Exhibit
2.1  AGREEMENT AND PLAN OF MERGER  DATED AS OF  December 16, 2004,  AMONG  MID-MISSOURI PARENT, LLC,  MID-MISSOURI HOLDING CORP.,  RURAL LEC ACQUISITION LLC  and  OTELCO MERGER SUBSIDIARY, INC.


TABLE OF CONTENTS  ARTICLE
  I GENERAL1.1
  DefinitionsThe Merger1.2
  Effective Time of the
  Merger1.3
  Effect of the Merger1.4
  Charter,
  Bylaws, Officers and Directors of Surviving Corporation1.5
  Taking of Necessary
  Action1.6
  Tax Free Reorganization1.7
  ClosingARTICLE
  II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
  EXCHANGE OF CERTIFICATES2.1
  Consideration;
  Effect on Capital Stock2.2
  Exchange of Certificates2.3
  MMHC
  OptionsARTICLE III
  REPRESENTATIONS AND WARRANTIES3.1
  Representations and Warranties
  of Parent and MMHC3.2
  Representations and Warranties
  of Otelco and MergerCoARTICLE
  IV CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME; ADDITIONAL AGREEMENTS4.1
  Access to Records4.2
  Conduct4.3
  Legal Conditions to Merger4.4
  Notice of Prospective Breach4.5
  Further Assurances; ConsentsARTICLE V CONDITIONS
  PRECEDENT5.1
  Conditions to Each Partys
  Obligations5.2
  Conditions to Obligations of
  Otelco and MergerCo5.3
  Conditions to Obligations of
  MMHCARTICLE VI TERMINATION6.1
  Termination6.2
  Effect of Termination


ARTICLE VII MISCELLANEOUS7.1
  Expenses7.2
  Entire Agreement7.3
  Survival7.4
  Descriptive Headings7.5
  Notices7.6
  Counterparts7.7
  Governing Law7.8
  Benefits of Agreement7.9
  Pronouns7.10
  Amendment, Modification and
  Waiver


AGREEMENT
AND PLAN OF MERGER(this Agreement) dated as of December 16, 2004, amongMID-MISSOURI PARENT, LLC, a Delaware limited liability company (Parent), MID-MISSOURI HOLDING CORP., a Delaware corporation and
wholly owned subsidiary of Parent (MMHC), RURAL LEC ACQUISITION LLC, a Delaware limited liability company
(together with is successor in interest upon the Conversion, Otelco),
and OTELCOMERGER
SUBSIDIARY, INC., a Delaware corporation and wholly owned subsidiary
of OTELCO (MergerCo).  WHEREAS, contemporaneous with the Effective Time,
Otelco will convert from a Delaware limited liability company into a Delaware
corporation under the name Otelco Inc. (the Conversion);  WHEREAS, contemporaneous
with the Conversion each membership interest of Otelco (each a Unit)
will be converted into (i) 0.19498 of a Class B Otelco Shares and (ii) 3.12572 IDSs;  WHEREAS, MMHC is currently a wholly owned
subsidiary of Parent and MergerCo is a wholly owned subsidiary of Otelco;  WHEREAS, the Board of Directors or Board of Managers
(as applicable) of each of Parent, MMHC, Otelco and MergerCo has determined to
engage in the transactions contemplated hereby, pursuant to which (i) MergerCo
will be merged with and into MMHC (the Merger) pursuant to Section 251
of the Delaware General Corporation Law (the DGCL), (ii) the
outstanding capital stock of MergerCo shall be converted into shares of capital
stock of MMHC, (iii) each share of common stock, $0.01 par value per share, of
MMHC (the MMHC Common Stock) issued and outstanding immediately prior
to the Merger will be exchanged and converted into the right to receive Class B
Otelco Shares and IDSs in accordance with Section 2.1(a), all upon the
terms and conditions set forth in this Agreement; and  WHEREAS, by their signature below, the current sole
shareholder of each of MMHC and MergerCo hereby approve the Merger and this
Agreement.  NOW,
THEREFORE,in
consideration of the mutual benefits to be derived from this Agreement and the
representations, warranties, covenants, agreements, conditions and promises
contained herein and therein, the parties hereby agree as follows:


ARTICLE I
GENERAL  1.1Definitions.  As used herein, the
following capitalized terms have the meanings set forth below:  Agreement
has the meaning set forth in the Caption.  Applicable Law means any statute, law,
ordinance, rule or regulation applicable to the parties hereto.  APSC means the Alabama Public Service
Commission, and any successor entity thereto.  Audited MMHC Balance Sheet has the meaning set
forth in Section 3.1(d)(i).  Audited MMHC Financial Statements has the
meaning set forth in Section 3.1(d)(i).  Audited Otelco Balance Sheet has the meaning
set forth in Section 3.1(d)(i).  Audited Otelco Financial Statements has the
meaning set forth in Section 3.1(d)(i).  Business
Day means any day other than a Saturday, Sunday or day on which banks are
permitted to close in the City and State of New York.  Certificate
of Merger has the meaning set forth in Section 1.2.  Class
A Otelco Shares has the meaning set forth in Section3.2(c).  Class
B Otelco Shares has the meaning set forth in Section 3.2(c).  Closing
has the meaning set forth in Section 1.7.  Closing
Date has the meaning set forth in Section 1.7.  Code
has the meaning set forth in Section 1.6.  Constituent
Corporations means MMHC and MergerCo.  Conversion
has the meaning set forth in the Recitals.  DGCL
has the meaning set forth in the Recitals.  DTC
means the Depository Trust Company.  2


Effective
Time has the meaning set forth in Section 1.2.  Environmental
Laws means any Applicable Law enacted
and in effect on or prior to the Closing Date relating to pollution or
protection of the environment, or to Hazardous Substances.  ERISA
means the Employee Retirement Income
Security Act of 1974, as amended.  GAAP
means generally accepted accounting principles consistently applied.  Governmental Entity means any federal, state,
local or foreign government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign.  Hazardous Substance means any material defined
as a toxic or hazardous substance pursuant to 42 U.S.C. § 9601(14).  IDS has the meaning set forth in Section 1.2  Intellectual
Property all industrial and intellectual property rights, including,
without limitation, patents, patent applications, patent rights, trademarks,
trademark applications, trade names, service marks, service mark applications,
copyrights, copyright applications, franchises, licenses, inventories,
know-how, trade secrets, proprietary processes and formulae, all source and
object code, algorithms, architecture, structure, display screens, layouts,
inventions, development tools and all documentation and media constituting,
describing or relating to the above, including, without limitation, manuals,
memoranda and records.  Judgment means any judgment, order or decree.  Latest MMHC Balance Sheet has the meaning set
forth in Section 3.1(d)(i).  Latest Otelco Balance Sheet has the meaning set
forth in Section 3.2(d)(i).  Leased
MMHC Property has the meaning set forth in Section 3.1(f).  Leased
Otelco Property has the meaning set forth in Section 3.2(f).  Lien
means and includes security interests, mortgages, liens, pledges, guarantees,
charges, easements, reservations, restrictions, clouds, equities, rights of
way, options, rights of first refusal and all other encumbrances, whether or
not relating to the extension of credit or the borrowing of money.  Material Adverse Effect means, with respect to
any Person, a change in the business, financial condition or results of
operations of such Person and its Subsidiaries, which has a material adverse
effect on such Person and its Subsidiaries, taken as a whole, other than
changes (a) relating to the public disclosure of the transactions contemplated
by this Agreement or the process of consummating such transactions, (b)
relating to United States or foreign  3


economies in general, (c)
affecting the industries which such Person operates and not specifically
relating to the business of such Person, (d) arising in connection with war or
acts of terrorism, or (e) in Applicable Law.  Material
MMHC Contracts has the meaning set forth in Section 3.1(h).  Material
Otelco Contracts has the meaning set forth in Section 3.2(h).  Merger
has the meaning set forth in the Recitals.  MergerCo
has the meaning set forth in the Caption.  Merger
Security has the meaning set forth in Section 2.1(a).  MMCH
Preferred has the meaning set forth in Section 3.1(c)(ii)  MMHC
has the meaning set forth in the Caption.  MMHC Benefit Plans has the meaning set forth in
Section 3.1(l)(i).  MMHC Financial Statements has the meaning set
forth in Section 3.1(d)(i).  MMHC
Common Stock has the meaning set forth in the Recitals.  MMHC
Entity means each of MMHC and its wholly owned Subsidiaries; and MMHC
Entities means, collectively, MMHC and its wholly owned Subsidiaries.  MMHC
Optionees has the meaning set forth in Section 2.3.  MMHC
Option Plan has the meaning set forth in Section 2.3.  MMHC
Options has the meaning set forth in Section 2.3.  MMHC Treasury Stock has the meaning set forth in Section 3.1(c)(i).  MMT
means Mid-Missouri Telephone Company, a Missouri corporation and wholly owned
subsidiary of MMHC.  MPSC means the Missouri Public Service Commission,
and any successor entity thereto.  Old
Certificate has the meaning set forth in Section 2.2(b).  Organizational
Documents means, with respect to any Person, each instrument or other
document that (x) defines the existence of such Person, including its
certificate of limited partnership or formation or articles or certificate of
incorporation, as filed or recorded with an applicable Governmental Authority,
or (y) governs the internal affairs of such Person, including its limited
liability company agreement, operating agreement, partnership agreement and/or
bylaws.  4


