Exhibit 10.44

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                             NOTE PURCHASE AGREEMENT

                                  by and among

                        THE CHILLICOTHE TELEPHONE COMPANY

                                       and

                     AMERICAN UNITED LIFE INSURANCE COMPANY
                                       and
                        THE STATE LIFE INSURANCE COMPANY



                            Dated as of June 1, 1998



                        The Chillicothe Telephone Company
                         $12,000,000 6.62% Senior Notes
                                Due June 1, 2018





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                                TABLE OF CONTENTS


SECTION 1.  PURCHASE AND SALE OF NOTES.........................................1

         (a)  The Notes........................................................1
         (b)  Purchases to Be Several..........................................1
         (c)  Late Payments....................................................2
         (d)  Manner of Payment................................................2
         (e)  Payment on Non-Business Days.....................................2

SECTION 2.  PREPAYMENTS OF THE NOTES...........................................2

         (a)  Voluntary Payments with Premium..................................2
         (b)  Manner of Effecting Voluntary Prepayment.........................2

SECTION 3.  REPRESENTATIONS AND WARRANTIES.....................................3

         (a)  Corporate Organization...........................................3
         (b)  Conflicting Agreements and Other Matters.........................3
         (c)  Due Authorization, etc...........................................3
         (d)  Legal Proceedings; Compliance With Law...........................3
         (e)  Financial Statements.............................................4
         (f)  Title to Assets..................................................4
         (g)  Securities Matters...............................................4
         (h)  Licenses and Permits.............................................5
         (i)  No Defaults on Indebtedness......................................5
         (j)  Tax Returns......................................................5
         (k)  No Margin Stock..................................................5
         (l)  ERISA Matters....................................................5
         (m)  Brokers and Finders..............................................6
         (n)  Use of Proceeds..................................................6
         (o)  Investment Company Act...........................................6
         (p)  Public Utility...................................................6
         (q)  Full Disclosure..................................................6
         (r)  Regulatory Approval..............................................6
         (s)  Existing Debt and Restricted Investments.........................7

SECTION 4.  AFFIRMATIVE COVENANTS..............................................7

         (a)  Payment..........................................................7
         (b)  Maintenance of Books and Records.................................7
         (c)  Inspection of Books and Records..................................7
         (d)  Financial Information............................................7
         (e)  Quarterly Financial Statements...................................7
         (f)  Annual Financial Statements......................................8
         (g)  Financial Certification..........................................9

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         (h)  Copies of Management Letters, etc................................9
         (i)  Copies of Regulatory Reports.....................................9
         (j)  Corporate Existence..............................................9
         (k)  Payment of Taxes and Claims......................................9
         (l)  Maintenance of Properties and Licenses..........................10
         (m)  Insurance.......................................................10
         (n)  Net Worth.......................................................10
         (o)  Notice of Default...............................................10
         (p)  Exchange of Notes...............................................10
         (q)  Qualified Retirement Plans......................................11

SECTION 5.  NEGATIVE COVENANTS................................................11

         (a)  Limitations on Funded Debt......................................11
         (b)  Limitations on Funded Debt of Subsidiaries......................11
         (c)  Subordination of Claims.........................................11
         (d)  Sale of Assets..................................................11
         (e)  Merger and Consolidation........................................12
         (f)  Maintenance of Present Business.................................12
         (g)  Transactions with Affiliates....................................12
         (h)  Permitted Liens.................................................12
         (i)  Restricted Payments and Restricted Investments..................14
         (j)  Fixed Charges...................................................14
         (k)  Sale of Accounts................................................15
         (l)  Guaranties; Etc.................................................15

SECTION 6.  CONDITIONS PRECEDENT..............................................15

SECTION 7.  DEFAULTS..........................................................16

SECTION 8.  PAYMENTS ON AND REGISTRATION AND TRANSFER OF NOTES................18

SECTION 9.  EXPENSES..........................................................18

SECTION 10. DELIVERY OF DOCUMENTS; PRO RATA PAYMENTS;
            AMENDMENTS AND CONSENTS...........................................19

         (a)  Delivery of Documents...........................................19
         (b)  Pro Rata Payments...............................................19
         (c)  Amendments and Consents.........................................19

SECTION 11. INVESTMENT PURPOSE................................................19

SECTION 12. DEFINITIONS.......................................................19

SECTION 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................25

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SECTION 14. SUCCESSORS AND ASSIGNS............................................25

SECTION 15. NOTICES...........................................................25

SECTION 16. GOVERNING LAW.....................................................25

SECTION 17. COUNTERPARTS......................................................25

SECTION 18. CAPTIONS..........................................................26


Appendix I     Purchasers, Note Allocations and Wire Instructions
Schedule 3(d)  Legal Proceedings
Exhibit A      Form of Note
Exhibit B      Subsidiaries
Exhibit C      Existing Debts and Liens
Exhibit D      Existing Restricted Investments
Exhibit E-1    Form of Opinion of Counsel to the Company
Exhibit E-2    Form of Opinion of Purchasers' Special Counsel

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                             NOTE PURCHASE AGREEMENT

                      Re: The Chillicothe Telephone Company
                         $12,000,000 6.62% Senior Notes
                                Due June 1, 2018

                            Dated as of June 1, 1998


TO THE PURCHASERS NAMED IN APPENDIX I HERETO:

Dear Sirs:

     The undersigned,  The Chillicothe  Telephone  Company,  an Ohio corporation
(herein called the  "Company"),  hereby  confirms its agreements set forth below
with the parties listed on Appendix I hereto  (herein called the  "Purchasers").
Reference is made to Section 12 hereof for definitions of capitalized terms used
herein and not otherwise defined.

SECTION 1. PURCHASE AND SALE OF NOTES.

          (a) The  Notes.  Subject  to the terms  and  conditions,  herein,  the
     Company will sell to each of the  Purchasers on such date on June 23, 1998,
     or such  later  date as may be fixed by the  Purchasers  on at least  three
     days' prior  written  notice to the Company,  or as may be mutually  agreed
     upon with the Purchasers (the date of sale being herein called the "Closing
     Date"),  and each of the  Purchasers  will purchase from the Company on the
     Closing Date, at 100% of the principal amount thereof, a promissory note of
     the Company (which,  together with any note or notes issued in substitution
     therefor,  are herein  collectively  called the "Notes" and  individually a
     "Note"), in the principal amount specified on Appendix I hereto,  dated the
     Closing  Date.  The  principal  amount  of the  Notes  shall  be due in ten
     consecutive equal annual installments, each in an aggregate amount equal to
     $1,200,000 payable on the lst day of June in each of the years 2009 through
     2018, inclusive.  The Notes shall bear interest from the Closing Date until
     payment in full of the  principal  amount  thereof at the rate of 6.62% per
     annum  (provided that solely for the purpose of determining  the portion of
     annual  interest  allocable to any  interest  payment  period,  it shall be
     assumed  that a year is comprised  of 360 days and twelve  30-day  months),
     payable  semi-annually  on the  1st day of June  and  December,  commencing
     December 1, 1998,  and  continuing  until  payment in full of the principal
     amount of the Notes.  The Notes shall be subject to optional and  mandatory
     prepayment  as herein  provided,  shall in all  respects  be subject to the
     terms of this Agreement,  and shall be substantially in the form of Exhibit
     A hereto.

          (b) Purchases to Be Several.  The purchase of each of the Notes by the
     respective  Purchasers  shall be separate and several,  but the purchase of
     each Note shall be a  condition  concurrent  to the  purchase of each other
     Note.




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          (c)  Late  Payments.  Any  payment  of  principal  or (to  the  extent
     permitted  by  applicable  law)  interest  on the  Notes not paid when due,
     whether at stated maturity, by acceleration or otherwise,  shall thereafter
     bear interest at a rate per annum equal to 8.62% (provided that in no event
     shall such rate exceed the maximum rate permitted by law).

          (d) Manner of Payment.  The Purchasers  will pay the purchase price of
     the Notes by wire transfer of immediately  available  Federal funds to such
     accounts as shall be specified by the Company, or in such other funds or in
     such other manner as may be mutually  agreed upon by the Purchasers and the
     Company,  against  delivery  of the Notes to  Purchasers  special  counsel,
     Chapman  and  Cutler,  which will be made at the  offices  of  Chapman  and
     Cutler,  111 West Monroe  Street,  Chicago,  Illinois  60603 at 10:00 A.M.,
     Chicago, Illinois time on the Closing Date.

          (e)  Payment on  Non-Business  Days.  Whenever  any payment to be made
     hereunder  or under  the Notes  shall be  stated  to be due on a  Saturday,
     Sunday  or  holiday  for banks  under  the laws of the  States of New York,
     Indiana or Ohio, such payment may be made on the next  succeeding  business
     day.

SECTION 2. PREPAYMENTS OF THE NOTES.

          (a) Voluntary  Payments with Premium.  The Company may, at its option,
     at any time,  prepay  the Notes in whole or in part (but if in part only in
     the aggregate amount of $1,000,000 or integral multiples thereof),  upon 30
     days' prior written notice to the holders of the Notes, and upon payment of
     a prepayment  premium equal to the excess,  if any, of (i) the amount equal
     to the present value of all  installments  of principal and interest  which
     are avoided by such prepayment,  determined by discounting such payments of
     principal  and interest at a rate per annum equal to .25% plus the Treasury
     Yield Percentage, over (ii) the principal amount to be prepaid. In no event
     shall such prepayment premium be less than zero.

          (b) Manner of Effecting Voluntary Prepayment. In the event the Company
     shall give notice of any prepayment in accordance  with Section 2(a) above,
     such notice shall specify the principal  amount of the Notes to be prepaid,
     the Section  pursuant to which  prepayment  is being made,  and the date of
     proposed  prepayment,  and thereupon such principal  amount,  together with
     accrued and unpaid  interest  thereon to the  prepayment  date and together
     with the  applicable  premium,  if any, shall become due and payable on the
     prepayment date. In the event any prepayment pursuant to Section 2(a) shall
     be less than the entire unpaid  principal  amount of the Notes, the amounts
     of the prepayments  (and the payment at maturity)  required by Section l(a)
     shall be reduced by an amount which is the same percentage of such required
     prepayment or payment as the percentage that the principal  amount of Notes
     prepaid  pursuant to Section 2(a) is of the aggregate  principal  amount of
     outstanding Notes immediately prior to such prepayment.



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SECTION 3. REPRESENTATIONS AND WARRANTIES.

