ex10_1.htm


    
      

    

    Exhibit
      10.1

    EXECUTION
      COPY


     

     

    GRANDE
      COMMUNICATIONS HOLDINGS, INC.

     

    GRANDE
      COMMUNICATIONS NETWORKS, INC., as Guarantor

     

    $25,000,000

     

    14%
      Senior Notes due 2011

     

    


     

    Purchase
      Agreement

     

    July
      6,
      2007

     

    GOLDMAN,
      SACHS & CO.

    


     

    HIGHLAND
      CRUSADER OFFSHORE PARTNERS, L.P.

     

    


    COMMUNICATIONS
      MEDIA ADVISORS, LLC


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    GRANDE
      COMMUNICATIONS HOLDINGS, INC.

    


    $25,000,000

    


    14%
      SENIOR NOTES DUE 2011

    


    PURCHASE
      AGREEMENT

    


    July
      6,
      2007

    New
      York,
      New York

    


    GOLDMAN,
      SACHS & CO.

    85
      Broad Street

    New
      York, New
      York  10004

    


    HIGHLAND
      CRUSADER OFFSHORE PARTNERS, L.P.

    c/o
      Highland Capital Management,
      L.P.

    13455
      Noel Road, Suite 800

    Dallas,
      Texas 75240

    


    COMMUNICATIONS
      MEDIA ADVISORS, LLC

    383
      Beacon Street

    Boston,
      Massachusetts
      02116

    


    HIGHLAND
      CAPITAL MANAGEMENT, L.P.

    13455
      Noel Road, Suite 800

    Dallas,
      Texas 75240

    


    Ladies
      & Gentlemen:

     

    Grande
      Communications Holdings, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to (a) Goldman,
      Sachs & Co. (“Goldman Sachs”), (b) Highland
      Crusader Offshore Partners, L.P. (the “Highland
      Purchaser” and, together with Goldman Sachs, the “Lead
      Purchasers”), and (c) Communications Media Advisors, LLC
      (“CMA” and, together with the Lead Purchasers, the
“Purchasers”), $25,000,000 in aggregate
      principal
      amount at maturity (the “Purchased Notes”) of its 14%
      Senior Notes due 2011 (the “Notes”), subject to the
      terms and conditions set forth herein.

     

    1.           The
      Transactions.  Subject to the terms and conditions herein
      contained, the Company proposes to issue and sell to the Purchasers the
      Purchased Notes.  The Purchased Notes will be issued pursuant to and
      have the terms and provisions that are described in the Indenture (the
“Indenture”), dated as of March 23, 2004, by and among
      the Company, each of the guarantors party thereto and U.S. Bank National
      Association, as trustee (the “Trustee”), as the
      Indenture is to be amended by the Supplemental Indenture (as defined below).
      The
      Purchased Notes, together with the related Guarantees (as defined below), are
      sometimes referred to herein as the
“Securities.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    The
      sale
      of the Purchased Notes to the Purchasers (the
“Offering”) will be made without registration under
      the Securities Act of 1933, as amended (the “Act”), in
      reliance upon the exemption therefrom provided by Section 4(2) of the
      Act.

     

    In
      connection with and as a condition to the Offering, the Company will seek to
      obtain the consent (the “Noteholder Consent”) of
      Holders of at least a majority in aggregate principal amount of Notes
      outstanding as of June 1, 2007, the record date established by the Company,
      to
      certain amendments to the Indenture as contained in Supplemental Indenture
      No.
      1, substantially in the form attached hereto as Exhibit A (the
“Supplemental Indenture”), to the
      Indenture.  Each of Goldman Sachs and Highland Capital Management,
      L.P. (“Highland”), on behalf of each entity
      controlled, directly or indirectly, by it, or by whom it is authorized to direct
      the vote of its Notes, agrees to vote or to enter into a consent, or to cause
      the record holder of the Notes beneficially owned by such Purchaser or entity,
      as the case may be, to vote or to enter into a consent, in favor of the
      Noteholder Consent approving the Supplemental Indenture.

     

    The
      payment of principal of, premium, if any, and interest on the Purchased Notes
      will be fully and unconditionally guaranteed on a senior basis, jointly and
      severally by (i) Grande Communications Networks, Inc., a Delaware
      corporation and the sole subsidiary of the Company (the
“Subsidiary” or the
“Guarantor”), and (ii) any subsidiary of the
      Company formed or acquired after the Closing Date that executes an additional
      guarantee in accordance with the terms of the Indenture (as modified by the
      Supplemental Indenture), and respective successors and assigns of the
      subsidiaries of the Company referred to in (i) and (ii) above (collectively,
      the
“Guarantors”), pursuant to their guarantees (the
“Guarantees”).  The Company and the
      Guarantors are herein collectively referred to as the
“Issuers.”  This Agreement, the Notes, the
      Guarantees, the Indenture, the Supplemental Indenture and the Security Documents
      (as defined below) are hereinafter referred to collectively as the
“Operative Documents.”  Capitalized terms
      used herein and not otherwise defined shall have the meanings assigned to such
      terms in the Indenture (as modified by the Supplemental Indenture).

     

    The
      Purchased Notes will be secured by first-priority liens on the assets of the
      Company and the Subsidiary, including the equity interests of the Subsidiary
      owned by the Company, pursuant to the Security Documents. As used herein, the
      term “Security Documents” means:

     

    (a)           the
      Pledge and Security Agreement, dated as of March 23, 2004, by and among the
      Company, the subsidiaries of the Company named therein and U.S. Bank National
      Association, as collateral agent (in such capacity, the “Collateral
      Agent”) (the “Security Agreement”);
      and

     

    (b)           the
      PTO Security Agreements, dated as of March 23, 2004, by Grande Communications,
      Inc., the Guarantor, and Grande Communications ClearSource Inc.,
      respectively.

     

    
      
        
        

      

      
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    2.           Representations
      and Warranties of the Company and the Guarantor.  The Company and
      the Guarantor, jointly and severally, represent and warrant to the Purchasers
      that:

     

    (a)           All
      reports filed by the Company with the Securities and Exchange Commission (the
      “SEC”) under the Securities Exchange Act of 1934, as
      amended (the “Exchange Act”), comply in all material
      respects with the appropriate requirements for such reports under the Exchange
      Act.  Each Purchaser has a copy of (i) the Company’s Annual
      Report on Form 10-K for the year ended December 31, 2006, filed with the SEC
      on
      March 30, 2007 (the “2006 Form 10-K”) and
      (ii) the Company’s Quarterly Report on Form 10-Q for the period ended March
      31, 2007, filed with the SEC on May 11, 2007, and the Company’s Forms 8-Ks filed
      with the SEC from January 1, 2007 through the date of this Agreement
      (collectively, the “Subsequent Filings” and, together
      with the 2006 Form 10-K, the “Public
      Filings”).  The Public Filings (taken as a whole) as of
      the date hereof do not, and, as of the Closing Date, will not, contain any
      untrue statement of a material fact or omit to state any material fact necessary
      in order to make the statements therein not misleading.  The books and
      records of the Company have been, and are being, maintained in all material
      respects in accordance with GAAP and any other applicable legal and accounting
      requirements.

     

    (b)           Subsequent
      to the respective dates as of which information is given in the Public Filings,
      except as disclosed in the Public Filings, the Company has not declared, paid
      or
      made any dividends or other distributions of any kind on or in respect of its
      capital stock and there has been no material adverse change or any development
      involving a prospective material adverse change, in the capital stock or the
      long-term debt, or material increase in the short-term debt, of the Company
      or
      the Subsidiary from that set forth in the Public Filings, whether or not arising
      from transactions in the ordinary course of business, in or affecting
      (i) the business, condition (financial or otherwise), results of
      operations, stockholders’ equity, properties or prospects of the Company and the
      Subsidiary, individually or taken as a whole; (ii) the ability of the
      Company to consummate the Offering or any of the other transactions contemplated
      by the Operative Documents.  Since March 31, 2007, except as
      contemplated by this Agreement, neither the Company nor the Subsidiary has
      incurred or undertaken any liability or obligation, whether direct or indirect,
      liquidated or contingent, matured or unmatured, or entered into any transaction,
      including any acquisition or disposition of any business or asset, which is
      material to the Company and the Subsidiary, individually or taken as a whole,
      except for liabilities, obligations and transactions which are disclosed in
      the Public Filings.

     

    (c)           Each
      of the Company and the Subsidiary has been duly organized and is validly
      existing as a corporation in good standing under the laws of the State of
      Delaware.  Each of the Company and the Subsidiary has all requisite
      corporate power and authority to carry on its business as it is currently being
      conducted and as described in the Public Filings, and to own, lease and operate
      its respective properties.  Each of the Company and the Subsidiary is
      duly qualified and authorized to do business and is in good standing as a
      foreign corporation in each jurisdiction in which the character or location
      of
      its properties (owned, leased or licensed) or the nature or conduct of its
      business requires such qualification, except for those failures to be so
      qualified or in good standing which (individually or in the aggregate) could
      not
      reasonably be expected to have a material adverse effect on (A) the
      properties, business, results of operations, condition (financial or otherwise),
      stockholders’ equity, properties or prospects of the Company and the Subsidiary,
      individually or taken as a whole; (B) the long-term debt or capital stock
      of the Company or the Subsidiary; (C) the issuance or marketability of the
      Purchased Notes or (D) the validity of this Agreement or any other
      Operative Document (any such effect being a “Material Adverse
      Effect”).

     

    
      
        
        

      

      
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    (d)           The
      Subsidiary is the only wholly owned subsidiary of the Company within the meaning
      of Rule 405 under the Act and comprises the only subsidiary of the
      Company.  Except for the Subsidiary, the Company holds no ownership or
      other interest, nominal or beneficial, direct or indirect, in any corporation,
      partnership, joint venture or other business entity.  All of the
      issued shares of capital stock of or other ownership interests in the Subsidiary
      have been duly and validly authorized and issued and are fully paid and
      non-assessable and, after giving effect to the Offering and the Use of Proceeds
      (as defined in Section 5(b) of this Agreement), are owned, directly or
      indirectly, by the Company, free and clear of any lien, charge, mortgage,
      pledge, security interest, claim, limitation on voting rights, equity, trust
      or
      other encumbrance, preferential arrangement, defect or restriction of any kind
      whatsoever (any “Lien”), except for Liens imposed by
      the Security Documents and any such security interest, claim, lien, limitation
      on voting rights or encumbrance imposed by federal and state securities
      laws.

     

    (e)           Except
      as disclosed in the Public Filings, neither the Company nor the Subsidiary
      has
      outstanding subscriptions, rights, warrants, calls, commitments of sale or
      options to acquire, or any preemptive rights or other rights to subscribe for
      or
      to purchase, or any contracts or commitments to issue or sell, or instruments
      convertible into or exchangeable for, any capital stock or other equity interest
      in, the Company or the Subsidiary (any “Relevant
      Security”).  The authorized, issued and outstanding
      capital stock of the Company is as set forth in the balance sheet included
      in
      the consolidated financial statements included in the Public
      Filings.  Except as disclosed in the Public Filings or pursuant to
      stock option plans which are disclosed in the 2006 Form 10-K, there are no
      outstanding (A) options, warrants or other rights to purchase from the
      Company or any of its subsidiaries, (B) agreements, contracts, arrangements
      or other obligations of the Company or any of its subsidiaries to issue, or
      (C) other rights to convert any obligation into or exchange any securities
      for, in the case of each of clauses (A) through (C), shares of capital
      stock of, or other ownership or equity interests in, the Company or any of
      its
      subsidiaries.

