Document:

EXHIBIT 10.23

                                BTI TELECOM CORP.

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                            INVESTOR RIGHTS AGREEMENT

                                December 28, 1999

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                                BTI TELECOM CORP.

                            INVESTOR RIGHTS AGREEMENT

                                December 28, 1999

                                      INDEX

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<S>         <C>                                                                                                <C>
                                                                                                               PAGE

ARTICLE I.........................................................................................................1

   REGISTRATION RIGHTS............................................................................................1
      1.1   CERTAIN DEFINITIONS...................................................................................1
      1.2   DEMAND REGISTRATIONS..................................................................................3
      1.3   "PIGGY BACK" REGISTRATIONS............................................................................4
      1.4   EXPENSES OF REGISTRATION..............................................................................5
      1.5   REGISTRATION PROCEDURES...............................................................................6
      1.6   INDEMNIFICATION.......................................................................................8
      1.7   INFORMATION BY HOLDER................................................................................11
      1.8   LIMITATIONS ON REGISTRATION RIGHTS...................................................................11
      1.9   RESERVED.............................................................................................11
      1.10     RULE 144 REPORTING................................................................................11
      1.11     LISTING APPLICATION...............................................................................12
      1.12     RESERVED..........................................................................................12
      1.13     MARKET STAND OFF..................................................................................12
      1.14     DAMAGES...........................................................................................13
      1.15     TERMINATION OF REGISTRATION RIGHTS................................................................13

ARTICLE II.......................................................................................................13

   PREEMPTIVE RIGHTS.............................................................................................13
      2.1   RIGHT OF PURCHASE....................................................................................13
      2.2   DEFINITION OF NEW SECURITIES.........................................................................13
      2.3   NOTICE FROM THE COMPANY..............................................................................14
      2.4   SALE BY THE COMPANY..................................................................................14
      2.5   TERMINATION OF RIGHTS................................................................................15

ARTICLE III......................................................................................................15

   INFORMATION RIGHTS............................................................................................15
      3.1   ACCOUNTS AND REPORTS.................................................................................15
      3.2   INSPECTION...........................................................................................16
      3.3   MEETINGS OF THE BOARD OF DIRECTORS...................................................................17
      3.4   RESTRICTIONS ON INFORMATION RIGHTS...................................................................17

ARTICLE IV.......................................................................................................18

   MISCELLANEOUS.................................................................................................18
      4.1   RECAPITALIZATION, ETC................................................................................18
      4.2   SUCCESSORS AND ASSIGNS...............................................................................18
      4.3   ENTIRE AGREEMENT.....................................................................................18
      4.4   SEVERABILITY.........................................................................................18
      4.5   SHARES OWNED BY AFFILIATES...........................................................................18
      4.6   AMENDMENTS AND WAIVERS...............................................................................19
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<S>     <C>                                                                                                     <C>

      4.7   NOTICES..............................................................................................19
      4.8   COUNTERPARTS.........................................................................................20
      4.9   EFFECT OF HEADINGS...................................................................................20
      4.10     GOVERNING LAW.....................................................................................20
      4.12  SPECIFIC ENFORCEMENT.................................................................................19

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                                BTI TELECOM CORP.

                            INVESTOR RIGHTS AGREEMENT

         THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of
the 28th day of December 1999, by and among BTI Telecom Corp., a North Carolina
corporation (the "Company"), and Welsh, Carson, Anderson & Stowe VIII, L.P., a
Delaware limited partnership, WCAS Information Partners, L.P., a Delaware
limited partnership, and BTI Investors LLC, a Delaware limited liability company
(collectively, the "Investor"). Capitalized terms used herein as defined terms
and not otherwise defined shall have the meanings set forth in the Series A
Purchase Agreement (as defined below) or its Related Agreements (as such term is
defined in the Series A Purchase Agreement).

         WHEREAS, in connection with the issuance and sale of shares of the
Company's Series A Preferred Stock (the "Series A Stock" or the "Preferred
Stock") and warrants (collectively, the "Warrant") to purchase shares of the
Company's Common Stock (the "Warrant Stock") to the Investor pursuant to that
certain Series A Preferred Stock Purchase Agreement, dated December 10, 1999, by
and among the Company, the Investor and FS Multimedia, Inc. (the "Series A
Purchase Agreement"), the Company desires to provide the Investor certain rights
with respect to registration of the shares of stock held by it and certain other
rights with respect to such shares as an inducement to the Investor to purchase
shares of the Series A Stock;

         NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions contained herein, the Company and the Investor hereby agree as
follows.

                                    ARTICLE I

                               REGISTRATION RIGHTS

         The Company hereby grants to each of the Holders (as defined below) the
registration rights set forth in this Article I, with respect to the Registrable
Securities (as defined below) owned by such Holders.

         1.1      Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:

         "Conversion Value" shall mean the Series A Conversion Value as defined
in Article IV.4 of the Company's Amended and Restated Articles of Incorporation.

         "Holder" (collectively, "Holders") means the Investor and each of its
assignees who is then a record owner of Registrable Securities.

<PAGE>

         "Initiating Holder(s)" means the Investor or its assignees who in the
aggregate are holders of at least a majority of the Registrable Securities held
by all Holders and their assigns.

         "Person" means an individual, corporation, partnership, joint venture,
trust, limited liability company or any other entity, or unincorporated
organization or a government or agency or political subdivision thereof.

         "Qualified Public Offering" shall have the meaning set forth in Article
IV of the Company's Amended and Restated Articles of Incorporation.

         "Registrable Securities" means (i) all shares of Series A Stock owned
by any Holder, (ii) all of the shares of the Company's common stock, no par
value per share (the "Common Stock"), issued or issuable upon conversion of the
shares of Preferred Stock owned by any Holder (the "Conversion Shares"), (iii)
all other shares of Common Stock now owned or hereafter acquired by any Holder;
(iv) all shares of Common Stock issuable with respect to securities of the
Company (including the Warrant) convertible into or exercisable for shares of
Common Stock now owned or hereafter acquired by any Holder; and (v) any Common
Stock or other securities issued in respect of the shares described in clauses
(i) through (iv) upon any stock split, stock dividend, recapitalization or other
similar event; provided, however, that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as (A)
they have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, and (B) the registration
rights associated with such securities have not been terminated pursuant to
Section 1.15 hereof.

         The term "register" means to register under the Securities Act of 1933,
as amended (the "1933 Act") and applicable state securities laws for the purpose
of effecting a public sale of securities.

         "Registration Expenses" means all expenses incurred by the Company in
compliance with Sections 1.2 or 1.3 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses, expenses of listing the
Registrable Securities on a securities exchange, reasonable fees and
disbursements of one counsel for all the selling Holders (which counsel shall be
selected by the Initiating Holders in the case of any registration requested
pursuant to Section 1.2), and the expense of any special audits incident to or
required by any such registration.

         "Selling Expenses" means all taxes, underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.

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         1.2      Demand Registrations.

                                    (a)     Demand for Registration. If the
Company shall receive from Initiating Holders a written demand that the Company
effect any registration (a "Demand Registration") of the Registrable Securities
(including a registration on Form S-3 or any successor form of registration
statement) having an anticipated net aggregate offering price (after deduction
of Selling Expenses) of at least $25,000,000, the Company will:

                           (i)      promptly give written notice of the proposed
         registration to all other Holders; and

                           (ii) as soon as practicable, use commercially
         reasonable efforts to effect such registration as may be so requested
         and as would permit or facilitate the sale and distribution of all or
         such portion of such Registrable Securities as are specified in such
         demand, together with such portion of the Registrable Securities of any
         Holder or Holders joining in such demand as are specified in a written
         demand given within twenty (20) days after receipt of written notice of
         such proposed registration from the Company, provided that the Company
         shall not be obligated to take any action to effect any such
         registration, pursuant to this Section 1.2:

                                    (A) Except as otherwise provided below,
                  after the Company has effected one (1) such registration
                  pursuant to this Section 1.2 and all of the Registrable
                  Securities included in such registration have been sold;

                                    (B) If the Company shall furnish to such
                  Holders a certificate signed by the President of the Company,
                  stating that in the good faith judgment of the Board of
                  Directors of the Company it would be significantly detrimental
                  to the Company and its shareholders for such Registration
                  Statement to be filed at the date filing would be required in
                  light of the existence, or in anticipation, of any acquisition
                  or financing activity involving the Company or the
                  unavailability for reasons beyond the Company's control of any
                  required financial statements, in which case the Company shall
                  have an additional period of not more than 90 days within
                  which to file such Registration Statement; provided, however,
                  that the Company shall not use this right more than once in
                  any 12-month period; or

                                     (C) Prior to December 31, 2002.

                  The Initiating Holders may, at any time prior to the effective
                  date of the registration statement relating to such
                  registration, revoke such request, without forfeiture of their
                  demand right under Section 1.2 and without liability (except
                  as set forth in Section 1.4) to any other Holder of
                  Registrable Securities requested to be registered pursuant to
                  this Section 1.2, by providing a written notice to the Company
                  revoking such request.