     The Company represents and warrants to the Purchasers as follows:

          (a)  Corporate  Organization.  The  Company and its  Subsidiaries  are
     corporations  organized and existing and in good standing under the laws of
     the State of Ohio,  and are duly  qualified  to do business and are in good
     standing under the laws of each state where the nature of the business done
     or property  owned  require  such  qualification.  The Company is organized
     under the laws of the State of Ohio.  Exhibit B hereto correctly sets forth
     the name of each Subsidiary,  its state of incorporation and the percentage
     of the outstanding capital stock of such Subsidiary owned by the Company or
     another Subsidiary. The Company does not own, directly or indirectly,  more
     than 1% of the total  outstanding  capital  stock of any class of any other
     corporation  except  for the  capital  stock of ComNet,  Inc.  of which the
     Company owns approximately 5% of the outstanding capital stock thereof.

          (b)  Conflicting  Agreements and Other Matters.  Neither the execution
     and  delivery  by the  Company of this  Agreement  and the  Notes,  nor the
     performance  or observance  by the Company or any  Subsidiary of any of the
     terms or conditions of this Agreement or the Notes, will (i) conflict with,
     or  result  in a breach  of the  terms,  conditions  or  provisions  of, or
     constitute a default under, or result in any violation of, or result in the
     creation of any Lien upon any of the properties or assets of the Company or
     any Subsidiary  pursuant to, the  Certificate of  Incorporation  or Code of
     Regulations of the Company or any Subsidiary,  any award of any arbitrator,
     or any  indenture,  contract or agreement  (including  any  agreement  with
     stockholders),  instrument,  order, judgment, decree, statute, law, rule or
     regulation  to which the  Company or any  Subsidiary  is  subject,  or (ii)
     require any registration or filing with, or any consent or approval of, any
     Federal,  state or local governmental  agency or authority,  except for the
     Application  for Consent and  Authority  to issue and sell  $12,000,000  of
     Senior  Unsecured  Notes to the Public  Utilities  Commission  of Ohio (the
     "Commission")  which was filed April 24, 1998 (the  "Application")  and the
     approval  thereof by the  Commission  which was  obtained by the Company on
     June 2, 1998.

          (c) Due  Authorization,  etc. The sale of the Notes and the  execution
     and  delivery  of this  Agreement  and the Notes are within  the  corporate
     powers of the Company and have been duly authorized by all necessary action
     of the Company and its Subsidiaries. The Notes and this Agreement have been
     duly executed and delivered by the Company and constitute the legal,  valid
     and  binding   obligations,   contracts  and   agreements  of  the  Company
     enforceable in accordance with their respective terms.

          (d)  Legal  Proceedings;  Compliance  With  Law.  Except  as listed on
     Schedule 3(d) hereto,  there are no actions,  suits, or proceedings pending
     or, to the knowledge of the Company,  threatened against the Company or any
     of  its  Subsidiaries  or  any  property  of  the  Company  or  any  of its
     Subsidiaries in any court or before any federal,  state, municipal or other
     governmental  agency,  which, if decided adversely to the Company or any of


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     its Subsidiaries,  would have a materially  adverse effect upon the Company
     or any of its  Subsidiaries  or upon  the  business  or  properties  of the
     Company or any of its  Subsidiaries.  Neither  the  Company  nor any of its
     Subsidiaries  is in  default  with  respect  to any  order of any  court or
     governmental agency.

          Neither the Company nor any Subsidiary (1) is in violation of any law,
     ordinance,  franchise,  governmental  rule or  regulation  to  which  it is
     subject;  or (2) has failed to obtain any  license,  permit,  franchise  or
     other governmental authorization necessary to the ownership of its property
     or to the conduct of its  business,  which  violation  or failure to obtain
     would  materially  affect  adversely  the  business,   prospects,  profits,
     properties  or condition  (financial  or  otherwise) of the Company and its
     Subsidiaries,  taken as a whole,  or impair the  ability of the  Company to
     perform its obligations contained in this Agreement or the Notes.

          (e) Financial Statements.  The Company has furnished to the Purchasers
     a consolidated balance sheet, statement of income and retained earnings and
     statement of cash flows of the Company and its Subsidiaries for each of the
     fiscal years ended December 31, 1994,  December 31, 1995, December 31, 1996
     and December 31, 1997,  respectively,  each certified by Arthur  Andersen &
     Co., independent certified public accountants,  and unaudited  consolidated
     and  consolidating  balance  sheets,  statements  of  income  and  retained
     earnings of the Company and its  Subsidiaries  for the three  months  ended
     March 31, 1998.  Said  financial  statements  fairly  present the financial
     condition of the Company and its  Subsidiaries  at the date(s)  thereof and
     the  results of  operations  of the Company  and its  Subsidiaries  for the
     period(s)  indicated,  all in conformity with generally accepted accounting
     principles consistently followed through the period(s) involved. There have
     been no material adverse changes in the condition,  financial or otherwise,
     of the Company and its Subsidiaries since December 31, 1997.

          (f) Title to Assets.  The Company and its  Subsidiaries  have good and
     marketable  title in fee simple to all real  property and good title to all
     personal property they purport to own,  including (except as they have been
     affected by transactions in the ordinary course of business) all properties
     and assets  reflected  in the most  recent  balance  sheet  referred  to in
     Section  3(e)  hereof.  In the case of  property  used in their  trades  or
     businesses but not owned by them, the Company and its  Subsidiaries  have a
     valid,  binding and  enforceable  right to use such property  pursuant to a
     written lease, license or other agreement. All of the assets of the Company
     and its  Subsidiaries  are free and clear of all Liens  (other  than  Liens
     permitted by Section 5(h) hereof).

          (g)   Securities   Matters.   Neither  the  Company  nor  any  of  its
     Subsidiaries  nor any agent  acting on the behalf of the  Company or any of
     its Subsidiaries has offered the Notes or any part thereof,  or any similar
     obligation  for sale to, or solicited any offers to buy such Notes,  or any
     part thereof,  or any similar  obligation from, any Person or Persons so as
     to bring the issue or sale of the Notes within the  provisions of Section 5


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     of the Securities Act of 1933, as amended,  and neither the Company nor any
     of its  Subsidiaries  will sell or offer  for sale any note or any  similar
     obligation of the Company or any Subsidiary to, or solicit any offer to buy
     any similar obligation of the Company or any Subsidiary from, any Person or
     Persons so as to bring the issue or sale of the Notes within the provisions
     of Section 5 of the Securities Act of 1933, as amended.

          (h)  Licenses  and  Permits.  The  Company and its  Subsidiaries  have
     procured and are now in possession  of all licenses or permits  required by
     federal,  state or local  laws for the  operation  of the  business  of the
     Company and its  Subsidiaries in each  jurisdiction  wherein the Company or
     any Subsidiary is now conducting or proposes to conduct business.

          (i) No  Defaults on  Indebtedness.  Neither the Company nor any of its
     Subsidiaries  is in default in the payment of the  principal of or interest
     on any  indebtedness  for  borrowed  money  nor  is in  default  under  any
     instrument  or agreement  under and subject to which any  indebtedness  for
     borrowed  money  has been  issued,  and no event  has  occurred  under  the
     provisions of any such  instrument  or agreement  which with or without the
     passing  of time or the  giving of notice,  or both,  constitutes  or would
     constitute an event of default thereunder.

          (j) Tax  Returns.  The  Company  and its  Subsidiaries  have filed all
     federal  and state  income  tax  returns  which,  to the  knowledge  of the
     officers of the Company,  are required to be filed, and have paid all taxes
     shown on said  returns and all  assessments  received by them to the extent
     that they have  become due.  The federal  income tax returns of the Company
     have  been  finally  determined  by  the  Internal  Revenue  Service  to be
     satisfactory (or have been closed by the applicable statute of limitations)
     for all years prior to and  including  the year ended 1994.  No claims have
     been asserted  against the Company in respect of Federal income tax returns
     for any subsequent year.

          (k) No Margin Stock.  Neither the Company nor any of its  Subsidiaries
     owns any Margin Stock and none of the  proceeds  received by the Company or
     any  Subsidiary  from the sale of the Notes will be used for the purpose of
     purchasing  or  carrying a Margin  Stock or for the  purpose of reducing or
     retiring  any  indebtedness  which was  originally  incurred  to purchase a
     Margin Stock or for any other purpose not permitted by Regulation U (12 CFR
     Part 207) of the Board of  Governors  of the  Federal  Reserve  System,  as
     amended from time to time.

          (l) ERISA Matters.  Each Plan of the Company and each ERISA  Affiliate
     in which any  employees of the Company or any ERISA  Affiliate  participate
     that is  subject  to any  provisions  of  ERISA is  being  administered  in
     accordance with the documents and instruments governing such Plan, and such
     documents and instruments are consistent with those provisions of ERISA and
     the Internal  Revenue Code which have become  effective and operative  with
     respect  to such  Plan as of the date of this  Agreement.  No such Plan has
     incurred any material  accumulated funding deficiency within the meaning of
     Section 302 of ERISA  (whether or not waived),  and neither the Company nor
     any ERISA  Affiliate  has incurred any material  liability  (including  any


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     material  contingent  liability)  to the PBGC in  connection  with any such
     Plan.  No such Plan nor any trust  created  thereunder  nor any  trustee or
     administrator thereof has engaged in a "prohibited  transaction" within the
     meaning  of ERISA or  Section  4975 of the  Internal  Revenue  Code and the
     issuance and sale of the Notes as contemplated hereby will not constitute a
     "prohibited transaction". No such Plan nor any trust created thereunder has
     been  terminated,  nor have there been any  "reportable  events" within the
     meaning of Section 4043 of ERISA with respect to any such Plan. Neither the
     Company nor any ERISA Affiliate contributes to or has any employees who are
     covered  by any  "multiemployer  plan," as such term is  defined in Section
     3(37) of  ERISA,  and  neither  the  Company  nor any ERISA  Affiliate  has
     incurred any withdrawal  liability  with respect to any such  multiemployer
     plan.

          (m) Brokers and Finders.  Neither the Company, any agent acting on its
     behalf nor any Person  controlling,  controlled by or under common  control
     with the Company has taken any action the effect of which would be to cause
     the  Purchasers to be liable for any  broker's,  finder's or agent's fee or
     commission  in  connection  with the  placement  of the  Notes or any other
     transactions  contemplated  by this  Agreement.  The Company  has  retained
     NatCity  Investments,  Inc. as its agent for  placement of the Notes and is
     solely responsible for any fees and expenses payable to such agent.

          (n) Use of Proceeds.  The Company  will use the net proceeds  from the
     sale of the Notes (i) to  retire  short  term  debt,  and (ii) for  general
     corporate purposes.

          (o)  Investment  Company  Act.  Neither  the  Company  nor  any of its
     Subsidiaries  is an "investment  company" or a company  "controlled"  by an
     "investment company" (as each of the quoted terms is defined or used in the
     Investment Company Act of 1940, as amended).

