ARTICLE V

                                CERTAIN COVENANTS

                  SECTION 5.01 Confidentiality.  (a) Unless otherwise agreed
to in writing by the Company, each of the HMTF Entities will, and will cause its
Affiliates, directors, officers, employees and agents (such Affiliates and other
Persons being collectively referred to as the applicable party's
"Representatives") to, (i) keep all Confidential Information of the Company
confidential and not disclose or reveal any such Confidential Information to any
Person other than those Representatives who are participating in effecting the
transactions contemplated hereby or who otherwise need to know such Confidential
Information, (ii) use such Confidential Information only in connection with
consummating the transactions contemplated hereby and enforcing such party's
rights hereunder, and (iii) not use Confidential Information in any manner
detrimental to the Company. If such party is requested pursuant to, or required
by, Applicable Law or by legal process to disclose any Confidential Information
of the Company, it will provide the Company with prompt notice of such
request(s) so that the Company may seek an appropriate protective order. Such
party's obligations hereunder with respect to Confidential Information that (i)
is disclosed to a third party with the Company's written approval, (ii) is
required to be produced under order of a court of competent jurisdiction or
other similar requirements of a Governmental Entity, or (iii) is required to be
disclosed by Applicable Law, will, subject in the case of clauses (ii) and (iii)
above to such party's compliance with the preceding sentence, cease to the
extent of the disclosure so consented to or required, except to the extent
otherwise provided by the terms of such consent or covered by a protective
order. In the event this Agreement is terminated, each of the HMTF Entities
will, if so requested by the Company, promptly return all of the Confidential
Information of the Company, including all copies, reproductions, summaries,
analyses or extracts thereof or based thereon in the possession of such party or
its Representatives; provided, however, that, upon termination of this
Agreement, such party will not be required to return or cause to be returned
summaries, analyses or extracts prepared by it or its Representatives, but will
destroy (or cause to be destroyed) the same promptly following such termination.
The confidentiality obligations of such party contained in this Section 5.01(a)
shall survive until the one-year anniversary of the Closing or the termination
of this Agreement. Notwithstanding the foregoing, the parties to this Agreement
understand and agree that the HMTF Entities and certain Affiliates are obligated
to make certain public filings pursuant to Sections 13 and

                                       13
<PAGE>   15

16 of the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, and this Section 5.01 shall not be deemed violated by any such
filing.

                  (b) For purposes of this Section 5.01, "Confidential
Information" of the Company means all confidential and proprietary information
about the Company (whether oral or written) that is furnished by it or its
agents or representatives to the HMTF Entities or their respective
Representatives, regardless of the manner in which it is furnished.
"Confidential Information" does not include, however, information which (i) has
been or in the future is published or is now or in the future is otherwise in
the public domain through no fault of the HMTF Entities or their respective
Representatives, (ii) was available to the HMTF Entities or their respective
Representatives on a non-confidential basis prior to its disclosure by the
disclosing party, (iii) becomes available to the HMTF Entities or their
respective Representatives on a non-confidential basis from a Person other than
the Company or its representatives or agents who is not otherwise bound by a
confidentiality agreement with the Company or its representatives or agents, or
is not otherwise prohibited from transmitting the information to the HMTF
Entities or their respective Representatives, or (iv) is independently developed
by the HMTF Entities or their respective Representatives through Persons who
have not had, either directly or indirectly, access to or knowledge of such
information.

                  SECTION 5.02 Taxes. (a) The HMTF Entities, the Company, IDTC,
IDTA and IDTV shall (and each HMTF Entity shall cause its Tax Owner to), for all
Tax purposes including all Tax Returns and any Tax controversies (and shall
cause any Affiliate or successor to their assets or businesses to), except as
otherwise agreed to by the parties in writing, take each of the positions set
forth below (and shall not take or permit to be taken any position, action or
inaction that is inconsistent therewith) unless there has been a Final
Determination contrary to such position:

                  (i) the Exchange will qualify as a transfer of property to the
         Company by the HMTF Entities, IDTC, IDTA and IDTV governed by section
         351(a) of the Code;

                  (ii) none of the Acquired Securities will be treated as other
         property or money under section 351(b) of the Code;

                  (iii) no income, gain or loss will be recognized by the HMTF
         Entities or their Affiliates, IDTC, IDTA or IDTV upon the Exchange; and

                  (iv) none of the consideration in the Exchange will be paid or
         issued for services.

                  (b) The HMTF Entities, the Company, IDTC, IDTA and IDTV shall
(and each HMTF Entity shall cause its Tax Owner to) promptly report to each
other any communication from or with the Internal Revenue Service or any other
Taxing authority that relates in any way to the characterization of the
Exchange. Notwithstanding any such communication, except as otherwise agreed to
by the parties in writing, the HMTF Entities, the Company, IDTC, IDTA and IDTV
shall (and each HMTF Entity shall cause

                                       14
<PAGE>   16

its Tax Owner to), and shall cause any Affiliate or successor to their assets or
businesses to, continue to take each of the positions specified in Section
5.02(a) for all Tax purposes (unless there has been a Final Determination
contrary to such position).

                  (c) The HMTF Entities shall (and each HMTF Entity shall cause
its Tax Owner to) provide to the Company such information as is reasonably
required by the Company to file its Tax Returns. Schedule 5.02 (c) provides all
information required pursuant to Treasury Regulation Section 1.351-3(a). In
addition, the parties hereto shall cooperate with respect to all matters
relating to Taxes.

                  SECTION 5.03 Transfer of Assets. At or prior to the Closing
Date, (i) IDTA will transfer to the Company $10 million in cash, in exchange for
9,098 shares of Class A Common Stock; (ii) IDTC will transfer to the Company $10
million in cash, in exchange for 9,098 shares of Class A Common Stock; and (iii)
IDTV will transfer to the Company 100% of the issued and outstanding capital
stock of Timetel Dutch Holdings BV, in exchange for 27,293 shares of Class A
Common Stock (collectively, the "Asset Transfers"). The Asset Transfers shall be
effected pursuant to agreements and instruments customary for transactions
similar to the Asset Transfers. To the extent necessary, each of the Company and
IDTA, IDTC and TDTV will cause such agreements or instruments of transfer with
respect to the Asset Transfers to be duly executed, filed or registered.

                  SECTION 5.04 Access to Information.

                  (a) During the period from the date hereof to the Closing,
each of the HMTF Entities shall (and shall cause its Tax Owner to) afford to
Representatives of the Company reasonable access to all of the books and records
of the HMTF Entities and their Tax Owners relating to the Transferred Interests,
and the HMTF Entities shall (and each HMTF Entity shall cause its Tax Owner to)
furnish promptly to the Company all information concerning the Transferred
Interests as the Company may reasonably request. To the extent that the Company
receives information pursuant to this Section 5.05(a), the Company agrees to
treat such information in accordance with Section 5.01 of this Agreement, it
being understood that for purposes of this Section 5.05(a), all references in
Section 5.01 to the HMTF Entities shall be deemed to be references to the
Company and that all references in such section to the Company shall be deemed
to be references to the HMTF Entities.

                  (b) During the period from the date hereof to the Closing,
each of the Company, IDTC, IDTA and IDTV shall afford to Representatives of
Hicks Muse and the HMTF Entities reasonable access to all of the books and
records of the Company relating to the Acquired Securities and the Asset
Transfers, as applicable, and each of the Company, IDTC, IDTA and IDTV shall
furnish promptly to Hicks Muse and the HMTF Entities all information concerning
the Transferred Interests and the Asset Transfers, as applicable, as Hicks Muse
and the HMTF Entities may reasonably request.

                  SECTION 5.05 Reasonable Efforts. Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto shall use all
reasonable efforts to

                                       15
<PAGE>   17

take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under Applicable Laws to consummate and
make effective the transactions contemplated by this Agreement as promptly as
practicable including, but not limited to, using all reasonable efforts to cause
the satisfaction of all conditions to Closing. This covenant shall not apply to
Section 6.01(d).

                  SECTION 5.06 Further Assurances. From time to time after the
Closing, without additional consideration, each of the parties hereto will (or,
if appropriate, cause their Affiliates to) execute and deliver such further
instruments and take such other action as may be necessary to make effective the
transactions contemplated by this Agreement. If any party to this Agreement
shall following the Closing have in its possession any asset or right which
under this Agreement should have been delivered to the other, such party shall
promptly deliver such asset or right to the other.

                  SECTION 5.07 Registration Rights. (a) Pursuant to this Section
5.07, the HMTF ICG Entities shall execute and deliver at the Closing a writing
evidencing the assignment by the HMTF ICG Entities of such entity's rights under
the Registration Rights Agreement dated as of April 7, 2000 between ICG and
certain purchasers (the "ICG Registration Rights Agreement").

                  (b) Pursuant to this Section 5.07, (i) the HMTF Teligent
Entities shall execute and deliver at the Closing a writing evidencing the
assignment by the HMTF Teligent Entities of each such entity's rights under the
Registration Rights Agreement dated as of December 3, 1999 between Teligent and
certain purchasers (the "Teligent Registration Rights Agreement") and (ii) in
the event Teligent is subject to any proceeding under the Bankruptcy Code, the
HMTF Teligent Entities shall execute and deliver at the Closing a writing
evidencing the assignment to the Company of all the HMTF Teligent Entities'
rights under any proof of claim filed by an HMTF Teligent Entity in connection
with the filing for Chapter 11 bankruptcy protection by Teligent (it being
understood that such HMTF Teligent Entities shall be under no obligation to file
any such claim).

                  SECTION 5.08 Capitalization of the Company. From the date
hereof until the Closing, the Company shall not make any material changes to the
capital structure of the Company or take any other action that would have caused
an adjustment to the Conversion Price (as defined in the Certificate of
Designation with respect to the Series B Preferred Stock) had the Series B
Preferred Stock been outstanding at the time of such action; provided, however,
that the Company may issue additional securities so long as the securities
issued are exchanged for assets valued for such purpose at the fair market value
thereof (as determined by the Board of Directors of the Company in good faith)
or as otherwise contemplated hereby.

                                       16
<PAGE>   18

                                   ARTICLE VI

                          CONDITIONS TO THE OBLIGATIONS
                                 OF THE COMPANY

                  SECTION 6.01 Conditions to the Obligations of the Company. The
obligation of the Company to deliver the Acquired Securities to the HMTF
Entities at the Closing against delivery of the Transferred Interests is
absolute, subject to the fulfillment or waiver at or before the Closing of each
of the following conditions, any or all of which may be waived by the Company:

                  (a) Representations and Warranties. The representations and
warranties of each of the HMTF Entities contained in this Agreement (without
regard to materiality or similar qualifiers contained therein) shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of such date, except for (a) changes contemplated by this Agreement and (b)
those representations and warranties which address matters only as of a
particular date (without regard to materiality or similar qualifiers contained
therein) (which shall have been true and correct in all material respects as of
such date, subject to clause (a));

                  (b) Covenants. Each of the HMTF Entities shall have performed
in all material respects all of its obligations and agreements and complied in
all material respects with all of its covenants contained in this Agreement to
be performed and complied with at or prior to the Closing;

                  (c) Certificate. The Company shall have received a
certificate, dated as of the Closing Date, executed by an executive officer (or
similar person) of each of the HMTF Entities on behalf of such entities and not
in his or her individual capacity and stating that, to the best knowledge of
such executive officer, the conditions set forth in clauses (a) and (b) above
have been satisfied;

                  (d) Tax Certificate. Each of the HMTF Entities and its
respective Tax Owner shall have delivered to Dewey Ballantine LLP an officer's
certificate containing certain representations relating to certain tax matters
acceptable to Dewey Ballantine LLP.