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                  (b) Underwriting. If the Initiating Holders intend to
distribute the Registrable Securities covered by their demand by means of an
underwriting, they shall so advise the Company as part of their demand made
pursuant to this Section 1.2; and the Company shall include such information in
the written notice referred to in Section 1.2(a)(i). In such event, the right of
any Holder to registration pursuant to this Section 1.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein.

                  The Company shall, together with all holders of capital stock
of the Company proposing to distribute their securities through such
underwriting, enter into an underwriting agreement in customary form with the
underwriter or underwriters selected by a majority-in-interest of the Initiating
Holders and reasonably satisfactory to the Company. Notwithstanding any other
provision of this Section 1.2, if the managing underwriter shall advise the
Company that marketing factors (including, without limitation, an adverse effect
on the per share offering price) require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities that have requested to participate in such offering, and the number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated pro rata among such Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the Registration
Statement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If at least 50% of the Registrable Securities requested to be registered by the
Initiating Holders are not included in such registration, then the Initiating
Holders may request that the Company effect an additional registration under the
1933 Act of all or part of the Initiating Holders' Registrable Securities in
accordance with Section 1.2 and the Company shall pay the Registration Expenses
in connection with such additional registration.

                  If any Holder disapproves of the terms of the underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. The Registrable Securities so
withdrawn shall also be withdrawn from registration.

                  If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other shareholders) in such registration if the
underwriter so agrees and if the number of Registrable Securities would not
thereby be limited.

         1.3      "Piggy Back" Registrations.

                  (a) If, at anytime after the earlier of six months after an
initial public offering of equity securities of the Company or the release of
the lock-up restrictions imposed by Section 1.13 hereof or otherwise imposed by
the Company's underwriters in connection with the Company's initial public
offering, the Company shall determine to register any of its

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securities, either for its own account or the account of a security holder or
holders exercising their registration rights, other than a registration relating
solely to employee benefit plans, a registration on Form S-4 relating solely to
a Rule 145 transaction or a registration on any registration form which does not
permit secondary sales, the Company will:

                  (i) promptly give to each Holder of Registrable Securities
         written notice thereof (which shall include the number of shares the
         Company or other security holder proposes to register and, if known,
         the name of the proposed underwriter); and

                  (ii) use its reasonable best efforts to include in such
         registration all the Registrable Securities specified in a written
         request or requests, made by any Holder within fifteen (15) days after
         the date of delivery of the written notice from the Company described
         in clause (i) above. If the managing underwriter advises the Company
         that marketing considerations require a limitation on the number of
         shares offered pursuant to any registration statement, then the Company
         may offer all of the securities it proposes to register for its own
         account or the maximum amount that the managing underwriter considers
         saleable and such limitation on any remaining securities that may, in
         the opinion of the managing underwriter, be sold will be imposed pro
         rata among all stockholders who are entitled to include shares in such
         registration statement according to the number of Registrable
         Securities and other securities with comparable rights with respect to
         registration each such stockholder requested to be included in such
         registration statement, provided that all other shares without
         contractual registration rights proposed to be included in such
         registration are first excluded.

                  (b) The Company shall select the underwriter for an offering
made pursuant to this Section 1.3. The Company may, at its option, terminate or
withdraw any registration statement filed pursuant to this Section 1.3 prior to
the effectiveness thereof.

                  (c) If any Holder disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders. The Registrable
Securities so withdrawn shall be withdrawn from registration.

         1.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 1.2 or 1.3 shall be paid by the Company. All Selling Expenses incurred
in connection with any such registration, qualification or compliance shall be
borne by the holders of the securities registered, pro rata on the basis of the
number of their shares so registered. Notwithstanding the foregoing, the Company
shall not be liable for Registration Expenses in connection with a registration
that shall not have become effective due to a revocation by the Initiating
Holders requesting such registration under Section 1.2, and such Registration
Expenses shall be borne by the Initiating Holders who initially requested and
revoked such registration.

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         1.5 Registration Procedures. In the case of each registration effected
by the Company pursuant to this Article I, the Company will keep each Holder of
Registrable Securities included in such registration advised in writing as to
the initiation of each registration and as to the completion thereof. At its
expense, the Company will do the following for the benefit of such Holders:

                  (a) Keep such registration effective (and not subject to a
stop order or injunction) for a period of one hundred twenty (120) days or until
the Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs, and amend or
supplement such registration statement and the prospectus contained therein from
time to time to the extent necessary to comply with the 1933 Act and applicable
state securities laws;

                  (b) As expeditiously as possible, prepare and file with the
Securities and Exchange Commission (the "Commission") such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement;

                  (c) Use its reasonable best efforts to register or qualify the
Registrable Securities covered by such registration under the applicable
securities or "blue sky" laws of such jurisdictions as the selling stockholders
may reasonably request; provided, that the Company shall not be obligated to
qualify to do business in any jurisdiction where it is not then so qualified or
otherwise required to be so qualified or to take any action which would subject
it to the service of process in suits other than those arising out of such
registration;

                  (d) Furnish such number of registration statements,
prospectuses and other documents incident thereto, including any amendment or
supplement thereto, as a Holder from time to time may reasonably request;
provided that the Company will, during the preparation of the registration
statement or prospectus or any amendment or supplement thereto, furnish in a
timely manner under the circumstances to each Holder including shares in such
registration copies of such registration statement or prospectus (or amendment
or supplement) as proposed to be filed (including, upon the request of such
Holder, documents to be incorporated by reference therein) which documents will
be subject to the reasonable review and comments of such Holder (and its
attorneys) and the Company will not file any registration statement, any
prospectus or any amendment or supplement thereto (or any such documents
incorporated by reference) containing any statements with respect to such Holder
to which such Holder shall reasonably object in writing;

                  (e) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 1.2 hereof, the Company will
enter into any underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and is entered into by the Holders including
Registrable Securities in such offering;

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                  (f) Obtain a comfort letter from the Company's independent
public accountants consistent with applicable professional guidelines and
standards in customary form and covering such matters of the type customarily
covered by comfort letters and an opinion from the Company's counsel in
customary form and covering such matters of the type customarily covered in a
public issuance of securities, in each case addressed to the Holders, and
provide copies thereof to the Holders;

                  (g) Permit any attorney, accountant or other agent retained by
the Holders to inspect and copy such corporate documents as any such Holder,
attorney, accountant or agent may reasonably request;

                  (h) Promptly notify each Holder of the Registrable Securities
and each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of an event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare and furnish to such Holder a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
Registrable Securities, such prospectus shall not include an untrue statement or
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;

                  (i) Use commercially reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
Holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve (12) months, beginning within three (3) months after the
effective date of the registration statement. The Company will use reasonable
best efforts to cause the earnings statement to satisfy the provisions of
Section 11(a) of the 1933 Act;

                  (j) Cause appropriate officers of the Company to attend and
participate in any "road shows" and analyst and investor presentations scheduled
in connection with any such registration and use its reasonable best efforts to
cooperate as reasonably requested by the Holders in the marketing of the
Registrable Securities; and

                  (k) Cooperate with the Holders of Registrable Securities to
take such actions as are reasonably required in order to facilitate the
disposition of Registrable Securities, including to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold, such certificates to be in such denominations and registered in such
names as such Holders may request at least two (2) business days prior to any
sale of Registrable Securities.

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         1.6      Indemnification.

                  (a) The Company will, and hereby does, indemnify each Holder,
each of its officers, directors and partners, and each person controlling such
Holder within the meaning of the 1933 Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Article I, and
each underwriter, if any, and each person who controls such underwriter within
the meaning of the 1933 Act, against all claims, losses, damages and liabilities
(or actions in respect thereof) (i) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) or any amendment or supplement
thereto incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (ii) arising out of any violation by the Company of the 1933 Act or the
Securities Exchange Act of 1934, as amended, or securities act of any state or
any rule or regulation thereunder applicable to the Company and relating (in the
case of clause (ii)) to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
such Holder, each of its officers, directors and partners, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, whether or not resulting in any liability, provided that
the Company will not be liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement (or alleged untrue statement) or omission (or alleged omission)
based upon written information furnished to the Company by any such Holder or
underwriter and stated to be specifically for use therein.

                  (b) Each Holder, severally and not jointly, will, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, and each underwriter, if any, of
the Company's securities covered by such a registration statement, each person
who controls the Company or such underwriter within the meaning of the 1933 Act
and the rules and regulations thereunder, and each of their officers, directors
and partners, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company and such directors, officers, partners, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, whether or not resulting in liability, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information

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<PAGE>

furnished to the Company by such Holder and stated to be specifically for use
therein; provided, however, that the obligations of each Holder hereunder shall
be limited to an amount equal to the net proceeds received by such Holder from
the sale of Registrable Securities covered by such registration statement.