     

    (f)           Assuming
      the Noteholder Consent is obtained, each of the Company and the Guarantor has
      the required corporate power and authority to execute, deliver and perform
      its
      obligations under this Agreement and each of the other Operative Documents
      to
      which it is a party and to consummate the transactions contemplated hereby
      and
      thereby, including, without limitation, the corporate power and authority to
      issue, sell and deliver the Purchased Notes and to issue and deliver the related
      Guarantees as provided herein and therein.

     

    (g)           The
      Purchased Notes have been duly and validly authorized by the Company for
      issuance and sale to the Purchasers pursuant to this Agreement and, subject
      to
      obtaining the Noteholder Consent, when executed by the Company and authenticated
      by the Trustee in accordance with the provisions of the Indenture (as modified
      by the Supplemental Indenture) and when delivered to and paid for by the
      Purchasers in accordance with the terms hereof and thereof, will have been
      duly
      and validly executed, issued and delivered and will constitute valid and legally
      binding obligations of the Company, entitled to the benefits of the Indenture
      (as modified by the Supplemental Indenture) and enforceable against the Company
      in accordance with their terms, except that the enforcement thereof may be
      limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
      similar laws now or hereafter in effect relating to or affecting creditors’
rights generally and (ii) general principles of equity (regardless of
      whether such enforcement is considered in a proceeding at law or in equity)
      ((i)
      and (ii) are referred to herein collectively as the “Enforceability
      Exceptions”).  At the Closing Date, the Purchased Notes
      will be in the form contemplated by the Indenture (as modified by the
      Supplemental Indenture).

     

    
      
        
        

      

      
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    (h)           The
      Guarantee of the Purchased Notes has been duly and validly authorized by the
      Guarantor for issuance to the Purchasers pursuant to this Agreement and, subject
      to obtaining the Noteholder Consent, when executed by the Guarantor in
      accordance with the provisions of the Indenture (as modified by the Supplemental
      Indenture) and when delivered to the Purchasers in accordance with the terms
      hereof and thereof, and when the Purchased Notes have been issued and
      authenticated in accordance with the provisions of the Indenture (as modified
      by
      the Supplemental Indenture) and delivered to and paid for by the Purchasers
      in
      accordance with the terms hereof and thereof, will constitute valid and legally
      binding obligations of the Guarantor, enforceable against it in accordance
      with
      its terms and entitled to the benefits of the Indenture (as modified by the
      Supplemental Indenture), except that the enforcement thereof may be limited
      by
      the Enforceability Exceptions.

     

    (i)           The
      Indenture has been duly and validly authorized by the Company and the Guarantor
      and meets the requirements for qualification under the Trust Indenture Act
      of
      1939, as amended (the “Trust Indenture Act”), and the
      rules and regulations of the Commission applicable to an indenture so qualified,
      and (assuming due authorization by the Trustee), constitutes a valid and legally
      binding agreement of the Company and the Guarantor, enforceable against each
      of
      them in accordance with its terms, except that the enforcement thereof may
      be
      limited by the Enforceability Exceptions.  The Supplemental Indenture
      has been duly and validly authorized by the Company and the Guarantor and meets
      the requirements for supplemental indentures under the Indenture and, assuming
      the Noteholder Consent has been obtained and due authorization by the Trustee,
      constitutes a valid and legally binding agreement of the Company and the
      Guarantor, enforceable against each of them in accordance with its terms, except
      that the enforcement thereof may be limited by the Enforceability
      Exceptions.  The Security Documents have been duly and validly
      authorized by the Company and the Guarantor and will create, upon the issuance
      of the Purchased Notes at the Closing, valid and enforceable security interests
      in favor of the Collateral Agent in all Collateral which security interests
      will
      secure the repayment of the Purchased Notes and the other obligations purported
      to be secured thereby (including the $168 million of Notes issued by the Company
      pursuant to the Indenture in 2004 and 2006) and will constitute the valid and
      legally binding obligations of the Company and the Guarantor, enforceable
      against each of them in accordance with their terms except that the enforcement
      thereof may be limited by the Enforceability Exceptions.  As of the
      Closing Date, after giving effect to the Offering and the Use of Proceeds,
      the
      Note Liens will be subject in terms of priority only to the Permitted Liens
      that
      are prior to the Note Liens by operation of law.

     

    
      
        
        

      

      
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    (j)           None
      of the Company or the Guarantor or any of their respective affiliates (as
      defined in Rule 501(b) of Regulation D under the Act) or representatives
      directly, or through any agent, sold, offered for sale, solicited offers to
      buy
      or otherwise negotiated in respect of any “security” (as defined in the Act)
      which is or could be integrated with the sale of the Purchased Notes in a manner
      that would require the registration under the Act of the Purchased
      Notes.

     

    (k)           This
      Agreement has been, and as of the Closing, the Supplemental Indenture will
      have
      been, duly and validly authorized, executed and delivered by the Company and
      the
      Guarantor.

     

    (l)           Neither
      the Company nor the Subsidiary is (i) prior to giving effect to the
      execution, delivery and performance by the Company and the Guarantor of this
      Agreement, and, assuming the accuracy of the representations made by the
      Purchasers in Section 3(d) of this Agreement, after giving effect to the
      execution, delivery and performance by the Company and the Guarantor of this
      Agreement, in violation of its certificate or articles of incorporation, bylaws,
      or other organizational documents, (ii) after giving effect to the Offering
      in accordance with the terms of this Agreement (assuming that the Noteholder
      Consent has been obtained) and the Use of Proceeds, in default under, and no
      event has occurred which, with notice or lapse of time or both or otherwise,
      would constitute a default under, or result in the creation or imposition of
      any
      Lien upon, any of its property or assets pursuant to, any bond, debenture,
      note,
      indenture, mortgage, deed of trust, loan agreement or other agreement or
      instrument to which it is a party or by which it is bound or to which any of
      its
      properties or assets is subject, other than the Note Liens, or (iii) in
      violation in any respect of any law, rule, regulation, ordinance, directive,
      judgment, decree or order of any judicial, regulatory or other legal or
      governmental agency or body (including, without limitation, environmental laws,
      statutes, ordinances, rules, regulations, judgments or court decrees), foreign
      or domestic, except (in the case of clauses (ii) and (iii) above) violations
      or
      defaults that could not (individually or in the aggregate) reasonably be
      expected to have a Material Adverse Effect.

     

    (m)           None
      of (i) the execution, delivery, and performance by the Company and the
      Guarantor of this Agreement and the other Operative Documents to which each
      of
      them, respectively, is a party, and consummation of the transactions
      contemplated by the Operative Documents to which each of them, respectively,
      is
      a party or (ii) the issuance and sale of the Purchased Notes and the
      issuance of the Guarantee, in the case of either of (i) or (ii), after giving
      effect to the Offering in accordance with the terms of this Agreement (assuming
      that the Noteholder Consent has been obtained) and the Use of Proceeds, violates
      or will violate, conflicts with or will conflict with, requires or will require
      consent under, or results or will result in a breach of any of the terms and
      provisions of, or constitutes or will constitute a default (or an event which
      with notice or lapse of time, or both, would constitute a default) under, or
      results or will result in the creation or imposition of any Lien upon any
      properties or assets of the Company or the Subsidiary other than the Note Liens,
      or an acceleration of any indebtedness of the Company or the Subsidiary pursuant
      to (1) any provision of the certificate of incorporation, articles of
      incorporation, charter, bylaws, certificate of formation, or other
      organizational document of the Company or the Subsidiary (assuming the accuracy
      of the representations made by the Purchasers in Section 3(d) of this
      Agreement), (2) any bond, debenture, note, indenture, mortgage, deed of
      trust, loan agreement or other agreement, instrument, franchise, license or
      permit to which the Company or the Subsidiary is a party or by which the Company
      or the Subsidiary or their respective properties, operations or assets is or
      may
      be bound, (3) or any statute, law, ordinance, rule or regulation applicable
      to the Company or the Subsidiary or any of their properties or assets, or
      (4) any directive, judgment, decree or order of any judicial, regulatory or
      other legal or governmental agency or body, domestic or foreign, except (in
      the
      case of clauses (2), (3) and (4) above) as could not reasonably be expected
      to
      have a Material Adverse Effect.

     

    
      
        
        

      

      
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    (n)           Each
      of the Company and the Subsidiary has all necessary consents, approvals,
      authorizations, orders, registrations, qualifications, licenses, filings and
      permits of, with and from all judicial, regulatory and other legal or
      governmental agencies, bodies or administrative agencies, and all third parties,
      foreign and domestic (collectively, the “Consents”),
      to own, lease and operate its properties and conduct its business as it is
      now
      being conducted and as disclosed in the Public Filings, except as could not
      reasonably be expected to have a Material Adverse Effect, and each such Consent
      is valid and in full force and effect, and neither the Company nor the
      Subsidiary has received notice of any investigation or proceedings which results
      in or, if decided adversely to the Company or the Subsidiary, could reasonably
      be expected to result in, the revocation of, suspension or imposition of a
      materially burdensome restriction on, any Consent.  Except to the
      extent disclosed in the Public Filings, which the Company and the Guarantor
      do
      not reasonably expect to cause a Material Adverse Effect, each of the Company
      and the Subsidiary is in compliance with all applicable laws, rules,
      regulations, ordinances, directives, judgments, decrees and orders, foreign
      and
      domestic.  No Consent contains a materially burdensome restriction not
      disclosed in the Public Filings.

     

    (o)           The
      Company has all licenses, permits, certificates, registrations and
      authorizations issued by state public utility commissions (each, a
“PUC”) and the Federal Communications Commission
      (“FCC”) (collectively, the “FCC and PUC
      Licenses”) that are necessary or required for the Company to carry
      on its business as disclosed in the Public Filings, except as could not
      reasonably be expected to cause a Material Adverse Effect.  The
      Company has all FCC and PUC Licenses, consents, approvals and orders required
      under all federal and state telecommunications laws, including, without
      limitation, the Communications Act of 1934, as amended, and FCC rules and
      regulations (collectively, the “Telecom Laws”) that
      are necessary for the Company to carry on its existing business as described
      in
      the Public Filings, except as could not reasonably be expected to cause a
      Material Adverse Effect.  All of the FCC and PUC Licenses have been
      issued through the means of regular administrative procedures applied in
      conformity with the Telecom Laws and there is no legal basis under the Telecom
      Laws to conclude that the Company cannot hold one or more of the FCC and PUC
      Licenses as a matter of law.  Further, (i) the FCC and PUC
      Licenses are in full force and effect without conditions that would have a
      material adverse effect on the Company’s operations except for such conditions
      imposed generally by the FCC or a PUC upon such licenses or conditions stated
      on
      the face of the FCC and PUC Licenses, (ii) all express conditions in the
      FCC and PUC Licenses have been satisfied where the failure to satisfy such
      conditions would have a material adverse effect on the Company’s operations as
      described in the Public Filings, and (iii) the Company has not received any
      notification that any revocation or limitation of any of the FCC and PUC
      Licenses is threatened or pending that would have a material adverse effect
      on
      the Company’s operations as described in the Public Filings.