                  (e) Section 9.02 and 9.03 Deliveries. Each of the HMTF
Entities shall have delivered to the Company all of the items contemplated to be
delivered by it pursuant to Sections 9.02 and 9.03;

                  (f) Injunction. There shall not be in effect any injunction or
order by any Governmental Entity (i) that prohibits or makes illegal any of the
transactions contemplated by this Agreement and (ii) which has been adopted or
issued, or has otherwise become effective, since the date of this Agreement; and

                  (g) Material Adverse Change. No material adverse change shall
have occurred in the ability of any of the HMTF Entities to perform their
respective obligations under this Agreement.

                                       17
<PAGE>   19

                                   ARTICLE VII

                          CONDITIONS TO THE OBLIGATIONS
                              OF THE HMTF ENTITIES

                  SECTION 7.01 Conditions to the Obligations of each of the HMTF
Entities. The obligation of each of the HMTF Entities to deliver the Transferred
Interests to the Company at the Closing against delivery of the Acquired
Securities is absolute, subject to the fulfillment or waiver at or before the
Closing of each of the following conditions, any or all of which may be waived
by such HMTF Entity:

                  (a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (without regard to
materiality or similar qualifiers contained therein) shall be true and correct
in all material respects at and as of the Closing Date as if made at and as of
such date, except for (a) changes contemplated by this Agreement and (b) those
representations and warranties which address matters only as of a particular
date (without regard to materiality or similar qualifiers contained therein)
(which shall have been true and correct in all material respects as of such
date, subject to clause (a));

                  (b) Covenants. Each of the Company, IDTC, IDTA and IDTV shall
have performed in all material respects all of its obligations and agreements
and complied in all material respects with all of its covenants contained in
this Agreement to be performed and complied with at or prior to the Closing;

                  (c) Certificate. The HMTF Entities shall have received a
certificate, dated as of the Closing Date, executed by an executive officer of
the Company on behalf of the Company and not in his or her individual capacity
and stating that, to the best knowledge of such executive officer, the
conditions set forth in clauses (a) and (b) above have been satisfied;

                  (d) Acquired Securities. The Company shall have delivered to
the HMTF Entities the shares of Series B Preferred Stock Acquired Securities to
be delivered by it pursuant to Section 9.01(a) and 9.01(b);

                  (e) Injunction. There shall be in effect any injunction or
order by any Governmental Entity (i) that prohibits or makes illegal the
transactions contemplated by this Agreement and (ii) which has been adopted or
issued, or has otherwise become effective, since the date of this Agreement;

                  (f) Material Adverse Change. No material adverse change shall
have occurred in the business or condition of the Company or any of its
subsidiaries taken as a whole or on the ability of the Company or any of its
subsidiaries to perform their respective obligations under this Agreement;

                  (g) Certificate of Designation. The Company shall have filed
with the Secretary of State of the State of Nevada the Certificate of
Designation (substantially in the form attached as Exhibit B hereto) with
respect to the Series B Preferred Stock; and

                                       18
<PAGE>   20

                  (h) Legal Opinion. The HMTF Entities shall have received a
legal opinion of Nevada counsel to the Company reasonably acceptable to the HMTF
Entities concerning such matters of Nevada law as are customary in transactions
similar to the transaction contemplated hereby.

                                  ARTICLE VIII

                              TRANSFER LIMITATIONS

                  SECTION 8.01 Transfer Limitations; 1933 Act Legend. (a) Until
the earlier of (i) consummation of an underwritten initial public offering with
net proceeds of at least $25 million of the Company's common equity and in
connection with which such common equity shall be listed on the Nasdaq National
Market or the New York Stock Exchange (an "IPO") (and thereafter for so long as
the underwriters of the IPO shall require) and (ii) the second anniversary of
the Closing Date, each of the HMTF Entities agrees not to offer, transfer,
pledge, encumber, contract to do any of the foregoing or otherwise transfer or
dispose of, whether or not for or without consideration, to any Person other
than the Company or any of its Affiliates ("Transfer") any of the Acquired
Securities (and the Class B Common Stock into which such Acquired Securities are
convertible) or any interest therein without the prior written consent of the
Company and any purported Transfer in the absence of such written consent shall
be void for all purposes. Notwithstanding the foregoing, at any time following
the one year anniversary of the Closing Date, any HMTF Entity may Transfer its
Acquired Securities to any of its Affiliates, provided that such Affiliate
agrees in writing with the Company to be bound hereby with the same effect as if
were named herein in lieu of the HMTF Entities (it being understood that
Distributions effected after the second anniversary of the Closing Date shall be
subject to Section 8.01(d) and not this sentence).

                  (b) Unless Transferred pursuant to an effective registration
statement, each certificate representing Acquired Securities shall bear a legend
substantially in the following form:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE (A) HAVE NOT BEEN
                  REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
                  AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES OR
                  "BLUE SKY" LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
                  TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH
                  SHARES ARE REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE
                  SECURITIES OR "BLUE SKY" LAWS UNLESS SUCH TRANSFER, PLEDGE OR
                  HYPOTHECATION IS PERMITTED PURSUANT TO RULE 144 UNDER THE ACT
                  OR ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT AND AN
                  OPINION OF COUNSEL REASONABLY

                                       19
<PAGE>   21

                  SATISFACTORY TO THE COMPANY IS DELIVERED TO THE COMPANY TO THE
                  EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED AND (B) ARE
                  SUBJECT TO TRANSFER RESTRICTIONS AS SET FORTH IN THE STOCK
                  EXCHANGE AGREEMENT, DATED MAY 2, 2001 BY AND AMONG THE
                  COMPANY, IDT CORPORATION, IDT AMERICA CORP., IDT VENTURES
                  INC., HM4 TELIGENT QUALIFIED FUND, LLC, HM4 TELIGENT PRIVATE
                  FUND, LLC, HM 4-SBS TELIGENT COINVESTORS, LLC, HM PG-IV
                  TELIGENT, LLC, HM 4-EQ TELIGENT COINVESTORS, LLC, AND LLC, HM4
                  ICG QUALIFIED FUND, LLC, HM4 ICG PRIVATE FUND, LLC, HM PG-IV
                  ICG, LLC, HM 4-SBS ICG COINVESTORS, LLC, AND HM 4-EQ ICG
                  COINVESTORS, LLC, A COPY OF WHICH MAY BE OBTAINED FROM THE
                  COMPANY."

                  (c) Except as set forth in Section 8.01(a)(i), no HMTF Entity
(in such capacity, a "Transferor") may sell, assign, dispose of or transfer any
Series B Preferred Stock, Class B Common Stock or the proceeds of any sale,
transfer or disposition of either, to any Affiliate of such HMTF Entity (the
"Affiliate Transferee") unless such Affiliate Transferee shall have executed and
delivered an instrument, in form and substance reasonably satisfactory to the
Company, in which such Affiliate Transferee agrees to be bound by this Agreement
(including without limitation Article XI) as if it were a signatory hereto;
provided, however, that, for the avoidance of any doubt, in the event of a
Distribution, no such instrument shall be required, the transferee shall not be
liable hereunder with respect to the distributed assets as a result of such
Distribution and the distributed assets shall no longer be deemed held by the
transferring HMTF Entity (and no proceeds shall be deemed to have resulted
therefrom) for purposes of Section 11.05).

                  (d) Notice. In the event that, after the second anniversary of
the Closing Date, any of the HMTF Entities or any Affiliate Transferee (each a
"Transferring Entity"), proposes to transfer or Distribute any of such
Transferring Entity's Series B Preferred Stock or Class B Common Stock to a
non-Affiliate transferee (other than pursuant to Section 8.01(a)(i)), such
Transferring Entity shall give written notice (a "Transfer Notice") to the
Company of such Transferring Entity's intention to transfer or Distribute such
number of shares of Series B Preferred Stock or Class B Common Stock as are set
forth on the Transfer Notice (the "Offered Securities"). Within 15 days after
receipt of a Transfer Notice, the Company shall give a written notice to the
Transferring Entity stating whether it wishes to purchase the Offered Securities
and, if it does, the Company shall also state its initial determination of the
fair market value for the Company and its proposed purchase price for such
Offered Securities based on such fair market value. If the Company (i) states
that it does not wish to purchase the Offered Securities, (ii) fails to give
such notice by the end of such 15-day period, (iii) gives such notice but fails
to include a proposed fair market value and proposed purchase price for

                                       20
<PAGE>   22

the Offered Securities or (iv) fails to give a Company Purchase Notice in
accordance with Section 8.01(e), the Company will be deemed to have consented to
the sale or Distribution of the Offered Securities and such Transferring Entity
shall be able to freely transfer or Distribute the Offered Securities to a
non-Affiliate transferee for a period of 75 days from such deemed consent. No
more than two Transfer Notices for all the HMTF Entities in the aggregate may be
given in any calendar year.

                  (e) Company Notice. If the Company delivers written notice in
compliance with the requirements of Section 8.01(d), for a period of 30 days
after receipt of the Company's Notice, the parties shall negotiate in good faith
to reach a mutually acceptable determination of the fair market value of the
Company and the purchase price of the Offered Securities. On or before the end
of such 30-day period, the Company shall notify the Transferring Entity in
writing of its final determination of the fair market value for the Company and
its final purchase price for all the Offered Securities which notice shall
constitute a binding, written offer irrevocable for 15 days to purchase all the
Offered Securities at that price (the "Company Purchase Notice").

                  (f) Closing. Within 15 days after delivery of the Company
Purchase Notice, the Transferring Entity shall give the Company written notice
as to whether it accepts the offer stated in the Company Purchase Notice. The
offer stated in the Company Purchase Notice may be accepted or rejected only in
full and not in part. If the Transferring Entity accepts the offer stated in the
Company Purchase Notice, each of the parties shall use its reasonable efforts to
obtain all consents and approvals, including from Governmental Entities, if any,
required to effect the purchase and sale of the Offered Securities at the price
stated therein. Unless the parties failed to receive all required consents and
approvals, the closing of the purchase and sale of the Offered Securities to the
Company pursuant to this Section 8.01 (f) shall take place at such location and
on such date, within 10 days of the date of such Transferring Entity's
acceptance of the Company's offer, subject to an extension if necessary to
comply with any Applicable Law, as shall be agreed by the Transferring Entity
and the Company. At any such closing, (i) the Transferring Entity shall deliver
to the Company certificates representing the Offered Securities being purchased,
registered in the name of the Transferring Entity and duly endorsed in favor of
the Company, free of all Encumbrances other than those resulting solely from the
actions of the Company, against payment of the applicable purchase price by wire
transfer of same day funds, and (ii) the Transferring Entity shall give
customary representations and warranties.

                  (g) If the Transferring Entity does not accept the offer
stated in the Company Purchase Notice in writing within the 15-day period or
prior to the expiration of such period rejects such offer in writing, the
Transferring Entity may, at its sole option, transfer the Offered Securities to
any Person or Persons (acting individually or as a group) for a purchase price
resulting in proceeds to the Transferring Entity in excess of what would have
been receivable under the offer set forth in the Company Purchase Notice;
provided, however, that such transfer is completed within 75 days from delivery
of the Company Purchase Notice.

                                       21
<PAGE>   23

                  (h) Payment in Common Stock. The Company shall have the right
to pay for the Offered Securities, at its sole option, in shares of Class B
Common Stock of IDTC, with such Class B Common Stock of IDTC to be registered
under the Securities Act not later than 180 days from the date of issuance
thereof, and valued as set forth in Section 7C(d) of the Certificate of
Designation with respect to the Series B Preferred Stock. The Company shall use
its commercially reasonable efforts to cause the registration contemplated by
the immediately preceding sentence to be completed as promptly as practicable.
If the Company elects to make payment in shares of Class B Common Stock of IDTC,
the Company shall pay to the Transferring Entity an additional amount in cash
equal to the applicable purchase price contemplated by subsection (f) above
times 11.5 % per annum compounding daily for the period from the date of
issuance of such shares of Class B Common Stock of IDTC until such registration
is completed.