                  (c) Each party entitled to indemnification under this Section
1.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations under this Section 1.6 (except and to the
extent the Indemnifying Party has been materially prejudiced as a consequence
thereof). The Indemnifying Party shall be responsible for the payment of all
fees and expenses in connection with the defense of any such claim or any
litigation resulting therefrom and will be entitled to participate in, and to
the extent that it may elect by written notice delivered to the Indemnified
Party promptly after receiving the aforesaid notice from such Indemnified Party,
at its expense to assume, the defense of any such claim or any litigation
resulting therefrom, with counsel reasonably satisfactory to such Indemnified
Party, provided that the Indemnified Party may participate in such defense at
its expense, notwithstanding the assumption of such defense by the Indemnifying
Party, and provided, further, that if the defendants in any such action shall
include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which 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 assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party or Parties and the reasonable fees and expenses
of such counsel shall be paid by the Indemnifying Party. No Indemnifying Party,
in the defense of any such claim or litigation, shall, except with the consent
of each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
(i) furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom and (ii) shall reasonably assist the Indemnifying Party in any such
defense, provided that the Indemnified Party shall be entitled to be reimbursed
by the Indemnifying Party for its out-of-pocket expenses paid in connection with
such assistance.

                  (d) If the indemnification provided for in this Section 1.6 is
held by a court of competent jurisdiction to be unavailable to the Indemnified
Parties in respect of any losses, claims, damages or liabilities referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages or liabilities (i) as between the
Company and the Holders holding Registrable Securities covered by a registration
statement on the one hand and the underwriters on the other, in such proportion
as is appropriate to reflect

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<PAGE>

the relative benefits received by the Company and such Holders on the one hand
and the underwriters on the other, from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Holders on the one hand and of such
underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each such Holder on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of each such Holder in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by the Company and such Holders
on the one hand and such underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
and such Holders bear to the total underwriting discounts and commissions
received by such underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company and such Holders
on the one hand and of such underwriters on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company and such Holders or by such
underwriters. The relative fault of the Company on the one hand and of each such
Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

                           The Company and the Holders agree that it would not
be just and equitable if contribution pursuant to this Section 1.6(d) were
determined by PRO RATA allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 1.6(d), no
underwriter shall be required to contribute any amount in excess of the amount
by which the underwriting discount applicable to Registrable Securities
purchased by such underwriter in such offering exceeds the amount of any damages
which such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and no
Holder shall be required to contribute any amount in excess of the amount by
which the net proceeds realized on the sale of the Registrable Securities of
such Holder exceeds the amount of any damages which such Holder 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 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent

                                       10
<PAGE>

misrepresentation. Each Holder's obligation to contribute pursuant to this
Section 1.6(d) is several in the proportion that the proceeds of the offering
received by such Holder bears to the total proceeds of the offering received by
all such Holders and not joint.

                  (e) No Holder shall be required to participate in a
registration pursuant to which it would be required to execute an underwriting
agreement in connection with a registration effected under Section 1.2 or 1.3
which imposes indemnification or contribution obligations on such Holder more
onerous than those imposed hereunder; provided, however, that the Company shall
not be deemed to breach the provisions of Section 1.2 or 1.3 if a Holder is not
permitted to participate in a registration on account of his refusal to execute
an underwriting agreement on the basis of this subsection (d).

         1.7 Information by Holder. Each Holder of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Article I or otherwise required by applicable state or federal securities
laws.

         1.8 Limitations on Registration Rights. From and after the date of this
Agreement, the Company shall not enter into any agreement with any holder or
prospective holder of any securities of the Company giving such holder or
prospective holder (a) the right to require the Company, upon any registration
of any of its securities, to include, among the securities which the Company is
then registering, securities owned by such holder, unless under the terms of
such agreement, such holder or prospective holder may include such securities in
any such registration only to the extent that the inclusion of its securities
will not limit the number of Registrable Securities sought to be included by the
Holders of Registrable Securities or reduce the offering price thereof; or (b)
the right to require the Company to initiate any registration of any securities
of the Company unless the Holders are entitled to participate in such
registration on a pro rata basis with the Person who initiated such
registration.

         1.9 Reserved.

         1.10 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
restricted securities (as that term is used in Rule 144 under the 1933 Act) to
the public without registration, the Company agrees to:

                  (a) make and keep public information available as those terms
are understood and defined in Rule 144 under the 1933 Act, at all times from and
after ninety (90) days following the effective date of the first registration
under the 1933 Act filed by the Company for an offering of its securities to the
general public;

                                       11
<PAGE>

                  (b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
1933 Act and the Exchange Act at any time after it has become subject to such
reporting requirements; and

                  (c) so long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 (at any time
from and after ninety (90) days following the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the 1933 Act and Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

         1.11 Listing Application. If shares of any class of stock of the
Company shall be listed on a national securities exchange, the Company shall, at
its expense, include in its listing application all of the shares of the listed
class then owned by any Holder at the time the initial public offering by the
Company pursuant to a registration statement filed under the 1933 Act..

         1.12 Reserved.

         1.13 "Market Stand Off" Agreement. Each Holder hereby agrees that
during the 180 day period following the effective date of the initial public
offering by the Company pursuant to a registration statement filed under the
1933 Act and during the 180 day period (or such shorter period Peter T. Loftin
agrees to pursuant to a similar agreement with the Company) following the
effective date of any subsequent offering of the Company pursuant to a
registration statement filed under the 1933 Act, it shall not, to the extent
requested by the Company and any managing underwriter, publicly sell, make any
short sale of, or otherwise publicly transfer or dispose of (other than to
donees who agree to be similarly bound) any Common Stock held by it at any time
during such period except Common Stock included in such registration; provided
that Peter T. Loftin enters into a similar agreement with the Company. In order
to enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the Registrable Securities of each Holder (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.

         The Company agrees that any agreement entered into after the date of
this Agreement pursuant to which the Company issues or agrees to issue any
privately placed securities shall contain a provision under which holders of
such securities agree not to effect any public sale of distribution of any such
securities during the periods described in Section 1.13 above, in each case
including a sale pursuant to Rule 144 (except as part of any such registration,
if permitted).

                                       12
<PAGE>

         1.14 Damages. The Company recognizes and agrees that the holders of
Registrable Securities shall not have an adequate remedy if the Company fails to
comply with the provisions of this Article I, and that damages will not be
readily ascertainable, and the Company expressly agrees that in the event of
such failure any Holder of Registrable Securities shall be entitled to seek
specific performance of the Company's obligations hereunder and that the Company
will not oppose an application seeking such specific performance based on there
being an adequate remedy at law.

         1.15 Termination of Registration Rights. No Holder shall be permitted
to exercise the rights afforded under Sections 1.2 or 1.3 after the time when
such Holder owns less than one percent (1%) of the Company's outstanding shares
of Common Stock (computed on a fully-diluted basis).

                                   ARTICLE II

                                PREEMPTIVE RIGHTS

         2.1 Right of Purchase. The Company hereby grants to each Holder so long
as it shall own, of record or beneficially, any shares of Preferred Stock or
Common Stock, the right to purchase all or part of its pro rata share of New
Securities (as defined in Section 2.2 below) which the Company, from time to
time, proposes to sell and issue. A Holder's pro rata share, for purposes of
this preemptive right, is the fraction, the numerator of which is the number of
issued or issuable shares of Common Stock which such Holder owns and the
denominator of which is the total number of shares of Common Stock then
outstanding (both the numerator and the denominator being calculated on a
fully-diluted basis). Each Holder shall have a right of over-allotment pursuant
to this Article II such that to the extent a Holder does not exercise its
preemptive right in full hereunder, such additional shares of New Securities
which such Holder did not purchase may be purchased by the other Holders in
proportion to the total number of shares of New Securities which each such other
Holder elected to purchase compared to the total number of shares of New
Securities which all such other Holders elected to purchase.

         2.2 Definition of New Securities. "New Securities" shall mean any
capital stock of the Company whether now authorized or not, and rights, options
or warrants to purchase capital stock, and securities of any type whatsoever
that are, or may become convertible into or exchangeable for capital stock,
issued on or after the date hereof; provided that the term "New Securities" does
not include (i) Conversion Shares issuable upon conversion of the Preferred
Stock, (ii) Warrant Stock issuable upon exercise of the Warrant, (iii) Common
Stock issued as a stock dividend to holders of Common Stock or upon any stock
split, subdivision or combination of shares of Common Stock, (iv) Preferred
Stock issued as a dividend to holders of Preferred Stock or upon any stock
split, subdivision or combination of Preferred Stock, (v) shares of Common Stock
issuable upon exercise of options granted under the Company's 1997 Stock Option
Plan, or any other stock option plan approved unanimously by the Board of
Directors of the Company, (vi) securities issued in connection with the
acquisition of any other

                                       13
<PAGE>

corporation or business concern, whether by acquisition of assets or stock,
(vii) securities issued in connection with strategic or collaborative
relationships and approved unanimously by the Board of Directors of the Company,
and (viii) blank check preferred stock issued to the Company's shareholders
(including a pro rata issuance to the holders of Series A Preferred Stock), in
connection with a rights plan, in accordance with the Company's Articles of
Incorporation, and (ix) capital stock or securities exercisable for or
convertible into such capital stock issued in connection with any borrowings or
equipment lease financings from financial or other institutions regularly
engaged in the business of lending money or leasing equipment if such issuance
is approved unanimously by the Board of Directors of the Company.