     

    
      
        
        

      

      
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    (p)           Except
      to the extent disclosed in the Public Filings, which the Company and the
      Guarantor do not reasonably expect to cause a Material Adverse Effect, no
      Consent of, with or from an judicial, regulatory or other legal or federal
      or
      state governmental agency (including, without limitation, the FCC or PUC) or
      body or any third party, foreign or domestic, is required for (i) the
      execution, delivery and performance by each of the Company and the Guarantor
      of
      this Agreement or consummation of the Offering and the other transactions
      contemplated by the Operative Documents to which each of them, respectively,
      is
      a party or (ii) the issuance, sale and delivery of the Purchased Notes and
      the issuance of the Guarantees, except such Consents as have been or will be
      obtained and made on or prior to the Closing Date.

     

    (q)           Except
      to the extent disclosed in the Public Filings, which the Company and the
      Guarantor do not reasonably expect to cause a Material Adverse Effect, and
      assuming the Noteholder Consent has been obtained, neither the execution,
      delivery and performance of the Purchase Agreement by the Company nor the
      issuance of the Securities will conflict with, violate or require any
      authorization, approval, or consent under the Telecom Laws or result in a breach
      or violation of any of the terms or provision of, or constitute a default under,
      or cause any forfeiture or impairment of, any of the FCC and PUC
      Licenses.  The Company has filed with the FCC and the PUC all
      applications, statements, reports, tariffs, information, forms, or any other
      document required under the Telecom Laws, except where the failure to so file
      would not have a material adverse effect on the Company’s ability to provide its
      services as described in the Public Filings and such filings or submissions
      were
      made in compliance with applicable laws or regulations when filed or submitted
      and no deficiencies have been asserted by the FCC or the PUC with respect to
      such filings or submissions, except where the deficiency is of such a nature
      that failure to cure any such deficiency would not have a material adverse
      effect on the Company’s ability to provide its services as described in the
      Public Filings.  The information contained in such filings or
      submissions was, in all material respects, accurate, complete and up-to-date
      at
      the time the filings or submissions were made.  There is (a) no
      unsatisfied adverse FCC or PUC order, decree or ruling outstanding against
      the
      Company; and (b) no proceeding, formal or informal complaint or
      investigation before the FCC or the PUC (including any pending judicial review
      of such an action by the FCC or the PUC) against the Company or any of the
      FCC
      and PUC Licenses or based on any violation or alleged violation by the Company
      of the Telecom Laws except for proceedings affecting the telecommunications
      industry generally to which the Company is not a specific party; (c) the
      Company is not a party to any complaint, action, or other proceeding at the
      FCC
      or the PUC; and (d) except to the extent disclosed in the Public Filings,
      which the Company and the Guarantor do not reasonably expect to cause a Material
      Adverse Effect, there is no threatened proceeding, formal or informal complaint
      or investigation by the FCC or the PUC or any third party relating to any
      alleged violation of the Telecom Laws.

     

    
      
        
        

      

      
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    (r)           Except
      as disclosed in the Public Filings, there is (i) no judicial, regulatory,
      arbitral or other legal or governmental action, suit, investigation or
      proceeding or other litigation or arbitration before or by any court, arbitrator
      or governmental agency, body or official, domestic or foreign, pending to which
      the Company or the Subsidiary is or may be a party or of which the business,
      property, operations or assets of the Company or the Subsidiary is or may be
      subject, (ii) no statute, rule, regulation or order that has been enacted,
      adopted or issued by any governmental agency or that has been proposed by any
      governmental body, and (iii) no injunction, restraining order or order of
      any nature by a federal or state court or foreign court of competent
      jurisdiction to which the Company or the Subsidiary is or may be subject or
      to
      which the business, property, operations or assets of the Company or the
      Subsidiary is or may be subject, that, individually or in the aggregate, if
      determined adversely to the Company or the Subsidiary, could reasonably be
      expected to have a Material Adverse Effect; to the best of the Company’s
      knowledge, no such proceeding, litigation or arbitration is threatened or
      contemplated; and the defense of all such proceedings, litigation and
      arbitration against or involving the Company or the Subsidiary could not
      reasonably be expected to have a Material Adverse Effect.

     

    (s)           There
      exists as of the date hereof, and there will exist as of the Closing after
      giving effect to the transactions contemplated by each of the Operative
      Documents (assuming the Noteholder Consent has been obtained), no event or
      condition that would constitute a default or an event of default (in each case
      as defined in each of the Operative Documents) under any of the Operative
      Documents that would result in a Material Adverse Effect or materially adversely
      affect the ability of the Company to consummate the Offering and the other
      transactions contemplated by the Operative Documents.

     

    (t)           Except
      as disclosed in the Public Filings, no action has been taken and no statute,
      rule, regulation or order has been enacted, adopted or issued by any
      governmental agency, body or authority or administrative agency (including,
      without limitation, the FCC) that prevents the issuance of the Purchased Notes
      or the Guarantees; no injunction, restraining order or order of any nature
      by a
      federal or state court of competent jurisdiction has been issued that prevents
      the issuance of the Purchased Notes or the Guarantees or prevents or suspends
      the sale of the Purchased Notes or the Guarantees in any jurisdiction referred
      to in Section 2(c) hereof; and there have been no requests of any
      securities authority or agency of any jurisdiction for additional
      information.

     

    (u)           There
      is (i) no significant unfair labor practice complaint pending against the
      Company or the Subsidiary nor, to the best knowledge of the Company and the
      Guarantor, threatened against either of them, before the National Labor
      Relations Board, any state or local labor relations board or any foreign labor
      relations board, and no significant grievance or significant arbitration
      proceeding arising out of or under any collective bargaining agreement is so
      pending against the Company or any of its subsidiaries or, to the best knowledge
      of the Company and the Guarantor, threatened against any of them, (ii) no
      significant strike, labor dispute, slowdown, or stoppage pending against the
      Company or any of its subsidiaries nor, to the best knowledge of the Company
      and
      the Guarantor, threatened against any of them, (iii) no labor disturbance
      by the employees of the Company or the Subsidiary or, to the best knowledge
      of
      the Company and the Guarantor, no such disturbance is imminent and neither
      the
      Company nor the Guarantor is aware of any existing or imminent labor
      disturbances by the employees of any of its respective, or the Subsidiary’s,
      principal suppliers, manufacturers, customers or contractors that, in any such
      case (individually or in the aggregate), could reasonably be expected to have
      a
      Material Adverse Effect, and (iv) no union representation question existing
      (to the best knowledge of the Company and the Guarantor) with respect to the
      employees of the Company or the Subsidiary.  To the best knowledge of
      the Company and the Guarantor, no collective bargaining organizing activities
      are taking place with respect to the Company or the Subsidiary.  None
      of the Company or any of its subsidiaries has violated (i) any federal,
      state or local law or foreign law relating to discrimination in hiring,
      promotion or pay of employees or (ii) any applicable wage or hour laws,
      except those violations that could not reasonably be expected to have a Material
      Adverse Effect.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (v)           No
      “prohibited transaction” (as defined in either Section 406 of the Employee
      Retirement Income Security Act of 1974, as amended, including the rules,
      regulations and published interpretations thereunder
      (“ERISA”) or Section 4975 of the Internal Revenue Code
      of 1986, as amended from time to time (the “Code”)),
“accumulated funding deficiency” (as defined in Section 302 of ERISA) or other
      event of the kind described in Section 4043(b) of ERISA (other than events
      with
      respect to which the 30-day notice requirement under Section 4043 of ERISA
      has
      been waived) has occurred with respect to any employee benefit plan for which
      the Company or the Subsidiary would have any liability; each employee benefit
      plan for which the Company or the Subsidiary would have any liability is in
      compliance in all material respects with applicable law, including (without
      limitation) ERISA and the Code; the Company has not incurred and does not expect
      to incur liability under Title IV of ERISA with respect to the termination
      of,
      or withdrawal from any “pension plan”; and each plan for which the Company would
      have any liability that is intended to be qualified under Section 401(a) of
      the
      Code is so qualified and nothing has occurred, whether by action or by failure
      to act, which could cause the loss of such qualification.  The
      execution and delivery of this Agreement, the other Operative Documents and
      the
      sale of the Purchased Notes to be purchased by the Purchasers will not involve
      any prohibited transaction within the meaning of Section 406 of ERISA or Section
      4975 of the Internal Revenue Code of 1986.  The representation made by
      the Company and the Guarantor in the preceding sentence is made in reliance
      upon
      and subject to the accuracy of, and compliance with, the representations and
      covenants made by the Purchasers herein.

     

    (w)           There
      has been no storage, generation, transportation, handling, treatment, disposal,
      discharge, emission or other release of any kind of toxic or other wastes or
      other hazardous substances by, due to, or caused by the Company or any of its
      current or former subsidiaries (or, to the Company’s knowledge, any other entity
      for whose acts or omissions the Company is or may be liable) upon any other
      property now or previously owned or leased by the Company or the Subsidiary,
      or
      upon any other property, which would be a violation of or give rise to any
      liability under any applicable law, rule, regulation, order, judgment, decree
      or
      permit relating to the protection of human health and safety, the environment
      or
      hazardous or toxic substances or wastes, pollutants or contaminants
      (“Environmental Law”), except as could not reasonably
      be expected to have a Material Adverse Effect.  There has been no
      disposal discharge, emission or other release of any kind onto such property
      or
      into the environment surrounding such property of any toxic or other wastes
      or
      other hazardous substances with respect to which the Company or the Subsidiary
      has knowledge, except as could not reasonably be expected to have a Material
      Adverse Effect.  Neither the Company nor the Subsidiary has agreed to
      assume, undertake or provide indemnification for any liability of any other
      person under any Environmental Law, including any obligation for cleanup or
      remedial action.  There is no pending or, to the best knowledge of the
      Company and the Guarantor, threatened administrative, regulatory or judicial
      action, claim or notice of noncompliance or violation, investigation or
      proceedings relating to any Environmental Law against the Company or the
      Subsidiary.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    (x)           There
      is no alleged liability, or to the best knowledge of the Company and the
      Guarantor, potential liability (including, without limitation, alleged or
      potential liability or investigatory costs, cleanup costs, governmental response
      costs, natural resource damages, property damages, personal injuries or
      penalties) of the Company or the Subsidiary arising out of, based on or
      resulting from (i) the presence or release into the environment of any
      Hazardous Material (as defined below) at any location, whether or not owned
      by
      the Company or the Subsidiary, as the case may be, or (ii) any violation or
      alleged violation of any Environmental Law, other than as disclosed in the
      Public Filings, except as could not reasonably be expected to have a Material
      Adverse Effect.  The term “Hazardous
      Material” means (i) any “hazardous substance” as defined by
      the Comprehensive Environmental Response, Compensation and Liability Act of
      1980, as amended, (ii) any “hazardous waste” as defined by the Resource
      Conservation and Recovery Act, as amended, (iii) any petroleum or petroleum
      product, (iv) any polychlorinated biphenyl, and (v) any pollutant or
      contaminant or hazardous, dangerous or toxic chemical, material, waste or
      substance regulated under or within the meaning of any other law relating to
      protection of human health or the environment or imposing liability or standards
      of conduct concerning any such chemical material, waste or
      substance.