                                   ARTICLE IX

                              DELIVERIES AT CLOSING

                  SECTION 9.01 Deliveries by the Company at the Closing. At the
Closing, the Company shall deliver, or shall cause to be delivered:

                  (a) to the HMTF Teligent Entities a certificate or
certificates representing an aggregate of 10,007 shares of Series B Preferred
Stock, each such certificate issued in such name or names and in such
denominations as specified by the HMTF Teligent Entities; and

                  (b) to the HMTF ICG Entities a certificate or certificates
representing an aggregate of 8,188 shares of Series B Preferred Stock, each such
certificate issued in such name or names and in such denominations as specified
by the HMTF ICG Entities.

                  SECTION 9.02 Deliveries by the HMTF Teligent Entities at the
Closing. At the Closing, the HMTF Teligent Entities shall deliver, or shall
cause to be delivered to the Company:

                  (a) a certificate or certificates representing the Teligent
Shares and a stock power or stock powers, duly executed in blank, sufficient to
transfer the Teligent Shares to the Company;

                  (b) a writing evidencing the assignment to the Company by the
HMTF Teligent Entities of the HMTF Teligent Entities' rights under the Teligent
Registration Rights Agreement; and

                  (c) a writing evidencing transfer to the Company by the HMTF
Teligent Entities of the Stock Rights associated with the Teligent Shares to the
fullest extent that such Stock Rights may be transferred to the Company without
violation of Applicable Law or the documents under which such rights were
granted.

                                       22
<PAGE>   24

                  SECTION 9.03 Deliveries by the HMTF ICG Entities at the
Closing. At the Closing, the HMTF ICG Entities shall deliver, or cause to be
delivered to the Company:

                  (a) a certificate representing the ICG Shares and a stock
power or stock powers, duly executed in blank, sufficient to transfer the ICG
Shares to the Company;

                  (b) the ICG Warrants and duly executed instruments of transfer
sufficient to transfer the ICG Warrants to the Company;

                  (c) a writing evidencing the assignment to the Company by the
HMTF ICG Entities of the HMTF ICG Entities' rights under the ICG Registration
Rights Agreement; and

                  (d) a writing evidencing transfer to the Company by the HMTF
ICG Entities of the Stock Rights associated with the ICG Shares and the ICG
Warrants to the fullest extent that such Stock Rights may be transferred to the
Company without violation of Applicable Law or the documents under which such
rights were granted.

                                    ARTICLE X

                  SECTION 10.01 Termination of the Agreement. Anything herein to
the contrary notwithstanding, this Agreement and the transactions contemplated
hereby may be terminated in any of the following ways at any time before the
Closing and in no other manner:

                  (a) By mutual written consent of the parties to this
Agreement, or

                  (b) By any party to this Agreement, if the Closing has not
occurred on or before 30 days from the date hereof; provided, however, that
party seeking to terminate this Agreement may not terminate this Agreement
pursuant to this Section 10.01(b), if the Closing has not occurred by such date
solely as a result of the failure of such party to perform any of its
obligations under this Agreement.

                                   ARTICLE XI

                            SURVIVAL; INDEMNIFICATION

                  SECTION 11.01 Survival. The representations and warranties
contained in this Agreement, and the rights of the parties to seek
indemnification with respect thereto, shall survive the execution and delivery
of this Agreement, and the Closing hereunder, regardless of any investigation
made by the parties hereto or by any Person on their behalf for a period of one
year following the Closing Date, provided that the representations and
warranties contained in Sections 4.11, 4.14, 4.15 and 4.16 hereof, and the right
of any Company Indemnified Party to seek indemnification with respect thereto,
shall survive the Closing and shall terminate and expire thereafter on the lapse
of the applicable statute of limitations (including any extensions thereof) with
respect to the relevant Tax; provided further that all covenants requiring
performance subsequent to

                                       23
<PAGE>   25

the Closing (including without limitation Section 5.02 hereof) shall survive the
Closing for so long as such covenants are applicable.

                  SECTION 11.02 Indemnity by the Company. The Company hereby
agrees to indemnify and hold harmless, on an after-Tax basis, each of the HMTF
Entities and their respective directors, officers, partners, managers, members,
employees, Affiliates, successors and assigns (each an "Acquiror Indemnified
Party") from and against:

                  (a) any and all damages, losses, Taxes, liabilities, claims,
judgments, penalties, costs and expenses (including amounts paid in
investigation or settlement and reasonable attorneys' fees, expert fees and
litigation expenses) direct or indirect, known or unknown, foreseeable or
unforeseeable (collectively, "Losses"), resulting to any Acquiror Indemnified
Party from or in connection with any breach of a representation or warranty
contained in this Agreement, or in any certificate delivered in connection
herewith, of the Company; and

                  (b) any and all Losses incurred or suffered by any Acquiror
Indemnified Party and based upon, attributable to or resulting from the breach
or nonfulfillment of any agreement, covenant or condition on the part of the
Company or contained in this Agreement.

                  SECTION 11.03 Indemnity by the HMTF Entities. Each of the HMTF
Entities, severally and not jointly, hereby agrees to indemnify and hold
harmless, on an after-Tax basis, the Company and its directors, officers,
partners, managers, members, employees, Affiliates, successors and assigns (each
a "Company Indemnified Party") from and against:

                  (a) any and all Losses, resulting to any Company Indemnified
Party from or in connection with any breach of a representation or warranty
contained in this Agreement, or in any certificate delivered in connection
herewith, of such HMTF Entity; and

                  (b) any and all Losses incurred or suffered by any Company
Indemnified Party and based upon, attributable to or resulting from the breach
or nonfulfillment of any agreement, covenant or condition (other than Section
6.01(d)) on the part of such HMTF Entity contained in this Agreement.

                  SECTION 11.04 Indemnification Procedures. (a) In the event
that any third-party judicial, administrative or arbitral action, suit,
proceeding (public or private), claim or governmental proceeding (collectively,
"Legal Proceedings") shall be instituted or any third-party claim or demand
("Claim") shall be asserted by any Person in respect of which payment may be
sought under Article XI hereof, the Company Indemnified Party or Acquiror
Indemnified Party, as the case may be (in either case referred to herein
generally as an "Indemnified Party"), shall promptly cause written notice of the
assertion of any Claim of which it has knowledge which is covered by this
indemnity to be forwarded to the party from whom the Indemnified Person seeks
indemnity (the

                                       24
<PAGE>   26

"Indemnifying Party"). The Indemnifying Party shall have the right, at its sole
option and expense, to be represented by counsel of its choice, which counsel
must be reasonably satisfactory to the Indemnified Party, and to assume the
defense of, negotiate, settle or otherwise deal with any Claim which relates to
any Losses indemnified against hereunder. If the Indemnifying Party elects to
assume the defense of, negotiate, settle or otherwise deal with any Claim which
relates to any Losses indemnified against hereunder, the Indemnifying Party
shall within fifteen (15) Business Days of receipt of written notice of the
assertion of a Claim notify the Indemnified Party of its intent to do so. If the
Indemnifying Party elects not to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder or
fails to notify the Indemnified Party of its election as herein provided or
contests its obligation to indemnify the Indemnified Party for such Losses under
this Agreement, the Indemnified Party may defend against, negotiate, settle or
otherwise deal with such Claim. In such event, if the Indemnified Party defends
any Claim, then the Indemnifying Party shall reimburse the Indemnified Party for
the reasonable expenses of defending such Claim (including attorneys' fees) upon
submission of periodic bills. If the Indemnifying Party shall assume the defense
of any Claim, the Indemnified Party may participate, at his or its own expense,
in the defense of such Claim; provided, however, that such Indemnified Party
shall be entitled to participate in any such defense with separate counsel at
the expense of the Indemnifying Party if, (i) so requested by the Indemnifying
Party to participate or (ii) in the opinion of counsel to the Indemnifying
Party, a conflict or potential conflict exists between the Indemnified Party and
the Indemnifying Party that would make such separate representation required.
The parties hereto agree to cooperate fully with each other in connection with
the defense, negotiation or settlement of any such Claim. No Indemnified Party
shall have the right, without the Indemnifying Party's prior written consent
(which consent will not be unreasonably withheld or delayed), to settle,
compromise or consent to the entry of any judgment in any Claim in respect of
which indemnification may be sought under Article XI hereof.

                  (b) The failure of the Indemnified Party to give reasonably
prompt notice of any Claim shall not release, waive or otherwise affect the
Indemnifying Party's obligations with respect thereto except to the extent that
the Indemnifying Party is materially prejudiced as a result of such failure.

                  SECTION 11.05 Limitation on Liability. (a) The parties hereto
acknowledge that each HMTF Entity's maximum aggregate liability under this
Article XI shall not exceed, and shall be satisfied solely by delivery of, (A)
the shares of Series B Preferred Stock and/or the Class B Common Stock then held
by such HMTF Entity and (B) the proceeds (whether in the form of cash or
securities or otherwise) received upon sale, transfer, exchange or other
disposition of shares of Series B Preferred or Class B Common Stock to the
extent then held by such HMTF Entity (the "Proceeds"); provided, however, that
to the extent that such HMTF Entity no longer holds the assets referred to in
(A) or (B) above but holds other assets, then such other assets shall also be
available to satisfy any such liability under this Article XI; provided further,
however, that in the event referred to in the preceding proviso such HMTF
Entity's maximum aggregate liability under this Article XI shall not exceed the
lesser of (1) the value of such other assets then held and (2) the amount of the
Proceeds, and shall be satisfied solely by

                                       25
<PAGE>   27

delivery of such other assets then held. Under no circumstances shall any HMTF
Entity have any liability whatsoever in respect of any Losses if and to the
extent that such HMTF Entity does not hold assets that are available to satisfy
such Losses in accordance with this Section 11.05. Notwithstanding the
immediately preceding sentence, in the event that (i) a Claim shall have been
made against an HMTF Entity under this Article XI and shall have resulted in the
payment by such HMTF Entity of an amount less than the Losses finally determined
to have been caused by such HMTF Entity because of the operation of this Section
11.05 (i.e., because of the amount of available assets), and (ii) such HMTF
Entity subsequently acquires other assets or reacquires any assets or any shares
of Class B Common Stock or Series B Preferred Stock, nothing in this Section
11.05 shall preclude the Indemnified Party from bringing a new Claim for the
amount of unsatisfied Losses, subject to the provisions of this Section 11.05
(i.e., limited to the extent of such new or reaquired assets or securities).

                  SECTION 11.06 Exclusive Remedy. Each of the parties hereto
agrees that, from and after the Closing, its sole and exclusive remedies with
respect to any and all claims against any other party relating to the subject
matter of this Agreement shall be pursuant to this Article XI or Section 13.09
hereof.

                                   ARTICLE XII

                  SECTION 12.01 Registration Rights. (a) Piggyback Rights.
Subject to Section 12.01 (c), if at any time after consummation of an IPO the
Company determines that it shall file a registration statement under the
Securities Act (which, for avoidance of doubt, shall not include the
registration statement in connection with the IPO) for the registration of any
class of the Company's common stock for its own account or for the account of
another Person (other than a registration statement on Form S-4 or S-8 (or
successor form) or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders), the Company shall
each such time promptly give each HMTF Entity (the "Piggyback Holders") written
notice of such determination setting forth the date on which the Company
proposes to file such registration statement, which date shall be not less than
30 nor more than 60 calendar days from the date of such notice, and advising
each Piggyback Holder of its right to have its Class B Common Stock included in
such registration. Upon the written request of any Piggyback Holder received by
the Company no later than 15 calendar days after the date of the Company's
notice (such Piggyback Holder, a "Participating Stockholder"), the Company shall
use its commercially reasonable efforts to cause to be registered under the
Securities Act all of the Class B Common Stock that such Piggyback Holder has so
requested to be registered on the same terms and conditions as the other
securities being registered (the "Piggyback Registration Right"). If, in the
good faith opinion of the managing underwriter (or, in the case of a
non-underwritten offering, in the good faith opinion of the placement agent, or
if there is none, the Company), the total amount of such securities to be so
registered, including the Class B Common Stock owned by the Piggyback Holders,
will exceed the maximum amount of the Company's securities which can be marketed
(i) at a price reasonably related to the then current market value of such
securities or (ii) without otherwise materially adversely affecting the entire
offering, then the Company shall be entitled to reduce, pro rata, the number of
shares of Class B

                                       26
<PAGE>   28

Common Stock owned by each Piggyback Holder to be so registered based on the
ratio that such Holder's requested shares bears to the total number of shares
requested to be included in such piggyback registration by all Persons other
than the Company who have the contractual right to request that their shares be
included in such registration statement and who have requested that their shares
be included.