          (p) Public Utility. The Company is an operating public utility subject
     to the  jurisdiction  of the Public  Utilities  Commission  of Ohio and the
     Federal Communications Commission.

          (q) Full Disclosure.  Neither this Agreement, the financial statements
     referred to in Section 3(e) hereof, the Information  Memorandum dated March
     1998 and prepared by NatCity  Investments,  Inc.,  nor any other  document,
     certificate  or  instrument  delivered to the  Purchasers  on behalf of the
     Company or any of its  Subsidiaries  in  connection  with the  transactions
     contemplated  hereby  contains any untrue  statement of a material  fact or
     omits to state a material  fact  necessary in order to make the  statements
     contained therein not misleading.

          (r) Regulatory Approval.  The issue and sale of the Notes have, to the
     extent  required  by law,  been duly  authorized  by the  Public  Utilities
     Commission  of Ohio  which  authorization  is not  subject to any appeal or
     modification  which could affect the validity or terms of the Notes, and no
     other  consent,   exemption,   approval  or   authorization  by  any  other
     governmental  authority is required in  connection  with the  execution and
     delivery of this Agreement or the issue and sale of the Notes.



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          (s)  Existing  Debt  and  Restricted  Investments.  Exhibit  C  hereto
     correctly  describes  all Debt of the Company and Liens  securing  any such
     Debt  as of  June  1,  1998.  Exhibit  D  hereto  correctly  describes  the
     Restricted  Investments  of the Company as of March 31, 1998,  all of which
     were made prior to January 1, 1998.

SECTION 4. AFFIRMATIVE COVENANTS.

     The Company  covenants  and agrees that, so long as any amount shall remain
unpaid on any of the Notes, it will:

          (a) Payment. Duly and punctually pay or cause to be paid the principal
     of and interest on the Notes and will duly and punctually  perform or cause
     to be performed all things on its part or on the part of any  Subsidiary to
     be done or performed under this Agreement and the Notes.

          (b) Maintenance of Books and Records. At all times keep and cause each
     Subsidiary  to keep proper books of record and account in which full,  true
     and correct  entries will be made of their  transactions in accordance with
     generally  accepted  accounting  principles  applied on a consistent  basis
     throughout the periods involved.

          (c) Inspection of Books and Records.  At all  reasonable  times permit
     and cause  each  Subsidiary  to permit  the  holders of the Notes and their
     representatives  to  inspect  its books and  records  and to make  extracts
     therefrom and to inspect its properties and operations.

          (d)  Financial  Information.  From time to time furnish and cause each
     Subsidiary  to furnish the holders of the Notes with such  information  and
     statements as the holders of the Notes may  reasonably  request  concerning
     performance  by it of  the  covenants  and  agreements  contained  in  this
     Agreement and the Notes,  and with copies of all financial  statements  and
     reports that it shall send or make  available to its  stockholders;  and in
     the event that an Event of Default has occurred, and the Company shall have
     notified  the  holders of the Notes  that such  Event of  Default  has been
     corrected,  the  Company  shall,  upon  request of the  holders of at least
     66-2/3%  of  the  unpaid   principal  amount  of  the  Notes  at  the  time
     outstanding, for the purpose of showing that such Event of Default has been
     corrected,  furnish to the  holders of the Notes a signed  copy of an audit
     report or, if such  matter may be  covered in a special  report,  a special
     report prepared and certified by an independent certified public accountant
     selected  by the  Company  and  satisfactory  to the  holders of the Notes,
     confirming  that such Event of Default  has been  corrected.  All  expenses
     incurred  in  connection  with such report  shall be borne by the  Company.
     Nothing in this Section 4(d), however,  shall diminish,  defer, postpone or
     otherwise  limit the right of the  holders  of the Notes to take any action
     permitted by Section 7 hereof.

          (e)  Quarterly  Financial  Statements.  Furnish to the  holders of the
     Notes,  within 60 days after the close of each quarterly  accounting period
     in each fiscal year of the Company and its Subsidiaries, (i) a consolidated


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     balance sheet and  consolidated  statement of income and retained  earnings
     reflecting the financial  condition of the Company and its  Subsidiaries at
     the end of each such quarterly period and the results of operations  during
     such period, all in reasonable detail, and setting forth comparable figures
     for the same  accounting  period in the preceding  fiscal year,  and (ii) a
     separate balance sheet,  statement of income and retained earnings for each
     Subsidiary reflecting the financial condition of each Subsidiary at the end
     of such quarterly  period and the results of operation  during such period,
     all in reasonable detail, and setting forth comparable figures for the same
     accounting period in the preceding fiscal year.

          The Company shall also furnish to the holders of the Notes,  within 60
     days after the close of each  quarterly  accounting  period in each  fiscal
     year of Telcom, a consolidated balance sheet and consolidated  statement of
     income and retained earnings  reflecting the financial  condition of Telcom
     and its subsidiaries at the end of each quarterly period and the results of
     operations during such period,  all in reasonable detail, and setting forth
     comparable  figures for the same accounting  period in the preceding fiscal
     year.

          (f) Annual Financial Statements.  Furnish to the holders of the Notes,
     as soon as  available,  but in any event within 120 days after the close of
     each fiscal year of the Company, duplicate signed copies of an audit report
     prepared and certified (without qualification as to the scope of the audit)
     by Arthur  Andersen  & Company  or another  firm of  independent  certified
     public  accountants  of  national  standing  selected  by the  Company  and
     satisfactory  to the holders of the Notes,  which  report  shall  include a
     consolidated  and  consolidating  balance  sheet  of the  Company  and  its
     Subsidiaries  as at the end of such year,  consolidated  and  consolidating
     statements  of  income  and  retained  earnings  of  the  Company  and  its
     Subsidiaries and consolidated and consolidating statements of cash flows of
     the Company and its  Subsidiaries  reflecting  the  operations  during said
     year, all in reasonable detail and setting forth comparable figures for the
     preceding  fiscal year, which report shall be accompanied by a statement by
     such accounting  firm certifying that in making the examination  upon which
     such report was based,  no information  came to its attention  which to its
     knowledge  indicated  a  default  under  this  Agreement  had  occurred  or
     specifying any such default.

          The Company shall also furnish to the holders of the Notes, as soon as
     available,  but in any event within 120 days after the close of each fiscal
     year of Telcom,  duplicate  signed  copies of an audit report  prepared and
     certified  (without  qualification  as to the scope of the audit) by Arthur
     Andersen  &  Company  or  another  firm  of  independent  certified  public
     accountants of national standing selected by Telcom and satisfactory to the
     holders  of the  Notes,  which  report  shall  include a  consolidated  and
     accompanying  supplementary  consolidating  balance sheet of Telcom and its
     subsidiaries  as at the end of such  year,  consolidated  and  accompanying
     supplementary  consolidating  statements of income and retained earnings of
     Telcom and its subsidiaries and consolidated and accompanying supplementary
     consolidating  statements  of cash  flows of  Telcom  and its  subsidiaries
     reflecting  the operations  during said year, all in reasonable  detail and
     setting forth comparable figures for the preceding fiscal year.



                                       8
<PAGE>

          (g)  Financial  Certification.  At the  time  of the  delivery  to the
     holders of the Notes of the reports  referred to in Sections  4(e) and 4(f)
     hereof,  deliver to the  holders of the Notes a  certificate  signed by its
     chief financial officer,  certifying that (s)he has reviewed the provisions
     of this Agreement and stating,  in his or her opinion, if such be the fact,
     that the Company and its Subsidiaries  have not been and are not in default
     as to any of the provisions  contained in this Agreement,  or, in the event
     the Company or its  Subsidiaries  is or was in default,  setting  forth the
     details of such default.  Such certificate shall set forth the computations
     upon which such  officer  based the  conclusion  that the  Company  and its
     Subsidiaries  are and have been in compliance  with Sections 4(n) and 5(a),
     (b), (d), (h), (i) and (j) hereof.

          (h) Copies of Management  Letters,  etc. Furnish to the holders of the
     Notes,  promptly  after the receipt  thereof by the Company,  copies of all
     management  letters  or  similar  documents  submitted  to the  Company  by
     independent certified public accountants in connection with each annual and
     any interim audit of the accounts of the Company or its Subsidiaries.

          (i) Copies of Regulatory Reports. Furnish to the holders of the Notes,
     promptly after transmittal or filing thereof by the Company,  copies of all
     proxy statements, notices and reports as it shall send to its stockholders,
     copies of all registration  statements  (without  exhibits) and all reports
     which it files with the  Securities  and Exchange  Commission  or any other
     regulatory  agency,  other  than  routine  reports  filed  with  respect to
     employee benefit plans (excepting those annual reports with respect to each
     such plan  requested  by the  holders of the Notes in writing  pursuant  to
     Section 4(q) hereof).

          (j)  Corporate  Existence.  Maintain  and  cause  each  Subsidiary  to
     maintain  its  corporate  existence  in  good  standing  (except  that  the
     corporate  existence  of any  Subsidiary  may be  terminated  pursuant to a
     merger or consolidation permitted under Section 5(e) of this Agreement) and
     comply with all applicable laws and regulations of the United States and of
     each state thereof and of each political subdivision thereof and of any and
     all other governmental authorities.

          (k) Payment of Taxes and Claims.  Pay and cause each Subsidiary to pay
     before they become  delinquent (a) all taxes,  assessments and governmental
     charges  or levies  imposed  on the  Company,  any  Subsidiary  or upon the
     property  of the  Company or any  Subsidiary,  (b) all claims or demands of
     materialmen,  mechanics, carriers,  warehousemen,  landlords and other like
     persons which, if unpaid,  might result in the creation of a Lien or charge
     upon any  property  of the Company or any  Subsidiary;  and (c) all claims,
     assessments or levies  required to be paid by the Company or any Subsidiary
     pursuant to any agreement, contract, law, ordinance or governmental rule or
     regulation governing any pension, retirement, profit-sharing or any similar
     plan of the Company or any  Subsidiary,  provided  that the Company or such
     Subsidiary  shall have the right to contest in good faith,  by  appropriate
     proceedings  promptly initiated and diligently conducted which will prevent
     the forfeiture or sale of any property of the Company or such Subsidiary or


                                       9
<PAGE>

     any  material  interference  with the use  thereof  by the  Company or such
     Subsidiary,  the  validity,  amount or  imposition  of any of the foregoing
     items and upon such good faith contest to delay or refuse payment  thereof,
     if such  reserve  or  other  appropriate  provision,  if any,  as  shall be
     required by generally accepted  accounting  principles shall have been made
     therefor.