     

    (y)           The
      Company and the Subsidiary own or lease all such properties as are necessary
      to
      the conduct of its business as presently operated and as proposed to be operated
      as described in the Public Filings, except as could not reasonably be expected
      to have a Material Adverse Effect.  The Company and the Subsidiary
      have (i) good and marketable title in fee simple to all of real property
      and good and marketable title to all personal property owned by them, in each
      case free and clear of all Liens except for Permitted Liens and except such
      as
      are described in the Public Filings or such as do not (individually or in the
      aggregate) materially affect the value of such property or interfere with the
      use made or proposed to be made of such property by the Company and the
      Subsidiary); (ii) peaceful and undisturbed possession of any real property
      and buildings held under lease or sublease by the Company and the Subsidiary
      and
      such leased or subleased real property and buildings are held by them under
      valid, subsisting and enforceable leases and no default exists thereunder,
      (including, to the best knowledge of the Company and the Guarantor, defaults
      by
      the landlord) with such exceptions as are not material to, and do not interfere
      with, the use made and proposed to be made of such property and buildings by
      the
      Company and the Subsidiary; (iii) all licenses, certificates, permits,
      authorizations, approvals, franchises and other rights from, and have made
      all
      declarations and filings with, all federal, state and local authorities, all
      self-regulatory authorities and all courts and other tribunals (including
      without limitation under applicable Environmental Laws) (each, an
“Authorization”) necessary to engage in the business
      conducted by any of them in the manner described in the Public Filings, except
      where the failure to have such an Authorization could not reasonably be expected
      to cause a Material Adverse Effect; and (iv) no reason to believe that any
      governmental body or agency is considering limiting, suspending or revoking
      any
      such Authorization.  All such Authorizations are valid and in full
      force and effect and the Company and the Subsidiary are in compliance in all
      material respects with the terms and conditions of all such Authorizations
      and
      with the rules and regulations of the regulatory authorities having jurisdiction
      with respect thereto.  Neither the Company nor the Subsidiary has
      received any notice of any claim adverse to its ownership of any real or
      personal property or of any claim against the continued possession of any real
      property, whether owned or held under lease or sublease by the Company or the
      Subsidiary.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (z)           The
      Company and the Subsidiary (i) own or possess adequate right to use all
      patents, patent applications, patent rights, licenses, formulae, customer lists,
      inventions, copyrights, know-how (including trade secrets and other unpatented
      and/or unpatentable proprietary or confidential information, software, systems
      or procedures), trademarks, service marks, trade names, trademark registrations,
      service mark registrations, computer programs, technical data and information,
      and know-how and other intellectual property (including trade secrets and other
      unpatented and/or unpatentable proprietary or confidential information, systems
      or procedures, the “Intellectual Property”) necessary
      for the conduct of their respective businesses as presently being conducted
      and
      as described in the Public Filings and (ii) have no reason to believe that
      the conduct of their respective businesses does or will conflict with, and
      have
      not received any notice of any claim of conflict with, any such right of
      others.  To the best knowledge of the Company and the Guarantor, all
      material technical information developed by and belonging to the Company or
      the
      Subsidiary which has not been patented has been kept
      confidential.  Neither the Company nor the Subsidiary has granted or
      assigned to any other person or entity any right to manufacture, have
      manufactured, assemble or sell the current products and services of the Company
      and the Subsidiary or those products and services described in the Public
      Filings.  There is no infringement by third parties of any
      Intellectual Property of the Company or the Subsidiary; there is no material
      pending or, to the knowledge of the Company and the Guarantor, threatened
      action, suit, proceeding or claim by others challenging the Company’s or the
      Subsidiary’s rights in or to any Intellectual Property, and the Company and the
      Guarantor are unaware of any facts which would form a reasonable basis for
      any
      such claim; and there is no material pending or, to the knowledge of the Company
      and the Guarantor, threatened action, suit, proceeding or claim by others that
      the Company or the Subsidiary infringes or otherwise violates any patent,
      trademark, copyright, trade secret or other proprietary rights of others, and
      the Company and the Guarantor are unaware of any other fact which would form
      a
      reasonable basis for any such claim.

     

    (aa)           Each
      of the Company and the Subsidiary has accurately prepared and timely filed,
      taking into account any valid extensions of due dates, all tax returns required
      to be filed by it and has paid or made provision for the payment of all taxes,
      assessments, governmental or other similar charges, including without
      limitation, all sales and use taxes and all taxes that the Company or the
      Subsidiary is obligated to withhold from amounts owing to employees, creditors
      and third parties, with respect to the periods covered by such tax returns
      (whether or not such amounts are shown as due on any tax return).  No
      deficiency assessment with respect to a proposed adjustment of the Company’s or
      the Subsidiary’s federal, state, local or foreign taxes is pending or, to the
      best knowledge of the Company and the Guarantor, threatened.  There
      are no material proposed additional tax assessments against the Company or
      the
      Subsidiary, or the assets or property of the Company or the
      Subsidiary.  The accruals and reserves on the books and records of the
      Company and the Subsidiary in respect of tax liabilities for any taxable period
      not finally determined are adequate to meet any assessments and related
      liabilities for any such period and, since the most recent year-end, the Company
      and the Subsidiary have not incurred any liability for taxes other than in
      the
      ordinary course of its business.  There is no tax Lien, whether
      imposed by any federal, state, foreign or other taxing authority, outstanding
      against the assets, properties or business of the Company or the Subsidiary,
      except for Permitted Liens.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    (bb)           The
      Company and the Subsidiary maintain a system of internal accounting and other
      controls sufficient to provide reasonable assurances that: (i) transactions
      are executed in accordance with management’s general or specific authorizations;
      (ii) transactions are recorded as necessary to permit preparation of
      financial statements in conformity with generally accepted accounting principles
      and to maintain accountability for assets; (iii) access to assets is
      permitted only in accordance with management’s general or specific
      authorization; and (iv) the recorded accounting for assets is compared with
      existing assets at reasonable intervals and appropriate action is taken with
      respect to any differences.

     

    (cc)           The
      Company is in compliance with provisions of the Sarbanes-Oxley Act of 2002
      (the
“SOX Act”) that currently are applicable to it and is
      actively taking steps to ensure that it will be in compliance with other
      applicable provisions of the SOX Act upon such provisions becoming applicable
      to
      the Company.

     

    (dd)           Since
      the end of the most recent fiscal year, the Company’s auditors and the audit
      committee of the board of directors of the Company (or persons fulfilling the
      equivalent function) have not been advised of (i) any significant
      deficiencies in the design or operation  of internal controls which
      could adversely affect the Company’s ability to record, process, summarize and
      report financial data nor any material weaknesses in internal controls; or
      (ii) any fraud, whether or not material, that involves management or other
      employees who have a significant role in the Company’s internal
      controls.

     

    (ee)           Since
      the end of the most recent fiscal year, there have been no significant changes
      in internal controls or in other factors that could significantly affect
      internal controls, including any corrective actions with regard to significant
      deficiencies and material weaknesses.

     

    (ff)           The
      Company’s board of directors, senior management and audit committee have
      reviewed and agreed with the selection, application and disclosure of critical
      accounting policies and have consulted with their legal advisers and independent
      accountants with regard to such disclosure.

     

    (gg)           The
      Company and the Subsidiary maintain insurance in such amounts and covering
      such
      risks as the Company reasonably considers adequate for the conduct of its
      business and the value of its properties and as is customary for companies
      engaged in similar businesses in similar industries, all of which insurance
      is
      in full force and effect, except where the failure to maintain such insurance
      could not reasonably be expected to have a Material Adverse
      Effect.  There are no material claims by the Company or the Subsidiary
      under any such policy or instrument as to which any insurance company is denying
      liability or defending under a reservation of rights clause.  The
      Company reasonably believes that it will be able to renew its existing insurance
      as and when such coverage expires or will be able to obtain replacement
      insurance adequate for the conduct of the business and the value of its
      properties at a cost that could not reasonably be expected to have a Material
      Adverse Effect.  Neither the Company nor the Subsidiary has received
      notice from any insurer or agent of such insurer that substantial capital
      improvements or other expenditures will have to be made in order to continue
      such insurance.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    


    (hh)           As
      of the Closing Date, after giving effect to the Offering and the Use of
      Proceeds, the Company and the Subsidiary will own the Collateral free and clear
      of all Liens except for Permitted Liens.  As of the Closing Date, the
      representations and warranties contained in the Security Documents will be
      true
      and correct in all material respects.  As of the Closing Date, the
      Note Liens will have been duly attached as to all Collateral and the Company
      and
      the Guarantor will have delivered to the Collateral Agent all Security Documents
      necessary to perfect such Note Liens.

     

    (ii)           Except
      as disclosed in the Public Filings, no relationship, direct or indirect, exists
      between or among the Company, the Subsidiary or any affiliate of the Company,
      on
      the one hand, and any director, officer, stockholder, customer or supplier
      of
      the Company, the Subsidiary or any affiliate of the Company, on the other hand,
      which would be required by the Act to be described in a registration statement
      on Form S-1 filed with the Commission relating to the offering of securities
      similar to the Purchased Notes.  There are no outstanding loans,
      advances (except normal advances for business expenses in the ordinary course
      of
      business) or guarantees of indebtedness by the Company to or for the benefit
      of
      any of the officers or directors of the Company or any of their respective
      family members.  The Company has not, directly or indirectly,
      including through a subsidiary, extended or maintained credit, arranged for
      the
      extension of credit, or renewed an extension of credit, in the form of a
      personal loan to or for any director or executive officer of the Company that
      would violate the SOX Act if the Company were subject to the provisions of
      the
      SOX Act prohibiting such actions.

     

    (jj)           The
      Company and the Subsidiary are not now and, after giving effect to the sale
      of
      the Purchased Notes as contemplated hereunder and application of the net
      proceeds of such sale in accordance with the Use of Proceeds, will not be,
      an
“investment company” or a company “controlled” by an “investment company” within
      the meaning of the Investment Company Act of 1940, as amended (the
“Investment Company Act”).

     

    (kk)           Except
      as described in the Public Filings, no holder of any Relevant Security has
      any
      rights to require registration of any Relevant Security by reason of the
      execution by the Company or the Guarantor of this Agreement or any other
      Offering Document to which it is a party or the consummation by the Company
      or
      the Guarantor of the transactions contemplated hereby and thereby, or as part
      or
      on account of, or otherwise in connection with the Offering and any of the
      other
      transactions contemplated by the Operative Documents, and at the Closing, any
      such rights so disclosed will have been effectively waived by the holders
      thereof, and any such waivers will remain in full force and effect.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (ll)            The
      financial statements and as adjusted data, including the notes thereto, included
      in the 2006 Form 10-K present fairly in all material respects the financial
      position as of the dates indicated and the cash flows and results of operations
      for the periods specified of the Company and its consolidated subsidiaries
      for
      which financial statements are included in the 2006 Form 10-K; except as
      otherwise stated in the 2006 Form 10-K, said financial statements have been
      prepared in conformity with United States generally accepted accounting
      principles applied on a consistent basis throughout the periods
      involved.  The other financial and statistical information included in
      the 2006 Form 10-K and derived from the historical financial statements,
      presents fairly in all material respects the information included therein and
      has been prepared on a basis consistent with that of the historical financial
      statements that are included in the 2006 Form 10-K and the books and records
      of
      the respective entities presented therein and, to the extent such information
      is
      a range, projection or estimate, is based on the good faith belief and estimates
      of the management of the Company and the Subsidiary.

     

    (mm)  
Ernst
&
Young
      LLP,
      who has certified the financial statements and information included or to be
      included as part of the 2006 Form 10-K, is an independent public accounting
      firm
      as required by the Act and the Exchange Act.

     

    (nn)
                 The
      statistical, industry-related and market-related data included in the 2006
      Form
      10-K, if any, are based on or derived from sources which the Company and the
      Guarantor reasonably and in good faith believe to be reliable and accurate,
      and
      such data agree with the sources from which they are derived.