         2.3 Notice from the Company. In the event the Company proposes to
undertake an issuance of New Securities, it shall give each Holder written
notice of its intention, describing the type of New Securities and the price and
the terms upon which the Company proposes to issue the same. Each Holder shall
have twenty (20) business days from the date of receipt of any such notice to
agree to purchase up to the Holder's pro rata share of such New Securities for
the price and upon the terms specified in the notice by giving written notice to
the Company and stating therein the quantity of New Securities to be purchased.
If any Holder decides not to purchase its full pro rata share of such New
Securities, the Company shall give to the other Holders written notice of their
ability to purchase such additional shares and such Holders shall have ten (10)
business days from the date of receipt of such notice to agree to purchase any
over-allotment amount pursuant to Section 2.1. The closing of the purchase of
the New Securities shall be at the Company's principal place of business within
fifteen (15) days following the expiration of the 20 (or 30) day period, or at
such other time or place as the Company and the Holders may determine; provided
that if any governmental, regulatory or other similar approval or consent is
required prior to the closing of the purchase of the New Securities, such
closing shall occur fifteen (15) days following the later to occur of (i) the
expiration of such 20 (or 30) day period, or (ii) receipt by the Company of such
approval or consent, unless the Company and the Holders otherwise agree.

         2.4 Sale by the Company. In the event any Holder fails to exercise in
full its preemptive right (after giving effect to the over-allotment provision
of Section 2.1 hereof), the Company shall have 120 days thereafter to enter into
written agreements that include the price and structure terms with respect to
the sale of the New Securities with respect to which the Holder's option was not
exercised on terms no more favorable to the purchaser than those set forth in
the notice in the notice provided pursuant to Section 2.3. To the extent the
Company does not (i) enter into written agreements that include the price and
structure terms with respect to the sale of all the New Securities offered
within said 120 day period, or (ii) consummate the transactions covered by
written agreements with respect to the sale of New Securities entered into
within said 120 day period on terms no more favorable (and with the same
purchaser or purchasers) than those set forth in such written agreements, the
Company shall not thereafter issue or sell such New Securities without first
again offering such securities to the Holders in the manner provided above.

                                       14
<PAGE>

         2.5 Termination of Rights. The rights granted to the Holders under this
Article II shall expire immediately prior to, and shall not apply in connection
with, the consummation of the Company's first Qualified Public Offering.

                                   ARTICLE III

                               INFORMATION RIGHTS

         Without limiting any other covenants and provisions hereof, the Company
covenants and agrees that it will observe the following covenants until a
Holder's rights terminate pursuant to Section 1.15, unless the failure to comply
with any such covenant is waived by the Holders pursuant to the terms hereof.

         3.1 Accounts and Reports. The Company will, and will cause each of its
Subsidiaries to, maintain a standard system of accounts in accordance with
generally accepted accounting principles consistently applied ("GAAP") and the
Company will, and will cause each of its Subsidiaries to, keep full and complete
financial records. The Company will furnish to each Holder the information set
forth in this Section 3.1.

                  (a) Promptly after being filed with the Commission (or, if no
filing with the Commission is required, within forty-five (45) days after the
end of each fiscal quarter (except the last fiscal quarter of any fiscal year)),
copies of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such fiscal quarter and the related consolidated
statements of operations, shareholders' equity and cash flows for such fiscal
quarter and for that portion of the fiscal year ending as of the end of such
fiscal quarter, setting forth in comparative form in each case the consolidated
and consolidating budgeted figures for the corresponding periods and the
consolidated and consolidating actual figures for the corresponding periods in
the preceding fiscal year. To the extent that the Company's Form 10-Q filed with
the Commission satisfies the foregoing requirements, the Company may deliver to
each Holder a copy of the Company's Form 10-Q in lieu of providing such
information separately to each Holder.

                  (b) Promptly after being filed with the Commission (or, if no
filing with the Commission is required, within ninety (90) days after the close
of each fiscal year), a copy of the annual audited consolidated and
consolidating financial statements of the Company and its Subsidiaries
consisting of the consolidated and consolidating balance sheets and consolidated
and consolidating statements of operations, shareholders' equity and
consolidated and consolidating statements of cash flows, setting forth in
comparative form in each case the consolidated and consolidating figures for the
previous fiscal year, which financial statements shall be prepared in accordance
with GAAP. To the extent that the Company's Form 10-K filed with the Commission
satisfies the foregoing requirements, the Company may deliver to each Holder a
copy of the Company's filed Form 10-K in lieu of providing such information
separately to each Holder.

                                       15
<PAGE>

                  (c) Within twenty (20) days after the end of each monthly
accounting period in each fiscal year: (i) unaudited consolidating and
consolidated statements of operations, shareholders' equity and cash flows of
the Company and its Subsidiaries for such monthly period and for the period from
the beginning of the fiscal year to the end of such month, and unaudited
consolidating and consolidated balance sheets of the Corporation and its
Subsidiaries as of the end of such monthly period, setting forth in each case
comparisons to the corresponding period in the preceding fiscal year (all such
statements shall be prepared in accordance with GAAP) and (ii) a summary of such
monthly financial statements, in the form agreed upon by the Company and the
Holders, prepared by the Company's chief financial officer.

                  (d) Within one (1) day after filing thereof, copies of all
registration statements, proxy statements and all regular, special or periodic
reports or other documents which the Company files, or (to the Company's
knowledge) any of its officers or directors file with respect to the Company,
with the Commission, the National Association of Securities Dealers, Inc. or
with any securities exchange.

                  (e) At least twenty-four (24) hours or as soon as is
reasonably practicable prior to transmission or release thereof, copies of all
financial statements, proxy statements, reports and any other general written
communications which the Company sends to its stockholders, and copies of all
material press releases and other material public statements made by the Company
(or by any third party, of which the Company has knowledge).

                  (f) At least twenty-four (24) hours, or as soon as reasonably
practicable, prior thereto, notice of any telephonic or other meetings with
equity or high yield analysts or rating agencies that are open to public
participation.

                  (g) A copy of the operating and capital expenditure plan and
budget, ("Business Plan") for each fiscal year, when such Business Plan has been
approved by the Board of Directors. Such Business Plan shall be submitted to the
Board of Directors for approval, and discussed at a meeting of the Board held,
no later than March 31 of the fiscal year covered by the Business Plan.

         3.2 Inspection. At any reasonable time during normal business hours and
from time to time, but not more frequently than once per calendar quarter for
all Holders and transferees of Holders as a group, upon five (5) days written
notice, the Company (and each of its Subsidiaries) will permit any one or more
of the Holders, or any transferee of any such Holders, who then own, of record
or beneficially, or have the right to acquire, not less than 25% of the
Conversion Shares or Series A Stock or Warrant Stock, or any of the agents or
representatives of the foregoing Persons, to examine and make copies of and
extracts from the records and books of account of and visit the properties of
the Company (and any of its Subsidiaries) and to discuss the Company's affairs,
finances and accounts with any of its officers or directors; provided that any
Person or Persons exercising rights under this Section 3.2 shall (a) use all
reasonable efforts to ensure that any such examination or visit results in a
minimum of disruption to the operations of the Company and shall not occur more
than once per calendar quarter for all Holders and their transferees as a group
and (b) shall agree in

                                       16
<PAGE>

writing to keep any information of the Company disclosed to him in the course of
such inspection confidential pursuant to Section 4.7 hereof. The rights granted
under this Section 3.2 shall be in addition to any rights which any Holder may
have under Section 1.5(g) or under applicable law in its capacity as a
stockholder of the Company. Any Holder requesting inspection rights shall
deliver written notice of such request to the other Holders simultaneously with
the delivery of such notice to the Company.

         3.3 Meetings of the Board of Directors. The Directors shall schedule
regular meetings not less frequently than once every calendar quarter. The
Company shall reimburse the Holders for all reasonable direct out-of-pocket
expenses incurred by any director designees of the Holders in attending Board
meetings and monthly strategy planning meetings.