Otelco
has the meaning set forth in the Caption.  Otelco
Entity means each of Otelco and its wholly owned Subsidiaries; and Otelco
Entities means, collectively, Otelco and its wholly owned Subsidiaries.  Otelco Financial Statements has the meaning set
forth in Section 3.2(d)(i).  Owned
MMHC Property has the meaning set forth in Section 3.1(f).  Owned
Otelco Property has the meaning set forth in Section 3.2(f).  Parent
has the meaning set forth in the Caption.  Permitted Liens means (i) those Liens set forth
on Schedule 3.1(e) or Schedule 3.2(e), as applicable, or in the MMHC
Financial Statements or Otelco Financial Statements, as applicable, or securing
debt reflected as a liability on the Latest MMHC Balance Sheet or Latest Otelco
Balance Sheet, as applicable; (ii) mechanics, carriers, workmens, repairmens
or other like Liens arising or incurred in the ordinary course of business,
Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business and liens for Taxes that are not due and payable or that may
thereafter be paid without penalty or that are being contested in good faith by
appropriate proceedings; (iii) other imperfections of title or encumbrances, if
any, that do not, individually or in the aggregate, materially impair the
continued use and operation of the Companys assets in the conduct of its
business as presently conducted; (iv) easements, covenants, rights-of-way and
other similar restrictions of record; (v) any conditions that may be shown by a
current, accurate survey or physical inspection of any Owned MMHC Property or
Owned Otelco Property (as applicable) made prior to Closing; and (vi) (A)
zoning, building and other similar restrictions, (B) Liens that have been
placed by any developer, landlord or other third party on property over which
the Company has easement rights and (C) unrecorded easements, covenants,
rights-of-way and other similar restrictions, none of which items set forth in
this clause (vi), individually or in the aggregate, materially impair the
continued use and operation of the Owned MMHC Property or Owned Otelco Property
(as applicable) in the conduct of the business of the MMHC Entities or Otelco
Entities (as applicable) as presently conducted.  Permits has the meaning set forth in Section
3.1(i).  Person
means any association, trust, partnership, limited liability company, joint
venture or other entity or business.  Proceeding
means any action, suit, investigation, litigation or proceeding before any
Governmental Entity or arbitrator.  Public
Offering has the meaning set forth in Section 1.2.  Surviving
Corporation has the meaning set forth in Section 0.  Surviving
Corporation Bylaws has the meaning set forth in Section 1.4.  5


Surviving
Corporation Charter has the meaning set forth in Section 1.4.  Tax
means any of the Taxes and Taxes means, with respect to any Person,
(A) all income taxes (including any tax on or based upon net income, gross
income, income as specially defined, earnings, profits or selected items of
income, earnings or profits) and all gross receipts, sales, use, ad valorem,
transfer, franchise, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property or windfall profits taxes,
alternative or add-on minimum taxes, customs duties and other taxes, fees,
assessments or charges of any kind whatsoever, together with all interest and
penalties, additions to tax and other additional amounts imposed by any taxing
authority (domestic or foreign) on such entity and (B) any liability for the
payment of any amount of the type described in the immediately preceding clause
(A) as a result of being a transferee (within the meaning of Section 6901 of
the Code or any other applicable law) of another entity or a member of an
affiliated or combined group.  Tax
Returns means, with respect to any Person, collectively, returns, declarations of estimated Tax, Tax
reports, information returns and statements relating to any material Taxes with
respect to any income, assets or operations of such Person.  Units means, collectively or individually, the units
representing an interest in Otelco prior to the Conversion.  The
Merger.  Subject to the terms and
conditions of this Agreement and contingent upon the substantially contemporaneous
consummation of the Public Offering, MergerCo will be merged with and into MMHC
in accordance with the DGCL, whereupon the separate existence of MergerCo shall
cease and MMHC shall be the surviving corporation (MMHC following the Merger is
sometimes referred to herein as the Surviving Corporation).  1.2Effective Time of the Merger.  As soon as practicable
after the satisfaction or waiver of the conditions set forth in Article V, the
Surviving Corporation shall file a Certificate of Merger (the Certificate
of Merger) with the Secretary of State of the State of Delaware, and make
all such other filings or recordings required by the DGCL in connection with
the Merger.  The Merger shall become
effective (the Effective Time) immediately following the Conversion
and immediately prior to the consummation of the initial public offering of
income deposit securities (each consisting of one Class A Otelco Share and $7.50 principal amount of Otelcos senior
subordinated notes due 2019 and referred to herein as an IDS) by Otelco
pursuant to a registration statement made effective under the Securities Act of
1933, as amended (the Public Offering).  1.3Effect of the Merger.  Except as specifically
set forth herein, in the Certificate of Merger or as may be required under the
DGCL, at and after the Effective Time, the identity, existence, corporate
organization, purposes, powers, objects, franchises, privileges, rights,
immunities, restrictions, debts, liabilities and duties of MMHC will continue
in effect and be unimpaired by the Merger, and the identity, existence,
corporate organization, purposes, powers, objects, franchises, privileges,
rights,  6


immunities, restrictions,
debts, liabilities and duties of MergerCo will be merged with and into MMHC.  1.4Charter, Bylaws, Officers and Directors of Surviving
Corporation.  From and after the
Effective Time, (a) the Certificate of Incorporation and Bylaws of MMHC,
as then in effect, will be the Certificate of Incorporation and Bylaws of the
Surviving Corporation (the Surviving Corporation Charter and the Surviving
Corporation Bylaws, respectively), in each case, unless and until altered,
amended or repealed as provided in the DGCL, the Surviving Corporation Charter
or the Surviving Corporation Bylaws, (b) the following individuals shall
serve as the directors of the board of directors of the Surviving Corporation,
unless and until removed or until their successors have been duly elected and
shall qualify in accordance with the DGCL, the Surviving Corporation Charter
and the Surviving Corporation Bylaws, as applicable:  Michael Weaver  Curtis Garner, Jr.  and (c) the following
individuals shall serve as officers of the Surviving Corporation, to hold the
offices set forth opposite their names until their successors shall have been
duly elected and shall qualify in accordance with the DGCL, the Surviving
Corporation Charter and the Surviving Corporation Bylaws, as applicable:  Michael Weaver
  Chief Executive
  OfficerCurtis Garner,
  Jr.
  Chief Financial
  Officer, SecretaryDenise Day
  Co-President,
  Vice President, Assistant Secretary, ControllerGary B. Romig
  Co-President,
  Vice President, Treasurer  1.5Taking of Necessary Action.  Prior to the Effective
Time, the parties hereto shall do or cause to be done all such acts and things
as may be necessary or appropriate in order to effectuate the Merger as
expeditiously as reasonably practicable in accordance with this Agreement and
the DGCL.  1.6Tax Free Reorganization.  For Federal, state and
local income Tax purposes, the parties intend that the Merger be treated as the
contribution to Otelco of the stock of MMHC by Parent, in connection with the contemporaneous
consummation of the Public Offering.  As
a consequence, Parents members, along with the new public shareholders of
Otelco, will own stock satisfying the definition of  7


