<PAGE>
                                                                    Exhibit 4(d)

                                                                    MLA NO. 0886

                              MASTER LOAN AGREEMENT


         THIS MASTER LOAN AGREEMENT (this "AGREEMENT"), dated as of February 18,
2003, is made by and between COBANK, ACB ("COBANK") and WARWICK VALLEY TELEPHONE
COMPANY, a New York corporation (the "BORROWER").

         WHEREAS, from time to time CoBank may make loans to the Borrower, and
in order to reduce the amount of paperwork associated therewith, CoBank and the
Borrower would like to enter into a master loan agreement;

         NOW, THEREFORE, in consideration of the foregoing, intending to be
legally bound hereby, and in consideration of CoBank making one or more loans to
the Borrower, CoBank and the Borrower agree as follows:

         SECTION 1. SUPPLEMENTS. In the event the Borrower desires to borrow
from CoBank and CoBank is willing to lend to the Borrower, or in the event
CoBank and the Borrower desire to consolidate any existing loans hereunder, the
parties will enter into a supplement to this Agreement (each supplement, as it
may be amended, modified, supplemented, extended or restated from time to time,
a "SUPPLEMENT" and, collectively, the "SUPPLEMENTS"). Each Supplement will set
forth CoBank's commitment to make a loan or loans (each, a "LOAN" and,
collectively, the "LOANS") to the Borrower, the amount of the Loan(s), the
purpose of the Loan(s), the interest rate or rate options applicable to the
Loan(s), the repayment terms of the Loan(s), and any other terms and conditions
applicable to the Loan(s). Each Loan will be governed by the terms and
conditions contained in this Agreement and in the Supplement relating to that
Loan. The initial Supplement shall be that certain First Supplement to the
Master Loan Agreement, dated as of February 18, 2003 (the "First Supplement"),
between CoBank and the Borrower.

         SECTION 2. AVAILABILITY. Advances under the Loans will be made
available on any day on which CoBank and the Federal Reserve Banks are open for
business (a "BUSINESS DAY") upon the telephonic or written request of an
authorized employee of the Borrower. Requests for advances under the Loans must
be received no later than 12:00 noon Eastern time on the date the advance is
desired or at such earlier date and time as may be specified in the relevant
Supplement. Advances under the Loans will be made available by wire transfer of
immediately available funds. Wire transfers will be made to such account or
accounts as may be authorized by the Borrower. In taking actions upon telephonic
requests, CoBank shall be entitled to rely on (and shall incur no liability to
the Borrower in acting upon) any request made by a person identifying himself or
herself as one of the persons authorized by the Borrower to request advances
under a delegation and wire and electronic transfer authorization form with
CoBank, so long as any funds advanced are wired to an account previously
designated by the Borrower.


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Master Loan Agreement/Warwick Valley Telephone Company
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         SECTION 3. NOTES AND PAYMENTS. The Borrower's obligation to repay the
Loans made under each Supplement shall be evidenced by a promissory note in form
and content acceptable to CoBank (such notes, as they may be amended, modified,
supplemented, extended, restated or replaced from time to time, collectively,
the "NOTES", and each, a "NOTE"). The Borrower shall make each payment which it
is required to make under the terms of this Agreement, each Supplement, the
Notes and all security and other instruments and documents relating hereto and
thereto (such agreements, Supplements, Notes, instruments and documents, as they
may be amended for time to time, collectively, at any time, the "LOAN
DOCUMENTS") by wire transfer of immediately available funds or by check. Wire
transfers shall be made to ABA No. 307088754 for advice to and credit of CoBank
(or to such other account as CoBank may direct by notice). The Borrower shall
give CoBank telephonic notice no later than 12:00 noon Eastern time of its
intent to pay by wire. Funds received by wire before 3:00 p.m. Eastern time
shall be credited on the day received and funds received by wire after 3:00 p.m.
Eastern time shall be credited on the next Business Day. Checks shall be mailed
to CoBank, at Department 167, Denver, Colorado 80291-0167 (or to such other
place as CoBank may direct by notice). Credit for payment by check will not be
given until the later of: (i) the day on which CoBank receives immediately
available funds; or (ii) the next Business Day after receipt of the check. If
any date on which a payment is due under any Loan Document is not a Business
Day, then such payment shall be made on the next Business Day and such extension
of time shall be included in the calculation of interest due.