         3.4 Restrictions on Information Rights. The Company shall not be
obligated pursuant to this Article III to provide trade secrets or confidential
information to any person whom the Company reasonably believes is a competitor
of the Company. Notwithstanding anything to the contrary contained herein, the
rights granted pursuant to this Article III may not be assigned or otherwise
conveyed by any Investor or by any subsequent transferee of any such rights
except in connection with a transfer of securities of the Company in which the
transferee acquires at least 25,000 shares of Common Stock (calculated on a
Fully-Diluted Basis) subject to adjustment for combinations, consolidations,
recapitalizations, stock splits, stock dividends and the like, or such lesser
number of shares representing all the shares of the shares owned by the
transferor.

         3.5 Confidentiality. The Company hereby agrees that the identity of the
Investor as a stockholder of the Company, and the terms and conditions of the
Investor's investment in the Company, are confidential and shall not be
disclosed by the Company or any of its affiliates to any person (other than the
Company's advisors, employees, investors, analysts and stockholders in the
ordinary course), and that no use of, or reference to, the name of the Investor
or any subsidiaries or affiliates of the Investor shall be made by the Company
or its affiliates, in each case without the prior written consent of the
Investor, except as may be required by applicable law, rule or regulation.

                                       17
<PAGE>

                                   ARTICLE IV

                                  MISCELLANEOUS

         4.1 Recapitalization, etc.. 4.1 Recapitalization, etc. In the event
that any capital stock or other securities are issued in respect of, in exchange
for, or in substitution of, any Shares by reason of any reorganization,
recapitalization, reclassification, merger, consolidation, spin-off, partial or
complete liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Shares or any other change in capital
structure of the Company, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.

         4.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided, however, that the Company may not transfer or assign
its obligations hereunder.

         4.3 Entire Agreement. This Agreement, along with the Amended and
Restated Articles of Incorporation, the Series A Purchase Agreement, the
Warrant, the Shareholders Agreement and the Redemption Agreement, constitutes
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof and supersedes all prior agreements and
understanding between them or any of them as to such subject matter. This
Agreement shall not confer any rights or remedies upon any person or entity
other than the parties hereto and their respective successors and permitted
assigns.

         4.4 Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any party of any one or more of the provisions of
this Agreement, or any part thereof, whether arising by reason of the law of any
such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of the remainder of this Agreement with
respect to such party or the validity, legality or enforceability of this
Agreement with respect to any other party. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

         4.5 Shares Owned by Affiliates. For the purposes of applying all
provisions of this Agreement which condition the receipt of information or
access to information or exercise of any rights upon ownership of a specified
number or percentage of shares, the shares owned of record by any affiliate of a
Holder shall be deemed to be owned by such Holder. For the

                                       18
<PAGE>

purpose of this Agreement, the term "affiliate" shall mean any Person
controlling, controlled by or under common control with, a Holder and any
general or limited partner of a Holder.

         4.6 Amendments and Waivers. Amendments or additions to this Agreement
may only be made and compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived only (in a particular
instance and either retroactively or prospectively) upon the written consent of
the Company and the holders of a majority of the then issued and issuable Series
A Stock, Conversion Shares and Warrant Stock (voting together as a class).
Prompt notice of any such amendment or waiver shall be given to any Person who
did not consent thereto. No failure or delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

         4.7 Confidentiality. Each Holder will keep confidential information
provided to such Holder pursuant to Section 3.1, except that the Holders may
disclose such terms and information to their advisors, employees, investors or
potential investors, stockholders, successors and assigns in the ordinary
course. Notwithstanding the foregoing, information will not be treated as
confidential if it: (A) is or becomes generally available to the public other
than as a result of a disclosure by the recipient party or its agents,
representatives, affiliates, employees, officers or directors; (B) was available
to third parties on a nonconfidential basis prior to its disclosure by the
recipient party or its agents, representatives, affiliates, employees, officers
or directors; or (C) becomes available to the recipient party on a
nonconfidential basis from a Person (other than the recipient party, its agents,
affiliates, employees, officers or directors) who is not known to the Holders to
be otherwise bound by a confidentiality agreement with respect to the
information.

         Nothing herein shall deprive a recipient party from using or disclosing
information that is otherwise confidential to the extent required: (i) to comply
with applicable requirements of any governmental entity; (ii) to prepare, file
and disseminate tax returns in accordance with applicable law and financial
statements in accordance with generally accepted accounting practices
consistently applied; (iii) to exercise or enforce any of such recipient party's
rights hereunder or under any other agreement among one or more of the parties
hereto or to conduct any defense of any action brought against such recipient
party; and (iv) to respond to any court order or legal or administrative
process.

         4.8 Notices. All notices, requests, consents, reports and demands shall
be in writing and shall be hand delivered, sent by facsimile or other electronic
medium, or sent by express delivery or mailed, postage prepaid, to the Company
or to the Holders at the address set forth below or to such other address as may
be furnished in writing to the other parties hereto:

                                       19
<PAGE>

The Company:               BTI Telecom Corp
                           4300 Six Forks Road
                           Raleigh, NC 27609
                           Attention: Brian Branson

with a copy to:            Wyrick Robbins Yates & Ponton LLP
                           4101 Lake Boone Trail, Suite 300
                           Post Office Drawer 17803
                           Raleigh, NC 27619
                           Attention: Larry E. Robbins

The Investor:              Welsh, Carson, Anderson & Stowe
                           320 Park Avenue, Suite 2500
                           New York, NY  10022
                           Attention:  Sanjay Swani, John Almeida

with a copy to:            Davis Polk & Wardwell
                           450 Lexington Avenue
                           New York, NY  10017
                           Attention:  Carole Schiffman

         4.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Agreement or any exhibit hereto may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.

         4.10 Effect of Headings. The article and section headings herein are
for convenience only and shall not affect the construction hereof.

         4.11 Governing Law. This Agreement shall be deemed a contract made
under the laws of the State of North Carolina and together with the rights and
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State, without regard to the conflict of laws provisions
thereof.

         4.12 Specific Enforcement. The Company expressly agrees that the
Holders may be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms or covenants of this
Agreement by the Company, the Holders shall, in addition to all other remedies,
each be entitled to apply for a temporary or permanent injunction, and/or a
decree for specific performance, in accordance with the provisions hereof.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       20
<PAGE>

         IN WITNESS WHEREOF, this Investor Rights Agreement has been duly
executed and delivered by the parties as of the date first above written.

COMPANY:                       BTI TELECOM CORP.

                               By: /s/ Peter T. Loftin
                                   ____________________________________
                               Name: Peter T. Loftin
                               Title: Chief Executive Officer

INVESTOR:                      WELSH, CARSON, ANDERSON & STOWE VIII, L.P.

                               BY:  WCAS VIII Associates, LLC,
                                        General Partner

                               By: /s/ Jonathan M. Rather
                                   _____________________________________
                               Name: Jonathan M. Rather
                               Title: Member

                               WCAS INFORMATION PARTNERS, L.P.

                               By:  WCAS  Info Partners,
                                        General Partner

                               By: /s/ Jonathan M. Rather
                                   _____________________________________
                               Name: Jonathan M. Rather
                               Title: Attorney-in-fact

                               BTI INVESTORS LLC

                               By: /s/ Jonathan M. Rather
                                   _____________________________________
                               Name: Jonathan M. Rather
                               Title:  Authorized Person

                                       21EXHIBIT 10.24

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION. THIS WARRANT AND SUCH UNDERLYING SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED, RENOUNCED OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
AND APPLICABLE LAWS OF ANY FOREIGN JURISDICTION.

                                BTI TELECOM CORP.
                          COMMON STOCK PURCHASE WARRANT

                                                               4,264,290 Shares

         This Warrant is issued as of this 28th day of December 1999, by BTI
TELECOM CORP., a North Carolina corporation (the "Company"), to WELSH, CARSON,
ANDERSON & STOWE VIII, L.P., a Delaware limited partnership (together with its
successors and permitted assigns, the "Holder").

         1.       Issuance of Warrant; Term; Price.

                  1.1 Issuance. Subject to the terms and conditions herein set
forth, the Company hereby grants to Holder the right to purchase Four Million
Two Hundred Sixty-Four Thousand Two Hundred Ninety (4,264,290) fully paid and
non-assessable shares of common stock, no par value per share ("Common Stock")
of the Company (the "Shares"). The number of Shares to be received on exercise
or exchange of this Warrant and the price to be paid for each Share are subject
to adjustment from time to time as hereinafter set forth. This Warrant is being
issued pursuant to the terms of a Series A Preferred Stock Purchase Agreement,
dated as of December 10, 1999 among the Company, the Purchaser named therein and
FS Multimedia, Inc. (the "Purchase Agreement").

                  1.2 Term. This Warrant shall be exercisable or exchangeable at
any time and from time to time in whole or in part during the period commencing
on the date which is the earlier of (i) the last day of the Measurement Period
(as hereinafter defined) or (ii) the date on which a Change in Control
Transaction is consummated, and from such date, and ending on the date which is
ten (10) years after the date hereof.