          (l)  Maintenance  of Properties  and Licenses.  Maintain and cause its
     Subsidiary  to maintain and keep its  properties  in good  repair,  working
     order and  condition,  and from time to time make all  needful  and  proper
     repairs,  renewals  and  replacements  so that the  business  carried on in
     connection  therewith may be properly and  advantageously  conducted at all
     times.  The  Company  will do or cause to be done all things  necessary  to
     preserve,  renew and keep in full force and effect  the  rights,  licenses,
     permits, agency agreements,  and trade names material to the conduct of its
     business and maintain and operate such  business  properly and  efficiently
     and in  substantially  the manner in which it is  presently  conducted  and
     operated.

          (m)  Insurance.  Maintain and cause each  Subsidiary  to maintain,  in
     financially sound insurance companies of recognized standing,  insurance of
     types and in amounts  usually  maintained  by similar  companies in similar
     businesses.

          (n) Net Worth. At all times during each twelve-month  period ending on
     March 31 in each year,  commencing with the  twelve-month  period ending on
     March 31, 1999,  maintain  Consolidated  Adjusted Net Worth in an amount at
     least equal to $20,000,000,  plus 25% of Consolidated  Net Income,  if any,
     determined on a cumulative basis for each fiscal year of the Company ending
     on or after  December  31,  1997 and prior to the  twelve-month  period for
     which  such   determination  is  being  made  (without  reduction  for  any
     Consolidated Net Loss incurred in any such fiscal year).

          (o) Notice of  Default.  Give the  holders of Notes  prompt  notice in
     writing of any  condition  or event which  constitutes  an Event of Default
     under Section 7 hereof,  or which,  after notice or lapse of time, or both,
     would constitute such an Event of Default.

          (p)  Exchange  of Notes.  At any time,  at its  expense  upon  written
     request of the holder of a Note and surrender of the Note for such purpose,
     issue new Notes in  exchange  therefor  in such  denominations  of at least
     $1,000,000 (or such smaller amount equal to the then outstanding  principal
     amount of such Note) as shall be specified  by the holder of such Note,  in
     an aggregate  principal amount equal to the then unpaid principal amount of
     the Note  surrendered  and  substantially  in the form of  Exhibit  A, with
     appropriate  insertions and variations,  and bearing interest from the date
     to which interest has been paid on the Note surrendered.

          (q) Qualified Retirement Plans. Cause each Plan of the Company and any
     ERISA  Affiliate  in  which  any  employees  of the  Company  or any  ERISA
     Affiliate  participate  that is subject to any  provisions of ERISA and the
     documents and instruments  governing each such Plan to be conformed to when
     necessary,  and  to be  administered  in a  manner  consistent  with  those


                                       10
<PAGE>

     provisions  of ERISA and the Internal  Revenue Code which may, from time to
     time,  become  effective and operative  with respect to such Plans;  and if
     requested by the holders of the Notes in writing from time to time, furnish
     to the  holders of the Notes a copy of any annual  report  with  respect to
     each such plan that the Company  files with the  Internal  Revenue  Service
     pursuant  to ERISA.  The  Company  will not,  and will not permit any ERISA
     Affiliate  to (i) engage in any  "prohibited  transaction,"  (ii) incur any
     "accumulated funding deficiency," whether or not waived (iii) terminate any
     Plan in a manner  which  could  result in the  imposition  of a Lien on any
     property  of  the  Company  or any  ERISA  Affiliate,  or  (iv)  incur  any
     withdrawal liability in connection with any "multiemployer plan."

SECTION 5. NEGATIVE COVENANTS.

     The Company  covenants  and agrees that so long as any amount  shall remain
unpaid on the Notes, it will not and will not permit any Subsidiary to:

          (a) Limitations on Funded Debt. Create,  assume,  incur,  guarantee or
     otherwise  become  liable in respect of any Funded  Debt other than (i) the
     Notes,  (ii) Funded Debt existing on the Closing Date and listed on Exhibit
     C hereto,  and (iii) Funded Debt of the Company to any Subsidiary or Funded
     Debt of any Subsidiary to the Company or to another  Subsidiary,  unless at
     the time such Funded Debt is incurred,  and after giving effect thereto and
     application  of the proceeds  thereof,  Consolidated  Funded Debt would not
     exceed 55% of Consolidated Total Capitalization.

          (b)  Limitations  on Funded Debt of  Subsidiaries.  In the case of any
     Subsidiary,  create, assume, incur, guarantee or otherwise become liable in
     respect  of any Funded  Debt  (other  than  Funded  Debt to the  Company or
     another Subsidiary),  unless at the time such Funded Debt is incurred,  and
     after giving effect thereto and the  application  of the proceeds  thereof,
     the  aggregate  amount of all such  Funded Debt of  Subsidiaries,  plus the
     aggregate  amount of all other Debt  secured by Liens  permitted by Section
     5(h)(ix) hereof, would not exceed 20% of Consolidated Adjusted Net Worth.

          (c) Subordination of Claims.  Subordinate or permit to be subordinated
     any claim  against,  or obligation of another Person held or owned by it to
     any other claim against, or obligation of, such other Person.

          (d) Sale of Assets.  Sell,  lease,  transfer or  otherwise  dispose of
     (collectively, a "Disposition"),  all or any part of its assets (other than
     sales or dispositions in the ordinary course of business) if either (i) the
     aggregate  amount of all  Dispositions  in any fiscal  year  exceeds 10% of
     Consolidated  Total  Assets  determined  as of the  end of the  immediately
     preceding  fiscal year,  or (ii) the aggregate  amount of all  Dispositions
     from and after the date of this Agreement exceed 25% of Consolidated  Total
     Assets determined as of the end of the immediately preceding fiscal year (a


                                       11
<PAGE>

     Disposition of assets  described in clause (i) or (ii) above is referred to
     herein as a "substantial part"), except: (i) any Subsidiary may sell, lease
     or  otherwise  dispose of, all or a  substantial  part of its assets to the
     Company or a  Subsidiary;  (ii) the  Company may sell,  lease,  transfer or
     otherwise  dispose of, all or a  substantial  part of its assets if the net
     proceeds  of such sales are used to  purchase  other  property of a similar
     nature of at least equivalent value within one year of such sale; and (iii)
     the Company may sell,  lease,  transfer  or  otherwise  dispose of all or a
     substantial part of its assets if the net proceeds of such sale are used to
     prepay Senior Debt (including the Notes) on a pro rata basis; provided that
     any  prepayment  of the Notes must be in  accordance  with the terms of and
     with the premium specified in Sections 2(a) and (b) hereof.

          (e)  Merger  and   Consolidation.   Merge  or  consolidate   with  any
     corporation  provided that (i) any Subsidiary may be merged or consolidated
     with the  Company  (if the Company is the  surviving  corporation)  or with
     another  Subsidiary  and (ii) the  Company  may merge or  consolidate  with
     another  corporation  if (A) the surviving  corporation  would be organized
     under the laws of the United States or any state thereof, (B) the surviving
     corporation  expressly  assumes the  obligations  of the Company under this
     Agreement  and the  Notes,  and (C)  immediately  following  the  merger or
     consolidation  and after  giving  effect  thereto (1) no event or condition
     would  exist  which,  with or  without  the lapse of time or the  giving of
     notice, or both, would constitute an Event of Default,  (2) the Company and
     its  Subsidiaries  would be  permitted  pursuant to Section  5(a) hereof to
     incur at least $1.00 of additional  Funded Debt,  and (3) the  Consolidated
     Adjusted  Net Worth of the  Company and its  Subsidiaries  would be no less
     than  the   Consolidated   Adjusted  Net  Worth  of  the  Company  and  its
     Subsidiaries immediately prior to the merger or consolidation.

          (f) Maintenance of Present Business. Engage in any business other than
     Existing Lines of Business, nor purchase or invest, directly or indirectly,
     in any  substantial  amount of  assets or  property  other  than  assets or
     property useful and to be used in Existing Lines of Business.

          (g)  Transactions  with  Affiliates.  Enter  into or be a party to any
     transaction  or  arrangement   with  any  Affiliate   (including,   without
     limitation, the purchase from, sale to or exchange of property with, or the
     rendering of any service by or for, any Affiliate),  except in the ordinary
     course of and pursuant to the  reasonable  requirements  of the business of
     the Company or its  Subsidiaries and upon fair and reasonable terms no less
     favorable to the Company or any of its Subsidiaries  than would be obtained
     in a  comparable  arm's-length  transaction  with a  Person  other  than an
     Affiliate.

          (h) Permitted Liens. Create, assume, or suffer to exist any Liens upon
     any of its  property or assets,  whether now owned or  hereafter  acquired,
     except:

               (i) Liens for taxes or assessments or other governmental  charges
          or levies  not yet due or which are being  contested  in good faith by
          appropriate  proceedings promptly initiated and diligently  conducted,
          if such reserve or other  appropriate  provision,  if any, as shall be


                                       12
<PAGE>

          required by generally accepted  accounting  principles shall have been
          made therefor;

               (ii) other Liens  incidental to the conduct of their  business or
          the ownership of their  respective  properties which were not incurred
          in connection  with borrowing of money or the obtaining of advances or
          credit and which do not in the aggregate  materially  detract from the
          value of their properties or materially  impair the use thereof in the
          operation of the business;

               (iii)  Liens on assets of any  Subsidiary  securing  Debt of such
          Subsidiary to the Company;

               (iv)  Liens (i) on  property  of the  Company  or any  Subsidiary
          securing all or any part of the purchase price or cost of construction
          of such property  created  contemporaneously  with, or within 270 days
          after,  the  acquisition  or completion of  construction,  (ii) on any
          property existing at the time of acquisition thereof by the Company or
          any  Subsidiary,  and (iii)  existing on the property of any Person at
          the time such  Person is  acquired  (whether  by  purchase of stock or
          assets,  by merger or  consolidation,  or otherwise) by the Company or
          any  Subsidiary;  provided that (A) none of such Liens shall  encumber
          any other property or assets of the Company and its Subsidiaries,  and
          (B) the  principal  amount of the Debt  secured by any such Lien shall
          not  exceed  100% of the fair  market  value of the  property  subject
          thereto at the time such Lien was created;

               (v)  presently  existing  Liens  described  in  Exhibit  C hereto
          securing  existing Debt described in Exhibit C, and any  replacements,
          extensions   or  renewals  of  such  Debt;   provided   that  no  such
          replacement,  extension or renewal shall increase the principal amount
          thereof;

               (vi) Liens of or resulting  from any judgment or award,  the time
          for the  appeal or  petition  for  rehearing  of which  shall not have
          expired,  or in respect of which the Company or a Subsidiary  shall at
          any time in good faith be  prosecuting  an appeal or proceeding  for a
          review and in respect of which a stay of execution pending such appeal
          or proceeding for review shall have been secured;

               (vii) Liens  incurred in  connection  with  obtaining or perform.
          government contracts;

               (viii) Liens on any property of the  Company;  provided  that the
          Company  shall have  granted to the  holders of the Notes a pari passu
          Lien on the same  property,  and the  holders of any such Lien and the
          holders  of  the  Notes  shall  have  entered  into  an  intercreditor
          agreement in form and substance reasonably satisfactory to the holders
          of the Notes providing for such pari passu ranking; and



                                       13
<PAGE>

               (ix) Liens in addition to those  permitted by clauses (i) through
          (viii) above, securing Debt of the Company or any Subsidiary, provided
          that at the time of the incurrence of any such Lien the sum of (i) the
          aggregate  principal  amount of all Debt secured by Liens permitted by
          this clause  (ix),  plus (ii) the  aggregate  amount of Funded Debt of
          Subsidiaries  incurred within the  limitations of Section 5(b),  shall
          not exceed 20% of Consolidated Adjusted Net Worth.