     

    (oo)           None
      of the execution, delivery and performance of this Agreement, the issuance
      and
      sale of the Purchased Notes, the application of the proceeds from the issuance
      and sale of the Securities and the consummation of the transactions contemplated
      thereby as set forth herein, will violate Regulations T, U or X promulgated
      by
      the Board of Governors of the Federal Reserve System or analogous foreign laws
      and regulations, in each case as in effect, or as the same may hereafter be
      in
      effect, on the Closing Date (the “Regulations”) and
      none of the Company, the Subsidiary or the Guarantor nor any agent thereof
      acting on the behalf of any of them has taken, and none of them will take,
      any
      action that might cause this Agreement or the issuance or sale of the Purchased
      Notes and the Guarantees to violate the Regulations.

     

    (pp)           Neither
      the Company nor the Guarantor is, nor will either of them be, after giving
      effect to the execution, delivery and performance of the Operative Documents
      and
      the consummation of the transactions contemplated thereby, (i) left with
      unreasonably small capital with which to carry on their respective businesses
      as
      proposed to be conducted; (ii) unable to pay their debts (contingent or
      otherwise) as they mature; or (iii) insolvent.  The fair value
      and present fair saleable value of the assets of the Company and the Guarantor
      exceed the amount that will be required to be paid on or in respect of its
      existing debts and other liabilities (including contingent liabilities) as
      they
      become absolute and matured.  The assets of the Company and the
      Guarantor do not constitute unreasonably small capital to carry out its business
      as conducted or as proposed to be conducted.  Immediately after the
      consummation of the Offering, (i) the fair value and present fair saleable
      value of the assets of the Company and the Guarantor will exceed the sum of
      their stated liabilities and identified contingent liabilities as they become
      absolute and matured, and (ii) the assets of the Company and the Guarantor
      will not constitute unreasonably small capital to carry out its business as
      now
      conducted, including the capital needs of the Company and the Guarantor, taking
      into account the projected capital requirements and capital
      availability.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    


    (qq)           Except
      pursuant to this Agreement, there are no contracts, agreements or understandings
      to which the Company or the Subsidiary is a party that would give rise to a
      valid claim against the Company, the Subsidiary or the Purchasers for a
      brokerage commission, finder’s fee or like payment in connection with the
      issuance, purchase and sale of the Purchased Notes and the
      Guarantees.

     

    (rr)           Except
      as described in the Public Filings, neither the Company nor the Subsidiary
      is in
      default under any of the Operative Documents or any of the contracts described
      in the Public Filings, has received a notice or claim of any such default or
      has
      knowledge of any breach of such contracts by the other party or parties thereto,
      except such defaults or breaches as would not, individually or in the aggregate,
      have a Material Adverse Effect.

     

    (ss)           Neither
      the Company, the Subsidiary nor, to the Company’s knowledge, any of its
      employees or agents has at any time during the last five years (i) made any
      unlawful contribution to any candidate for foreign office, or failed to disclose
      fully any contribution in violation of law, or (ii) made any payment to any
      federal or state governmental officer or official, or other person charged
      with
      similar public or quasi-public duties, other than payments required or permitted
      by the laws of the United States of any jurisdiction thereof.

     

    (tt)           Except
      as disclosed in the Public Filings and as contemplated by this Agreement, there
      are no outstanding guarantees or other contingent obligations of the Company
      or
      the Subsidiary that could reasonably be expected to have a Material Adverse
      Effect.

     

    Each
      certificate signed by or on behalf of the Company or the Guarantor and delivered
      to the Purchasers or counsel for the Purchasers shall be deemed to be a
      representation and warranty by the Company or the Guarantor, as the case may
      be,
      to the Purchasers as to the matters covered thereby.

     

    Each
      of
      the Company and the Guarantor acknowledge that the Purchasers and, for purposes
      of the opinion to be delivered to the Purchasers pursuant to Section 9 hereof,
      counsel for the Company and the Guarantor, will rely upon the accuracy and
      truth
      of the foregoing representations and hereby consent to such
      reliance.

     

    3.           Representations
      and Warranties of the Purchasers. Each Purchaser (and (i) for purposes
      of paragraph (e) below only, Goldman Sachs, (ii) for purposes of paragraph
      (f)
      below only, Highland, and (iii) for purposes of paragraph (g) below only,
      CMA, with respect to which paragraphs no other party hereto makes any
      representation or warranty) represents, warrants and covenants to the Company
      and the Guarantor and agrees that:

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


    (a)           Such
      Purchaser is an “accredited investor” (within the meaning of Rule 501 of
      Regulation D), with such knowledge and experience in financial and business
      matters as are necessary in order to evaluate the merits and risks of an
      investment in the Purchased Notes.

     

    (b)           Such
      Purchaser has been advised that the Securities have not been registered under
      the Securities Act, or any state securities laws and, therefore, cannot be
      resold unless they are registered under the Securities Act and applicable state
      securities laws or unless an exemption from such registration requirements
      is
      available.  Such Purchaser is aware that Company is under no
      obligation to effect any such registration with respect to the Securities or
      to
      file for any exemption from registration.  Such Purchaser has not been
      formed solely for the purpose of investing in the Securities.  Such
      Purchaser is acquiring the Securities for its own account, and such Purchaser
      does not intend to resell or distribute the Securities in contravention of
      the
      Securities Act or any other applicable securities laws.  Such
      Purchaser has such knowledge and experience in financial and business matters
      that such Purchaser is capable of evaluating the merits and risks of such
      investment, is able to incur a complete loss of such investment and is able
      to
      bear the economic risk of such investment for an indefinite period of
      time.

     

    (c)           Such
      Purchaser has not engaged, and will not engage, in any form of “general
      solicitation or general advertising” (within the meaning of Regulation D under
      the Securities Act) in connection with any offer or sale of the Securities,
      including, but not limited to, articles, notices or other communications
      published in any newspaper, magazine, or similar medium or broadcast over
      television or radio, or any seminar or meeting whose attendees have been invited
      by any general solicitation or general advertising.

     

    (d)           Such
      Purchaser does not own, directly or indirectly, five percent or more of the
      outstanding capital stock of the Company, assuming conversion of all options,
      warrants and other convertible securities of the Company.

     

    (e)           Goldman
      Sachs is the beneficial owner of, and, either directly or upon the issuance
      of
      an omnibus proxy from the Depositary, has or will have the power to direct
      the
      vote of (directly or by direction to a direct or indirect participant of the
      Depositary), Notes in the aggregate principal amount and in the manner
      (i.e., directly as a Holder or through the Depositary) set forth on
Schedule 1 to this Agreement opposite such Purchaser’s name.

     

    (f)           Highland,
      either directly or upon the issuance of an omnibus proxy from the Depositary,
      has or will have the power to direct the vote of (directly or by direction
      to a
      direct or indirect participant of the Depositary), Notes in the aggregate
      principal amount and in the manner (i.e., directly as a Holder or
      through the Depositary) set forth on Schedule 1 to this Agreement
      opposite Highland’s name.

     

    
      
        
        

      

      
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    (g)           The
      representations and warranties made by CMA in the Accredited Investor
      Questionnaire delivered by CMA to the Company on the date hereof are correct
      and
      complete.

     

    Such
      Purchaser (and for purposes of paragraph (f), Highland) acknowledges that the
      Company and the Guarantor and, for purposes of the opinion to be delivered
      to
      the Purchasers pursuant to Section 9 hereof, counsel for the Company and the
      Guarantor, will rely upon the accuracy and truth of the foregoing
      representations and hereby consent to such reliance.

     

    4.           Purchase,
      Sale and Delivery.

     

    (a)           On
      the basis of the representations, warranties and covenants contained in this
      Agreement, and subject to its terms and conditions, the Company agrees to issue
      and sell to the Purchasers, and each Purchaser, severally and not jointly,
      agrees to purchase from the Company, the respective aggregate principal amount
      of the Notes set forth next to the name of such Purchaser on the signature
      page
      hereto.  The purchase price for the Notes will be $1,040 per $1,000 in
      principal amount of Notes.

     

    (b)           On
      the Closing Date, the Company shall deliver to each Purchaser, registered in
      the
      name of such Purchaser, a number of Notes in definitive form (the
“Definitive Notes”) in an aggregate principal amount
      equal to the aggregate principal amount of Notes being purchased by such
      Purchaser pursuant to Section 4(a), against payment of the purchase price
      therefor by such Purchaser by wire transfer of same-day funds to the account
      of
      the Company, previously designated by it in writing; provided that the
      Company shall give at least two business days’ prior written notice to the
      Purchasers of the information required to effect such wire
      transfer.  Such delivery of and payment for the Notes shall be made at
      the offices of Jackson Walker L.L.P., Austin, Texas or such other location
      or in
      such other manner as may be mutually acceptable.  Such delivery and
      payment shall be made at 11:00 a.m., CST time, on the first business day after
      the conditions set forth in Sections 9 and 10 of this Agreement shall have
      been
      satisfied or waived (other than the conditions which are to be satisfied on
      the
      Closing Date) or at such other time or in such other manner as shall be agreed
      upon by the Purchasers and the Company.  The time and date of such
      delivery and payment are herein called the “Closing
      Date.”  The Definitive Notes shall be made available to
      the Purchasers for inspection not later than 11:00 a.m., CST time, on the
      business day immediately preceding the Closing Date.

     

    5.           Agreements
      of the Company and the Guarantor.  Each of the Company and the
      Guarantor covenants and agrees with each Purchaser that:

     

    (a)           If
      this Agreement shall terminate or shall be terminated after execution because
      of
      any failure or refusal on the part of the Company or the Guarantor to comply
      with the terms or fulfill any of the conditions of this Agreement, the Company
      agrees to reimburse such Purchaser for all reasonable out-of-pocket expenses
      (including fees and expenses of counsel for such Purchaser) incurred by such
      Purchaser in connection herewith.

     

    
      
        
        

      

      
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    (b)           The
      Company shall apply the net proceeds from the sale of the Purchased Notes for
      capital expenditures and working capital (the “Use of
      Proceeds”).

     

    (c)           The
      Company and the Guarantor shall not voluntarily claim, and shall actively resist
      any attempts to claim, the benefit of any usury laws against the holders of
      any
      Notes.

     

    (d)           The
      Company and the Guarantor shall use all reasonable efforts to do and perform
      all
      things required or necessary to be done and performed under this Agreement
      prior
      to or after the Closing Date and to satisfy all conditions precedent to the
      delivery of the Purchased Notes.

     

    (e)           None
      of the Company, the Guarantor or any of their respective “affiliates” (as
      defined in Rule 144 under the Act) will sell, offer for sale or solicit
      offers to buy or otherwise negotiate in respect of any “security” (as defined in
      the Act) that could be integrated with the sale of the Purchased Notes in a
      manner that would require the registration under the Act of the sale to the
      Purchasers of the Purchased Notes.

     

    (f)           During
      the period of five years from the Closing Date (or until such time as the
      Purchased Notes are redeemed, if earlier), the Company and the Guarantor shall
      deliver without charge to each Purchaser (i) promptly after their becoming
      available, copies of each report and other communication (financial or
      otherwise) of the Company mailed to the Trustee of the holders of the Notes,
      stockholders or any national securities exchange on which any class of
      securities of the Company or the Guarantor may be listed (including without
      limitation, press releases) other than materials filed with the Commission
      and
      (ii) from time to time such other information concerning the Company and
      the Subsidiary as either Lead Purchaser may reasonably request.