control in Section 368(c)
of the Code, and therefore the Merger will be a transfer described in Section
351(a) of the Code.  1.7Closing.  Unless this Agreement
will have been terminated and the transactions contemplated by this Agreement
abandoned pursuant to the provisions of Article VI, and subject to the
provisions of Article V, the closing of the Merger (the Closing) will
take place on a date (the Closing Date) to be mutually agreed upon by
the parties.  The Closing will take place
at the New York offices of OMelveny & Myers LLP, unless another place is
agreed to by the parties.  ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES  2.1Consideration; Effect on Capital Stock.  At the Effective Time,
subject and pursuant to the terms and conditions of this Agreement, by virtue
of the Merger and without any action on the part of the Constituent
Corporations or the holders of the capital stock of the Constituent
Corporations:  (a)Conversion of MMHC Common Stock for Merger
Securities.  Subject to Section 2.2, each share of
MMHC Common Stock issued and outstanding immediately prior to the Effective
Time will be exchanged for and converted into the right to receive 0.00881 Class B Otelco Shares and 0.14126 IDSs
(such number of Class B Otelco Shares and IDSs that each share of MMHC Common
Stock is exchanged for and converted into, collectively, a Merger Security).  (b)Capital Stock of MergerCo. 
Each issued and outstanding share of common stock, par value $0.01 per
share, of MergerCo will be converted into 1 share of MMHC Common Stock.  (c)Shares of Dissenting Stockholders. 
Each issued and outstanding share of MMHC Common Stock held by a
dissenting stockholder, if any, shall not be exchanged and converted as
described in Section 2.1(a) but shall become the right to receive such
consideration as may be determined to be due to such dissenting stockholder
pursuant to the DGCL; provided, however, that each share of MMHC
Common Stock issued and outstanding at the Effective Time and held by a
dissenting stockholder who or which shall, after the Effective Time, withdraw
his or her demand for appraisal or lose or fail to perfect his or its right of
appraisal as provided in the DGCL shall be deemed, as of the Effective Time, to
be exchanged for and converted into Merger Securities as provided in Section
2.1(a), without interest.  After the
Effective Time, as provided in the DGCL, no dissenting stockholder will be
entitled to vote the shares of MMHC Common Stock subject to such dissenting
stockholders demand for appraisal for any purpose or be entitled to the
payment of dividends or other distributions on such shares.  8


(d)Cancellation of MMHC Treasury Stock. 
Each share of MMHC Treasury Stock shall be automatically cancelled and
no consideration shall be delivered in exchange thefefor.  2.2Exchange of Certificates.  (a)Procedure for
Exchange of MergerCo Stock.  Upon delivery
by Otelco to MMHC of a certificate or certificates which, immediately prior to
the Effective Time, represented issued and outstanding shares of MergerCo
capital stock, MMHC will issue and deliver to Otelco a new stock certificate
representing ownership of an equivalent number of shares of MMHC Common
Stock.  After the Effective Time and
until the time that any such certificate has been exchanged in accordance with
the preceding sentence, each certificate for MergerCo capital stock will be
deemed, for all purposes, to represent an equivalent number of shares of MMHC
Common Stock.  (b)Procedure for Exchange of MMHC Stock. 
Upon delivery by Parent to Otelco of a certificate or certificates
which, immediately prior to the Effective Time, represented issued and
outstanding shares of MMHC Common Stock, Otelco will issue and deliver to
Parent new certificates (to the extent applicable) representing ownership of
that number of Merger Securities that Parent has the right to receive pursuant
to Section 2.1(a).  After the
Effective Time and until the time that any such MMHC Common Stock certificates
have been exchanged in accordance with the preceding sentence, such certificates
will be deemed, for all purposes, to represent that number of Merger Securities
that Parent would have the right to receive pursuant to Section 2.1(a).  (c)No Further Ownership Rights in MMHC
Common Stock.  All Merger Securities issued upon the
surrender for exchange of shares of MMHC Common Stock in accordance with the
terms of this Article II will be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of MMHC Common Stock.  If, after the Effective Time, any certificate
representing shares of MMHC Common Stock outstanding prior to the Effective
Time is presented to the Surviving Corporation for any reason, such certificate
will be cancelled and exchanged as provided in this Article II.  2.3MMHC Options.  MMHC and Otelco have or shall
enter into the Option Exchange Agreement (attached hereto as Exhibit A)
with all of the holders (each an MMHC Optionee) of options to purchase
shares of MMHC Common Stock (MMHC Options) that were granted pursuant
to MMHCs 2001 Second Amended and Restated Stock Option Plan, as may be
amended, supplemented and/or restated (the MMHC Option Plan), pursuant
to which each MMHC Optionee shall agree to exchange all of his, her or its MMHC
Options for that number of Class B Otelco Shares and IDSs such MMHC Optionee
would have been entitled to receive pursuant to Section 2.1(a) if such
MMHC Optionee would have exercised all of his, her or its MMHC Options for MMHC
Commons Stock by cashless exercise prior to the Effective Time, such exchange
to be effective contemporaneously with the Effective Time.  9


ARTICLE III
REPRESENTATIONS AND WARRANTIES  3.1Representations and Warranties of Parent
and MMHC.  Each of Parent and MMHC
hereby represents and warrants to MergerCo and Otelco as follows:  (a)Organization, Good Standing, Qualification and Power.  Parent and each MMHC Entity is duly
organized, validly existing and in good standing under the laws of the state of
its incorporation and has the requisite power and authority to own, lease and
operate its properties and to carry on its business as presently conducted, to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby.  Each MMHC Entity is duly qualified and in
good standing to do business in each jurisdiction in which such qualification
is necessary because of the nature of the business conducted by it, except
where the failure to be so qualified has not had a Material Adverse
Effect.  Complete copies of the Organizational
Documents of each MMHC Entity have been made available to Otelco.  (b)No Conflicts; Consents. The execution and delivery by
Parent and MMHC of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance by Parent and MMHC with the terms hereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under any obligation, or result in
the creation of any Lien upon any of the assets owned or used by Parent or any
MMHC Entity under any provision of (i) the Organizational Documents of the
Parent or any MMHC Entity, (ii) except as set forth on Schedule 3.1(b),
any Material Contract to which Parent or any MMHC Entity is a party or by which
any of their respective properties or assets are bound or (iii) any Judgment or
Applicable Law applicable to Parent, MMHC or MMT or their respective properties
or assets, other than, in the case of clauses (ii) and (iii) above, any such
conflicts, violations, defaults, rights or Liens that, individually or in the
aggregate, would not have a Material Adverse Effect.  No consent of, or registration, declaration
or filing with, any Governmental Entity is required to be obtained or made by
or with respect to Parent or any MMHC Entity in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than (i)those consents set forth on Schedule 3.1(b), (ii) those the failure of which to obtain or make, individually or in
the aggregate, would not (A) have a Material Adverse Effect or
(B) materially impair the ability of Parent or MMHC to perform its
obligations under this Agreement and (iii) those that may be required
solely by reason of Otelcos (as opposed to any other third partys)
participation in the transactions contemplated hereby.  This Agreement is a legal, valid and
binding obligation of Parent and MMHC, enforceable against it in accordance
with the terms herein.  (c)Capitalization.  (i)The authorized capital stock of MMHC
consists of 10,000,000 authorized shares, all of which have been designated as
common stock, $0.01 par value per share, (x) 6,000,000 of which are issued and
outstanding, fully paid and  10


nonassessable and (y) 4,000 of which are held in
treasury and are issued but not outstanding (MMHC Treasury Stock).  All of the issued and outstanding shares of
capital stock of MMHC are held of record by Parent (without giving effect to Section
2.3), were validly issued and are fully paid and nonassessable.  Schedule
3.1(c)(i) sets forth a list of each outstanding MMCH Option and the holder
thereof.  Except for this Agreement and
the MMHC Options, there are no outstanding options, warrants, rights, calls,
agreements, convertible securities or other commitments or rights to purchase
or acquire any unissued Common Stock or other securities from MMHC.  (ii)MMHC owns 100% of the issued and outstanding
capital stock of MMT.  MMT owns (A) 100%
of the issued and outstanding capital stock of Imagination, Inc. and (B) 5,800
shares of Series A Redeemable Participating Preferred Stock, 0.01 par value per
share, of MMC Holding Corp. (the MMCH Preferred).  Except as set forth in this Section 3.1(c)(ii),
no MMHC Entity owns any capital stock, other securities, or rights or
obligations to acquire the same, of any other Person.  (d)Financial Statements.  (i)MMHC has previously provided Otelco with
a true, correct and complete copy of (i) the audited consolidated balance sheet
of MMHC as of December 31, 2003 (the Audited MMHC Balance Sheet), and
the related audited statements of operations, shareholders equity and cash
flows for the fiscal year then ended (together with the Audited Balance Sheet,
the Audited MMHC Financial Statements) and (ii) the unaudited
consolidated balance sheet of MMHC as of June 30, 2004 (the Latest MMHC
Balance Sheet) and the related unaudited statement of operations,
shareholders equity and cash flows for the period then ended (together with
the Audited Financial Statements and the Latest MMHC Balance Sheet, the MMHC
Financial Statements).  The MMHC
Financial Statements have been prepared from the books and records of MMHC in
accordance with GAAP (except, in the case of unaudited MMHC Financial
Statements, for normal year-end adjustments and the absence of footnotes).  Except as set forth on Schedule 3.1(d)(i),
the MMHC Financial Statements fairly present in all material respects the
financial condition, results of operations, and cash flows of MMHC and its
consolidated Subsidiaries as of the dates and for the periods indicated.  (ii)The MMHC Entities do not have any
liabilities or obligations of the type required to be reflected in a balance
sheet or disclosed in the footnotes to the MMHC Financial Statements, in each
case prepared in accordance with GAAP and that would have a Material Adverse
Effect, except (i) as disclosed, reflected or reserved against in the MMHC
Financial Statements, (ii) for items disclosed on Schedule 3.1(d)(ii),
or (iii) for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the Audited MMHC
Financial Statements.  (e)Assets Other than Real Property Interests.  The MMHC Entities have good and valid title
to all of the assets and properties reflected on the Latest Balance Sheet or
acquired subsequent thereto (except for assets and properties sold, consumed or
otherwise disposed of in the ordinary course of business since the date of the
Latest MMHC Balance Sheet), free and clear of all Liens, except Permitted
Liens.  This Section 3.1(e)
contains the sole and exclusive  11