                  1.3. Exercise Price. Subject to adjustment as hereinafter
provided, the exercise price (the "Warrant Price") per share for which all or
any of the Shares may be purchased pursuant to the terms of this Warrant shall
be equal to One Cent ($0.01).

         2. Adjustment of Warrant Price, Number and Kind of Shares. The Warrant
Price and the number and kind of securities issuable upon the exercise or
exchange of this Warrant shall be

<PAGE>

subject to adjustment from time to time, and the Company agrees to provide ten
(10) days prior written notice of the happening of any of the following events,
together with a certificate of adjustment executed by an officer of the Company
setting forth the nature of the adjustment and a brief description of such event
triggering adjustment. The Company further agrees that it will not change the
par value of the Common Stock from no par value per share to any higher par
value which exceeds the Warrant Price then in effect.

                  2.1 Dividends in Stock Adjustment. In case at any time and
from time to time on or after the date hereof the holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise or exchange of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefor, other
additional securities or other property (other than regular cash dividends) by
way of dividend or distribution, then and in each case, the holder of this
Warrant shall, upon the exercise or exchange hereof, be entitled to receive, in
addition to the number of Shares receivable thereupon, and without payment of
any additional consideration therefor, the amount of such other or additional
securities or other property (other than regular cash dividends) which such
holder would hold on the date of such exercise or exchange had it been the
holder of record of such Shares on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such exercise or
exchange, retained such Shares and/or all other additional securities or other
property receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by this Section 2.

                  2.2 Reclassification Adjustment. In case of any
reclassification or change of the outstanding securities of the Company at any
time and from time to time on or after the date hereof, the holder of this
Warrant, upon the exercise or exchange hereof at any time after the consummation
of such reclassification or change, shall be entitled to receive, in lieu of the
stock or other securities and property receivable upon the exercise or exchange
hereof prior to such consummation, the stock or other securities or property to
which such holder would have been entitled upon such consummation if such holder
had exercised or exchanged this Warrant immediately prior thereto, all subject
to further adjustment as provided in this Section 2.

                  2.3 Capital Reorganization; Merger or Sale of Assets. If at
any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this Section 2) or a merger,
consolidation or similar business combination of the Company with or into
another entity, or the sale, assignment, lease or transfer of all or
substantially all of the Company's properties and assets to any other person, or
the sale of a majority of the voting securities of the Company in one
transaction or a series of related transactions (any of which events is herein
referred to as a "Reorganization"), then as a part of such Reorganization,
provision shall be made so that the Holder, upon the exercise or exchange hereof
at any time on or after the consummation of such Reorganization, shall be
entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise or exchange hereof, the number of shares of stock
or other securities or property of the Company, or of the successor corporation
resulting from such Reorganization, to which such Holder would have been
entitled if such Holder had exercised or exchanged this Warrant immediately
prior thereto, all such subject to further adjustment as set forth in this
Section 2. In any such case, appropriate adjustment shall

                                       2
<PAGE>

be made in the application of the provisions of this Section 2 with respect to
the rights of the Holder after the Reorganization, to the end that the
provisions of this Section 2 shall be applicable after that event in as nearly
equivalent a manner as may be practicable.

                  2.4 Stock Splits and Reverse Stock Splits. If at any time and
from time to time on or after the date hereof the Company shall subdivide or
otherwise change its outstanding shares of Common Stock into a greater number of
shares, the number of shares receivable upon exercise or exchange of this
Warrant shall thereby be proportionately increased; and, conversely, if at any
time and from time to time on or after the date hereof the outstanding number of
shares of Common Stock shall be combined or otherwise changed into a smaller
number of shares, the number of shares receivable upon exercise or exchange of
this Warrant shall thereby be proportionately decreased.

                  2.5 Anti-dilution. Adjustments shall be made on an equitable
basis to the Warrant Price and the number of shares issuable upon exercise or
exchange of this Warrant in the manner set forth in Section 4(d) of the Amended
and Restated Articles of Incorporation of the Company except that instead of the
adjustments to the Series A Conversion Value adjustments shall be made on an
equitable basis to adjust the Warrant Price and/or the number of shares of
Common Stock issuable upon exercise or exchange of this Warrant. The provisions
of this Section 2.5 shall terminate upon any conversion of any Series A
Preferred Stock under the Amended and Restated Articles of Incorporation of the
Corporation or at such time as the Company elects pursuant to Article IV,
Section 4(m) of the Amended and Restated Articles of Incorporation of the
Company to terminate certain rights of the Series A Preferred Stock as set forth
in such Section 4(m).

         3. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise or exchange hereunder. In lieu of any
fractional shares that would otherwise be issuable, the Company shall pay cash
equal to the product of such fraction multiplied by the Fair Market Value
(defined below) of one share of Common Stock on the date of exercise or
exchange.

         4. No Shareholder Rights. This Warrant as such shall not entitle Holder
to any of the rights of a shareholder of the Company until the Holder has
exercised or exchanged this Warrant in accordance with Section 6 or Section 7
hereof.

         5. Reservation of Stock. The Company covenants that during the period
this Warrant is exercisable, the Company will reserve a sufficient number of
shares of its authorized and unissued Common Stock or other securities of the
Company from time to time issuable upon the exercise or exchange of this Warrant
to provide for the issuance of Shares or other securities upon the exercise or
exchange of this Warrant. The Company agrees that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
Shares or other securities upon the exercise or exchange of this Warrant.

         6. Exercise of Warrant. This Warrant may be exercised, in whole or in
part, by Holder by the surrender of this Warrant at the principal office of the
Company, accompanied by notice of and payment in full of the purchase price of
the Shares the Holder elects to purchase hereunder.

                                       3
<PAGE>

This Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the Shares or other securities and/or
property issuable upon such exercise shall be treated for all purposes as the
holder of such Shares or other securities of record as of the close of business
on such date. As promptly as practicable, the Company shall issue and deliver
(or, if so requested at the time of surrender of this Warrant, hold for pick-up
at its principal office by) to the person or persons entitled to receive the
same a certificate or certificates for the number of full Shares or other
securities issuable upon such exercise, together with cash in lieu of any
fraction of a share as provided above. The Shares or other securities issuable
upon exercise hereof shall, upon their issuance, be fully paid and nonassessable
and free and clear of all liens, security interests or other encumbrances. If
this Warrant shall be exercised in part only, the Company shall, at the time of
delivery of the certificate representing the Shares or other securities in
respect of which this Warrant has been exercised, deliver to the Holder a new
Warrant evidencing the right to purchase the remaining Shares or other
securities purchasable under this Warrant, which new warrant shall, in all other
respects, be identical to this Warrant. The Company shall pay any and all
documentary, stamp or similar issue or transfer taxes payable in respect of the
issue or delivery of the Shares to the Holder.

         7.       Right to Exchange Warrant for Stock.

                  7.1 Right to Exchange. In addition to and without limiting the
rights of the Holder under the terms of this Warrant, but subject to the
provisions of Section 1.2, the Holder shall have the right to exchange this
Warrant or any portion hereof (the "Exchange Right") for Shares as provided in
this Section 7. Upon exercise of the Exchange Right with respect to a particular
number of Shares subject to this Warrant (the "Exchange Warrant Shares"), the
Company shall deliver to the Holder (without payment by the Holder of any cash
or other consideration other than shares of Common Stock in the case of clause
(i) of the first sentence of Section 7.2) that number of Shares equal to the
quotient obtained by dividing (x) the value of this Warrant (or the specified
portion hereof) on the Exchange Date (as defined in Section 7.2 hereof), which
value shall be equal to the aggregate Fair Market Value of the Exchange Warrant
Shares issuable upon exchange of this Warrant (or the specified portion hereof)
on the Exchange Date (as herein defined) minus, in the case of clause (ii) of
the first sentence of Section 7.2, the aggregate Warrant Price of the Exchange
Warrant Shares immediately prior to the exercise of the Exchange Right by (y)
the Fair Market Value of one Share on the Exchange Date (as herein defined). No
fractional shares shall be issuable upon exercise of the Exchange Right, and if
the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the Fair Market Value of the resulting fractional share
on the Exchange Date (as herein defined).

                  7.2 Method of Exchange. The Exchange Right may be exercised by
the Holder by the surrender of this Warrant at the principal office of the
Company (the date of such surrender, the "Exchange Date") together with a
written statement specifying that the Holder thereby intends to exercise the
Exchange Right, indicating the number of shares subject to this Warrant that are
being surrendered (referred to in Section 7.1 hereof as the Exchanged Warrant
Shares) in exercise of the Exchange Right and specifying whether the Holder has
elected to pay the exchange price (i) in shares of Common Stock owned by the
Holder (in which case the Holder shall surrender a number of shares having a
Fair Market Value equal to the aggregate

                                       4
<PAGE>

Warrant Price of the Exchanged Warrant Shares) or (ii) in shares of Common Stock
to be issued upon exchange of this Warrant. Certificates for the Shares issuable
upon exercise of the Exchange Right (or any other securities deliverable in lieu
thereof under Section 2) shall be issued as of the Exchange Date and shall be
delivered to the Holder immediately following the Exchange Date.