     

    (g)           The
      Company and the Guarantor shall not take, directly or indirectly, any action
      designed to, or that might reasonably be expected to, cause or result in
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of the Purchased Notes, or take any action
      prohibited by Regulation M under the Exchange Act, in connection with the
      distribution of the Securities contemplated hereby.  Except as
      permitted by the Act, neither the Company nor the Guarantor will distribute
      any
      (i) preliminary offering memorandum, (ii) offering memorandum, or
      (iii) other offering material in connection with the offering and sale of
      the Purchased Notes.

     

    (h)           For
      so long as the Purchased Notes constitute “restricted” securities within the
      meaning of Rule 144(a)(3) under the Act, the Company and the Guarantor shall
      not, and shall not permit the Subsidiary to, solicit any offer to buy or offer
      to sell the Purchased Notes by means of any form of general solicitation or
      general advertising (as those terms are used in Regulation D under the Act)
      or
      in any manner involving a public offering within the meaning of Section 4(2)
      of
      the Act.

     

    
      
        
        

      

      
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    (i)           During
      the period from the Closing Date until two years after the Closing Date, without
      the prior written consent of the Lead Purchasers, the Company and the Guarantor
      shall not, and shall not permit any of their respective “affiliates” (as defined
      in Rule 144 under the Act) that are controlled by the Company to, resell
      any of the Securities that constitute “restricted securities” under Rule 144
      that have been reacquired by any of them.

     

    (j)           So
      long as any of the Securities are outstanding and the Company or any of its
      subsidiaries are subject to the provisions of the SOX Act, the Company and
      its
      Restricted Subsidiaries shall use all their respective reasonable best efforts
      to remain in compliance with provisions of the SOX Act that are applicable
      to
      each of them.

     

    (k)           Except
      as may be required by applicable law or the Indenture (as modified by the
      Supplemental Indenture), neither the Company nor the Guarantor shall publish
      a
      press release or other public announcement concerning the closing of the
      Offering without the consent of the Lead Purchasers, which consent shall not
      be
      unreasonably withheld; provided that the foregoing shall apply only with respect
      to such portions of such press release or announcement concerning the
      Offering.

     

    6.           Expenses.  Whether
      or not the transactions contemplated by this Agreement are consummated or this
      Agreement becomes effective or is terminated (pursuant to Section
      15 or otherwise), the Company and the Guarantor agree to
      pay all the following costs and expenses and all other costs, expenses, fees
      and
      taxes incident to the performance by the Company and the Guarantor of their
      obligations hereunder:  (i) the negotiation, preparation,
      printing, typing, filing, reproduction, execution and delivery of this Agreement
      and of the other Operative Documents, any amendment or supplement to or
      modification of any of the foregoing and any and all other documents furnished
      pursuant hereto or thereto or in connection herewith or therewith; (ii) the
      issuance, transfer, delivery, printing and authentication of the Purchased
      Notes
      and the Guarantees endorsed thereon to the Purchasers, including any stamp
      taxes
      in connection with the issuance and sale of the Purchased Notes and Trustee’s
      fees; (iii) the fees, disbursements and expenses of the Company’s and the
      Guarantor’s counsel (including local and special counsel, if any) and
      accountants; (iv) the fees and expenses of the Trustee and its counsel;
      (v) all expenses incurred in connection with the performance by the Company
      and the Guarantor of their other obligations under this Agreement and the other
      Operative Documents; and (vi) up to a total of $50,000 of the Lead Purchasers’
expenses incurred in connection with the Offering and the preparation of this
      Agreement, including, without limitation, fees, disbursements and other charges
      of counsel and examiners, search fees, due diligence expenses, transportation
      expenses, and appraisal, environmental, audit and consultant costs and
      expenses.  The Lead Purchasers have agreed that $25,000 shall be
      allocated for the payment of consultant costs and expenses and that the
      remaining $25,000 shall be allocated $10,000 for the Highland Purchaser and
      $15,000 for Goldman Sachs.

     

    7.           Indemnification.

     

    (a)           The
      Company and the Guarantor, jointly and severally, shall indemnify and hold
      harmless (i) each Purchaser, (ii) each person, if any, who controls
      such Purchaser within the meaning of Section 15 of the Act or Section 20(a)
      of
      the Exchange Act, and (iii) the respective officers, directors, partners,
      employees, representatives and agents of each of such Purchasers or any of
      such
      controlling persons, from and against any and all losses, liabilities, claims,
      damages and expenses whatsoever as incurred (including but not limited to
      attorneys’ fees and any and all expenses whatsoever incurred in investigating,
      preparing or defending against any investigation or litigation, commenced or
      threatened, or any claim whatsoever, and any and all amounts paid in settlement
      of any claim or litigation), joint or several, to which they or any of them
      may
      become subject under the Act, the Exchange Act or otherwise, insofar as such
      losses, liabilities, claims, damages or expenses (or actions in respect thereof)
      arise out of or are based upon (i) any untrue statement or alleged untrue
      statement of a material fact contained in the Public Filings, or (ii) the
      omission or alleged omission to state in the Public Filings, a material fact
      necessary to make the statements therein not misleading.  This
      indemnity agreement will be in addition to any liability that the Company and
      the Guarantor may otherwise have, including under this Agreement.

     

    
      
        
        

      

      
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    (b)           Promptly
      after receipt by an indemnified party under subsection (a) above of notice
      of
      the commencement of any action, such indemnified party shall, if a claim in
      respect thereof is to be made against the indemnifying party under such
      subsection, notify each party against whom indemnification is to be sought
      in
      writing of the commencement thereof (but the failure so to notify an
      indemnifying party shall not relieve it from any liability that it may have
      under this Section 7 except to the extent that it has been prejudiced in any
      material respect by such failure).  In case any such action is brought
      against any indemnified party, and it notifies an indemnifying party of the
      commencement thereof, the indemnifying party will be entitled to participate,
      at
      its own expense in the defense of such action, and to the extent it may elect
      by
      written notice delivered to the indemnified party promptly after receiving
      the
      aforesaid notice from such indemnified party, to assume the defense thereof
      with
      counsel satisfactory to such indemnified party; provided,
however, that counsel to the indemnifying party shall not (except
      with
      the written consent of the indemnified party) also be counsel to the indemnified
      party.  Notwithstanding the foregoing, the indemnified party or
      parties shall have the right to employ its or their own counsel in any such
      case, but the fees and expenses of such counsel shall be at the expense of
      such
      indemnified party or parties unless (i) the employment of such counsel
      shall have been authorized in writing by one of the indemnifying parties in
      connection with the defense of such action, (ii) the indemnifying parties
      shall not have employed counsel to take charge of the defense of such action
      within a reasonable time after notice of commencement of the action,
      (iii) the indemnifying party does not diligently defend the action after
      assumption of the defense, or (iv) such indemnified party or parties shall
      have reasonably concluded that there may be defenses available to it or them
      that are different from or additional to those available to one or all of the
      indemnifying parties (in which case the indemnifying party or parties shall
      not
      have the right to direct the defense of such action on behalf of the indemnified
      party or parties), in any of which events such fees and expenses of counsel
      shall be borne by the indemnifying parties.  No indemnifying party
      shall, without the prior written consent of the indemnified parties, effect
      any
      settlement or compromise of, or consent to the entry of judgment with respect
      to, any pending or threatened claim, investigation, action or proceeding in
      respect of which indemnity or contribution may be or could have been sought
      by
      an indemnified party under this Section 7 or Section 8 hereof (whether or not
      the indemnified party is an actual or potential party thereto), unless
      (x) such settlement, compromise or judgment (1) includes an
      unconditional release of the indemnified party from all liability arising out
      of
      such claim, investigation, action or proceeding and (2) does not include a
      statement as to or an admission of fault, culpability or any failure to act,
      by
      or on behalf of the indemnified party, and (y) the indemnifying party
      confirms in writing its indemnification obligations hereunder with respect
      to
      such settlement, compromise of judgment.

     

    
      
        
        

      

      
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    8.           Contribution.  In
      order to provide for contribution in circumstances in which the indemnification
      provided for in Section 7 is for any reason held to be unavailable from an
      indemnifying party or is insufficient to hold harmless a party indemnified
      thereunder, the Company and the Guarantor shall contribute to the aggregate
      losses, liabilities, claims, damages and expenses of the nature contemplated
      by
      such indemnification provision (including any investigation, legal and other
      expenses incurred in connection with, and any amount paid in settlement of,
      any
      action, suit or proceeding or any claims asserted, in such proportion as is
      appropriate to reflect the relative benefits received by the Company and the
      Guarantor, on the one hand, and the Purchasers, on the other hand, from the
      Offering of the Purchased Notes or, if such allocation is not permitted by
      applicable law or indemnification is not available as a result of the
      indemnifying party’s not having received notice as provided in Section 7, in
      such proportion as is appropriate to reflect not only the relative benefits
      referred to above but also the relative fault of the Company and the Guarantor,
      on the one hand, and the Purchasers, on the other hand, in connection with
      the
      statements or omissions that resulted in such losses, liabilities, claims,
      damages or expenses, as well as any other relevant equitable
      considerations.  The relative benefits received by the Company and the
      Guarantor, on the one hand, and the Purchasers, on the other hand, shall be
      deemed to be in the same proportion as (i) the total proceeds from the
      Offering of the Purchased Notes (net of discounts but before deducting expenses)
      received by the Company and the Guarantor bear to (ii) the discounts
      received by the Purchasers.  The relative fault of the Company and the
      Guarantor, on the one hand, and of the Purchasers, on the other hand, shall
      be
      determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or the omission or alleged omission to
      state
      a material fact relates to information supplied by the Company, the Guarantor
      or
      the Purchasers and the parties’ relative intent, knowledge, access to
      information and opportunity to correct or prevent such statement or
      omission.  The Company, the Guarantor and each Purchaser agree that it
      would not be just and equitable if contribution pursuant to this Section 8
      were
      determined by pro rata allocation or by any other method of allocation
      that does not take into account the equitable considerations referred to
      above.  The aggregate amount of losses, liabilities, claims, damages
      and expenses incurred by an indemnified party and referred to above in this
      Section 8 shall be deemed to include any legal or other expenses reasonably
      incurred by such indemnified party in investigating, preparing or defending
      against any litigation, or any investigation or proceeding by any judicial,
      regulatory or other legal or governmental agency or body, commenced or
      threatened, or any claim whatsoever based upon any such untrue or alleged untrue
      statement or omission or alleged omission.  Notwithstanding the
      provisions of this Section 8, (i) in no case shall a Purchaser be required
      to contribute any amount in excess of the amount by which the discounts
      applicable to the Purchased Notes purchased by such Purchaser pursuant to this
      Agreement exceeds the amount of damages that such Purchaser has otherwise been
      required to pay by reason of any untrue or alleged untrue statement or omission
      or alleged omission and (ii) no person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Act) shall be
      entitled to contribution from any person who was not guilty of such fraudulent
      misrepresentation.  For purposes of this Section 8, (A) each
      person, if any, who controls a Purchaser within the meaning of Section 15 of
      the
      Act or Section 20(a) of the Exchange Act and (B) the officers, directors,
      partners, employees, representatives and agents of the Purchasers or any
      controlling person shall have the same rights to contribution as the Purchasers,
      and (1) each person, if any, who controls the Company or the Guarantor
      within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
      Act
      and (2) the respective officers, directors, partners, employees,
      representatives and agents of the Company and the Guarantor shall have the
      same
      rights to contribution as the Company and the Guarantor, subject in each case
      to
      clauses (i) and (ii) of this Section 9.  Any party entitled to
      contribution will, promptly after receipt of notice of commencement of any
      action, suit or proceeding against such party in respect of which a claim for
      contribution may be made against another party or parties under this Section
      8,
      notify such party or parties from whom contribution may be sought, but the
      failure to so notify such party or parties shall not relieve the party or
      parties from whom contribution may be sought from any obligation it or they
      may
      have under this Section 8 or otherwise.  No party shall be liable for
      contribution with respect to any action or claim settled without its prior
      written consent, provided that such written consent was not
      unreasonably withheld.