         (b) Participating Stockholder Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Article 12 that the Participating Stockholders shall furnish to the Company such
information regarding themselves, the Class B Common Stock held by them, and the
intended method of disposition of such Class B Common Stock as the Company shall
reasonably request and as shall be required in connection with the action to be
taken by the Company.

         (c) Reasonable Terms. In connection with any underwritten offering, the
Company shall not be required under this Article 12 to include any Class B
Common Stock owned by any Participating Stockholder other than on the terms of
the underwriting of such offering that have been reasonably agreed upon between
the Company and the underwriters; provided, that, in any such underwriting the
Company and all Participating Stockholders, subject to the other provisions
hereof, shall be treated substantially similarly.

         (d) Private Sale. Notwithstanding any other provisions of this Article
XII, the Company shall not be required to register the Class B Common Stock of
any Participating Stockholder if, in the reasonable opinion of counsel to the
Company, the sale or other disposition of such Participating Stockholder's Class
B Common Stock, in the manner proposed by such Participating Stockholder may be
effected without restriction under Rule 144.

                                  ARTICLE XIII

                                  MISCELLANEOUS

                  SECTION 13.01 Successors and Assigns. This Agreement may not
be assigned by any party without the prior written consent of each other party
hereto and any attempted or purported assignment without such consent shall be
void. Nothing in this Agreement, express or implied, is intended to confer upon
any Person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement, except as expressly provided in this Agreement.

                  SECTION 13.02 Governing Law; Submission to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Delaware without giving effect to conflicts of law
principles of such state. Each of the Company, and the HMTF Entities hereby
submits to the nonexclusive jurisdiction of the Chancery Court, Newcastle
County, Delaware for purposes of all legal proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby. Each of the
Company and the HMTF Entities irrevocably waives,

                                       27
<PAGE>   29

to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.

                  SECTION 13.03 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, and all of
which together shall be deemed to constitute one and the same instrument.

                  SECTION 13.04 Captions and Headings. The captions and headings
used in this Agreement are for convenience only and are not to be considered in
construing or interpreting this Agreement.

                  SECTION 13.05 Notices. Unless otherwise provided, any notice
or other communication required or permitted to be given or effected under this
Agreement shall be in writing and shall be deemed effective upon personal or
facsimile delivery to the party to be notified or one business day after deposit
with an internationally recognized overnight courier service, delivery fees
prepaid, or three business days after the deposit with the U.S. mail, return
receipt requested, postage prepaid, and in each case, addressed to the party to
be notified at the following respective addresses, or at such other addresses as
may be designated by written notice; provided that any notice of change of
address shall be deemed effective only upon receipt:

         If to the Company, IDTC, IDTA OR IDTV, to such party at:

         2325B Renaissance Drive
         Las Vegas, Nevada 89119
         Attn: Chief Financial Officer
         Fax:  (702) 966-4247

         with a copy to:

         IDT Corporation
         520 Broad Street
         Newark, New Jersey 07102
         Attn:  President
         Fax:  (973) 438-1503

         and also to:

         Dewey Ballantine LLP
         1301 Avenue of the Americas
         New York, New York 10019
         Attn: Jonathan Freedman
               Hershel Wein
         Fax:  (212) 259-6333

                                       28
<PAGE>   30

         If to the HMTF Entities, to such party at:

         c/o Hicks, Muse, Tate & Furst Incorporated
         200 Crescent Court, Suite 1600
         Dallas, Texas  75201
         Attn:  General Counsel
         Fax:   (214) 720-7888

         with a copy to

         Vinson & Elkins L.L.P.
         666 Fifth Avenue, 26th Floor
         New York, NY 10019
         Attn:  Eric S. Shube
         Fax:   917-206-8100

                  SECTION 13.06 Amendments and Waivers. The terms of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of all of the parties hereto.

                  SECTION 13.07 Severability. If one or more provisions of this
Agreement are held to be unenforceable under Applicable Law, such provisions
shall be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

                  SECTION 13.08 Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and discussions between them.

                  SECTION 13.09 Specific Enforcement. The parties hereto agree
that irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.

                  SECTION 13.10 Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense.

                  SECTION 13.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT.

                                       29
<PAGE>   31

THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF
THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS
SECTION 13.11 HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE
PROVISIONS SHALL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY
FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH
ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR
MODIFICATIONS TO (OR ASSIGNMENTS OF) THIS AGREEMENT. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT A JURY) BY
THE COURT.

                  SECTION 13.12 No Affiliate Liability. Except to the extent
that any such Person shall have executed and delivered an instrument in which
such Person shall have agreed to be bound by this Agreement, no Affiliate of any
of the HMTF Entities shall have any liability or obligation of any nature
whatsoever in connection with or under this Agreement or the transactions
contemplated hereby, and the Company hereby waives and releases all claims of
any such liability and obligation, it being understood that no such Person or
entity (other than each such HMTF Entity) shall be liable for or in respect of
this Agreement or the transactions contemplated hereby.

                  SECTION 13.13 Several Liability of the HMTF Entities. Nothing
in this Agreement shall be construed to impose on any HMTF Entity any liability
for any action or failure to act of any other HMTF Entity, including the breach
of this Agreement by any such other HMTF Entity; provided, however, that nothing
in this Section 13.13 shall be construed to limit the liability of any HMTF
Entity for a breach of its representations, warranties or covenants hereunder
with respect to any other Person.

                       [Signatures on the following page.]

                                       30
<PAGE>   32

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

                                    IDT INVESTMENTS INC.

                                    By:       /s/  Jonathan Levy
                                       -----------------------------------------
                                         Name:  Jonathan Levy
                                         Title: Treasurer and Secretary

                                    IDT CORPORATION
                                    solely for purposes of Sections 5.02, 5.03,
                                    5.04, 5.05, 5.06 and Article XIII and
                                    acknowledging the registration rights
                                    contemplated by Section 8.01(h)

                                    By:            /s/  Joyce Mason
                                       -----------------------------------------
                                       Name:  Joyce Mason
                                       Title: Secretary

                                    IDT AMERICA, CORP.
                                    solely for purposes of Sections 5.02, 5.03,
                                    5.04, 5.05, 5.06 and Article XIII

                                    By:           /s/  Joyce Mason
                                       -----------------------------------------
                                       Name:  Joyce Mason
                                       Title: Secretary

                                    IDT VENTURES INC.
                                    solely for purposes of Sections 5.02, 5.03,
                                    5.04, 5.05, 5.06 and Article XIII

                                    By:            /s/  Joyce Mason
                                       -----------------------------------------
                                       Name:  Joyce Mason
                                       Title: Secretary

<PAGE>   33

                                    HM4 TELIGENT QUALIFIED FUND, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM4 TELIGENT PRIVATE FUND, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM 4-SBS TELIGENT COINVESTORS, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM PG-IV TELIGENT, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM 4-EQ TELIGENT COINVESTORS, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

<PAGE>   34

                                    HM4 ICG QUALIFIED FUND, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM4 ICG PRIVATE FUND, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM PG-IV ICG, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM 4-SBS ICG COINVESTORS, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President

                                    HM 4-EQ ICG COINVESTORS, LLC

                                    By:       /s/  David W. Knickel
                                       -----------------------------------------
                                       Name:  David W. Knickel
                                       Title: Vice President<PAGE>   1

                                                                     EXHIBIT 4.1

                     SCANSOFT, INC. SHARE PURCHASE AGREEMENT

         This SHARE PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of April 25, 2001, by and among SCANSOFT, INC., a Delaware corporation
(the "Company"), and the purchasers listed on Schedule A attached hereto
(collectively, the "Purchasers" and individually, a "Purchaser").

1.       AUTHORIZATION OF SALE OF THE SHARES

         Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of up to 4,761,905 shares (the "Shares") of common stock,
par value $0.001 per share (the "Common Stock"), of the Company.

2.       AGREEMENT TO SELL AND PURCHASE THE SHARES

         2.1      PURCHASE AND SALE

         Subject to the terms and conditions of this Agreement, each Purchaser
severally agrees to purchase, and the Company agrees to sell and issue to each
Purchaser, at the Closing (as defined below) that number of Shares set forth
opposite such Purchaser's name on Schedule A attached hereto.

         2.2      PURCHASE PRICE

         The purchase price of each Share shall be $1.05 (the "Per Share
Price"). The Company shall not, during the period beginning on the date of this
Agreement and ending ninety (90) days after the Closing Date (as defined below),
without adjusting the price per Share hereunder accordingly, sell (i) Shares at
a price per Share of less than the Per Share Price, or (ii) options, warrants or
any other securities that can be converted into, or otherwise exchanged for,
shares of the Company's common stock at a conversion, exchange or exercise price
per Share of less than the Per Share Price (excluding (x) all securities of the
Company outstanding on the date hereof, including outstanding options and
warrants, and (y) option grants to new employees granted in the ordinary course
of business at 100% of the fair market value of the Common Stock). In the event
the Company shall, during the period beginning on the date of this Agreement and
ending ninety (90) days after the Closing Date, sell any such shares of the
Company's common stock at, or any such instruments that can be converted into or
otherwise exchanged for the Company's common stock (the "Subsequent Sale")
exercisable at, a price per Share (the "Subsequent Purchase Price") of less than
the Per Share Price, the Company shall, within ten (10) business days of the
Subsequent Sale, pay to the Purchaser a cash amount equal to the number of
Shares times the difference between the Per Share Price and the Subsequent
Purchase Price.

3.       DELIVERY OF THE SHARES AT THE CLOSING

         (a) The completion of the purchase and sale of the Shares (the
"Closing") shall occur at the offices of the Company, at 9 Centennial Drive,
Peabody, MA 01960 at 9:00 a.m. local

                                       1.
<PAGE>   2
time on April 26, 2001 or such other time and date as may be agreed by the
parties (the "Closing Date").

         (b) At the Closing, the Company shall authorize its transfer agent (the
"Transfer Agent") to issue to each Purchaser one or more stock certificates
registered in the name of such Purchaser, or in such nominee name(s) as
designated by such Purchaser in writing, representing the number of Shares set
forth in Section 2 above and bearing an appropriate legend referring to the fact
that the Shares were sold in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 under the Securities Act. The Company will
deliver one certificate representing 3,809,524 Shares and one certificate
representing 952,381 Shares (the "Certificates") against delivery of payment for
the Shares by the Purchasers. Prior to the Purchasers' delivery of payment for
the Shares, the Company will deliver via facsimile a copy of the Certificates to
be delivered upon Closing to the office of the Purchasers (at the fax number
indicated on the signature pages attached hereto).

         (c) The Company's obligation to complete the purchase and sale of the
Shares shall be subject to the following conditions, any one or more of which
may be waived by the Company:

                  (i) receipt by the Company from stockholders holding rights to
require the Company to register the sale of any securities owned by such holder
in the Registration Statement (as defined below) of waivers of such rights
(including the waiver of any notice requirements related to such rights);

                  (ii) receipt by the Company of same-day funds in the full
amount of the purchase price for the Shares being purchased under this
Agreement; and

                  (iii) the accuracy in all material respects of the
representations and warranties made by the Purchasers and the fulfillment in all
material respects of those undertakings of the Purchasers to be fulfilled before
the Closing.