representations
and warranties of MMHC with respect to matters relating to the assets and
properties of the MMHC Entities, except for Owned MMHC Property and Leased MMHC
Property, which are the subject of Section 3.1(f), and Intellectual
Property, which is the subject of Section 3.1(g).  (f)Real Property.  Schedule 3.1(f)
contains a true, correct and complete list of all real property and interests
in real property owned in fee by the MMHC Entities and used, or held for use,
in the operation or conduct of the business of the MMHC Entities as presently
conducted (the Owned MMHC Property). 
The MMHC Entities have good title to all Owned MMHC Property, in each
case, free and clear of all Liens, except Permitted Liens.  Schedule 3.1(f) contains a list of all
real property and interests in real property leased by the MMHC Entities and
used, or held for use, in the operation or conduct of the MMHC Entities
respective businesses (the Leased MMHC Property).  An MMHC Entity is the lessee of each Leased
Property and is in possession of the premises purported to be leased
thereunder, and each such lease is valid without any material default
thereunder by the applicable MMHC Entity or, to the knowledge of MMHC, by the
lessor.  Schedule 3.1(f) contains
a list of all Owned MMHC Property or Leased MMHC Property on which a telephone
switch owned, leased or operated by MMT is located.  This Section 3.1(f) contains the sole
and exclusive representations and warranties of MMHC with respect to matters
relating to Owned MMHC Property and Leased MMHC Property.  (g)Intellectual Property.  Schedule 3.1(g) sets forth a list of
all material Intellectual Property (other than rights of an MMHC Entity as
licensee) owned or used by the MMHC Entities. 
Except as set forth on Schedule 3.1(g), no MMHC Entity has
received any written notice from any other Person challenging in any material
respect the right of such MMHC Entity to use any of the material Intellectual
Property or any rights thereunder. 
Except as set forth on Schedule 3.1(g), no MMHC Entity has
granted any licenses or other rights and no MMHC Entity has any obligation to
grant licenses or other rights to any of the material Intellectual Property to
any other Person.  No MMHC Entity has, in
the last two years, made any claim in writing of a violation or infringement by
others of its rights to or in connection with any material Intellectual
Property.  This Section 3.1(g)
contains the sole and exclusive representations and warranties of MMHC with
respect to matters relating to Intellectual Property.  (h)Contracts.  Schedule 3.1(h)
sets forth a list of the materialagreements, understandings, commitments, or
instruments, whether written or oral, to
which each MMHC Entity is a party or by which any of them or any of their
assets are bound as of the date hereof (the Material Contracts).  Except as set forth on Schedule 3.1(h),
(i) the Material Contracts are, to the knowledge of MMHC, in full force and
effect and enforceable by the applicable MMHC Entity in accordance with their
respective terms, except to the extent that such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors rights generally and to general principles of equity,
(ii) no MMHC Entity is in material breach of or material default under (and no
event has occurred which with notice or the passage of time or both would
constitute a material breach or material default under) any Material Contract,
and (iii) no MMHC Entity has given nor, to the knowledge of MMHC, received from
any other Person, any notice or other communication regarding the existence of
any breach of, or default under, any Material Contract.  12


(i)Permits.  Except as set
forth on Schedule 3.1(i), (a) each MMHC Entity holds and is in
compliance with all material certificates, licenses, permits, authorizations
and approvals (Permits) required under Applicable Law for the conduct
of its respective business; and (b) during the one-year period prior to the
date of this Agreement, no MMHC Entity has received notice of any Proceedings
relating to the revocation or modification of any such Permits.  This Section 3.1(i) contains the sole
and exclusive representations and warranties of MMHC with respect to Permits,
except for Permits required by (i) the MPSC, which are the subject of Section
3.1(o), and (ii) any Environmental Law, which are the subject of Section
3.1(p).  (j)Taxes.  MMHC filed a
consolidated Tax Return for United Stated federal income Tax purposes.  Except as set forth on Schedule 3.1(j),
(a) each MMHC Entity has filed all Tax Returns required to be filed by
them prior to the Closing Date; (b) as of the time of filing, the Tax
Returns were true and correct in all material respects; (c) all Taxes
shown to be due on such Tax Returns have been paid; (d) no statute of
limitations has been waived and no extension of time during which a Tax
assessment or deficiency assessment may be made has been agreed to, which
waiver or extension is still outstanding with respect to any Tax liability of
an MMHC Entity; (e) there are no pending Tax audits of any Tax Returns of
any MMHC Entity and no MMHC Entity has received written notice of any
unresolved questions or claims concerning its Tax liability; (f) each MMHC
Entity has complied in all material respects with Applicable Laws, rules and
regulations relating to the payment and withholding of income Taxes; and
(g) no MMHC Entity is or has ever been a party to any Tax sharing
agreement.  This Section 3.1(j)
contains the sole and exclusive representations and warranties of MMHC with
respect to matters relating to Taxes.  (k)Proceedings.  Schedule 3.1(k)
sets forth a true, correct and complete list as of the date of this Agreement
of all pending Proceedings or claims with respect to which a MMHC Entity has
been contacted in writing by counsel for the plaintiff or claimant, arising out
of the conduct of their respective businesses or against any of their
respective assets and that (a) relate to or involve more than $200,000, (b)
seek any injunctive relief or (c) would give rise to any legal restraint on or
prohibition against the transactions contemplated by this Agreement.  To the knowledge of MMHC, except as set forth
on Schedule 3.1(k), no MMHC Entity is a party or subject to or in
default under any Judgment applicable to the conduct of its respective business
as presently conducted or any of its respective assets.  (l)Benefit Plans.  (i)Schedule3.1(l)(i)contains
a list of all employee benefit plans (as defined in Section 3(3) of ERISA)
and all other bonus, stock option, deferred and incentive compensation plans
and programs maintained or contributed to by the MMHC Entities for the benefit
of its employees or former employees (all of the foregoing being referred to
herein as the MMHC Benefit Plans).  (ii)Except as set forth on Schedule 3.1(l)(ii), (i) each MMHC
Benefit Plan has been operated and administered pursuant to its terms and in
material compliance with ERISA, the Code, and all Applicable Laws; (ii) all
contributions due and payable by an MMHC Entity on or before the Closing Date
in respect of any MMHC Benefit Plan have been made in full and proper form, or
adequate accruals have been provided for in the  13