          (i) Restricted Payments and Restricted Investments.

               (1)  Declare  or  make,  or  incur  any  liability  to  make  any
          Restricted Payments or Restricted Investments, except:

                    (A) a Subsidiary may pay dividends to the Company; and

                    (B) subject to the limitations in clauses (2) and (3) below,
               the Company and its Subsidiaries may make Restricted Payments and
               Restricted  Investments,  provided that immediately  after giving
               effect to any such Restricted  Payment or Restricted  Investment,
               (x) no Event of Default or event  which with the  passing of time
               or the giving of notice,  or both,  would  constitute an Event of
               Default  shall exist,  (y) the Company  would be able to incur at
               least $1.00 of  additional  Funded Debt pursuant to Section 5(a),
               and (z) the  aggregate  amount  of all  Restricted  Payments  and
               Restricted  Investments  made on or after  January 1, 1998 to and
               including  the  date of such  Restricted  Payment  or  Restricted
               Investment would not exceed the sum of (i) $3,000,000,  plus (ii)
               60% of any Cumulative  Consolidated Net Income,  minus (iii) 100%
               of any  Cumulative  Consolidated  Net  Loss,  plus  (iv)  the net
               proceeds to the Company from any  issuance of capital  stock from
               and after January 1, 1998;

               (2) In addition to the limitations contained in clause (1) above,
          from January 1, 1997 through  December 31, 1998, the Company shall not
          increase the  aggregate  quarterly  dividend on its common stock above
          $710,000; and

               (3) In addition to the limitations contained in clause (1) above,
          the aggregate amount of all Restricted  Investments of the Company and
          its  Subsidiaries  outstanding at any time on or after January 1, 1998
          shall not exceed $2,500,000.

     In valuing any  Investments for the purpose of applying the limitations set
forth in this Section  5(i),  Investments  shall be taken at the  original  cost
thereof,  without  allowance for any subsequent  write-offs or  appreciation  or
depreciation therein, but less any amount repaid or recovered in cash on account
of capital or principal.



                                       14
<PAGE>

          (j)  Fixed  Charges.  Permit,  as of the end of each  fiscal  quarter,
     Consolidated  Net Income  Available for Fixed  Charges for the  immediately
     preceding  twelve-month  period to be less than 250% of Fixed  Charges  for
     such twelve-month period.

          (k) Sale of Accounts.  Sell with recourse,  discount or otherwise sell
     to an Affiliate any notes  receivable or accounts  receivable for an amount
     less than the face amount thereof,  less a reserve factor for credit losses
     adjusted from time to time to reflect actual credit loss experience.

          (l) Guaranties; Etc. Be or become liable in respect of any Guaranty of
     any  obligation  of any  Affiliate,  or grant any  security  interest in or
     otherwise  pledge  any  of its  assets  to  secure  any  obligation  of any
     Affiliate.

SECTION 6. CONDITIONS PRECEDENT.

     The  obligations  of the  Purchasers to purchase the Notes,  as provided in
Section I hereof, shall be subject to the satisfaction, on or before the Closing
Date, of the following conditions.

          (a) The representations  and warranties  contained in Section 3 hereof
     shall be true and correct as of the Closing Date;  the Company shall not be
     in default with respect to any of the  provisions  hereof,  and there shall
     exist no event which,  with the passage of time or the giving of notice, or
     both, would constitute such a default; and the Company shall have delivered
     to the  Purchasers a  certificate  signed by a  responsible  officer of the
     Company to such effects.

          (b) The Purchasers shall have received from Squire, Sanders & Dempsey,
     counsel  for  the  Company,  a  favorable  opinion  in form  and  substance
     satisfactory  to the Purchasers as to all matters  specified in Exhibit E-1
     hereto  and  such  other  matters   incident  to  the  transaction   herein
     contemplated as the Purchasers may reasonably request.

          (c) The  Purchasers  shall have received  from their special  counsel,
     Chapman and Cutler, a favorable opinion in form and substance  satisfactory
     to the Purchasers, as to all matters specified in Exhibit E-2 hereto and as
     to such other matters  incident to the transaction  herein  contemplated as
     the Purchasers may reasonably request.

          (d) The  Purchasers  shall  have  received a Uniform  Commercial  Code
     Search and  judgment  and tax lien  searches  against  the Company and each
     Subsidiary  from the States of Ohio and every other state as the Purchasers
     may reasonably request,  dated as of a date no more than fifteen days prior
     to the Closing Date,  certified by a reporting service  satisfactory to the
     Purchasers,  and  disclosing  no Liens  other  than those  permitted  under
     Section 5(h) of this Agreement.

          (e) The Company shall have provided the Purchasers  with copies of all
     approvals from the Public Utilities  Commission of Ohio and any other state


                                       15
<PAGE>

     or federal  governmental agency or agencies from whom regulatory  approvals
     are necessary for the consummation of all of the transactions  contemplated
     hereby and which approvals are not subject to appeal or modification  which
     could affect the validity or terms of the Notes.

          (f)  Neither  the Company  nor any  Subsidiary  shall have  suffered a
     material adverse change in financial  condition,  nor shall there exist any
     material  action,  suit or proceeding  pending,  or to the knowledge of the
     Company  threatened,  against  the  Company nor any  Subsidiary  which,  if
     decided adversely to the Company or any Subsidiary, would have a materially
     adverse  effect  upon the  Company or any  Subsidiary  or upon any of their
     businesses or properties.

          (g) All  proceedings  to be taken in connection  with the  transaction
     contemplated by this Agreement and all documents  incident thereto shall be
     satisfactory  in form and substance to the Purchasers and their counsel and
     the  Purchasers  shall  have  received  copies of all  documents  which the
     Purchasers may reasonably request.

SECTION 7. DEFAULTS.

     If one or more Events of Default shall occur, that is to say, if

          (a) default shall be made in the punctual  payment of the principal of
     or  premium,  if any,  on any of the Notes  when due,  whether  by  regular
     installment, upon prepayment, by acceleration, at maturity or otherwise; or

          (b)  default  shall  have been  made in the  punctual  payment  of any
     interest on any of the Notes when due, whether by regular installment, upon
     prepayment,  by  acceleration  at maturity or  otherwise,  and such default
     shall have continued for a period of five days; or

          (c) the Company or any Subsidiary defaults in any payment of principal
     of or interest on any other obligation for borrowed money beyond any period
     of grace provided with respect  thereto or in the  performance of any other
     agreement,  term or condition  contained in any  agreement  under which any
     such  obligation  is created if the effect of such default is to cause,  or
     permit  the  holder or  holders  of any  obligation  of the  Company or any
     Subsidiary in excess of  $1,000,000  (or a trustee on behalf of such holder
     or holders)  to cause,  such  obligation  to become due prior to its stated
     maturity; or

          (d) an order for relief  shall be entered  in any  Federal  Bankruptcy
     proceeding  in which  the  Company  or any  Subsidiary  is the  debtor;  or
     bankruptcy, receivership,  insolvency, reorganization, relief, dissolution,
     liquidation or other similar  proceedings shall be instituted by or against
     the  Company or any  Subsidiary  or all or any part of the  property of the
     Company or any Subsidiary  under the Federal  Bankruptcy  Code or any other
     law of the United States or any bankruptcy or competent jurisdiction; or



                                       16
<PAGE>

          (e) the  Company or any  Subsidiary  shall have  become  insolvent  or
     unable to pay its debts as they  mature,  cease  doing  business as a going
     concern, make an assignment for the benefit of creditors,  admit in writing
     its  inability  to pay its  debts  as they  become  due,  or if a  trustee,
     receiver or liquidator shall be appointed for the Company or any Subsidiary
     or for  any  substantial  portion  of the  assets  of  the  Company  or any
     Subsidiary; or

          (f) default  shall be made in the  performance  or  observance  of any
     covenant contained in Section 5 of this Agreement; or

          (g) default  shall be made in the  performance  or  observance  of any
     other of the terms,  covenants or  conditions  of this  Agreement  and such
     default  shall  continue for a period of thirty days after  written  notice
     thereof shall have been given by the holders of Notes to the Company; or

          (h) final  judgments  or orders for the  payment of money in excess of
     $1,000,000  in the aggregate  shall be rendered  against the Company or any
     Subsidiary and such judgments or orders shall remain unsatisfied,  unstayed
     and  unbonded  for a period of 30 days  after the date  such  judgments  or
     orders are required to be paid; or

          (i) if any  representation or warranty  contained in this Agreement or
     in any other  document  supplied  to the holders of Notes by the Company or
     its Subsidiary in connection with this transaction proves to be false as of
     the time this Agreement was made (provided  that, if the Company shall have
     given the holders of the Notes written notice that any such  representation
     or warranty  was false at the time this  Agreement  was made,  which notice
     shall   describe   the  facts  giving  rise  to  the  breach  of  any  such
     representation  or  warranty,  and the  holders or the Notes shall not have
     declared an Event of Default under this clause (I) based on the information
     contained  in the notice  from the Company  within  sixty (60) days of such
     notice,  then the  holders of the Notes  shall be deemed to have waived any
     Event of Default under this clause (I) based on the  information  contained
     in the notice from the Company),

then  the  holder  of the Note if only one  Note  shall be  outstanding,  or the
holders of at least  two-thirds  of the principal  amount of the Notes,  if more
than one Note shall be  outstanding,  may at its or their  option,  by notice in
writing to the  Company,  declare the Note or all of the Notes,  as the case may
be, to be forthwith due and payable and thereupon the Note, or all of the Notes,
shall be and become due and payable,  together with interest accrued thereon and
the premium  specified  in Section  2(a)  (provided  that if an Event of Default
results from the filing of a voluntary or involuntary petition in any bankruptcy
proceeding  in which the  Company or any  Subsidiary  is the  debtor,  the Notes
thereupon  shall  immediately  become due and  payable,  with  interest  accrued
thereon  and the  premium  specified  in Section  2(a)  hereof  (whether  or not
prepayment would then be permitted by said Section 2(a), without any notice from
the holders of the Notes or otherwise), and the holder or holders of the Note or


                                       17
<PAGE>

Notes may take any  action or  proceeding  at law or in equity  which it or they
deem  advisable  for the  protection  of its or their  interests  to collect and
enforce  payment,  and the  Company  shall  pay all  expenses,  court  costs and
reasonable  attorneys'  fees incurred in  connection  with or arising out of any
default hereunder.