         (d) The Purchasers' obligations to accept delivery of such stock
certificates and to pay for the Shares evidenced by the certificates shall be
subject to the following conditions, any one or more of which may be waived by a
Purchaser with respect to such Purchaser's obligation:

                  (i) the representations and warranties made by the Company in
this Agreement shall be accurate in all material respects and the undertakings
of the Company shall have been fulfilled in all material respects on or before
the Closing;

                  (ii) the Company shall have delivered to the Purchasers a
certificate executed by the chairman of the board or president and the chief
financial or accounting officer of the Company, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchasers, to the effect that the
representations and warranties of the Company set forth in Section 4 hereof are
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, and that the Company has complied with all the
agreements and satisfied all the conditions in this Agreement on its part to be
performed or satisfied on or before the Closing Date; and

                                       2.
<PAGE>   3
                  (iii) the Company shall have delivered to Purchasers a legal
opinion in substantially the form attached hereto as Exhibit A.

                  (iv) the Company shall have obtained gross proceeds of at
least $5,000,000 from the sale of the Shares at the Closing.

4.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

         Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B, the Company hereby represents and warrants to the Purchasers as
follows (which representations and warranties shall be deemed to apply, where
appropriate, to each subsidiary of the Company):

         4.1      ORGANIZATION AND QUALIFICATION

         The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware. The
Company has the corporate power and authority to own, lease and operate its
properties and to conduct its business as currently conducted and to enter into
and perform its obligations under this Agreement. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not, singly or in the aggregate, have a material
adverse effect on the condition, financial or otherwise, or the earnings,
assets, business affairs or business prospects of the Company.

         4.2      CAPITALIZATION

         (a) The authorized capital stock of the Company consists of 140,000,000
shares of Common Stock and 40,000,000 shares of Preferred Stock.

         (b) As of March 31, 2001, the issued and outstanding capital stock of
the Company consists of 46,132,288 shares of Common Stock and 3,562,238 shares
of Preferred Stock. The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable and have not been issued in violation of or are not otherwise
subject to any preemptive or other similar rights.

         (c) The Company has reserved 1,000,000 shares of Common Stock for
issuance under the Company's employee stock purchase plan and 16,769,553 shares
of Common Stock for issuance upon the exercise of stock options granted or
available for future grant under the Company's stock option plans.

         (d) As of March 31, 2001 the Company has reserved 526,919 shares of
Common Stock for issuance upon the exercise of outstanding warrants to purchase
Common Stock.

         With the exception of the foregoing, there are no outstanding
subscriptions, options, warrants, convertible or exchangeable securities or
other rights granted to or by the Company to purchase shares of Common Stock or
other securities of the Company and there are no commitments, plans or
arrangements to issue any shares of Common Stock or any security convertible
into or exchangeable for Common Stock.

                                       3.
<PAGE>   4
         4.3      ISSUANCE, SALE AND DELIVERY OF THE SHARES

         (a) The Shares have been duly authorized for issuance and sale to the
Purchasers pursuant to this Agreement and, when issued and delivered by the
Company pursuant to this Agreement against payment of the consideration set
forth in this Agreement, will be validly issued and fully paid and nonassessable
and free and clear of all pledges, liens and encumbrances. The certificates
evidencing the Shares are in due and proper form under Delaware law.

         (b) The issuance of the Shares is not subject to preemptive or other
similar rights. No further approval or authority of the shareholders or the
Board of Directors of the Company will be required for the issuance and sale of
the Shares to be sold by the Company as contemplated in this Agreement.

         (c) Subject to the accuracy of the Purchasers' representations and
warranties in Section 5 of this Agreement, the offer, sale, and issuance of the
Shares in conformity with the terms of this Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act and
from the registration or qualification requirements of the laws of any
applicable state or United States jurisdiction.

         4.4      FINANCIAL STATEMENTS

         The financial statements included (as exhibits or otherwise) in the
Company Documents (as defined below) present fairly the financial position of
the Company as of the dates indicated and the results of their operations for
the periods specified. Except as otherwise stated in such Company Documents,
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis, and any supporting
schedules included with the financial statements present fairly the information
stated in the financial statements. The financial and statistical data set forth
in the Company Documents were prepared on an accounting basis consistent with
such financial statements.

         4.5      NO MATERIAL CHANGE

         Since March 31, 2001,

         (a) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business;

         (b) there have been no transactions entered into by the Company other
than those in the ordinary course of business, which are material with respect
to the Company; and

         (c) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.

         The Company has no material contingent obligations.

                                       4.
<PAGE>   5
         4.6      ENVIRONMENTAL

         Except as would not, singly or in the aggregate, reasonably be expected
to have a material adverse effect on the condition, financial or otherwise, or
the earnings, assets, business affairs or business prospects of the Company,

         (a) the Company is in compliance with all applicable Environmental Laws
(as defined below);

         (b) the Company has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with the
requirements of such permits authorizations and approvals;

         (c) there are no pending or, to the best knowledge of the Company,
threatened Environmental Claims (as defined below) against the Company; and

         (d) under applicable law, there are no circumstances with respect to
any property or operations of the Company that are reasonably likely to form the
basis of an Environmental Claim against the Company.

         For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.

         4.7      NO DEFAULTS

         The Company is not in violation of its certificate of incorporation or
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant or condition contained in any material contract,
indenture, mortgage, loan agreement, deed, trust, note, lease, sublease, voting
agreement, voting trust, or other instrument or material agreement to which the
Company is a party or by which it may be bound, or to which any of the property
or assets of the Company is subject.

         4.8      LABOR MATTERS

         No labor dispute with the employees of the Company exists or, to the
best knowledge of the Company, is imminent.

         4.9      NO ACTIONS

         There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened,

                                       5.
<PAGE>   6
against or affecting the Company which, singly or in the aggregate, might result
in any material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company, or which,
singly or in the aggregate, might materially and adversely affect the properties
or assets thereof or which might materially and adversely affect the
consummation of this Agreement, nor, to the best knowledge of the Company, is
there any reasonable basis therefor. The Company is not in default with respect
to any judgment, order or decree of any court or governmental agency or
instrumentality which, singly or in the aggregate, would have a material adverse
effect on the assets, properties or business of the Company.

         4.10     INTELLECTUAL PROPERTY

         (a) The Company, to the best of its knowledge, owns or is licensed to
use all patents, patent applications, inventions, trademarks, trade names,
applications for registration of trademarks, service marks, service mark
applications, copyrights, know-how, manufacturing processes, formulae, trade
secrets, licenses and rights in any thereof and any other intangible property
and assets that are material to the business of the Company as now conducted and
as proposed to be conducted (in this Agreement called the "Proprietary Rights"),
or is seeking, or will seek, to obtain rights to use such Proprietary Rights
that are material to the business of the Company as proposed to be conducted.

         (b) The Company does not have any knowledge of, and the Company has not
given or received any notice of, any pending conflicts with or infringement of
the rights of others with respect to any Proprietary Rights or with respect to
any license of Proprietary Rights which are material to the business of the
Company.

         (c) No action, suit, arbitration, or legal, administrative or other
proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights, nor, to the best
knowledge of the Company, is there any reasonable basis therefor.

         (d) The Company is not subject to any judgment, order, writ, injunction
or decree of any court or any Federal, state, local, foreign or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any arbitrator, and has not entered into or is not a
party to any contract which restricts or impairs the use of any such Proprietary
Rights in a manner which would have a material adverse effect on the use of any
of the Proprietary Rights.

         (e) The Company has not received written notice of any pending conflict
with or infringement upon such third-party proprietary rights.

         (f) The Company has not entered into any consent, indemnification,
forbearance to sue or settlement agreement with respect to Proprietary Rights
other than in the ordinary course of business. No claims have been asserted by
any person with respect to the validity of the Company's ownership or right to
use the Proprietary Rights and, to the best knowledge of the Company, there is
no reasonable basis for any such claim to be successful.

                                       6.
<PAGE>   7
         (g) The Company has complied, in all material respects, with its
obligations relating to the protection of the Proprietary Rights which are
material to the business of the Company used pursuant to licenses.

         (h) To the best knowledge of the Company, no person is infringing on or
violating the Proprietary Rights.

         4.11     PERMITS

         The Company possesses and is operating in compliance with all material
licenses, certificates, consents, authorities, approvals and permits from all
state, federal, foreign and other regulatory agencies or bodies necessary to
conduct the businesses now operated by it, and the Company has not received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, assets, business affairs
or business prospects of the Company.

         4.12     DUE EXECUTION, DELIVERY AND PERFORMANCE

         (a) This Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

         (b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement, including the sale, issuance and
delivery of the Shares, (i) have been duly authorized by all necessary corporate
action on the part of the Company, its directors and stockholders; (ii) will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, any contract, indenture, mortgage, loan
agreement, deed, trust, note, lease, sublease, voting agreement, voting trust or
other instrument or agreement to which the Company is a party or by which it may
be bound, or to which any of the property or assets of the Company is subject;
(iii) will not trigger anti-dilution rights or other rights to acquire
additional equity securities of the Company; and (iv) will not result in any
violation of the provisions of the articles of incorporation or bylaws of the
Company or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.

         4.13     PROPERTIES

         The Company has good and marketable title to its properties, free and
clear of all material security interests, mortgages, pledges, liens, charges,
encumbrances and claims of record. The properties of the Company are, in the
aggregate, in good repair (reasonable wear and tear excepted), and suitable for
their respective uses. Any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the conduct of the business of the Company.
The Company owns or leases all such properties as are necessary to its business
or operations as now conducted.

                                       7.
<PAGE>   8
         4.14     COMPLIANCE

         The Company has conducted and is conducting its business in compliance
with all applicable Federal, state, local and foreign statutes, laws, rules,
regulations, ordinances, codes, decisions, decrees, directives and orders,
except where the failure to do so would not, singly or in the aggregate, have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of the Company.

         4.15     SECURITY MEASURES

         The Company takes security measures designed to enable the Company to
assert trade secret protection in its non-patented technology.

         4.16     CONTRIBUTIONS

         To the best of the Company's knowledge, neither the Company nor any
employee or agent of the Company has made any payment of funds of the Company or
received or retained any funds in violation of any law, rule or regulation.

         4.17     USE OF PROCEEDS; INVESTMENT COMPANY

         The Company intends to use the proceeds from the sale of the Shares for
working capital and other general corporate purposes. The Company is not now,
and after the sale of the Shares under this Agreement and under all other
agreements and the application of the net proceeds from the sale of the Shares
described in the proceeding sentence will not be, an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.

         4.18     PRIOR OFFERINGS

         All offers and sales of capital stock of the Company before the date of
this Agreement were at all relevant times duly registered or exempt from the
registration requirements of the Securities Act and were duly registered or
subject to an available exemption from the registration requirements of the
applicable state securities or Blue Sky laws.

         4.19     TAXES

         The Company has filed all material tax returns required to be filed,
which returns are true and correct in all material respects, and the Company is
not in default in the payment of any taxes, including penalties and interest,
assessments, fees and other charges, shown thereon due or otherwise assessed,
other than those being contested in good faith and for which adequate reserves
have been provided or those currently payable without interest which were
payable pursuant to said returns or any assessments with respect thereto.

         4.20     OTHER GOVERNMENTAL PROCEEDINGS

         To the Company's knowledge, there are no rulemaking or similar
proceedings before any Federal, state, local or foreign government bodies that
involve or affect the Company, which, if the subject of an action unfavorable to
the Company, could involve a prospective material

                                       8.
<PAGE>   9
adverse change in or effect on the condition, financial or otherwise, or in the
earnings, assets, business affairs or business prospects of the Company.