Financial Statements for all other contributions or
amounts in respect of MMHC Benefit Plans for periods ending on or before the
Closing Date; (iii) no MMHC Entity has breached the fiduciary rules of ERISA or
engaged in a prohibited transaction with respect to any MMHC Benefit Plan which
would subject such MMHC Entity to any Tax or penalty imposed under Sections
4975 of the Code or Section 502 (i), (j) or (l) of ERISA; (iv) no MMHC Benefit
Plan subject to Part (3) of Subtitle B of Title I of ERISA or Section 412 of
the Code has incurred any accumulated funding deficiency (as defined in
Section 412(a) of the Code), whether or not waived; (v) no reportable event
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
MMHC Benefit Plan; and (vi) no Proceedings (other than routine benefit claims)
are pending or, to the knowledge of MMHC, threatened against or relating to any
MMHC Benefit Plan, or any fiduciary thereof.  (iii)True and complete copies of the following
documents, as they have been amended to the date hereof, relating to the MMHC
Benefit Plans, have been made available to Otelco: (A) all MMHC Benefit Plan
documents and (B) the Form 5500, 5500-C or 5500-R for each MMHC Benefit Plan
for the two most recent plan years.  This
Section 3.1(l)(iii) contains
the sole and exclusive representations and warranties of MMHC with respect to
any MMHC Benefit Plans.  (m)Employee and Labor Matters.Except as disclosed on Schedule 3.1(m), (a) no MMHC Entity is party to any collective
bargaining agreement or similar agreement, (b) there are no unfair labor
practice complaints pending against any MMHC Entity, or to the knowledge of
MMHC, threatened against any MMHC Entity before the National Labor Relations
Board, or (c) no strike, labor dispute, slowdown or stoppage is pending against
any MMHC Entity except with respect to any matter specified above, which, in
the case of clause (b) or (c), individually or in the aggregate, has not had a
Material Adverse Effect.  This Section 3.1(m) contains the sole
and exclusive representations and warranties of MMHC with respect to employee
and labor matters.  (n)Absence of Changes or Events.  Except as set forth on Schedule 3.1(n),
from the date of the Latest MMHC Balance Sheet until the date hereof, there has
not been any event which would reasonably be expected to have a Material
Adverse Effect on the MMHC Entities.  (o)Compliance with
Applicable Laws.  (i)Except as set forth on Schedule 3.1(o)(i), the MMHC Entities
are in compliance with all Applicable Laws, except for instances of
noncompliance that, individually or in the aggregate, have not had a Material
Adverse Effect.  Except as set forth on Schedule 3.1(o)(i), no MMHC Entity has
received any written communication during the past two years from a
Governmental Entity that alleges that such MMHC Entity is not in compliance in
any material respect with any Applicable Laws.  (ii)The regulatory tariffs applicable to MMT
stand in full force and effect in accordance with their terms, and there is no outstanding
notice of cancellation or termination or, to the knowledge of MMHC, any
threatened cancellation or termination in connection therewith.  Except as otherwise disclosed on Schedule 3.1(o)(ii), MMT is not
subject to any restrictions or conditions applicable to its regulatory tariffs
that limit the  14


operations of MMT (other than restrictions or
conditions generally applicable to tariffs of that type).  Except as otherwise disclosed on Schedule3.1(o)(ii), MMT is not in
material violation under the terms and conditions of any such tariff and, to
the knowledge of MMHC, there is no basis for any claim of violation by MMT
under any such tariff.  Except as set
forth on Schedule 3.1(o)(ii)
there are no applications by MMT, nor any complaints or petitions, or other
filings by others, or Proceedings pending or, to the knowledge of MMHC,
threatened, before the MPSC relating to MMT or its operations or regulatory
tariffs.  A true and correct copy of each
tariff applicable to MMT has been made available to Otelco.  (iii)This Section 3.1(o) contains the sole and exclusive representations and
warranties of MMHC with respect to MMT regulatory tariffs and other regulatory
matters before the MPSC.  (p)Environmental Matters.  Except as set forth on Schedule 3.1(p)
and except for those matters that, individually or in the aggregate, have not
had a Material Adverse Effect, (a) during the past two years, no MMHC Entity
has received any written communication from a Governmental Entity that alleges
that it is not in compliance with any Environmental Law, (b) the MMHC Entities
hold, and are in compliance with, all Permits required under Environmental Laws
to conduct their respective businesses, and are in compliance with all
Environmental Laws and (c) in connection with the conduct of their respective
businesses, the MMHC Entities have not entered into or agreed to any court
decree or order and are not subject to any Judgment relating to compliance with
any Environmental Law or to investigation or cleanup of a Hazardous Substance
under any Environmental Law.  This Section
3.1(p) contains the sole and exclusive representations and warranties of
MMHC with respect to any environmental, health or safety matters, including,
without limitation, any matters arising under Environmental Law.  (q)No Additional Representations.  NEITHER PARENT NOR MMHC IS MAKING ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH
RESPECT TO PARENT OR THE MMHC ENTITIES, INCLUDING ANY OF THE ASSETS OF THE MMHC
ENTITIES, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THISSECTION 3.1, AND EXCEPT AS SET
FORTH EXPRESSLY HEREIN, THE CONDITION OF THE ASSETS OF THE MMHC ENTITIES SHALL
BE AS IS AND WHERE IS.  3.2Representations and Warranties of Otelco
and MergerCo.  Each of Otelco and
MergerCo represents and warrants to MMHC and Parent as follows:  (a)Organization, Good Standing,
Qualification and Power. (i) As of the date hereof, Otelco is a limited liability company duly
organized, validly existing and in good standing under the laws of its state of
formation, (ii) immediately following the Conversion, Otelco will be a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation, (iii) MergerCo is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, (iv) each of Otelco and MergerCo has the requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as presently conducted, to enter into this Agreement, to perform its  15


obligations hereunder and
to consummate the transactions contemplated hereby and (v) each of Otelco and
MergerCo is duly qualified and in good standing to do business in each jurisdiction in which such qualification
is necessary because of the nature of the business conducted by it, except
where the failure to be so qualified has not had a Material Adverse Effect.  Otelco has delivered or made available to
MMHC true and complete copies of the Organizational Documents of Otelco and
MergerCo.  (b)No Conflicts; Consents. The execution and delivery by Otelco
and MergerCo of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance by Otelco and MergerCo with the terms hereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under any obligation, or result in
the creation of any Lien upon any of the assets owned or used by any Otelco
Entity under any provision of (i) the Organizational Documents of any Otelco
Entity, (ii) except as set forth on Schedule 3.2(b), any Material
Contract to which any Otelco Entity is a party or by which any of their
respective properties or assets are bound or (iii) any Judgment or Applicable
Law applicable to any Otelco Entity or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such conflicts,
violations, defaults, rights or Liens that, individually or in the aggregate,
would not have a Material Adverse Effect. 
No consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to any
Otelco Entity in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby,
other than (i)those
consents set forth on Schedule 3.2(b), (ii) those the failure of which to obtain or
make, individually or in the aggregate, would not (A) have a Material
Adverse Effect or (B) materially impair the ability of Otelco or MergerCo
to perform its obligations under this Agreement and (iii) those that may
be required solely by reason of Parents, the MMHC Optionees or MMHCs (as
opposed to any other third partys) participation in the transactions
contemplated hereby.  This
Agreement is legal, valid and binding obligation of each of Otelco and MergerCo,
enforceable against it in accordance with the terms herein.  (c)Capitalization; Subsidiaries.  Effective
as of the Effective Time, the authorized capital stock of Otelco will consist
of 20,800,000 authorized shares of common stock, (i) 20,000,000 of which will
be designated as Class A Common Stock, $0.01 par value per share (the Class
A Otelco Shares), 9,676,733 of
which will then be issued and outstanding and (ii) 800,000 of which will be designated
as Class B Common Stock, $0.01 par value per share (the Class B Otelco Shares), 544,671 of which will then be currently
issued and outstanding.  All outstanding Class
B Otelco Shares will be validly issued, fully paid and non-assessable.  Except as set forth in on Schedule 3.2(c),
there are no preemptive rights, options, warrants, other rights, calls,
commitments or agreements of any character to which Otelco is a party or by
which it is bound calling for the issuance of shares of capital stock of Otelco
or any securities convertible into or exercisable or exchangeable for, or
representing the right to purchase or otherwise receive, any capital stock of
Otelco.  All outstanding shares of the
capital stock of MergerCo are validly issued, fully paid and nonassessable and
owned by Otelco, free and clear of all Liens. 
Immediately prior to the Closing, except for this Agreement, there will
be no options, warrants, rights, calls, commitments or agreements of any
character to which Otelco is a party or by which it is bound calling for the
issuance of shares of capital stock of MergerCo or any securities convertible
into or exchangeable for, or representing the right to purchase or otherwise
receive, any such capital stock, or other arrangement to acquire, at any time
or under any circumstances,  16