     

    
      
        
        

      

      
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    9.           Conditions
      of Purchasers’ Obligations.  The obligations of each Purchaser to
      purchase and pay for the Purchased Notes, as provided herein, are subject to
      the
      satisfaction of the following conditions unless waived in writing by such
      Purchaser:

     

    (a)           All
      of the representations and warranties of the Company and the Guarantor contained
      in this Agreement shall be true and correct on the date hereof and on the
      Closing Date with the same force and effect as if made on and as of the date
      hereof and the Closing Date, respectively.  The Company and the
      Guarantor shall have performed or complied with all of the agreements and
      satisfied all conditions on their respective parts to be performed, complied
      with or satisfied hereunder at or prior to the Closing Date.

     

    (b)           None
      of the issuance and sale of the Purchased Notes pursuant to this Agreement
      or
      any of the transactions contemplated by any of the other Operative Documents
      shall be enjoined (temporarily or permanently) and no restraining order or
      other
      injunctive order shall have been issued; and there shall not have been any
      legal
      action, statute, order, rule, regulation, decree or other administrative
      proceeding enacted, instituted, adopted, issued or threatened against the
      Company, the Guarantor, or against such Purchaser relating to the issuance
      of
      the Purchased Notes or any of such Purchaser’s activities in connection
      therewith or any other transactions contemplated by this Agreement or the other
      Operative Documents.  No action, suit or proceeding shall have been
      commenced and be pending against or affecting or, to the best knowledge of
      the
      Company and the Guarantor, threatened against, the Company or the Subsidiary
      before any court or arbitrator or any governmental body, agency or official
      that, if adversely determined, could reasonably be expected to result in a
      Material Adverse Effect.

     

    (c)           Subsequent
      to the date of this Agreement, (i) there shall not have occurred any
      change, or any development involving a prospective change, in or affecting
      the
      general affairs, management, business, condition (financial or other),
      properties, prospects, results of operations, capital stock, or long-term debt,
      or a material increase in the short-term debt, of the Company or the Subsidiary,
      not contemplated by the Public Filings that is, in the judgment of either Lead
      Purchaser, so material and adverse as to make it impracticable or inadvisable
      to
      proceed with the offering of the Purchased Notes on the terms and in the manner
      contemplated by the Operative Documents, (ii) no dividend or distribution
      of any kind shall have been declared, paid or made by the Company or the
      Subsidiary on any class of its capital stock, and (iii) except as
      contemplated by this Agreement, none of the Company or the Subsidiary shall
      have
      incurred any liability or obligation, direct or contingent, that is material,
      individually or in the aggregate, to the Company and its subsidiaries, taken
      as
      a whole, and that is required to be disclosed on a balance sheet or notes
      thereto in accordance with generally accepted accounting principles and is
      not
      disclosed on the latest balance sheet or notes thereto included in the Public
      Filings.

     

    
      
        
        

      

      
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    (d)           At
      the Closing Date and after giving effect to the consummation of the transactions
      contemplated by the Operative Documents, there exists no Default or Event of
      Default.

     

    (e)           The
      Lead Purchasers shall have received certificates, dated the Closing Date, signed
      by the chief executive officer and the chief financial officer of the Company
      and the Guarantor (in their respective capacities as such), in form and
      substance reasonably satisfactory to the Lead Purchasers, confirming, as of
      the
      Closing Date, the matters set forth in paragraphs (a), (b), (c), and (d) of
      this
      Section 9 and that, as of the Closing Date, the obligations of the Company
      and
      the Guarantor, as the case may be, to be performed hereunder on or prior thereto
      have been duly performed and subsequent to the date as of which information
      is
      given in the Public Filings, there has not been any Material Adverse Effect,
      or
      any development involving a prospective material adverse change to the Company,
      except in each case as described in the Public Filings.

     

    (f)           The
      Lead Purchasers shall have received on the Closing Date an opinion, dated the
      Closing Date, in form and substance satisfactory to the Purchasers and Proskauer
      Rose LLP, of counsel for the Purchasers, of Jackson Walker L.L.P., counsel
      for
      the Company and the Guarantor, to the effect set forth in Exhibit B
      hereto.

     

    (g)           The
      Company and the Guarantor shall have furnished or caused to be furnished to
      the
      Purchasers such further information, certificates and documents as either Lead
      Purchaser may have reasonably requested.

     

    (h)           The
      Purchased Notes and the Guarantees thereof shall have been duly executed and
      delivered by the Company and the Guarantor, and the Purchased Notes shall have
      been duly authenticated by the Trustee.

     

    (i)           On
      or after the date hereof, (i) there shall not have occurred any
      downgrading, suspension or withdrawal of, nor shall there have been any
      announcement of any potential or intended downgrading, suspension or withdrawal
      of, or of any review (or of any potential or intended review) for a possible
      downgrading, or with negative implications, or direction not determined of,
      any
      rating of the Company or the Guarantor or any securities of the Company or
      the
      Guarantor (including, without limitation, the placing of any of the foregoing
      ratings on credit watch with negative or developing implications or under review
      with an uncertain direction) by any “nationally recognized statistical rating
      organization” as such term is defined for purposes of Rule 436(g)(2) under the
      Act, and (ii) there shall not have occurred any change, nor shall any
      notice have been given of any potential or intended change, in the outlook
      for
      any rating of the Company or the Guarantor or any securities of the Company
      or
      the Guarantor by any such rating organization.

     

    
      
        
        

      

      
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    (j)           Each
      of the Operative Documents and each other agreement or instrument executed
      in
      connection with the transactions contemplated thereby shall be reasonably
      satisfactory in form and substance to the Lead Purchasers and shall have been
      executed and delivered by all the respective parties thereto and shall be in
      full force and effect, and there shall have been no material amendments,
      alterations, modifications or waivers of any provision thereof since the date
      of
      this Agreement.


    (k)           All
      opinions, certificates, letters, schedules, documents or instruments required
      by
      this Section 9 to be delivered by the Company and the Guarantor will be in
      compliance with the provisions hereof only if they are reasonably satisfactory
      in form and substance to the Lead Purchasers and counsel to the Lead
      Purchasers.  The Company and the Guarantor shall furnish the Lead
      Purchasers with such additional copies of such opinions, certificates, letters,
      schedules, documents and instruments in such quantities as either Lead Purchaser
      shall reasonably request.

     

    10.           Condition
      of the Company’s and the Guarantor’s Obligations.  The obligation
      of the Company and the Guarantor to sell and issue the Purchased Notes, as
      provided herein, are subject to the satisfaction of the following condition
      unless waived in writing by the Company:

     

    (a)           All
      of the representations and warranties of the Purchasers contained in this
      Agreement shall be true and correct on the date hereof and on the Closing Date
      with the same force and effect as if made on and as of the date hereof and
      the
      Closing Date, respectively.

     

    (b)           The
      Noteholder Consent shall have been obtained and the Trustee shall have duly
      executed and delivered the Supplemental Indenture.

     

    11.           Offering
      of Securities; Restrictions on Transfer.  Each Purchaser agrees
      with the Company and the Guarantor that it has not and will not solicit offers
      for, or offer or sell, the Securities by any form of general solicitation or
      general advertising (as those terms are used in Regulation D under the Act)
      or
      in any manner involving a public offering within the meaning of Section 4(2)
      of
      the Act.

     

    12.           Survival
      of Representations and Agreements.  The respective
      representations, warranties, covenants, agreements, indemnities and other
      statements of the Company and the Guarantor, their respective officers and
      the
      Purchasers set forth in this Agreement or made by or on behalf of them,
      respectively pursuant to this Agreement shall remain operative and in full
      force
      and effect regardless of (i) any investigation made by or on behalf of the
      Company, the Guarantor, any of their respective officers or directors, the
      Purchasers or any controlling person referred to in Sections 7 and 8 hereof,
      and
      (ii) delivery of and payment for the Purchased Notes to and by the
      Purchasers, and shall be binding upon and shall inure to the benefit of, any
      successors, assigns, heirs, personal representatives of the Company, the
      Guarantor, the Purchasers and the indemnified parties referred to in Section
      7
      hereof.  The respective representations, agreements, covenants, and
      other statements set forth in Sections 6, 7, 8, 11 and 12 shall survive the
      termination of this Agreement, regardless of any termination or cancellation
      of
      this Agreement.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    13.           Effective
      Date of Agreement; Termination.

     

    (a)           This
      Agreement shall become effective upon execution and delivery of a counterpart
      hereof by each of the parties hereto.

     

    (b)           This
      Agreement may be terminated in the sole discretion of either Lead Purchaser
      by
      notice to the Company from such Lead Purchaser, without liability on the
      Purchasers’ part to the Company or the Guarantor in the event that the Company
      or the Guarantor have failed, refused or been unable to perform or satisfy
      all
      conditions on their respective parts to be performed or satisfied hereunder
      on
      or prior to the Closing Date, any other condition to the obligations of the
      Purchasers hereunder as provided in Section 9 is not fulfilled when and as
      required, or if (i) in the reasonable judgment of such Lead Purchaser, any
      material adverse change shall have occurred since the respective dates as of
      which information is given in the Public Filings in the condition (financial
      or
      otherwise), business, properties, assets, liabilities, prospects, net worth,
      results of operations or cash flows of the Company and its subsidiaries, taken
      as a whole, other than as set forth in the Public Filings, that, in the judgment
      of such Lead Purchaser, makes it inadvisable or impracticable to proceed with
      the Offering or the sale and delivery of the Notes on the terms and in the
      manner contemplated by the Operative Documents; or (ii) there shall not have
      been any disruption, adverse change or condition in the financial, lending
      or
      capital markets generally, or in the market for high yield debt in
      particular.

     

    The
      right of the Lead Purchasers to
      terminate this Agreement will not be waived or otherwise relinquished by its
      failure to give notice of termination prior to the time that the event giving
      rise to the right to terminate shall have ceased to exist, provided
      that notice is given prior to the Closing Date.

     

    (c)           Any
      notice of termination pursuant to this Section 13 shall be by telephone or
      facsimile and, in either case, confirmed promptly in writing by
      letter.