         4.21     NON-COMPETITION AGREEMENTS

         To the knowledge of the Company, any full-time employee who has entered
into any non-competition, non-disclosure, confidentiality or other similar
agreement with any party other than the Company is neither in violation of nor
is expected to be in violation of that agreement as a result of the business
currently conducted or expected to be conducted by the Company or such person's
performance of his or her obligations to the Company. The Company has not
received written notice that any consultant or scientific advisor of the Company
is in violation of any non-competition, non-disclosure, confidentiality or
similar agreement.

         4.22     TRANSFER TAXES

         On the Closing Date, all stock transfer or other taxes (other than
income taxes) that are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Purchasers under this Agreement will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.

         4.23     INSURANCE

         The Company maintains insurance of the type and in the amount that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against by similarly situated companies, all of which
insurance is in full force and effect.

         4.24     GOVERNMENTAL/REGULATORY CONSENTS

         No registration, authorization, approval, qualification or consent with
or required by any court or governmental/regulatory authority or agency is
necessary in connection with the execution and delivery of this Agreement or the
offering, issuance or sale of the Shares under this Agreement.

         4.25     SECURITIES AND EXCHANGE COMMISSION FILINGS

         The Company has timely filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed by the Company
under the Securities Exchange Act of 1934, as amended (the "Exchange Act.")

         4.26     ADDITIONAL INFORMATION

         The Company represents and warrants that the information contained in
the following documents (the "Company Documents"), which will be provided to
Purchaser before the Closing, is or will be true and correct in all material
respects as of their respective final dates:

                                       9.
<PAGE>   10
         (a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000;

         (b) the Company's Proxy Statement for its 2000 Annual Meeting of
Shareholders; and

         (c) all other documents, if any, filed by the Company with the
Commission since December 31, 2000 pursuant to the reporting requirements of the
Securities Exchange Act.

         4.27     CONTRACTS

         The contracts described in the Company Documents or incorporated by
reference therein are in full force and effect on the date hereof, except for
contracts the termination or expiration of which would not, singly or in the
aggregate, have a material adverse effect on the business, properties or assets
of the Company. Neither the Company nor, to the best knowledge of the Company,
any other party is in material breach of or default under any such contracts.

         4.28     NO INTEGRATED OFFERING

         Neither the Company, nor any of its affiliates, nor any person acting
on its or their behalf, has directly or indirectly made any offers or sales in
any security or solicited any offers to buy any security under circumstances
that would require registration under the Securities Act of the issuance of the
Shares to the Purchasers. The issuance of the Shares to the Purchasers will not
be integrated with any other issuance of the Company's securities (past, current
or future) for purposes of the Securities Act or any applicable rules of Nasdaq
(or of any national securities exchange on which the Company's Common Stock is
then traded). The Company will not make any offers or sales of any security
(other than the Shares) that would cause the offering of the Shares to be
integrated with any other offering of securities by the Company for purposes of
any registration requirement under the Securities Act or any applicable rules of
Nasdaq (or of any national securities exchange on which the Company's Common
Stock is then traded).

         4.29     LISTING OF SHARES

         The Company agrees to promptly secure the listing of the Shares upon
each national securities exchange or automated quotation system upon which
shares of Common Stock are then listed and, so long as any Purchaser owns any of
the Shares, shall maintain such listing of all Shares. The Company has taken no
action designed to delist, or which is likely to have the effect of delisting,
the Common Stock from any of the national securities exchange or automated
quotation system upon which the shares of Common Stock are then listed.

         4.30     NO MANIPULATION OF STOCK

         The Company has not taken and will not, in violation of applicable law,
take any action outside the ordinary course of business designed to or that
might reasonably be expected to cause or result in unlawful manipulation of the
price of the Common Stock to facilitate the sale or resale of the Shares.

                                      10.
<PAGE>   11
5.       REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS

         5.1      SECURITIES LAW REPRESENTATIONS AND WARRANTIES

         Each Purchaser represents, warrants and covenants to the Company as
follows:

         (a) The Purchaser is knowledgeable, sophisticated and experienced in
making, and is qualified to make, decisions with respect to investments in
shares representing an investment decision like that involved in the purchase of
the Shares, including investments in securities issued by the Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares.

         (b) The Purchaser is acquiring the number of Shares set forth in
Section 2 above in the ordinary course of its business and for its own account
for investment (as defined for purposes of the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 and the regulations thereunder) only, and has no present
intention of distributing any of the Shares nor any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act, other than as contemplated in
Section 7 of this Agreement.

         (c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Shares except in compliance
with the Securities Act and the rules and regulations promulgated thereunder
(the "Rules and Regulations").

         (d) The Purchaser has completed or caused to be completed the Stock
Certificate Questionnaire and the Registration Statement Questionnaire, attached
to this Agreement as Appendices I and II, for use in preparation of the
Registration Statement (as defined in Section 7.3 below), and the answers to the
Questionnaires are true and correct as of the date of this Agreement and will be
true and correct as of the effective date of the Registration Statement;
provided that the Purchasers shall be entitled to update such information by
providing notice thereof to the Company before the effective date of such
Registration Statement.

         (e) The Purchaser has, in connection with its decision to purchase the
number of Shares set forth in Section 2 above, relied solely upon the Company
Documents and the representations and warranties of the Company contained in
this Agreement.

         (f) The Purchaser is an "accredited investor" within the meaning of
Rule 501 of Regulation D promulgated under the Securities Act.

         5.2      RESALES OF SHARES

         (a) The Purchaser hereby covenants with the Company not to make any
sale of the Shares without satisfying the requirements of the Securities Act and
the Rules and Regulations, including, in the event of any resale under the
Registration Statement, the prospectus delivery requirements under the
Securities Act, and the Purchaser acknowledges and agrees that such Shares are
not transferable on the books of the Company pursuant to a resale under the

                                      11.
<PAGE>   12
Registration Statement unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate officer's certificate

                  (i) in the form of Appendix III to this Agreement;

                  (ii) executed by an officer of, or other authorized person
designated by, the Purchaser; and

                  (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement and (B) the requirement of delivering
a current prospectus has been satisfied.

         (b) The Purchaser acknowledges that there may occasionally be times
when the Company determines, in good faith following consultation with its Board
of Directors or a committee thereof, the use of the prospectus forming a part of
the Registration Statement (the "Prospectus," as further defined in Section
7.3.1 below) should be suspended until such time as an amendment or supplement
to the Registration Statement or the Prospectus has been filed by the Company
and any such amendment to the Registration Statement is declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. The Purchaser hereby
covenants that it will not sell any Shares pursuant to the Prospectus during the
period commencing at the time at which the Company gives the Purchaser written
notice of the suspension of the use of the Prospectus and ending at the time the
Company gives the Purchaser written notice that the Purchaser may thereafter
effect sales pursuant to the Prospectus. The Company may, upon written notice to
the Purchasers, suspend the use of the Prospectus for up to thirty (30) days in
any 365-day period based on the reasonable determination of the Company's Board
of Directors that there is a significant business purpose for such
determination, such as pending corporate developments, public filings with the
SEC or similar events. The Company shall in no event be required to disclose the
business purpose for which it has suspended the use of the Prospectus if the
Company determines in its good faith judgment that the business purpose should
remain confidential. In addition, the Company shall notify each Purchaser (i) of
any request by the SEC for an amendment or any supplement to such Registration
Statement or any related prospectus, or any other information request by any
other governmental agency directly relating to the offering, and (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or of any order preventing or suspending the use of any
related prospectus or the initiation or threat of any proceeding for that
purpose.

         (c) The Purchaser further covenants to notify the Company promptly of
the sale of any of its Shares, other than sales pursuant to a Registration
Statement contemplated in Section 7 of this Agreement or sales upon termination
of the transfer restrictions pursuant to Section 7.4 of this Agreement.

         5.3      DUE EXECUTION, DELIVERY AND PERFORMANCE

         (a) This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms.

                                      12.
<PAGE>   13
         (b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated in this Agreement and the
fulfillment of the terms of this Agreement have been duly authorized by all
necessary corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Purchaser pursuant to, any
contract, indenture, mortgage, loan agreement, deed, trust, note, lease,
sublease, voting agreement, voting trust or other instrument or agreement to
which the Purchaser is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Purchaser is subject, nor will such
action result in any violation of the provisions of the charter or bylaws of the
Purchaser or any applicable statute, law, rule, regulation, ordinance, decision,
directive or order.

6.       SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         Notwithstanding any investigation made by any party to this Agreement,
all covenants, agreements, representations and warranties made by the Company
and the Purchasers in this Agreement and in the certificates for the Shares
delivered pursuant to this Agreement shall survive the execution of this
Agreement, the delivery to the Purchasers of the Shares being purchased and the
payment therefor.

7.       FORM D FILING; REGISTRATION; COMPLIANCE WITH THE SECURITIES ACT;
         COVENANTS

         7.1      FORM D FILING; REGISTRATION OF SHARES

                  7.1.1    REGISTRATION STATEMENT; EXPENSES

         The Company shall:

         (a) file in a timely manner a Form D relating to the sale of the Shares
under this Agreement, pursuant to Securities and Exchange Commission Regulation
D.

         (b) as soon as practicable after the Closing Date, but in no event
later than the 20th day following the Closing Date, prepare and file with the
Commission a Registration Statement on Form S-3 (or, if the Company is
ineligible to use Form S-3, then on Form S-1) relating to the sale of the Shares
by the Purchasers from time to time on the Nasdaq National Market (or the
facilities of any national securities exchange on which the Company's Common
Stock is then traded) or in privately negotiated transactions (the "Registration
Statement");

         (c) provide to Purchasers any information required to permit the sale
of the Shares under Rule 144A of the Securities Act;

         (d) subject to receipt of necessary information from the Purchasers,
use its best efforts to cause the Commission to notify the Company of the
Commission's willingness to declare the Registration Statement effective on or
before 90 days after the Closing Date;

         (e) notify Purchasers promptly upon the Registration Statement, and any
post-effective amendment thereto, being declared effective by the Commission;

                                      13.
<PAGE>   14
         (f) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the Prospectus (as defined in
Section 7.3.1 below) and take such other action, if any, as may be necessary to
keep the Registration Statement effective until the earlier of (i) the date on
which the Shares may be resold by the Purchasers without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the Shares
have been sold pursuant to the Registration Statement or Rule 144 under the
Securities Act or any other rule of similar effect;

         (g) promptly furnish to the Purchasers with respect to the Shares
registered under the Registration Statement such reasonable number of copies of
the Prospectus, including any supplements to or amendments of the Prospectus, in
order to facilitate the public sale or other disposition of all or any of the
Shares by the Purchasers;

         (h) during the period when copies of the Prospectus are required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and the rules
and regulations promulgated thereunder;

         (i) file documents required of the Company for customary Blue Sky
clearance in all states requiring Blue Sky clearance; provided, however, that
the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented; and

         (j) bear all expenses in connection with the procedures in paragraphs
(a) through (i) of this Section 7.1.1 and the registration of the Shares
pursuant to the Registration Statement.

                  7.1.2    DELAY IN EFFECTIVENESS OF REGISTRATION STATEMENT

         In the event that the Registration Statement is not declared effective
on or before the 90th day following the Closing Date (the "Penalty Date"), the
Company shall pay to each Purchaser liquidated damages in an amount equal to
0.25% of the total purchase price of the Shares purchased by such Purchaser
pursuant to this Agreement for each week after the Penalty Date that the
Registration Statement is not declared effective.

         7.2      TRANSFER OF SHARES AFTER REGISTRATION

         Each Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within
the meaning of the Securities Act, except as contemplated in the Registration
Statement referred to in Section 7.1 or as otherwise permitted by law, and that
it will promptly notify the Company of any changes in the information set forth
in the Registration Statement regarding the Purchaser or its plan of
distribution.