capital stock of
MergerCo.  Effective as of the Effective
Time, Otelco will have duly authorized and reserved for issuance the Merger Securities
and, when issued in accordance with the terms of Article II, the Merger Securities
will be validly issued, fully paid and nonassessable.  Except as set forth on Schedule 3.2(c),
no Otelco Entity owns any capital stock, other securities, or rights or
obligations to acquire the same, of any other Person.  (d)Financial Statements.  (i)Otelco has previously provided MMHC with
a true, correct and complete copy of (i) the audited consolidated balance sheet
of Otelco as of December 31, 2003 (the Audited Otelco Balance Sheet),
and the related audited statements of operations, members equity and cash
flows for the fiscal year then ended (together with the Audited Balance Sheet,
the Audited Otelco Financial Statements) and (ii) the unaudited
consolidated balance sheet of Otelco as of June 30, 2004 (the Latest Otelco
Balance Sheet) and the related unaudited statement of operations, members
equity and cash flows for the period then ended (together with the Audited
Otelco Financial Statements and the Latest Otelco Balance Sheet, the Otelco
Financial Statements).  The Otelco Financial
Statements have been prepared from the books and records of Otelco in
accordance with GAAP (except, in the case of unaudited Otelco Financial
Statements, for normal year-end adjustments and the absence of footnotes).  Except as set forth on Schedule 3.2(d)(i),
the Otelco Financial Statements fairly present in all material respects the
financial condition, results of operations, and cash flows of Otelco and its
consolidated Subsidiaries as of the dates and for the periods indicated.  (ii)The Otelco Entities do not have any
liabilities or obligations of the type required to be reflected in a balance
sheet or disclosed in the footnotes to the Otelco Financial Statements, in each
case prepared in accordance with GAAP and that would have a Material Adverse
Effect, except (i) as disclosed, reflected or reserved against in the Otelco
Financial Statements, (ii) for items disclosed on Schedule 3.2(d)(ii),
or (iii) for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the Audited Otelco
Financial Statements.  (e)Assets Other than Real Property Interests.  The Otelco Entities have good and valid title
to all of the assets and properties reflected on the Latest Otelco Balance
Sheet or acquired subsequent thereto (except for assets and properties sold,
consumed or otherwise disposed of in the ordinary course of business since the
date of the Latest Otelco Balance Sheet), free and clear of all Liens, except
Permitted Liens.  This Section3.2(e)contains the sole and exclusive
representations and warranties of Otelco with respect to matters relating to
the assets and properties of the Otelco Entities, except for Owned Otelco
Property and Leased Otelco Property, which are the subject of Section3.2(f), and Otelco Intellectual
Property, which is the subject of Section 3.2(g).  (f)Real Property.  Schedule3.2(f)contains a true, correct and
complete list of all real property and interests in real property owned in fee
by the Otelco Entities and used, or held for use, in the operation or conduct
of the business of the Otelco Entities as presently conducted (the Owned Otelco
Property).  The Otelco Entities have
good title to all Owned Otelco Property, in each case, free and clear of all
Liens, except Permitted Liens.  Schedule3.2(f)  17


contains
a list of all real property and interests in real property leased by the Otelco
Entities and used, or held for use, in the operation or conduct of the Otelco
Entities respective businesses (the Leased Otelco Property).  A Otelco Entity is the lessee of each Leased Otelco
Property and is in possession of the premises purported to be leased
thereunder, and each such lease is valid without any material default thereunder
by the applicable Otelco Entity or, to the knowledge of Otelco, by the
lessor.  Schedule3.2(f)contains a list of all Owned Otelco
Property or Leased Otelco Property on which a primary telephone switch owned,
leased or operated by an Otelco Entity is located.  This Section3.2(f)contains the sole and exclusive
representations and warranties of Otelco with respect to matters relating to
Owned Otelco Property and Leased Otelco Property.  (g)Intellectual Property.  Schedule3.2(g)sets forth a list of all
material Intellectual Property (other than rights of an Otelco Entity as
licensee) owned or used by the Otelco Entities. 
Except as set forth on Schedule3.2(g), no Otelco Entity has received
any written notice from any other Person challenging in any material respect
the right of such Otelco Entity to use any of the material Intellectual
Property or any rights thereunder. 
Except as set forth on Schedule3.2(g), no Otelco Entity has granted
any licenses or other rights and no Otelco Entity has any obligation to grant
licenses or other rights to any of the material Intellectual Property to any
other Person.  No Otelco Entity has, in
the last two years, made any claim in writing of a violation or infringement by
others of its rights to or in connection with any material Intellectual
Property.  This Section3.2(g)contains the sole and exclusive
representations and warranties of Otelco with respect to matters relating to
Intellectual Property.  (h)Contracts.  Schedule 3.1(h)
sets forth a list of the materialagreements, understandings, commitments, or
instruments, whether written or oral, to
which each Otelco Entity is a party or by which any of them or any of their
assets are bound as of the date hereof (the Material Otelco Contracts).  Except as set forth on Schedule 3.1(h),
(i) the Material Otelco Contracts are, to the knowledge of Otelco, in full
force and effect and enforceable by the applicable Otelco Entity in accordance
with their respective terms, except to the extent that such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors rights generally and to general principles
of equity, (ii) no Otelco Entity is in material breach of or material default
under (and no event has occurred which with notice or the passage of time or
both would constitute a material breach or material default under) any Material
Otelco Contract, and (iii) no Otelco Entity has given nor, to the knowledge of Otelco,
received from any other Person, any notice or other communication regarding the
existence of any breach of, or default under, any Material Otelco Contract.  (i)Permits.  Except as set
forth on Schedule 3.2(i), (a) each Otelco Entity holds and is in
compliance with all material certificates, licenses, permits, authorizations
and approvals (Permits) required under Applicable Law for the conduct
of its respective business; and (b) during the one-year period prior to the
date of this Agreement, no Otelco Entity has received notice of any Proceedings
relating to the revocation or modification of any such Permits.  This Section 3.2(i) contains the sole
and exclusive representations and warranties of Otelco with respect to Permits,
except for Permits required by (i) the APSC, which are the subject of Section
3.2(o), and (ii) any Environmental Law, which are the subject of Section
3.2(p).  18


(j)Taxes.  Otelco filed a
consolidated Tax Return for United Stated federal income Tax purposes.  Except as set forth on Schedule 3.2(j),
(a) each Otelco Entity has filed all Tax Returns required to be filed by
them prior to the Closing Date; (b) as of the time of filing, the Tax
Returns were true and correct in all material respects; (c) all Taxes
shown to be due on such Tax Returns have been paid; (d) no statute of
limitations has been waived and no extension of time during which a Tax
assessment or deficiency assessment may be made has been agreed to, which
waiver or extension is still outstanding with respect to any Tax liability of a
Otelco Entity; (e) there are no pending Tax audits of any Tax Returns of
any Otelco Entity and no Otelco Entity has received written notice of any
unresolved questions or claims concerning its Tax liability; (f) each Otelco
Entity has complied in all material respects with Applicable Laws, rules and
regulations relating to the payment and withholding of income Taxes; and
(g) no Otelco Entity is or has ever been a party to any Tax sharing
agreement.  This Section 3.2(j)
contains the sole and exclusive representations and warranties of Otelco with
respect to matters relating to Taxes.  (k)Proceedings.  Schedule 3.2(k)
sets forth a true, correct and complete list as of the date of this Agreement
of all pending Proceedings or claims with respect to which a Otelco Entity has
been contacted in writing by counsel for the plaintiff or claimant, arising out
of the conduct of their respective businesses or against any of their
respective assets and that (a) relate to or involve more than $200,000, (b)
seek any injunctive relief or (c) would give rise to any legal restraint on or
prohibition against the transactions contemplated by this Agreement.  To the knowledge of Otelco, except as set
forth on Schedule 3.2(k), no Otelco Entity is a party or subject to or
in default under any Judgment applicable to the conduct of its respective
business as presently conducted or any of its respective assets.  (l)Benefit Plans.  (i)Schedule3.2(l)(i)contains a list of all employee benefit plans (as
defined in Section 3(3) of ERISA) and all other bonus, stock option, deferred
and incentive compensation plans and programs maintained or contributed to by
the Otelco Entities for the benefit of its employees or former employees (all
of the foregoing being referred to herein as the Otelco Benefit Plans).  (ii)Except as set forth on Schedule 3.2(l)(ii), (i) each Otelco
Benefit Plan has been operated and administered pursuant to its terms and in
material compliance with ERISA, the Code, and all Applicable Laws; (ii) all
contributions due and payable by an Otelco Entity on or before the Closing Date
in respect of any Otelco Benefit Plan have been made in full and proper form,
or adequate accruals have been provided for in the Financial Statements for all
other contributions or amounts in respect of Otelco Benefit Plans for periods
ending on or before the Closing Date; (iii) no Otelco Entity has breached the
fiduciary rules of ERISA or engaged in a prohibited transaction with respect to
any Otelco Benefit Plan which would subject such Otelco Entity to any Tax or
penalty imposed under Sections 4975 of the Code or Section 502 (i), (j) or (l)
of ERISA; (iv) no Otelco Benefit Plan subject to Part (3) of Subtitle B of
Title I of ERISA or Section 412 of the Code has incurred any accumulated
funding deficiency (as defined in Section 412(a) of the Code), whether or not
waived; (v) no reportable event (within the meaning of Section 4043 of ERISA)
has occurred with respect to any Otelco Benefit  19