     

    (d)           If
      this Agreement shall be terminated pursuant to any of the provisions hereof,
      or
      if the sale of the Purchased Notes provided for herein is not consummated
      because any condition to the obligations of the Purchasers set forth herein
      is
      not satisfied or because of any refusal, inability or failure on the part of
      the
      Company or the Guarantor to perform any agreement herein or comply with any
      provision hereof, the Company and the Guarantor shall, subject to demand by
      either Lead Purchaser, reimburse the Purchasers for all out-of-pocket expenses
      (including the reasonable fees and expenses of the Purchasers’ counsel),
      incurred by the Purchasers in connection herewith.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    14.           Notices.  All
      communications hereunder shall be in writing and, if sent to the Purchasers,
      shall be hand-delivered, mailed by first-class mail, couriered by next-day
      air
      courier or faxed and confirmed in writing to the Purchasers at the addresses
      set
      forth opposite their respective names on the signature page hereto, with a
      copy
      to Proskauer Rose LLP, 1585 Broadway, New York, New York,  10036,
      Attention Ian Blumenstein, telecopy number: (212) 969-2900 and to Haynes and
      Boone LLP, 1221 McKinney Street, Suite 2100, Houston, Texas 77010, Attention:
      Debra Gatison Hatter, telecopy number: (713) 236-5437.  If sent to the
      Company and the Guarantor, shall be mailed, delivered, couriered or faxed and
      confirmed in writing to Grande Communications Holdings, Inc., 401 Carlson
      Circle, San Marcos, Texas 78666, Attention: Chief Financial Officer, telecopy
      number: (512) 878-4010, and with a copy to Jackson Walker L.L.P., 100 Congress
      Avenue, Suite 1100, Austin, Texas 78701, Attention: Ann Benolken, telecopy
      number: (512) 236-2002.

     

    15.           Successors.  This
      Agreement shall inure to the benefit of, and shall be binding upon, the
      Purchasers, the Company, the Guarantor and their respective successors, legal
      representatives and assigns, and, except as provided in the last paragraph
      of
      Section 2 of this Agreement, in the last paragraph of Section 3 of this
      Agreement, and in Sections 7 and 8 of this Agreement, nothing expressed or
      mentioned in this Agreement is intended or shall be construed to give any other
      person any legal or equitable right, remedy or claim under or in respect of,
      or
      by virtue of, this Agreement or any provision herein contained; this Agreement
      and all conditions and provisions hereof being intended to be and being for
      the
      sole and exclusive benefit of such persons and for the benefit of no other
      person.

     

    16.           No
      Waiver; Modifications in Writing.  No failure or delay on the part
      of the Company, the Guarantor or the Purchasers in exercising any right, power
      or remedy hereunder shall operate as a waiver thereof, nor shall any single
      or
      partial exercise of any such right, power or remedy preclude any other or
      further exercise thereof or the exercise of any other right, power or
      remedy.  The remedies provided for herein are cumulative and are not
      exclusive of any remedies that may be available to the Company, the Guarantor
      or
      the Purchasers at law or in equity or otherwise.  No waiver of or
      consent to any departure by the Company, the Guarantor or the Purchasers from
      any provision of this Agreement shall be effective unless signed in writing
      by
      the party entitled to the benefit thereof; provided that notice of any
      such waiver shall be given to each party hereto as set forth
      above.  Except as otherwise provided herein, no amendment,
      modification or termination of any provision of this Agreement shall be
      effective unless signed in writing by or on behalf of the Company, the Guarantor
      and the Lead Purchasers, and any amendment, modification or termination of
      any
      provision of this Agreement signed in writing by or on behalf of the Company,
      the Guarantor and the Lead Purchasers shall be binding upon the Company, the
      Guarantor and all Purchasers.  Any amendment, supplement or
      modification of or to any provision of this Agreement, any waiver of any
      provision of this Agreement, and any consent to any departure by the Company,
      the Guarantor or the Purchasers from the terms of any provision of this
      Agreement shall be effective only in the specific instance and for the specific
      purpose for which made or given.  Except where notice is specifically
      required by this Agreement, no notice to or demand on the Company or the
      Guarantor in any case shall entitle the Company or the Guarantor to any other
      or
      further notice or demand in similar or other circumstances.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    17.           Entire
      Agreement.  This Agreement constitutes the entire agreement among
      the parties hereto and supersedes all prior agreements, understandings and
      arrangements, oral or written, among the parties hereto with respect to the
      subject matter hereof.

     

    18.           Applicable
      Law.  THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE
      TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN
      ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
      TO
      ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.  TIME IS OF THE ESSENCE
      IN THIS AGREEMENT.

     

    19.           Partial
      Invalidity.  In case any provision of this Agreement shall be
      invalid, illegal or unenforceable, the validity, legality and enforceability
      of
      the remaining provisions shall not in any way be affected or impaired
      thereby.

     

    20.           Captions.  The
      captions included in this Agreement are included solely for convenience of
      reference and are not to be considered a part of this Agreement.

     

    21.           Counterparts.  This
      Agreement may be executed by any one or more of the parties hereto in various
      counterparts, each of which shall constitute an original, but all of which
      together shall constitute one and the same instrument.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    22.           DTPA
      Waiver.  In consideration of the Purchasers’ agreement to perform
      the services described in this Agreement, each of the Company and the Guarantor
      hereby WAIVES AND RELEASES all of the Company’s rights and remedies under the
      Texas Deceptive Trade Practices—Consumer Protection Act (hereinafter referred to
      as the “DTPA”), Subchapter E of Chapter 17 of the
      Texas Business and Commerce Code, if any, including without limitation, all
      rights and remedies resulting from, arising out of or associated with any and
      all acts or practices of the Purchasers in connection with the Offering and
      the
      Use of Proceeds therefrom and/or the other transactions contemplated hereby
      (collectively, the “Transactions”), whether such acts
      or practices occur before or after the date hereof or consummation of any of
      the
      Transactions. Each of the Company and the Guarantor understands that its rights
      and remedies with respect to the Transactions and with respect to all acts
      or
      transactions shall be governed by legal principles other than the DTPA;
provided, however, that neither the Company nor the Guarantor
      waives subchapter 17.555 of the DTPA. In connection with this waiver, each
      of
      the Company and the Guarantor acknowledges, represents and warrants that it
      has
      assets of $5.0 million or more (calculated in accordance with generally accepted
      accounting principles), that it has knowledge and experience in financial and
      business matters that enable it to evaluate the merits and risks of transactions
      such as the Transactions, and that it is not in a significantly disparate
      bargaining position with the Purchasers. Neither termination of this Agreement,
      nor consummation of the Offering or any of the transactions contemplated hereby
      shall affect the provisions of this Section 22, which shall remain
      operative and in full force and effect.

     

     

    [Signature
      page to follow]

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    If
      the
      foregoing correctly sets forth the understanding among the Purchasers, the
      Company and the Guarantor please so indicate in the space provided below for
      that purpose, whereupon this letter shall constitute a binding agreement among
      us.

     

    
      
        	 	
                Very
                  truly yours,

              
	 	 	 
	 	
                GRANDE
                  COMMUNICATIONS HOLDINGS, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/  Roy
                  H. Chestnutt

              
	 	 	
                Name:  Roy
                  H. Chestnutt

              
	 	 	
                Title:  Chief
                  Executive Officer

              
	 	 	 
	 	 	 
	 	
                GRANDE
                  COMMUNICATIONS NETWORKS, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/  Roy
                  H. Chestnutt

              
	 	 	
                Name:  Roy
                  H. Chestnutt

              
	 	 	
                Title:  Chief
                  Executive Officer

              


      

    

     

    
      
        
        

      

      
        S-1

        
          

        

      

      
        
        

      

    


    Accepted
      and agreed to as of

    the
      date
      first above written:

    


    PURCHASERS

    


    
      	
              GOLDMAN,
                SACHS & CO. 

            	 	
              Principal
                amount of Notes: $14,975,000

            
	 	 	 	 	
              Address
                for notices:

            
	 	 	 	 	
              85
                Broad Street

            
	 	 	 	 	
              New
                York, New York 10004

            
	
              By:

            	
              /s/
                Vivian Lau

            	 	
              Attn:

            
	 	
              Authorized
                Signatory 

            	 	 
	 	 	 	 	 
	
              HIGHLAND
                CRUSADER OFFSHORE PARTNERS, L.P. 

            	 	
              Principal
                amount of Notes: $10,000,000

            
	
              By:    Highland
                Crusader Fund GP, L.P., 

            	 	
              Address
                for notices:

            
	
               
                its General Partner 

            	 	
              13455
                Noel Road, Suite 800

            
	
              By:
                Highland Crusader GP, LLC 

            	 	
              Dallas,
                Texas 75240

            
	
              its
                General Partner 

            	 	
              Attn:  General
                Counsel

            
	 	
               By:
                Highland Capital Management, L.P., 

            	 	 
	 	
               its
                sole member 

            	 	 
	 	
               By:  Strand
                Advisors, Inc. 

            	 	 
	 	
               its
                General Partner 

            	 	 
	 	 	 	 	 
	 	 	 	 	 
	
            	
              
                 By:

              

            	/s/
              Mark Okada	 	 
	 	
               

            	
              Authorized
                Signatory

            	 	 
	 	 	 	 	 
	
              COMMUNICATIONS
                MEDIA ADVISORS, LLC 

            	 	
              Principal
                amount of Notes: $25,000

            
	 	 	 	 	
              Address
                for notices:

            
	 	 	 	 	
              383
                Beacon Street

            
	 	 	 	 	
              Boston,
                Massachusetts 02116

            
	
              By:

            	
              /s/
                Nicholas Vantzelfde

            	 	
              Attn:  Nicholas
                Vantzelfde

            
	 	
              Authorized
                Signatory 

            	 	
              Telecopy:

            
	 	 	 	 	 
	
              HIGHLAND

            	 	 	 
	 	 	 	 	 
	
              HIGHLAND
                CAPITAL MANAGEMENT, L.P. 

            	 	
              Principal
                amount of Notes: n/a

            
	 	
              By:  Strand
                Advisors, Inc. 

            	 	
              Address
                for notices:

            
	 	
              its
                General Partner 

            	 	
              13455
                Noel Road, Suite 800

            
	 	 	 	 	
              Dallas,
                Texas 75240

            
	 	 	 	 	
              Attn:  General
                Counsel

            
	
              By:

            	
              /s/
                Mark Okada

            	 	
              Telecopy:

            
	 	
              Authorized
                Signatory 

            	 	 


    


    
      
        
        

      

      
        S-2

        
          

        

      

      
        
        

      

    


    SCHEDULE 1

     

    
      	
              PARTY

            	
              
                PRINCIPAL
                  AMOUNT OF NOTES

              

            	
              
                MANNER
                  HELD

                (AS
                  HOLDER OR AS OR THROUGH PARTICIPANT OF DEPOSITARY)

              

            	
              
                PARTICIPANT
                  OF DEPOSITARY, IF APPLICABLE

              

            	
              
                ENTITY
                  HOLDING THROUGH PARTICIPANT

              

            
	
              GOLDMAN
                SACHS

            	
              $72,513,000

            	
              Holder
                - $32,000,000 
                 As
                  Participant - $41,513,000

              

            	
              Goldman,
                Sachs & Co.

            	
              N/A

            
	
              HIGHLAND

            	
              $20,500,000

            	
              Through
                Participants

            	 	 
	 	 	
              $8,250,000

            	
              Wells
                LLC

            	
              Highland
                Purchaser

            
	 	 	
              $3,000,000

            	
              ________________

            	
              CALPERS1

            
	 	 	
              $1,250,000

            	
              PNC
                Bank, NA

            	
              Restoration
                Opportunities Fund

            
	 	 	
              $5,000,000

            	
              Goldman,
                Sachs & Co

            	
              Highland
                Credit Strategies Fund

            
	 	 	
              $2,000,000

            	
              PNC
                Bank, NA

            	
              Prospect
                Street High Income Fund

            
	 	 	
              $1,000,000

            	
              PNC
                Bank, NA

            	
              Prospect
                Street Income Shares

            
	
              CMA

            	
              $0

            	
              N/A

            	
              N/A

            	
              N/A

            


    

     

     

    
      

    

    
      1
        California Public
        Employees Retirement System.