         7.3      INDEMNIFICATION

         For the purpose of this Section 7.3, the term "Registration Statement"
shall include any preliminary or final prospectus, exhibit, supplement or
amendment included in or relating to the Registration Statement referred to in
Section 7.1.

                                      14.
<PAGE>   15
                  7.3.1    INDEMNIFICATION BY THE COMPANY

         The Company agrees to indemnify and hold harmless each of the
Purchasers and each person, if any, who controls any Purchaser within the
meaning of the Securities Act, against any losses, claims, damages, liabilities
or expenses, joint or several, to which such Purchasers or such controlling
person may become subject, under the Securities Act, the Exchange Act, or any
other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company, which consent shall not be
unreasonably withheld), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rule 434,
of the Rules and Regulations, or the Prospectus, in the form first filed with
the Commission pursuant to Rule 424(b) of the Regulations, or filed as part of
the Registration Statement at the time of effectiveness if no Rule 424(b) filing
is required (the "Prospectus"), or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them, in light of the circumstances under which they were
made, not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company contained in
this Agreement, or any failure of the Company to perform its obligations under
this Agreement or under law, and will reimburse each Purchaser and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon (i) an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement of the
Registration Statement or Prospectus in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Purchaser
expressly for use in the Registration Statement or the Prospectus, or (ii) the
failure of such Purchaser to comply with the covenants and agreements contained
in Sections 5.2 or 7.2 of this Agreement respecting resale of the Shares, or
(iii) the inaccuracy of any representations made by such Purchaser in this
Agreement or (iv) any untrue statement or omission of a material fact required
to make such statement not misleading in any Prospectus that is corrected in any
subsequent Prospectus that was delivered to the Purchaser before the pertinent
sale or sales by the Purchaser.

                  7.3.2    INDEMNIFICATION BY THE PURCHASER

         Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person may become
subject, under

                                      15.
<PAGE>   16
the Securities Act, the Exchange Act, or any other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Purchaser, which consent shall not be unreasonably withheld) insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon (i) any failure on the
part of such Purchaser to comply with the covenants and agreements contained in
Sections 5.2 or 7.2 of this Agreement respecting the sale of the Shares or (ii)
the inaccuracy of any representation made by such Purchaser in this Agreement or
(iii) any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement to
the Registration Statement or Prospectus, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser expressly for use therein; provided,
however, that the Purchaser shall not be liable for any such untrue or alleged
untrue statement or omission or alleged omission of which the Purchaser has
delivered to the Company in writing a correction before the occurrence of the
transaction from which such loss was incurred, and the Purchaser will reimburse
the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action.

                  7.3.3    INDEMNIFICATION PROCEDURE

         (a) Promptly after receipt by an indemnified party under this Section
7.3 of notice of the threat or commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section 7.3, promptly notify the indemnifying party in writing
of the claim; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7.3 or to the extent it is not prejudiced as a result of such failure.

         (b) In case any such action is brought against any indemnified party
and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be a
conflict between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon

                                      16.
<PAGE>   17
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
unless:

                  (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by such indemnifying party representing all of the indemnified parties
who are parties to such action) or

                  (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. Notwithstanding the provisions of this
Section 7.3, the Purchaser shall not be liable for any indemnification
obligation under this Agreement in excess of the amount of gross proceeds
received by the Purchaser from the sale of the Shares.

                  7.3.4    CONTRIBUTION

         If the indemnification provided for in this Section 7.3 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under this Section 7.3 in
respect to any losses, claims, damages, liabilities or expenses referred to in
this Agreement, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to in this Agreement

         (a) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Purchaser from the placement of Common
Stock or

         (b) if the allocation provided by clause (a) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (a) above but the relative fault of the
Company and the Purchaser in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.

         The respective relative benefits received by the Company on the one
hand and each Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by such Purchaser to the Company pursuant to this
Agreement for the Shares purchased by such Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the "Difference") between
the amount such Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company and each Purchaser shall be determined by
reference to, among other things, whether the untrue or alleged statement of a
material fact or the omission or alleged

                                      17.
<PAGE>   18
omission to state a material fact or the inaccurate or the alleged inaccurate
representation or warranty relates to information supplied by the Company or by
such Purchaser and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 7.3.3, any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim. The provisions set forth in Section 7.3.3 with
respect to the notice of the threat or commencement of any threat or action
shall apply if a claim for contribution is to be made under this Section 7.3.4;
provided, however, that no additional notice shall be required with respect to
any threat or action for which notice has been given under Section 7.3 for
purposes of indemnification. The Company and each Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 7.3 were
determined solely by pro rata allocation (even if the Purchaser were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, no Purchaser shall be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that such Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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. The Purchasers' obligations to contribute pursuant to this
Section 7.3 are several and not joint.

         7.4      TERMINATION OF CONDITIONS AND OBLIGATIONS

         The restrictions imposed by Section 5 or this Section 7 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares upon the passage of two years from the Closing Date or at
such time as an opinion of counsel satisfactory in form and substance to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.

         7.5      INFORMATION AVAILABLE

         From the date of this Agreement through the date the Registration
Statement covering the resale of Shares owned by any Purchaser is no longer
effective, the Company will furnish to such Purchaser:

         (a) as soon as practicable after available (but in the case of the
Company's Annual Report to Shareholders, within 90 days after the end of each
fiscal year of the Company), one copy of

                  (i) its Annual Report to Shareholders (which Annual Report
shall contain financial statements audited in accordance with generally accepted
accounting principles by a national firm of certified public accountants);

                  (ii) if not included in substance in the Annual Report to
Shareholders, its Annual Report on Form 10-K;

                                      18.
<PAGE>   19
                  (iii) if not included in substance in its Quarterly Reports to
Shareholders, its quarterly reports on Form 10-Q; and

                  (iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case, excluding exhibits);

         (b) upon the request of the Purchaser, a reasonable number of copies of
the Prospectus to supply to any other party requiring the Prospectus.

         7.6      RULE 144 INFORMATION

         Until the earlier of (i) the date on which the Shares may be resold by
the Purchasers without registration and without regard to any volume limitations
by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the Shares have been sold pursuant to the Registration
Statement or Rule 144 under the Securities Act or any other rule of similar
effect, the Company shall file all reports required to be filed by it under the
Securities Act, the Rules and Regulations and the Exchange Act and shall take
such further action to the extent required to enable the Purchasers to sell the
Shares pursuant to Rule 144 under the Securities Act (as such rule may be
amended from time to time).

         7.7      STOCK OPTION MATTERS AND PROHIBITION ON TOXICS

         The Company shall, within thirty (30) days of the Closing Date, adopt
such amendments to, with respect to (i) and (ii) below, the Company's stock
option plans and By-laws, and, with respect to (iii) and (iv) below, the
Company's By-laws (together, the "Stock Option Plan and By-law Amendments") to
provide that, unless approved by the holders of a majority of the shares present
and entitled to vote at a duly convened meeting of shareholders, the company
shall not:

                  (i) grant any stock options with an exercise price that is
less than 100% of the fair market value of the underlying stock on the date of
grant;

                  (ii) reduce the exercise price of any stock option granted
under any existing or future stock option plan;

                  (iii) sell or issue any security of the Company convertible,
exercisable or exchangeable into shares of Common Stock, having a conversion,
exercise or exchange price per share which is subject to downward adjustment
based on the market price of the Common Stock at the time of conversion,
exercise or exchange of such security into Common Stock (except for appropriate
adjustments made to give effect to any stock splits or stock dividends); or

                  (iv) enter into (a) any equity line or similar agreement or
arrangement; or (b) any agreement to sell Common Stock (or any security
convertible, exercisable or exchangeable into shares of Common Stock ("Common
Stock Equivalent")) at a per share price (or, with respect to a Common Stock
Equivalent, at a conversion, exercise or exchange price, as the case may be
("Equivalent Price")) that is fixed after the execution date of the agreement,
whether or not based on any predetermined price-setting formula or calculation
method. Notwithstanding the foregoing, however, a price protection clause shall
be permitted in an agreement for sale of Common Stock or Common Stock
Equivalent, if such clause provides for an adjustment to the

                                      19.
<PAGE>   20
price per share of Common Stock or, with respect to a Common Stock Equivalent,
to the Equivalent Price (provided that such price or Equivalent Price is fixed
on or before the execution date of the agreement)(the "Fixed Price") in the
event that the Company, during the period beginning on the date of the agreement
and ending no later than 90 days after the closing date of the transaction,
sells shares of Common Stock or Common Stock Equivalent to another investor at a
price or Equivalent Price, as the case may be, below the Fixed Price.

         The Stock Option Plan and By-law Amendments may not be further amended
or repealed without the affirmative vote of the holders of a majority of the
shares present and entitled to vote at a duly convened meeting of shareholders.
Upon the adoption of the Stock Option Plan and By-law Amendments, the Company
shall promptly furnish a copy of such amendments to the Purchasers. The Company
agrees that, prior to the adoption of the Stock Option Plan and By-law
Amendments by all necessary corporate action of the Company as described above,
the Company shall not conduct any of the actions specified in (i), (ii), (iii)
or (iv) above of this Section 7.7.

8.       LEGAL FEES AND OTHER TRANSACTION EXPENSES

         At the Closing, the Company agrees to pay a flat fee of $5,000 to the
State of Wisconsin Investment Board for their legal and other transaction
expenses (whether internal or external) arising in connection with the
transactions contemplated by this Agreement.

9.       BROKER'S FEE

         Each of the parties to this Agreement hereby represents that, on the
basis of any actions and agreements by it, there are no brokers or finders
entitled to compensation in connection with the sale of the Shares to the
Purchasers. The Company shall indemnify and hold harmless the Purchasers from
and against all fees, commissions or other payments owing by the Company to any
other person or firm acting on behalf of the Company hereunder.

10.      NOTICES

         All notices, requests, consents and other communications under this
Agreement shall be in writing, shall be mailed by first-class registered or
certified airmail, confirmed facsimile or nationally recognized overnight
express courier postage prepaid, and shall be delivered as addressed as follows:

         (a) if to the Company, to:

         ScanSoft, Inc.
         9 Centennial Drive
         Peabody, MA  01960
         Attention:  Chief Financial Officer
         Telephone: 978-977-2041
         Facsimile: 977-978-2436

or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and

                                      20.
<PAGE>   21
         (b) if to a Purchaser, at its address as set forth on the signature
page to this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.

         Such notice shall be deemed effectively given upon confirmation of
receipt by facsimile, one business day after deposit with such overnight courier
or three days after deposit of such registered or certified airmail with the
U.S. Postal Service, as applicable.

11.      MODIFICATION; AMENDMENT

         This Agreement may not be modified or amended except pursuant to an
instrument in writing signed by the Company and each of the Purchasers.

12.      TERMINATION

         This Agreement may be terminated as to any Purchaser, at the option of
such Purchaser, if the Closing has not occurred on or before thirty (30) days
from the date of this Agreement.

13.      HEADINGS

         The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.

14.      SEVERABILITY

         If any provision contained in this Agreement should be held to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained in this Agreement shall not
in any way be affected or impaired thereby.

15.      GOVERNING LAW; JURISDICTION

         This Agreement shall be governed by and construed in accordance with
the laws of the state of Delaware and the federal law of the United States of
America. The parties hereto hereby submit to the jurisdiction of the courts of
the State of Wisconsin, or of the United States of America sitting in the State
of Wisconsin, over any action, suit, or proceeding arising out of or relating to
this Agreement. Nothing herein shall affect the right of the Purchaser to serve
process in any manner permitted by law or limit the right of the Purchaser to
bring proceedings against the Company in the competent courts of any other
jurisdiction or jurisdictions.