Plan; and (vi) no Proceedings (other than routine
benefit claims) are pending or, to the knowledge of Otelco, threatened against
or relating to any Otelco Benefit Plan, or any fiduciary thereof.  (iii)True and complete copies of the following
documents, as they have been amended to the date hereof, relating to the Otelco
Benefit Plans, have been made available to MMHC: (i) all Otelco Benefit Plan
documents; (ii) the most recently completed actuarial valuation for each Plan;
(iii) the Form 5500, 5500-C or 5500-R for each Otelco Benefit Plan for the two
most recent plan years; and (iv) all collective bargaining agreements or other
similar agreements covering employees of the Otelco Entities.  This Section 3.2(l) contains the sole and exclusive representations and
warranties of Otelco with respect to any Otelco Benefit Plans.  (m)Employee and Labor Matters.Except as disclosed on Schedule 3.2(m), (a) no Otelco Entity is party to any
collective bargaining agreement or similar agreement, (b) there are no unfair
labor practice complaints pending against any Otelco Entity, or to the
knowledge of Otelco, threatened against any Otelco Entity before the National
Labor Relations Board, or (c) no strike, labor dispute, slowdown or stoppage is
pending against any Otelco Entity except with respect to any matter specified
above, which, in the case of clause (b) or (c), individually or in the
aggregate, has not had a Material Adverse Effect.  This Section 3.2(m)
contains the sole and exclusive representations and warranties of Otelco with
respect to employee and labor matters.  (n)Absence of Changes or Events.  Except as set forth on Schedule 3.2(n),
from the date of the Latest Otelco Balance Sheet until the date hereof, there
has not been any event which would reasonably be expected to have a Material
Adverse Effect on the Otelco Entities.  (o)Compliance with
Applicable Laws.  (i)Except as set forth on Schedule 3.2(o)(i), the Otelco
Entities are in compliance with all Applicable Laws, except for instances of
noncompliance that, individually or in the aggregate, have not had a Material
Adverse Effect.  Except as set forth on Schedule 3.2(o)(i), no Otelco Entity
has received any written communication during the past two years from a
Governmental Entity that alleges that such Otelco Entity is not in compliance
in any material respect with any Applicable Laws.  (ii)The regulatory tariffs applicable to the Otelco
Entities stand in full force and effect in accordance with their terms, and
there is no outstanding notice of cancellation or termination or, to the
knowledge of Otelco, any threatened cancellation or termination in connection
therewith.  Except as otherwise disclosed
on Schedule 3.2(o)(ii), no Otelco
Entity is subject to any restrictions or conditions applicable to its
regulatory tariffs that limit the operations of the Otelco Entities (other than
restrictions or conditions generally applicable to tariffs of that type).  Except as otherwise disclosed on Schedule 3.2(o)(ii), no Otelco Entity
is in material violation under the terms and conditions of any such tariff and,
to the knowledge of Otelco, there is no basis for any claim of violation by any
Otelco Entity under any such tariff. 
Except as set forth on Schedule 3.2(o)(ii),
there are no applications by any Otelco Entity, nor any complaints or
petitions, or other filings by others, or Proceedings pending or, to the
knowledge of  20


Otelco, threatened, before the APSC relating to any Otelco
Entity or its operations or regulatory tariffs. 
A true and correct copy of each tariff applicable to the Otelco Entities
has been made available to Otelco.  (iii)This Section 3.2(o) contains the sole and exclusive representations and
warranties of Otelco with respect to regulatory tariffs and other regulatory
matters before the APSC.  (p)Environmental Matters.  Except as set forth on Schedule 3.2(p)
and except for those matters that, individually or in the aggregate, have not
had a Material Adverse Effect, (a) during the past two years, no Otelco Entity
has received any written communication from a Governmental Entity that alleges
that it is not in compliance with any Environmental Law, (b) the Otelco
Entities hold, and are in compliance with, all Permits required under
Environmental Laws to conduct their respective businesses, and are in
compliance with all Environmental Laws and (c) in connection with the conduct
of their respective businesses, the Otelco Entities have not entered into or
agreed to any court decree or order and are not subject to any Judgment
relating to compliance with any Environmental Law or to investigation or
cleanup of a Hazardous Substance under any Environmental Law.  This Section 3.2(p) contains the sole
and exclusive representations and warranties of Otelco with respect to any
environmental, health or safety matters, including, without limitation, any
matters arising under Environmental Law.  (q)No Additional Representations.  Otelco IS NOT MAKING ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH RESPECT TO THE OTELCO
ENTITIES, INCLUDING ANY OF THE ASSETS OF THE OTELCO ENTITIES, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THISSECTION 3.2, AND EXCEPT AS SET
FORTH EXPRESSLY HEREIN, THE CONDITION OF THE ASSETS OF THE OTELCO ENTITIES
SHALL BE AS IS AND WHERE IS.  ARTICLE IV
CONDUCT AND TRANSACTIONS PRIOR 
TO EFFECTIVE TIME; ADDITIONAL AGREEMENTS  4.1Access to Records.  From and after the date
hereof until the Effective Time or the earlier termination of this Agreement
pursuant to Section 6.1 hereof (the Executory Period), MMHC
shall afford:  (i) to the officers,
independent certified public accountants, legal counsel and other
representatives of Otelco, free and full access at all reasonable times to all
of the properties, books and records (including Tax Returns filed and those in
preparation) of the MMHC Entities, in order that Otelco and such other Persons
may have full opportunity to make such investigations as they shall reasonably
desire to make of the business and affairs of the MMHC Entities; and (ii) to
the independent certified public accountants of Otelco, free and full access at
all reasonable times to the work papers of the independent certified public
accountants for the MMHC Entities. 
Additionally, MMHC will permit Otelco, its officers, directors,
auditors, legal counsel and other representatives to make such reasonable
inspections of the MMHC Entities and their operations  21


during normal business
hours as Otelco may reasonably require and MMHC will cause its officers to
furnish to Otelco and such other Persons, such additional financial and
operating data and other information as to its business and properties as Otelco
or such other persons shall from time to time reasonably request.  No investigation pursuant to this Section 4.1,
or made prior to the date hereof, shall affect or otherwise diminish or obviate
in any respect any of the representations and warranties of MMHC.  4.2Conduct.  During the Executory
Period and except in connection with the consummation of the transactions
contemplated hereby, MMHC will and will cause the other MMHC Entities to,
operate their respective businesses as now operated and only in the normal and
ordinary course and, consistent with such operation, preserve intact its
present business organization, keep available the services of its officers and
employees and maintain satisfactory relationships with customers and other
Persons having business dealings with the MMHC Entities.  Notwithstanding the foregoing, the parties
acknowledge that during the Executory Period, the MMCH Preferred shall be
dividended or otherwise distributed to Parent.  4.3Legal Conditions to Merger.  Each party will take all
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and will take all
reasonable action necessary to cooperate with and furnish information to the
other party in connection with any such requirements imposed upon such other
party in connection with the Merger. 
Each party will take all reasonable actions necessary (a) to obtain (and
will take all reasonable actions necessary to promptly cooperate with the other
party in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority, or other third party, required to be
obtained or made by such party (or by the other party) in connection with the
Merger or the taking of any action contemplated by this Agreement, (b) to
defend, lift, rescind or mitigate the effect of any lawsuit, order, injunction
or other action adversely affecting the ability of such party to consummate the
transactions contemplated hereby and (c) to fulfill all conditions precedent
applicable to such party pursuant to this Agreement.  4.4Notice of Prospective Breach.  (a)MMHC shall immediately notify Otelco in
writing upon the occurrence of any act, event, circumstance or thing that is
reasonably likely to cause or result in a representation or warranty of MMHC
hereunder to be untrue at the Closing, the failure of a closing condition to be
achieved at the Closing or any other breach or violation hereof or default
hereunder by any MMHC Entity.  (b)Otelco shall immediately notify MMHC in
writing upon the occurrence of any act, event, circumstance or thing that is
reasonably likely to cause or result in a representation or warranty of Otelco
hereunder to be untrue at the Closing, the failure of a closing condition to be
achieved at the Closing or any other breach or violation hereof or default
hereunder by any Otelco Entity.  22