SECTION 8. PAYMENTS ON AND REGISTRATION AND TRANSFER OF NOTES.

     The Company agrees that it will make payment of the principal of,  premium,
if any and  interest  on the Notes by wire  transfer  of  immediately  available
federal funds with sufficient information to identify the source and application
of  funds  to each of the  Purchasers  in  accordance  with  the  wire  transfer
instructions  set forth in  Appendix I hereto,  or to such other  accounts or in
such  other  manner as may from time to time be  designated  by the  holder of a
Note,  without  presentment  of the Notes and without the rendering of any bills
therefor. The Company shall keep at its principal office a register in which the
Company shall provide for the  registration of the Notes and of transfers of the
Notes (the "Note  Register").  Upon  surrender  of any Note for  transfer at the
office of the Company, the Company shall execute and deliver, in the name of the
designated  transferee  a new Note in a  principal  amount  equal to the  unpaid
principal  amount of, and dated the date to which interest has been paid on, the
Note so surrendered.  When a Note shall be presented or surrendered for transfer
it shall be duly endorsed, or be accompanied by a written instrument of transfer
duly executed, by the holder thereof or his attorney duly authorized in writing.
The  Company  may treat the Person in whose name the Note is  registered  on the
Note  Register as the owner of the Note for the purpose of receiving  payment of
principal of and interest on the Note and for all other purposes and the Company
shall not be affected by notice to the contrary.

SECTION 9. EXPENSES.

     The  Company  agrees,  whether  or not the  purchase  of the  Notes  herein
contemplated  shall be  consummated,  to pay and save  the  Purchasers  harmless
against  liability  for the  payment of all  out-of-pocket  expenses  arising in
connection  with this  transaction  including any  documentary  stamp taxes (and
including interest and penalties, if any), which may be determined to be due and
payable  with  respect to the  execution  and  delivery  of the  Notes,  and the
reasonable  fees and  expenses of counsel to the  Purchasers.  The Company  also
agrees to pay, and to save the  Purchasers  harmless  against  liability for the
payment of, the  reasonable  fees and expenses of counsel to the  Purchasers  in
connection with any documentation and related services arising after the Closing
Date in  connection  with  the  preparation  of  waivers  or  amendments  of any
provisions of this Agreement and the Notes.  In addition,  the Company agrees to
pay, and to save the holders of the Notes  harmless  against,  all  brokerage or
finders fees incurred in the transaction contemplated by this Agreement.



                                       18
<PAGE>

SECTION 10. DELIVERY OF DOCUMENTS; PRO RATA PAYMENTS; AMENDMENTS AND CONSENTS.

          (a)  Delivery  of  Documents.  All  notices,  certificates,  requests,
     statements and other documents required or permitted to be delivered to the
     Purchasers  or the holders of Notes by any  provision  hereof shall also be
     delivered to each holder of a Note.

          (b)  Pro  Rata  Payments.   All  interest  payments  and  payments  or
     prepayments  of  principal  shall be made and applied pro rata on all Notes
     outstanding in accordance  with the  respective  unpaid  principal  amounts
     thereof.

          (c)  Amendments and Consents.  The registered  holder or holders of at
     least  two-thirds of the unpaid  principal  amount of the Notes at the time
     outstanding may by agreement with the Company amend this Agreement, and any
     consent, notice, request or demand required or permitted to be given by the
     Purchasers  or the holders of the Notes by any  provision  hereof  shall be
     sufficient if given by the holder or holders of at least  two-thirds of the
     unpaid  principal  amount  of Notes at the time  outstanding  except  that,
     without  the  written  consent  of the  holders  of all  Notes  at the time
     outstanding,  no amendment to this  Agreement  shall extend the maturity of
     any Note, or alter the rate of interest or any premium payable with respect
     to any Note,  or affect the amount of any required  prepayments,  or reduce
     the  proportion of the principal  amount of the Notes required with respect
     to any consent.

SECTION 11. INVESTMENT PURPOSE.

     Each Purchaser  represents  that its acquisition of the Notes by it will be
for investment and not with a view to resale in connection with any distribution
thereof, it being understood,  however,  that the disposition of the property of
each Purchaser shall at all times be within its control.

SECTION 12. DEFINITIONS.

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

     "Additional Funded Debt" of any Person shall mean the lowest average amount
of Current Debt of such Person  outstanding  during any period of 30 consecutive
days which occurs during the 365-day  period  immediately  preceding any date of
determination thereof.

     "Affiliate" shall mean any Person (i) which directly or indirectly  through
one or more  intermediaries  controls,  or is controlled  by, or is under common
control with, the Company,  (ii) which  beneficially owns or holds 5% or more of
any class of the voting stock of the  Company,  (iii) 5% or more of any class of
the voting stock (or in the case of a Person which is not a  corporation,  5% or
more of the  equity  interest)  of  which is  beneficially  owned or held by the
Company or a Subsidiary,  (iv) any director,  officer of employee of the Company
or any  Subsidiary  or other Person  described  in clauses  (i),  (ii) and (iii)


                                       19
<PAGE>

hereof, and (v) any spouse,  lineal descendant or ascendant,  brother or sister,
by blood, adoption or marriage, of any Person listed in clauses (i) through (iv)
hereof, and spouses of such ascendants,  descendants,  brothers and sisters. The
term "control"  means the  possession,  directly or indirectly,  of the power or
cause the direction of the management and policies of a Person,  whether through
the ownership of voting stock, by contract or otherwise.

     "Capital  Lease" shall mean any lease of property which in accordance  with
generally accepted  accounting  principles should be capitalized on the lessee's
balance sheet or for which the amount of the asset and  liability  thereunder as
if so capitalized should be disclosed in a note to such balance sheet.

     "Capitalized Lease Obligations" shall mean lease payment  obligations under
Capital Leases.

     "Closing Date" shall have the meaning set forth in Section l(a).

     "Consolidated  Adjusted  Net Worth" shall mean  Consolidated  Stockholders'
Equity less (i) goodwill and other  intangible  assets created after the Closing
Date, and (ii) all Investments in Affiliates.

     "Consolidated Funded Debt" shall mean, as of any date, the aggregate amount
of  all  Funded  Debt  of the  Company  and  its  Subsidiaries  determined  on a
consolidated basis in accordance with generally accepted  accounting  principles
consistent  with those  followed  in  preparation  of the  financial  statements
referred to in Section 3(e).

     "Consolidated  Net Income (Net Loss)" shall mean,  for any period,  the net
after-tax  income  (or  net  loss)  of the  Company  and its  Subsidiaries  on a
consolidated basis determined in accordance with generally  accepted  accounting
principles  consistent  with those  followed  in  preparation  of the  financial
statements  referred to in Section 3(e),  excluding (i) extraordinary  gains and
losses and (ii) any equity interest of the Company in the unremitted earnings of
any corporation which is not a Subsidiary.

     "Consolidated  Net Income  Available for Fixed Charges" shall mean, for any
period,  Consolidated  Net Income for such period,  plus (i) all  deductions for
taxes levied in respect of income deducted in computing  Consolidated Net Income
for such period,  and (ii) Fixed Charges deducted in computing  Consolidated Net
Income for such period.

     "Consolidated  Stockholders' Equity" shall mean Consolidated  Stockholders'
Equity  of the  Company  and its  Subsidiaries  determined  in  accordance  with
generally accepted accounting principles.

     "Consolidated Total Assets" shall mean, as of any date, the total amount of
all assets of the  Company and its  Subsidiaries  determined  on a  consolidated
basis in accordance with generally accept accounting  principles consistent with
those followed in preparation of the financial statements referred to in Section
3(e).



                                       20
<PAGE>

     "Consolidated  Total  Capitalization"  shall  mean the sum of  Consolidated
Adjusted Net Worth and Consolidated Funded Debt.

     "Cumulative Consolidated Net Income" shall mean the excess, if any, of:

               (i) the sum of (A)  Consolidated  Net  Income,  if any,  for each
          completed fiscal year of the Company commencing on or after January 1,
          1998 and (B)  Consolidated  Net  Income,  if any,  for each  completed
          quarter  ending after the end of the most  recently  completed  fiscal
          year of the Company; over

               (ii)  the sum of (A)  Consolidated  Net  Loss,  if any,  for each
          completed fiscal year of the Company commencing on or after January 1,
          1998 and (B) Consolidated Net Loss, if any, for each completed quarter
          ending after the end of the most recently completed fiscal year of the
          Company.

     "Cumulative Consolidated Net Loss" shall mean the excess, if any, of:

               (i) the sum of (A)  Consolidated  Net  Loss,  if  any,  for  each
          completed fiscal year of the Company commencing on or after January 1,
          1998 and (B) Consolidated Net Loss, if any, for each completed quarter
          ending after the end of the most recently completed fiscal year of the
          Company; over

               (ii) the sum of (A)  Consolidated  Net Income,  if any,  for each
          completed fiscal year of the Company commencing on or after January 1,
          1998 and (B)  Consolidated  Net  Income,  if any,  for each  completed
          quarter  ending after the end of the most  recently  completed  fiscal
          year of the Company.

     "Current  Debt" of any Person shall mean all Debt of such Person other than
Funded Debt.

     "Debt" shall mean (i)  indebtedness  for borrowed money or for the deferred
purchase price of property or services, including without limitation Capitalized
Lease Obligations,  but excluding trade accounts payable and accrued liabilities
arising  in the  ordinary  course  of  business,  (ii)  any  other  indebtedness
evidenced by a promissory note or other instrument, (iii) the face amount of all
letters of credit issued for the account of any Person and, without  duplication
all drafts drawn  thereunder,  (iv) any  indebtedness  for borrowed money or the
deferred  purchase  price  of  property  or  services  secured  by a Lien on any
property of any Person,  whether or not such indebtedness has been assumed,  and
(v) Guaranties or other contingent obligations for any indebtedness described in
clauses (i) through (iv).

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974 and
the regulations adopted pursuant thereto.