16.      NO CONFLICTS OF INTEREST.

         The Company represents, warrants, and covenants that, to the best of
its knowledge, no trustee or employee of the State of Wisconsin Investment Board
identified on the attached list, either directly or indirectly (a) currently
holds, except as may be specifically set forth below, a personal interest in the
Company or any of its affiliates (together, the "Entity") or the Entity's
property or securities, or (b) will, in connection with the investment made
pursuant to this Agreement, receive (i) a personal interest in the Entity or the
Entity's property or securities or (ii) anything of substantial economic value
for his or her private benefit from the Entity or anyone

                                      21.
<PAGE>   22
acting on its behalf. As to ownership of an interest in the Entity's publicly
traded securities, "knowledge" hereunder is based on an examination of record
holders of the Entity's securities and actual knowledge of the undersigned.

17.      COUNTERPARTS

         This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party to this Agreement and delivered to
the other parties.

                            [Signature pages follow]

                                      22.
<PAGE>   23
                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE

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

                                       SCANSOFT, INC.

                                       By:     /s/ Paul Ricci
                                          -------------------------------------

                                       Name:   Paul Ricci
                                           ------------------------------------

                                       Its:    CEO & Chairman
                                           ------------------------------------

                                       STATE OF WISCONSIN INVESTMENT BOARD

                                       By:     /s/ John F. Nelson
                                          -------------------------------------

                                       Name:   John Nelson
                                           ------------------------------------

                                       Title:  Investment Director
                                             ----------------------------------

                                       Address:

                                       121 East Wilson Street
                                       Madison, WI 53702
                                       Facsimile: (608) 266-2436

                            SHARE PURCHASE AGREEMENT
                                 SIGNATURE PAGE
<PAGE>   24
                                   SCHEDULE A

                                   PURCHASERS

State of Wisconsin Investment Board
121 East Wilson Street
Madison, WI 53702
Facsimile: (608) 266-2436
<PAGE>   25
                                    EXHIBIT A

April ____, 2001

To the Purchasers of
Common Stock of ScanSoft, Inc.
listed on Exhibit A attached hereto

Ladies and Gentlemen:

I am General Counsel of ScanSoft, Inc., a Delaware corporation (the "Company")
and rendering this opinion in connection with the issuance and sale to you of
4,761,905 shares of the Company's Common Stock (the "Shares") pursuant to the
Share Purchase Agreement dated as of April ____, 2001 between the Company and
each of the Purchasers listed on Exhibit A hereto (the "Agreement"). I am
rendering this opinion pursuant to Section 3(d)(iii) of the Agreement. Except as
otherwise defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Agreement.

In connection with this opinion, I have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Agreement by the various parties and originals or copies
certified to our satisfaction, of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinion expressed below. Where I render
an opinion "to the best of my knowledge" or concerning an item "known to me" or
my opinion otherwise refers to my knowledge, it is based solely upon
investigation, if any, that I specifically set forth herein.

In rendering this opinion, I have assumed: the genuineness and authenticity of
all signatures on original documents; the authenticity of all documents
submitted to me as originals; the conformity to originals of all documents
submitted to me as copies; the accuracy, completeness and authenticity of
certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
by the Company of the Agreement), where authorization, execution and delivery
are prerequisites to the effectiveness of such documents. I have also assumed:
that all individuals executing and delivering documents on behalf of the
Purchasers had the legal capacity to so execute and deliver; that you have
received all documents you were to receive under the Agreement; and that the
Agreement is an obligation binding upon you. In rendering this opinion I have
also assumed that there are no extrinsic agreements or understandings among the
parties to the Agreement that would modify or interpret the terms of the
Agreement or the respective rights or obligations of the parties thereunder.

My opinion is expressed only with respect to the federal laws of the United
States of America, the laws of the State of Delaware and the General Corporation
Law of the State of Delaware. I express no opinion as to whether the laws of any
particular jurisdiction apply, and no opinion to the extent that the laws of any
jurisdiction other than those identified above are applicable to the
<PAGE>   26
subject matter hereof. I am not rendering any opinion as to compliance with any
antifraud law, rule or regulation relating to securities, or to the sale or
issuance thereof.

On the basis of the foregoing, in reliance thereon and with the foregoing
qualifications, I am of the opinion that:

1. The Company has been duly incorporated and is validly existing in good
standing under the laws of the State of Delaware. The Company is duly qualified
or licensed as a foreign corporation to do business, and is in good standing
(with respect to jurisdictions that recognize such concept), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or licensed and in
good standing that would not, either individually or in the aggregate, be
material to the Company. The Company has the requisite corporate power to own or
lease its property and assets and to conduct its business as currently
conducted.

2. The execution, delivery and performance of the Agreement have been duly
authorized by all necessary corporate action on the part of the Company, its
directors and stockholders. The Agreement has been duly executed and delivered
on behalf of the Company and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights, and (ii) as limited by equitable principles generally and
limitations on the availability of equitable remedies, whether such
enforceability is considered in a proceeding in equity or at law.

3. As of the date hereof, the authorized capital stock of the Company consists
of 180,000,000 shares. The issued and outstanding capital stock of the Company
consists of 140,000,000 shares of Common Stock, of which 46,132,287 shares are
issued and outstanding, and 40,000,000 shares of Preferred Stock, of which
3,562,238 are issued and outstanding.

4. The sale, issuance and delivery of the Shares have been duly authorized all
necessary corporate action on the part of the Company, its directors and
stockholders. When issued, delivered and paid for in accordance with the terms
of the Agreement, the Shares will be validly issued, fully paid and
non-assessable and free of any pre-emptive or similar rights.

5. Except as set forth in the Agreement, to our knowledge there is no action,
proceeding or investigation pending or overtly threatened in writing against the
Company which could reasonably be anticipated to result, either individually or
in the aggregate, in any material adverse change in the assets, financial
condition or operations of the Company, or which questions the validity or
enforceability of, or seeks to enjoin or invalidate, the Agreement or any action
to be taken by the Company in connection therewith.

6. The offer and sale of the Shares by the Company to the Purchasers is exempt
from the registration requirements of the Securities Act of 1933, as amended,
subject to timely filing of a Form D pursuant to Securities and Exchange
Commission Regulation D, and the qualification and registration requirements of
all applicable state securities and "blue sky" laws.
<PAGE>   27
7. The execution, delivery and performance of the Agreement by the Company and
the consummation of the sale, issuance and delivery of the Shares by the Company
as contemplated therein do not conflict with or violate any provisions of the
Company's Certificate of Incorporation or By-laws; or any provision of any
applicable federal or state law, statute, rule or regulation; or any material
agreements to which the Company is a party.

8. All consents, approvals, authorizations, or orders of, and filings,
registrations and qualifications with or required by any regulatory or
governmental body or authority in the United States necessary for the issuance
by the Company of the Shares as contemplated by the Agreements, have been made
or obtained, except for (i) the filing of a Form D pursuant to Securities and
Exchange Commission Regulation D, and (ii) the filing of a Form D with the
Securities Commissioners of the state of Wisconsin.

This opinion is intended solely for your benefit and is not to be made available
to or be relied upon by any other person, firm, or entity without my prior
written consent. I disclaim any obligation to advise you of any change of law
that occurs, or any facts of which I become aware, after the date of this
opinion.

Very truly yours,

Jo-Anne Sinclair
General Counsel
<PAGE>   28
                                    EXHIBIT B

                             SCHEDULE OF EXCEPTIONS

Section numbers correspond to those in the Agreement.

SECTION 4.10(f)

On December 17, 1999, Caere Corporation entered into a Release and Settlement
Agreement and License Agreement with Horst Froessl in connection with a claim of
patent infringement. In connection therewith, Caere Corporation paid Mr. Froessl
$1,500,000.

In September 1999, ScanSoft, Inc. entered into a Mutual Release and Settlement
Agreement with Vivid Details, Inc. in connection with a claim of patent
infringement regarding the Kai products purchased from MetaCreations, Inc. In
connection therewith, ScanSoft, Inc. paid Vivid Details $45,000.

SECTION 4.13

Fleet Bank has a general security interest in all of the Company's assets.
<PAGE>   29
                                    EXHIBIT C

               TRUSTEES OF THE STATE OF WISCONSIN INVESTMENT BOARD

Jon D. Hammes                           Wayne McCaffery
John Petersen III                       George F. Lightbourn
Eric O. Stanchfield                     James R. Nelsen
Andrea Steen Crawford                   William R. Sauey
James A. Senty

          RELEVANT EMPLOYEES OF THE STATE OF WISCONSIN INVESTMENT BOARD

All Transactions

Patricia Lipton            Executive Director
Joseph Gorman              Chief Investment Officer - Equities
Keith Johnson              Chief Legal Counsel
Teresa Lau                 Assistant Legal Counsel
Cynthia Richson            Assistant Legal Counsel
Jon Traver                 Chief Investment Officer - Fixed Income

For Real Estate Transactions

Robert Severance           Investment Director
Chuck Carpenter            Assistant Investment Director
Dave Lewandowski           Investment Officer
Steve Spiekerman           Investment Officer

For Private Placement Loans

Jim Gannon                 Investment Director
Eve Hennessee              Portfolio Manager
Monica Jaehnig             Portfolio Manager

For Private Placement Funds & Equity Investments

Jim Gannon                 Investment Director
Jon Vanderploeg            Portfolio Manager
Carrie Thome               Assistant Portfolio Manager
Tom Olson                  Investment Officer

For Non-traditional Investments

Mike Wagner                Investment Director
Tom Drake                  Securities Analyst

For Small Cap Portfolio Direct Placements

John Nelson                Investment Director
Chad Neumann               Assistant Portfolio Manager
Jackie Doeler              Securities Analyst
Mark Traster               Securities Analyst
Dan Kane                   Securities Analyst
<PAGE>   30
                                   APPENDIX I

                                    [COMPANY]

                         STOCK CERTIFICATE QUESTIONNAIRE

         Pursuant to Section 3 of the Agreement, please provide us with the
following information:

1.       The exact name that your Shares are to be registered in (this is the
         name that will appear on your stock certificate(s)). You may use a
         nominee name if appropriate:

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

2.       The relationship between the Purchaser of the Shares and the Registered
         Holder listed in response to item 1 above:

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

3.       The mailing address of the Registered Holder listed in response to item
         1 above:

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

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

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

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

4.       The Social Security Number or Tax Identification Number of the
         Registered Holder listed in response to item 1 above:

         -----------------------------------
<PAGE>   31
                                   APPENDIX II

                                    [COMPANY]

                      REGISTRATION STATEMENT QUESTIONNAIRE

         In connection with the preparation of the Registration Statement,
please provide us with the following information:

5.       Pursuant to the "Selling Shareholder" section of the Registration
         Statement, please state your or your organization's name exactly as it
         should appear in the Registration Statement:

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

6.       Please provide the number of shares that you or your organization will
         own immediately after Closing, including those Shares purchased by you
         or your organization pursuant to this Purchase Agreement and those
         shares purchased by you or your organization through other
         transactions:

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

7.       Have you or your organization had any position, office or other
         material relationship within the past three years with the Company or
         its affiliates?

                  _____ Yes         _____ No

         If yes, please indicate the nature of any such relationships below:

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

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

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

         -------------------------------------------------------
<PAGE>   32
                                  APPENDIX III

                   PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

         The undersigned, an officer of, or other person duly authorized by

--------------------------------------------------------------------------------
              [fill in official name of individual or institution]

hereby certifies that he/she/it is the Purchaser of the shares evidenced by the
attached certificate, and as such, sold such shares on ________________, 200__
in accordance with Registration Statement number 333-________________, and
complied with the requirement of delivering a current prospectus in connection
with such sale.

PRINT OR TYPE:

Name of Purchaser (Individual or Institution):

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

Name of Individual representing Purchaser (if an Institution)

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

Title of Individual representing Purchaser (if an Institution):

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

SIGNATURE:

Individual Purchaser or Individual representing Purchaser:

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

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