4.5Further Assurances; Consents.  Each party will use its
commercially reasonable efforts, and the other party will cooperate with such
efforts, to obtain any consents and approvals of, or effect the notification of
or filing with, each Person or authority, whether private or governmental,
whose consent or approval is required in order to permit the consummation of
the Merger and the transactions contemplated hereby and to enable the Surviving
Corporation to conduct and operate the business of the MMHC Entities
substantially as presently conducted. 
Subject to the terms and conditions herein provided, the parties will
use their commercially reasonable efforts to do or cause to be done all such
acts and things as may be necessary, proper or advisable, consistent with all
applicable laws and regulations, to consummate and make effective the
transactions contemplated hereby and to satisfy or cause to be satisfied all
conditions precedent that are set forth in Article V as soon as reasonably
practicable.  ARTICLE V
CONDITIONS PRECEDENT  5.1Conditions to Each Partys Obligations.  The obligations of each
party to perform this Agreement and to effect the Merger are subject to the
satisfaction of the following conditions unless waived (to the extent such
conditions can be waived) by all parties hereto:  (a)Approvals.  All
authorizations, consents, orders or approvals of, or declarations or filings
with or expiration of waiting periods imposed by, any Governmental Authority
necessary for the consummation of the transactions contemplated hereby will
have been obtained or made or will have occurred.  (b)Legal Action. 
No temporary restraining order, preliminary injunction or permanent
injunction or other order preventing the consummation of the Merger will have
been issued by any Federal or state court or other Governmental Authority and
remain in effect.  (c)Legislation. 
No Federal, state, local or foreign statute, rule or regulation will
have been enacted which prohibits, restricts or delays the consummation of the
transactions contemplated by this Agreement or any of the conditions to the consummation
of such transactions.  (d)Public Offering. 
The conditions to the consummation of the Public Offering shall have
been satisfied or waived and the parties hereto shall reasonably believe that
the consummation of the Public Offering will take place promptly after the
consummation of the Merger.  5.2Conditions to Obligations of Otelco and
MergerCo.  The obligation of Otelco
and MergerCo to perform this Agreement is subject to the satisfaction of the
following conditions unless waived (to the extent such conditions can be
waived) by Otelco:  23


(a)Representations and Warranties. 
The representations and warranties of MMHC set forth in Section 3.1
hereof will in each case be true and correct in all material respects (except
for any representation or warranty that by its terms is qualified by
materiality, in which case it will be true and correct in all respects) as of
the date of this Agreement and (except those representations and warranties
which are made expressly only as of another date) as of the Closing Date as
though made at and as of such dates, respectively, and Otelco will have
received a certificate signed by an executive officer of MMHC to that effect.  (b)Performance of Obligations of MMHC. 
MMHC will have performed in all material respects the obligations
required to be performed by it under this Agreement prior to or as of the
Closing Date, and Otelco will have received a certificate signed by an
executive officer of MMHC to that effect.  (c)Consents and Approvals.  Otelco
will have received duly executed copies of all consents and approvals
contemplated by this Agreement in form and substance satisfactory to Otelco.  (d)Government Consents, Authorizations, Etc.All consents, authorizations, orders or approvals of, and filings or
registrations with, any Governmental Authority which are required for or in
connection with the execution and delivery by MMHC of this Agreement and the
consummation by MMHC of the transactions contemplated hereby will have been
obtained or made.  5.3Conditions to Obligations of MMHC.  The obligation of MMHC to
perform this Agreement are subject to the satisfaction of the following
conditions unless waived (to the extent such conditions can be waived) by MMHC:  (a)Representations and Warranties. 
The representations and warranties of Otelco and MergerCo set forth in Section
3.2 hereof will be true and correct in all material respects (except for
any representation or warranty that by its terms is qualified by materiality,
in which case it will be true and correct in all respects) as of the date of
this Agreement and (except those representations and warranties which are made
expressly only as of another date) as of the Closing Date as though made at and
as of such dates, respectively, and MMHC will have received a certificate
signed by an executive officer of each of Otelco and MergerCo to that effect.  (b)Performance of Obligations by Otelco and
MergerCo.  Otelco and MergerCo will have performed in
all material respects the obligations required to be performed by them under
this Agreement prior to or as of the Closing Date and MMHC will have received a
certificate signed by an executive officer of each of Otelco and MergerCo to
that effect.  (c)Government Consents, Authorizations, Etc.All consents, authorizations, orders or approvals of, and filings or
registrations with, any Governmental Authority which are required for or in
connection with the execution and delivery by Otelco and MergerCo of this
Agreement and the consummation by Otelco and MergerCo of the transactions
contemplated hereby will have been obtained or made.  24


ARTICLE VI
TERMINATION  6.1Termination.  This Agreement may be
terminated, and the Merger abandoned at any time prior to the Effective Time,
by:  (a)the mutual consent of Otelco and MMHC;  (b)Otelco or MMHC if the Effective Time has
not occurred within 7 days following the date hereof; or  (c)Otelco, if the conditions set forth in Section
5.2 hereof will not have been met, and MMHC, if the conditions set forth in
Section 5.3 hereof will not have been met, except if such conditions
have not been met solely as a result of the action or inaction of the party
seeking to terminate.  Any termination pursuant
to this Section 6.1 (other than a termination pursuant to Section 6.1(a))
will be effected by written notice from the party so terminating to the other
parties hereto.  6.2Effect of Termination.  In the event of the
termination of this Agreement as provided in Section 6.1, this Agreement
will be of no further force or effect, except for this Section 6.2 and Article VII, each of which
will survive the termination of this Agreement.  ARTICLE VII
MISCELLANEOUS  7.1Expenses.  Each party hereto will
bear its own fees and expenses in connection with the transactions contemplated
hereby.  7.2Entire Agreement.  This Agreement (including
the disclosure schedules and the Exhibits attached hereto) and the other
writings referred to herein contain the entire agreement among the parties
hereto with respect to the transactions contemplated hereby and supersede all
prior agreements or understandings, written or oral, among the parties with
respect thereto.  7.3Survival.  The representations,
warranties and covenants contained in this Agreement shall not survive the
Closing.  25


7.4Descriptive Headings.  Descriptive headings are
for convenience only and will not control or affect the meaning or construction
of any provision of this Agreement.  7.5Notices.  All notices or other
communications which are required or permitted hereunder will be in writing and
sufficient if delivered Personally or sent by nationally-recognized overnight
courier or by registered or certified mail, postage prepaid, return receipt
requested or by telecopier, with confirmation as provided above addressed as
follows:  if to Otelco:  Otelco Inc.
505 3rd Avenue East
Oneonta, AL  35121
Attention: Mike Weaver
Telecopier: (205) 625-3528  with a copy to:  OMelveny & Myers LLP
Times Square Tower
7 Times Square 
New York, NY  10036
Attention: Adam K. Weinstein, Esq.
Telecopier: (212) 408-2420  if to MMHC, to:  215 Roe Street
Pilot Grove, MO  65276
Attention Denise M. Day
Telecopier: (660) 834-6632  with a copy to:  OMelveny & Myers LLP
Times Square Tower
7 Times Square 
New York, NY  10036
Attention: Adam K. Weinstein, Esq.
Telecopier: (212) 326-2061  or to such other address
as the party to whom notice is to be given may have furnished to the other
party in writing in accordance herewith. 
All such notices or communications will be deemed to be received (a) in
the case of Personal delivery or telecopy, on the date of such  26


delivery, (b) in the case
of nationally-recognized overnight courier, on the next Business Day after the
date when sent and (c) in the case of mailing, on the third Business Day
following the date on which the piece of mail containing such communication was
posted.  7.6Counterparts.  This Agreement may be
executed in any number of counterparts by original or facsimile signature, each
such counterpart will be an original instrument and all such counterparts
together will constitute one and the same agreement.  7.7Governing Law.  This Agreement will be
governed by and construed in accordance with the DGCL and with the laws of the
State of Delaware applicable to contracts made and to be performed wholly
therein.  7.8Benefits of Agreement.  All the terms and
provisions of this Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.  This Agreement will not be assignable by any
party hereto without the consent of the other parties hereto.  7.9Pronouns.  As used herein, all
pronouns will include the masculine, feminine, neuter, singular and plural
thereof whenever the context and facts require such construction.  7.10Amendment, Modification and Waiver.  This Agreement will not
be altered or otherwise amended except pursuant to an instrument in writing
signed by Otelco and MMHC.  The waiver by
any party hereto of a breach of any provision of this Agreement will not
operate or be construed as a waiver of any subsequent breach.  * * * *  27


IN WITNESS WHEREOF, each
of the parties hereto has caused this Agreement and Plan of Merger to be
executed on its behalf as of the day and year first above written.  MID-MISSOURI PARENT, LLCBy:
  /s/
  Denise M. DayName:
  Denise
  M. DayTitle:
  Co-Chief
  Executive OfficerMID-MISSOURI HOLDING CORP.By:
  /s/
  Denise M. DayName:
  Denise
  M. DayTitle:
  Co-Chief
  Executive OfficerRURAL LEC ACQUISITION LLCBy:
  /s/
  Michael D. WeaverName:
  Michael
  D. WeaverTitle:
  PresidentOTELCO MERGER SUBSIDIARY, INC.By:
  /s/
  Michael D. WeaverName:
  Michael
  D. WeaverTitle:
  President