     "ERISA  Affiliate"  shall  mean  each  trade or  business  (whether  or not
incorporated) which,  together with the Company,  would be deemed to be a single
employer within the meaning of Section 4001(b)(1) of ERISA.



                                       21
<PAGE>

     "Event of Default" shall have the meaning set forth in Section 7.

     "Existing Lines of Business" shall mean operations in the voice,  video and
data communications industry.

     "Fixed  Charges"  shall mean,  for any period,  all  consolidated  interest
expense on all Debt and all rental expense on all operating  leases  deducted in
computing Consolidated Net Income for such period, determined in accordance with
generally  accepted  accounting  principles  consistent  with those  followed in
preparation of the financial statements referred to in Section 3(e).

     "Funded  Debt" shall mean any Debt payable more than one year from the date
of its  creation  (or which is  renewable at the option of the obligor to a date
more than one year from the date of its creation), including the current portion
thereof,  which under generally accepted  accounting  principles is shown on the
balance sheet as a liability,  including but not limited to the Notes,  any Debt
outstanding  under  a  revolving  credit  or  similar  agreement  providing  for
borrowings  (and  renewables and extensions  thereof) over a period of more than
one year  notwithstanding  that any such Debt may be payable on demand or within
one year after the creation  thereof,  any Capitalized  Lease  Obligations,  any
Additional  Funded Debt and any Guaranty  with respect to Funded Debt of another
Person.

     "Guaranties"  by  any  Person  shall  mean  all  obligations   (other  than
endorsements  in the ordinary  course of business of negotiable  instruments for
deposit or collection) of such Person  guaranteeing,  or in effect guaranteeing,
any indebtedness, dividend or other obligation of any other Person (the "primary
obligor")  in any manner,  whether  directly or  indirectly  including,  without
limitation,  all  obligations  incurred  through  an  agreement,  contingent  or
otherwise,  by such Person:  (i) to purchase such  indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of such  indebtedness or obligation or (y)
to maintain  working  capital or other balance  sheet  condition or otherwise to
advance or make available funds for the purchase or payment of such indebtedness
or  obligation,  (iii) to lease  property  or to  purchase  securities  or other
property or services primarily for the purpose of payment of the indebtedness or
obligation,  or (iv)  otherwise  to  assure  the  owner of the  indebtedness  or
obligation of the primary obligor against loss in respect thereof.

     "Investments" shall mean with respect to any Person all investments by such
Person,  in cash or by delivery of property,  made directly or indirectly in any
property or assets or in any other Person,  whether by  acquisition of shares of
capital  stock,  Debt  or  other  obligations  or  by  loan,  advance,   capital
contribution  or  otherwise;  provided,  that  "Investments"  shall  not mean or
include (i) investments by such Person in property to be used or consumed in the
ordinary course of business, (ii) receivables arising from the sale of goods and
services in the ordinary course of business, and (iii) the billing or collection
of the accounts receivable of such Person by another on behalf of such Person.

     "Liens" shall mean as to any Person, any mortgage,  lien,  pledge,  adverse
claim,  charge,  security  interest  or other  encumbrance  of any kind  whether


                                       22
<PAGE>

presently  effective  or  springing  in or on, or any  interest  or title of any
vendor,  lessor,  lender  or  other  secured  party to or of such  Person  under
conditional  sale or other  title  retention  agreement  or  Capital  Lease with
respect to, any property or asset of such Person,  or the signing or filing of a
financing  statement  which names such  Person as debtor,  or the signing of any
security  agreement  authorizing any other party as the secured party thereunder
to file any financing statement.

     "Margin  Stock"  shall have the  meaning  ascribed  to that term in Section
207.2(i)  of  Regulation  U (12 CFR Part 207) of the Board of  Governors  of the
Federal Reserve Board.

     "Note" or "Notes" shall have the meaning set forth in Section l(a).

     "Note Register" shall have the meaning set forth in Section 8.

     "PBGC"  shall mean the Pension  Benefit  Guaranty  Corporation  established
under ERISA, or any successor thereto.

     "Permitted Investments" shall mean (i) Investments in direct obligations of
the United States government  maturing within one year from the date of purchase
thereof;  (ii)  certificates  of  deposit,  repurchase  agreements,  and bankers
acceptances with final maturities of one year or less issued by U.S.  commercial
banks having capital and surplus  aggregating not less than $100,000,000;  (iii)
if so permitted by law,  savings  deposits in national banks and federal savings
and loan associations having capital stock and surplus aggregating not less than
$100,000,000,  provided that the  aggregate of all such savings  deposits at any
one bank or savings and loan association  shall not exceed $150,000 at any time;
(iv) commercial paper rated A-1 or P-1 by recognized rating services;  (v) money
market preferred stock rated "A" or above by recognized  rating  services;  (vi)
tax exempt,  floating  rate option  tender  bonds,  backed by a letter of credit
issued  by a bank  rated AA by  Standard  & Poor's  or Aa by  Moody's  Investors
Service;  (vii)  loans by the  Company to  Subsidiaries  engaged  in  businesses
similar  to the  Company's  Existing  Lines  of  Business  constituting  general
obligations  of  such  Subsidiaries,  provided  such  obligations  shall  not be
subordinated to any other obligations of any  Subsidiaries;  (viii) loans by any
Subsidiary to the Company;  (ix) equity  Investments in Subsidiaries  engaged in
businesses similar to the Company's  Existing Lines of Business;  and (x) travel
and expense  advances of the Company and its  Subsidiaries  to their  respective
officers and employees in the ordinary course of business.

     "Person"  shall  mean  an  individual,  partnership,  corporation,  limited
liability  company,  trust or  unincorporated  organization,  or a government or
agency or political subdivision thereof.

     "Plan"  shall mean any  employee  pension  benefit or other plan within the
meaning  of Section  3(2) of ERISA  that is subject to Title IV of ERISA,  other
than any "multiemployer plan" within the meaning of Section 3(37) of ERISA.

     "Prohibited Transaction" shall have the meaning set forth in Section 2(b).



                                       23
<PAGE>

     "Purchaser"  or  "Purchasers"  shall  have  the  meaning  set  forth in the
preamble.

     "Restricted  Investments"  shall mean all Investments  other than Permitted
Investments.

     "Restricted Payments" shall mean (i) payment or declaration of any dividend
or any other  distribution  on account of any class of stock  (including  in the
term "stock" any warrant or option or other right to purchase  such stock of the
Company or any  Subsidiary)  of the  Company  or any  Subsidiary  excluding  any
distribution  which may be  payable  solely in common  stock of the  corporation
making the  distribution,  (ii) direct or indirect  redemptions,  purchases,  or
other  acquisitions  of shares of stock of the  Company,  and (iii) any optional
prepayment  by the Company or any  Subsidiary  of any  Subordinated  Debt of the
Company or any Subsidiary.

     "Senior  Debt"  shall  mean all  Funded  Debt  which  does  not  constitute
Subordinated Debt.

     "Subordinated  Debt" shall mean all Debt which is expressly  subordinate in
right of  payment  pursuant  to its  terms to the  Notes,  whether  or not it is
subordinated to other indebtedness of the Company.

     "Subsidiary"  or  "Subsidiaries"  shall  mean the  corporations  listed  on
Exhibit B hereto, and any other corporation or corporations more than 50% of the
outstanding  capital stock of every class of which is hereafter owned,  directly
or indirectly, by the Company.

     "Telcom" shall mean Horizon Telcom, Inc., an Ohio corporation and corporate
parent of the Company.

     "Total  Capitalization" shall mean, as of any date, the sum of Consolidated
Adjusted Net Worth and Funded Debt.

     "Treasury Yield Percentage" shall mean, as of any date, (i) the most recent
weekly  average  yield on actively  traded U.S.  Treasury  obligations  having a
constant  maturity  equal to the average life of the  payments of principal  and
interest  that are avoided by any  prepayment  as determined by reference to the
week-ending figures published in the most recent Statistical Release which shall
have become  available  at least two  business  days prior to the date fixed for
prepayment,  or  (ii)  if a  Statistical  Release  is not  then  published,  the
arithmetic  average  (rounded  to the nearest  .01%) of the per annum  yields to
maturity for each business day during the week ending at least two business days
prior to the date as of which such  determination  is made, of all the issues of
actively traded marketable United States Treasury fixed interest rate securities
with a constant  maturity equal to the average life of the payments of principal
and interest that are avoided by any prepayment  (excluding all such  securities
which can be surrendered at the option of the holder at face value in payment of
any Federal  estate tax,  which  provide for tax benefits to the holder or which
were issued at substantial discount) as published in The Wall Street Journal or,
if The Wall Street Journal shall cease such publication,  based on average asked
prices  (or  yields)  as  quoted  by  each of  three  United  States  government
securities  dealers of recognized  national  standing selected by the holders of


                                       24
<PAGE>

the Notes.  If the average life of the payments of principal  and interest  that
are avoided by any  prepayment  is not equal to the constant  maturity of a U.S.
Treasury obligation for which a weekly average yield is published or quoted, the
Treasury Yield  Percentage shall be calculated by linear  interpolation  (to the
nearest  one-twelfth  of a year) from the most recent weekly  average  yields of
actively traded U.S. Treasury obligations for which such yields are published or
quoted for the two maturities most closely  corresponding  to such average life;
provided,  however,  that if the average life of the  payments of principal  and
interest that are avoided by any  prepayment is less than one year, the Treasury
Yield  Percentage  shall equal the most recent weekly average yield published or
quoted on actively traded U.S. Treasury  obligations with a constant maturity of
one year.

     "Voting  Stock"  shall  mean  capital  stock of any class or  classes  of a
corporation  having power under ordinary  circumstances  to vote for election of
members of the board of directors  of such  corporation,  or persons  performing
similar functions.

SECTION 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     All representations  and warranties  contained herein or made in writing by
the Company in connection  herewith  shall survive the execution and delivery of
this Agreement and of the Notes.

SECTION 14. SUCCESSORS AND ASSIGNS.

     All covenants and agreements in this Agreement contained by or on behalf of
any of the parties  hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.

SECTION 15. NOTICES.

     All communications provided for hereunder shall be sent by first class mail
and, if to the  Purchasers,  addressed to the  Purchasers at the notice  address
listed on Appendix I hereto, and if to the Company, addressed to The Chillicothe
Telephone Company, P.O. Box 480, 68 East Main Street,  Chillicothe,  Ohio 45601,
Attention:  Mr. Jack E.  Thompson,  or to such other address with respect to any
party as such shall notify the other parties in writing.

SECTION 16. GOVERNING LAW.

     This  Agreement is being  delivered  and is intended to be performed in the
State of Ohio,  and shall be construed and enforced in accordance  with the laws
of such State.