                  7.3      Reserved.

                  7.4 Exchange. This Warrant shall be deemed to have been
exchanged immediately prior to the close of business on the date of its
surrender for exchange as provided above, and the person entitled to receive the
Shares or other securities and/or property issuable upon such exchange shall be
treated for all purposes as the holder of such Shares or other securities of
record as of the close of business on such date. As promptly as practicable, the
Company shall issue and deliver (or, if so requested at the time of surrender of
this Warrant, hold for pick-up at its principal office by) to the person or
persons entitled to receive the same a certificate or certificates for the
number of full Shares or other securities issuable upon such exchange, together
with cash in lieu of any fraction of a share as provided above. The Shares or
other securities issuable upon exchange hereof shall, upon their issuance, be
fully paid and nonassessable and free and clear of all liens, security interests
or other encumbrances. If this Warrant shall be exchanged in part only, the
Company shall, at the time of delivery of the certificate representing the
Shares or other securities in respect of which this Warrant has been exchanged,
deliver to the Holder a new Warrant evidencing the right to purchase the
remaining Shares or other securities purchasable under this Warrant, which new
warrant shall, in all other respects, be identical to this Warrant. The Company
shall pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Shares to the Holder.

         8.       Reduction in Number of Shares.

                  8.1 Notwithstanding anything contained herein to the contrary,
if prior to the date which is three (3) years after the date hereof the Company
undertakes a Qualified Public Offering (as defined in the Company's Amended and
Restated Articles of Incorporation), then the number of Shares that may be
purchased upon exercise or exchange of this Warrant shall be reduced as follows:

                           (a) If the average (weighted by daily trading volume)
Daily Price of the Company's publicly traded shares of Common Stock during the
Measurement Period (as defined below) exceeds the product obtained by
multiplying 2.5 by the Series A Conversion Value (as such term is defined in the
Company's Amended and Restated Articles of Incorporation) on the last day of the
Measurement Period, this Warrant shall terminate immediately and the Holder of
this Warrant shall not be entitled to purchase any shares pursuant to the
exercise or exchange hereof; and

                           (b) If the average (weighted by daily trading volume)
Daily Price of the Company's publicly traded shares of Common Stock during the
Measurement Period exceeds the product obtained by multiplying 2.0 by the Series
A Conversion Value on the last day of the Measurement Period (the "2.0 Value")
but is less than or equal to the product obtained by

                                       5
<PAGE>

multiplying 2.5 by such Series A Conversion Value (the "2.5 Value"), the total
number of Shares issuable upon exercise or exchange hereof, taking into account
all adjustments to the number and kind of Shares provided in this Warrant, shall
automatically be reduced in accordance with the formula set forth at Schedule A
attached hereto.

                           (c) As used herein, "Measurement Period" means any
single period of ninety (90) consecutive trading days including the date which
is three (3) years after the date hereof, which period shall be selected by the
Company. The Company shall provide written notice to the Holder within three (3)
days after the end of the Measurement Period in which the average (weighted by
daily trading volume) Daily Price exceeds the 2.5 Value, which notice shall
specify the number of Shares provided in this Warrant that have been reduced in
accordance with the formula set forth at Schedule A attached hereto.

                           (d) For purposes of this Section 8.1 the term
"Company" shall include any successor entity or any surviving entity as a result
of a Reorganization (other than a Change in Control Transaction) that has a
class of securities registered under the Securities Act of 1933, as amended,
with a market capitalization equal or greater than $100,000,000.

                           8.2      If, at any time prior to December 28, 2001,
a Change in Control Transaction (as hereinafter defined) is consummated in which
the Fair Market Value of the per share consideration received by a holder of
Common Stock (i) exceeds the product obtained by multiplying 2.0 by the Series A
Conversion Value at the time of such Change in Control Transaction and (ii)
represents an Internal Rate of Return (defined below) on the Series A Preferred
Stockholders' investment of at least 30% (assuming for the purposes of this
Section 8.2, that the Holder continues to own its Series A Preferred Stock at
the time of such Change in Control Transaction), this Warrant shall terminate
without exercise or exchange hereof and the Holder shall receive that portion of
the consideration to which it would have been entitled had it exercised or
exchanged this Warrant for the maximum number of shares for which it was
exercisable or exchangeable immediately prior to the closing of the Change in
Control Transaction. For purposes of this Warrant, a "Change in Control
Transaction" shall mean one transaction or a series of transactions involving
(x) the sale, assignment, lease or transfer of all the shares of the Company's
capital stock or of all or substantially all of its assets to, or a merger,
consolidation or similar business combination with or into, or the sale of a
majority of the voting securities of the Company to, an entity, a majority of
the voting power of which is not owned or controlled, directly or indirectly, by
one or more shareholders of the Company immediately prior to the transaction, or
(y) a liquidation or distribution of all or substantially all the assets of the
Company.

                  8.3 If, at any time after December 28, 2001, and before March
28, 2002, a Change in Control Transaction is consummated in which the Fair
Market Value of the per share consideration received by a holder of Common Stock
(i) exceeds the product obtained by multiplying 2.25 by the Series A Conversion
Value at the time of such Change in Control Transaction and (ii) represents an
Internal Rate of Return on the Series A Preferred Stockholders' investment of at
least 30% (assuming for the purposes of this Section 8.3, that the Holder
continues to own its Series A Preferred Stock at the time of such Change in
Control

                                       6
<PAGE>

Transaction), this Warrant shall terminate without exercise or exchange hereof
and the Holder shall receive that portion of the consideration to which it would
have been entitled had it exercised or exchanged this Warrant for the maximum
number of shares for which it was exercisable or exchangeable immediately prior
to the closing of the Change in Control Transaction.

                  8.4 If, at any time after March 28, 2002, and before December
28, 2002, a Change in Control Transaction is consummated in which the Fair
Market Value of the per share consideration received by a holder of Common Stock
(i) exceeds the product obtained by multiplying 2.5 by the Series A Conversion
Value at the time of such Change in Control transaction and (ii) represents an
Internal Rate of Return on the Series A Preferred Stockholders' investment of at
least 30% (assuming for the purposes of this Section 8.4, that the Holder
continues to own its Series A Preferred Stock at the time of such Change in
Control Transaction), this Warrant shall terminate without exercise or exchange
hereof and the Holder shall receive that portion of the consideration to which
it would have been entitled had it exercised or exchanged this Warrant for the
maximum number of shares for which it was exercisable or exchangeable
immediately prior to the closing of the Change in Control Transaction.

         9. Notice of Proposed Transfers. This Warrant and the Shares may be
transferred and assigned by the Holder subject to the restrictions on transfer
set forth in the Shareholders Agreement, dated as of the date hereof by and
among the Company, Peter T. Loftin and the Holder (the "Shareholders
Agreement"). Each certificate evidencing the securities transferred as above
provided shall bear the appropriate restrictive legends set forth in the
Shareholders Agreement for so long as such legend is required pursuant to the
terms of such Agreement.

         10. Replacement of Warrants. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant, and in the case of any such loss, theft or
destruction of the Warrant, on delivery of an indemnity agreement or security
satisfactory in form and amount to the Company acting reasonably, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant if mutilated, the Company will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

         11. Certain Definitions. As used in this Warrant, the following terms,
have the following meanings:

                  11.1 "Daily Price" means (1) if the shares of such Common
Stock then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"),
the closing price on such day as reported on the NYSE Composite Transactions
Tape; (2) if the shares of Common Stock then are not listed and traded on the
NYSE, the closing price on such day as reported by the principal national
securities exchange on which the shares are listed and traded; (3) if the shares
of Common Stock then are not listed and traded on any such securities exchange,
the last reported sale price on such day on the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ");
or (4) if the shares of Common Stock

                                       7
<PAGE>

then are not traded on the NASDAQ National Market, the average of the highest
reported bid and lowest reported asked price on such day as reported by NASDAQ.