SECTION 17. COUNTERPARTS.

     This Agreement may be executed  simultaneously in two or more counterparts,
each of which shall be an original,  but all of which shall  constitute  but one
agreement.



                                       25
<PAGE>

SECTION 18. CAPTIONS.

     The captions in this  Agreement are for  convenience  only and shall not be
considered in the interpretation of any of the provisions hereof.

                            THE BALANCE OF THIS PAGE
                            INTENTIONALLY LEFT BLANK




                                       26
<PAGE>




     If the Purchasers are in agreement with the foregoing, please sign the form
of acceptance on the enclosed  counterpart of this letter and return the same to
the undersigned. Upon acceptance by all the Purchasers, this letter shall become
a binding agreement between the Purchasers and the undersigned.

                                   Very truly yours,

                                   THE CHILLICOTHE TELEPHONE COMPANY



                                   By /s/ Thomas McKell
                                      ------------------------------------------
                                      Its President
                                          --------------------------------------


The foregoing Agreement is accepted
as of the date first above written

AMERICAN UNITED LIFE INSURANCE COMPANY

By
   -----------------------------------
   Its
       -------------------------------



THE STATE LIFE INSURANCE COMPANY


By
   -----------------------------------
   Its
       -------------------------------


                                       27
<PAGE>



     If the Purchasers are in agreement with the foregoing, please sign the form
of acceptance on the enclosed  counterpart of this letter and return the same to
the undersigned. Upon acceptance by all the Purchasers, this letter shall become
a binding agreement between the Purchasers and the undersigned.


                                        Very truly yours,

                                        THE CHILLICOTHE TELEPHONE COMPANY


                                        By:
                                           -------------------------------------
                                            Its:
                                                --------------------------------


The foregoing Agreement is accepted
as of the date first above written


AMERICAN UNITED LIFE INSURANCE COMPANY


By: /s/ G. David Sapp (G. David Sapp)
   ----------------------------------
     Its: Senior Vice President
          ---------------------------


THE STATE LIFE INSURANCE COMPANY

By: /s/ G. David Sapp (G. David Sapp)
   ----------------------------------
   Its: Senior Vice President of American
        ----------------------------------
        United Life Insurance Company as
        Agent for State Life Insurance Company


                                       27
<PAGE>

                           APPENDIX I

NAME AND ADDRESS OF PURCHASER                        PRINCIPAL AMOUNT OF
                                                    NOTES TO BE PURCHASED

AMERICAN UNITED LIFE INSURANCE COMPANY                   $11,000,000
One American Square                             consisting of one (1) Note for
Post Office Box 368                                $2,000,000 and three (3)
Indianapolis, Indiana 46206                       Notes for $3,000,000 each
Attention:  Securities Department

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal or other immediately  available funds  (identifying each payment as "The
Chillicothe Telephone Company,  6.62% Senior Notes due 2018, PPN 169240 B#4" and
identifying  the  breakdown of  principal,  premium and interest and the payment
date) to:

         Bank of New York (ABA #021000018)
         One Wall Street, 3rd Floor
         New York, New York 10286
         Window A

         for credit to: American United Life Insurance Company
         Account Number 186683/AUL

Notices

All notices and  communications,  including notices with respect to payments and
written  confirmation  of each such payment,  to be addressed as first  provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  35-0145825



<PAGE>


NAME AND ADDRESS OF PURCHASER                              PRINCIPAL AMOUNT OF
                                                          NOTES TO BE PURCHASED

AMERICAN UNITED LIFE INSURANCE COMPANY                         $1,000,000
One American Square
Post Office Box 368
Indianapolis, Indiana 46206
Attention:  Securities Department

Payments

All  payments  on or in  respect  of the  Notes to be by bank wire  transfer  of
Federal or other immediately  available funds  (identifying each payment as "The
Chillicothe Telephone Company,  6.62% Senior Notes due 2018, PPN 169240 B#4" and
identifying  the  breakdown of  principal,  premium and interest and the payment
date) to:

         Bank of New York (ABA #021000018)
         One Wall Street, 3rd Floor
         New York, New York 10286
         Window A

         for credit to: The State Life Insurance Company
         Account Number 343761/State Life c/o AUL

Notices

All notices and  communications,  including notices with respect to payments and
written  confirmation  of each such payment,  to be addressed as first  provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number: 35-0684263

                                      I-2
<PAGE>

                                                                   SCHEDULE 3(d)

                                LEGAL PROCEEDINGS

     On January 3, 1989,  the Company  received a "PRP"  notice  letter from the
U.S. EPA under Section  104(e) of CERCLA  requesting  information  regarding the
United  Scrap  Lead Site in Troy,  Ohio (the  "Site").  The  Company's  response
indicated that its only indirect  involvement with the Site was that it had sold
a small amount of scrap  material to an  identified  scrap dealer over a several
year period.  The Company is aware that in July, 1991, the U.S. EPA filed a suit
to recover  response  costs at the Site  against  ten PRPs.  The Company was not
named as a defendant  and has not received  any further  notices or requests for
information from the U.S. EPA since 1989.

        In 1997, the Company was contacted by  representatives of the Members of
the United Scrap Lead Respondent Group (the "Respondent  Group")  threatening to
assert claims against the Company for participation in the clean up costs agreed
to by the  Respondent  Group  in the  "PRP  Group  Agreement  (Phase  I)  and/or
Respondent  Agreement  (Phase  II)." In order to settle  all known and  existing
claims respecting this matter, the Company, on February 26, 1998, entered into a
Settlement  Agreement  by and  among  the  Members  of  the  United  Scrap  Lead
Respondent  Group and the Company  whereby the Company  agreed to pay $11,450 to
the Respondent Group in exchange for a covenant not to sue for "covered matters"
as  set  forth  in  the  Agreement.  The  Agreement  specifically  reserves  the
Respondent  Group's rights against the Company  respecting:  (i) future clean up
costs not specifically covered by the Agreement;  (ii) claims for damages or for
injury to or destruction of natural  resources;  (iii) claims for damages or for
injury to persons or  property;  (iv) claims  arising  out of acts,  releases or
conditions  occurring at  locations  off the Site;  (v) claims  between or among
persons or entities regarding storage,  transportation,  handling or disposition
of hazardous wastes or materials from the Site at or to locations other than the
Site; (vi) claims based upon criminal  liability;  and (vii) remedial actions on
private property other than the Site.


<PAGE>
                                                                       EXHIBIT A

     THIS NOTE HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
     AMENDED, AND MAY NOT BE SOLD OR OTHERWISE  TRANSFERRED EXCEPT IN COMPLIANCE
     WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

                        THE CHILLICOTHE TELEPHONE COMPANY
                                6.62% SENIOR NOTE

$________________                                              ___________, 19__

     FOR VALUE RECEIVED, the undersigned,  THE CHILLICOTHE TELEPHONE COMPANY, an
Ohio  corporation  (the  "Company"),  hereby promises to pay to  _______________
_______________________  or registered  assigns by wire transfer of  immediately
available  Federal funds to the account specified on Appendix I to the Agreement
(hereinafter  defined) with  sufficient  information  to identify the source and
application  of funds,  or to such other  account or in such other manner as the
holder of this Note shall specify by notice in writing to the Company, in lawful
money of the United  States,  the principal  sum of  ___________________________
DOLLARS  ($___________)  in ten  consecutive  equal annual  installments  in the
amount of  $____________  each on the lst day of June in each of the years  2009
through  2018,  inclusive,  and to pay  interest  in like  money  on the  unpaid
principal  balance  hereof at the rate of 6.62% per annum  (provided that solely
for the purpose of determining the portion of annual  interest  allocable to any
interest  payment  period,  it shall be assumed  that a year is comprised of 360
days and twelve 30-day months) from the date hereof,  payable  semi-annually  on
the 1st day of June and December in each year,  commencing December 1, 1998, and
continuing until payment in full of the principal amount of this Note.

     Any payment of principal or (to the extent  permitted  by  applicable  law)
interest  on this  Note not paid  when  due,  whether  at  stated  maturity,  by
acceleration  or otherwise,  shall  thereafter bear interest at a rate per annum
equal to 8.62%  (provided  that in no event  shall such rate  exceed the maximum
rate permitted by law).

     This Note is issued pursuant to a Note Purchase Agreement (the "Agreement")
entered into among the Company,  American United Life Insurance  Company and The
State Life Insurance Company dated as of June 1, 1998 and is subject to optional
and mandatory prepayment,  in whole or in part, in the amounts, upon the notice,
with the premium, and subject to the conditions specified in the Agreement.

     As provided in the Agreement,  this Note is  transferable  only on the Note
Register  of the  Company,  upon  surrender  of this  Note  for  transfer,  duly
endorsed,  or accompanied  by a written  instrument of transfer duly executed by
the  registered  holder hereof or his attorney duly  authorized in writing.  The
Company may treat the Person in whose name this Note is  registered as the owner
hereof for the purpose of receiving payment and for all other purposes,  and the
Company shall not be affected by any notice to the contrary.


<PAGE>

     In case an Event of Default, as defined in the Agreement,  shall occur, the
principal  of this Note may be  declared  due and payable in the manner and with
the effect provided in the Agreement.

     This Note shall be governed by and construed in accordance with the laws of
the State of Ohio.

                        THE CHILLICOTHE TELEPHONE COMPANY


                        By:
                           -----------------------------------
                           Its:
                               -------------------------------


                                       2
<PAGE>


                                                                      EXHIBIT B

                                  SUBSIDIARIES

                                      NONE





<PAGE>


                                                                       EXHIBIT C

                             EXISTING DEBT AND LIENS
                               AS OF JUNE 1, 1998


$10,000,000 - 6.72% Senior  Notes due  November 1, 2005 owned by  Northern  Life
                    Insurance  Company and Northwestern  National Life Insurance
                    Company

$10,500,000         Outstanding unsecured line of credit with National City Bank
                    evidenced  by  demand  promissory  note (to be  repaid  with
                    Proceeds of Notes)




<PAGE>


                                                                       EXHIBIT D

                         EXISTING RESTRICTED INVESTMENTS
                          MADE PRIOR TO JANUARY 1, 1998
                              AS OF MARCH 31, 1998


Independent Telecommunications Network             $250,000 equity Investment

ComNet, Inc.                                       $18,500 equity Investment

Guarantee of Chillicothe Long Distance Debt        $55,000 Contingent obligation
to MCI, Inc.

Intercompany Advances from the Company             $779,847
To Horizon PCS, Inc. (formerly Horizon Infotech)   Intercompany Receivable

Intercompany Advances from the Company             $168,244
To United Communications, Inc.                     Intercompany Receivable




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