                  11.2 "Fair Market Value", as of a particular date, means (i)
with respect to one share of Common Stock, if the aggregate Daily Prices of all
of the outstanding shares of Common Stock that have been registered pursuant to
a public offering is at least $200 million as of such date, the average
(weighted by daily trading volume) of the Daily Prices, if any, per share of
Common Stock for the 20 consecutive trading days immediately prior to such date
or (ii) in all other events with respect to the Common Stock, or with respect to
any other property or consideration, the fair market value of such Common Stock
or other property or consideration as determined by two appraisers, one selected
by the Board of Directors of the Company and one selected by the Holder. No
Director who is a Holder or who is designated by or affiliated with a Holder
shall vote on the selection of the appraiser chosen by the Company. In the event
the Board of Directors or the Holder fails to appoint an appraiser within a
reasonable period of time, the appraisal shall be undertaken by the remaining
single appraiser. The Fair Market Value shall be the fair market value
(determined in the manner described above) arrived at by the appraisers within
thirty (30) days following the appointment of the last appraiser to be
appointed. In the event that the two appraisers agree in good faith on such fair
market value within such a period of time, such agreed value shall be used for
these purposes. If the appraisers cannot agree, but their valuations are within
10% of each other, the Fair Market Value shall be the mean of the two
valuations. If the appraisers cannot agree and the differences in the valuations
are greater than 10%, the appraisers shall select a third appraiser who will
calculate fair market value independently (provided that such calculations shall
not be more than the value calculated by the appraiser selected by the Holder or
less than the value calculated by the appraiser selected by the Board of
Directors) and, except as provided in the next sentence, the Fair Market Value
of the shares shall be the mean of the two fair market values arrived at by the
appraisers who are closest in amount. If one appraiser's valuations is the mean
of the other two valuations, such mean valuation shall be the Fair Market Value.
In the event that the two original appraisers cannot agree upon a third
appraiser within ten (10) days following the end of the thirty (30) day period
referred to above, then the third appraiser, which appraiser shall be a
nationally recognized investment banking firm, shall be appointed by the
American Arbitration Association in Washington, D.C. The expenses of the
appraisers will be borne by the Company.

                  11.3 "Internal Rate of Return" means the effective annual rate
of interest which, when applied to all cash flows (as determined below) made to,
or received from, the Company with respect to the Series A Investment, makes the
net present value of all such cash flows equal to zero. The Series A Investment
shall be deemed to be a cash outflow. Payments made by a new Holder for a
purchase of securities from an existing Holder shall not be deemed to be a cash
outflow. Cash dividends or other cash amounts, if any, paid by the Company to
the Holder in respect of the Series A Investment will be deemed to be interim
cash inflows with respect to the Series A Investment. Distributions or proceeds
received by the Holder in respect of the Series A Investment consisting of
property other than cash shall be valued at the Fair Market Value thereof as
determined as of the date such distributions or proceeds were received. The
final cash flow with respect to the Series A Investment will be based on the
total net proceeds that will be actually received by the Holder on the date of
the completion of a Change in Control Transaction. Notwithstanding the
foregoing, the Internal Rate of Return will be calculated on a

                                       8
<PAGE>

fully diluted basis taking into account any and all dilution, if any, to the
Holder, including without limitation (i) the dilution, if any, that will result
from this Warrant and (ii) the assumed exercise of any then outstanding stock
options of the Company to the extent that the per share consideration received,
or that would be received upon the deemed exercise of such option, in connection
with such Change in Control Transaction exceeds the exercise price of any such
outstanding options at the date of such Change in Control Transaction. The
Internal Rate of Return will be calculated with the timing of cash flows assumed
to be on a quarterly basis (March 31, June 30, September 30 and December 31) and
with all specific cash flows during a quarter deemed to have occurred on the
last day of such quarter.

                  11.4 "Series A Investment" means, as of any date, the
aggregate dollar amount of all equity capital invested by the Holder in the
Series A Participating Preferred Stock on or prior to such date.

         12. Amendment. Any term of this Warrant may be amended with the written
consent of the Company and the Holder. Any amendment effected in accordance with
this Section 12 shall be binding upon the Holder of this Warrant, each future
holder of such Warrant, and the Company.

         13. Remedies. In the event of any default or threatened default by the
Company in the performance of or observance with any of the terms of this
Warrant, it is agreed that remedies at law are not and will not be adequate for
the Holder and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

         14. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided that the Company may not assign its obligations under
this Warrant.

         15. Entire Agreement. This Warrant, along with the Amended and Restated
Articles of Incorporation, the Series A Purchase Agreement, the Investor Rights
Agreement, the Shareholders Agreement and the Redemption Agreement, constitutes
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof and supersedes all prior agreements and
understanding between them or any of them as to such subject matter.

         16. Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any party of any one or more of the provisions of
this Warrant, or any part thereof, whether arising by reason of the law of any
such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of the remainder of this Warrant with
respect to such party or the validity, legality or enforceability of this
Agreement with respect to any other party. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,

                                       9
<PAGE>

legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

         17. Notices. All notices and other communications between the Company
and the holder of this Warrant shall be delivered in the manner set forth in the
Investor Rights Agreement.

         18. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Agreement or any exhibit hereto may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.

         19. Effect of Headings. The article and section headings herein are for
convenience only and shall not affect the construction hereof.

         20. Governing Law. This Warrant shall be governed by the laws of the
State of North Carolina, without regard to the conflict of laws provisions
thereof, and together with the rights and obligations of the parties hereunder,
shall be construed under and governed by the laws of such State without regard
to the conflicts of laws provisions thereof.

         21. No Third Party Beneficiaries. This Warrant shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successor and permitted assigns.

                      [THE NEXT PAGE IS THE SIGNATURE PAGE]

                                       10
<PAGE>

         IN WITNESS WHEREOF, the undersigned officer of the Company has executed
this Common Stock Purchase Warrant as of the date first above written.

                                BTI TELECOM CORP.

                                By: /s/ R. Michael Newkirk
                                    _________________________________
                                Name:    R. Michael Newkirk
                                Title:   President

Acknowledged and Agreed as of the date first above written:

WELSH, CARSON, ANDERSON & STOWE VIII, L.P.

By:      WCAS VIII Associates LLC,
         General Partner

By:  /s/ Jonathan M. Rather
     _______________________
Name: Jonathan M. Rather
Title: Member

<PAGE>

                                                    SCHEDULE A

Formula:  j-[[[(a/b)-c] / f] * g]
<TABLE>
<CAPTION>
<S>                                                                           <C>               <C>              <C>
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
EXAMPLE                                                                        EXAMPLE 1         EXAMPLE 2        EXAMPLE 3
                                                                               ---------         ---------        ---------
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Average Daily Price of Common Stock                                             $ 19.24  [a]     $ 18.38  [a]      $ 20.09  [a]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Series A Conversion Value                                                       $  8.55  [b]     $  8.55  [b]       $ 8.55  [b]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Multiple of Series A Conversion Value (Actual Multiple)                             2.25x             2.15x             2.35x
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Minimum multiple of Series A Conversion Value  (Minimum Multiple)                   2.00  [c]         2.00x [c]         2.00x [c]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Difference:  Actual Multiple - Minimum Multiple                                     0.25x             0.15x             0.35x
--------------------------------------------------------------------------- ----------------- ---------------- -----------------

--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Multiple difference between 100% cancellation and no cancellation                   0.50x [f]         0.50x [f]         0.50x [f]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
% of Maximum Shares subject to cancellation                                        50.0%               30.0%            70.0%
--------------------------------------------------------------------------- ----------------- ---------------- -----------------

--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Maximum Shares subject to cancellation                                         1,421,430 [g]    1,421,430 [g]     1,421,430 [g]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
NUMBER OF SHARES CANCELLED                                                           710,715          426,429           995,001
--------------------------------------------------------------------------- ----------------- ---------------- -----------------

--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Total Shares issuable upon exercise or exchange of Warrant ("Maximum WCAS     4,264,290  [j]   4,264,290  [j]    4,264,290  [j]
Warrants")
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Maximum WCAS Warrants less cancelled Shares ("WCAS Warrants")                      3,553,575        3,837,861         3,269,289
--------------------------------------------------------------------------- ----------------- ---------------- -----------------

<S>                               <C>                         <C>
------------------------------------------------------------------------------
                                 SUMMARY TABLE
---------------------------- ------------------------- -----------------------
        MULTIPLE OF                   SHARES                     WCAS
         SERIES A                   CANCELLED                  WARRANTS
---------------------------- ------------------------- -----------------------

---------------------------- ------------------------- -----------------------
           2.00x                        --                     4,264,290
---------------------------- ------------------------- -----------------------
           2.05x                     142,143                   4,122,147
---------------------------- ------------------------- -----------------------
           2.10x                     284,286                   3,980,004
---------------------------- ------------------------- -----------------------
           2.15x                     426,429                   3,837,861
---------------------------- ------------------------- -----------------------
           2.20x                     568,572                   3,695,718
---------------------------- ------------------------- -----------------------
           2.25x                     710,715                   3,553,575
---------------------------- ------------------------- -----------------------
           2.30x                     852,858                   3,411,432
---------------------------- ------------------------- -----------------------
           2.35x                     995,001                   3,269,289
---------------------------- ------------------------- -----------------------
           2.40x                    1,137,144                  3,127,146
---------------------------- ------------------------- -----------------------
           2.45x                    1,279,287                  2,985,003
---------------------------- ------------------------- -----------------------
           2.50x                    1,421,430                  2,842,860
---------------------------- ------------------------- -----------------------
</TABLE>

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