         SECTION 4. SECURITY. The Borrower's obligations under the Loan
Documents shall be secured by a statutory first lien on all equity which the
Borrower may now own or hereafter acquire or be allocated in CoBank. In
addition, the Borrower's obligations under this Agreement, the Supplements and
the Notes shall be secured as provided in the Supplements, and shall be
guaranteed as provided in the Supplements. The First Supplement shall be
unsecured except as provided in the first sentence of this Section 4. The
Borrower agrees to take such steps (including the execution of such instruments
and documents) as CoBank may from time to time reasonably require to enable
CoBank to obtain, perfect and maintain its security interests in such property
as is described in the Supplements.

         SECTION 5. CONDITIONS PRECEDENT.

            (A) CONDITIONS TO FIRST SUPPLEMENT. CoBank's obligation to extend
credit under the First Supplement is subject to the conditions precedent that
CoBank receive, in form and substance satisfactory to CoBank, each of the
following:

                        (1) THIS AGREEMENT, ETC. A duly executed original of
            this Agreement and all instruments and documents contemplated
            hereby.

                        (2) DELEGATION FORM. A duly completed and executed
            original of a CoBank Delegation and Wire Transfer Authorization
            form.

            (B) CONDITIONS TO EACH SUPPLEMENT. CoBank's obligations, if any, to
extend credit under, each Supplement, including the First Supplement, is subject
to the conditions

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Master Loan Agreement/Warwick Valley Telephone Company
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precedent that CoBank receive, in form and content satisfactory to CoBank, each
of the following:

                        (1) SUPPLEMENT. A duly executed original of such
            Supplement, the Note relating thereto, and all other instruments and
            documents contemplated by such Supplement.

                        (2) EVIDENCE OF AUTHORITY. Such certified board
            resolutions, evidence of incumbency, and other evidence that CoBank
            may require that the Supplement, the Note relating thereto and all
            other instruments and documents executed in connection therewith,
            and, in the case of the First Supplement, this Agreement and all
            instruments and documents executed in connection herewith, have been
            duly authorized and executed.

                        (3) CONSENTS AND APPROVALS. Such evidence as CoBank may
            require that all required regulatory and other consents and
            approvals have been obtained and are in full force and effect,
            including, without limitation, all consents and approvals required
            from the FCC, the PSC and the NJBPU (each as hereinafter defined).

                        (4) FEES AND OTHER CHARGES. All fees and other charges
            provided for herein or in the Supplement.

                        (5) INSURANCE. Such evidence as CoBank may require that
            the Borrower is in compliance with Subsection 7(D) hereof.

                        (6) EVIDENCE OF PERFECTION, ETC. Such evidence as CoBank
            may require that CoBank has a duly perfected first priority security
            interest in any collateral contemplated by the Supplement.

                        (7) OPINIONS OF COUNSEL. Opinions of counsel to the
            Borrower and any other entity party to the Loan Documents relating
            to such Supplement acceptable to CoBank; provided, however, such
            opinions may take exception for limitations imposed by or resulting
            from bankruptcy, insolvency, moratorium, reorganization or other
            laws affecting creditors' rights generally and may conform to the
            generally recognized principles of opinions among practicing counsel
            in the States of New York and New Jersey or promulgated by a
            recognized national association of counsel.

                  (C) CONDITIONS TO EACH ADVANCE. CoBank's obligation under each
Supplement to make any Loan or advance to the Borrower thereunder is subject to
the further conditions set forth in such Supplement and that no Event of Default
(as defined in Section 9 hereof) or event which with the giving of notice by the
Borrower and/or the passage of time would become an Event of Default hereunder
(a "POTENTIAL DEFAULT"), shall have occurred and be continuing.

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         SECTION 6. REPRESENTATIONS AND WARRANTIES. The execution by the
Borrower of each Supplement and each request for an advance thereunder shall
constitute a representation and warranty to CoBank that:

                  (A) APPLICATION. Each representation and warranty and all
other information set forth in any application or other document submitted in
connection with, or to induce CoBank to enter into, such Supplement is correct
in all material respects as of the date of the Supplement or request for
advance.

                  (B) DISCLOSURE. No representation or warranty of the Borrower
contained in this Agreement, the financial statements referred to in Subsection
6(F), any other document, certificate or written statement furnished to CoBank
by or on behalf of the Borrower for use in connection with the Loan Documents
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the same were
made.

                  (C) ORGANIZATION; POWERS; ETC. The Borrower and each of its
Subsidiaries (as defined in Section 6(Q)) (i) is duly incorporated, organized,
or formed (as applicable), validly existing, and in good standing under the laws
of its state of incorporation, organization or formation (as applicable); (ii)
is duly qualified to do business and is in good standing in each jurisdiction in
which the character of its properties or the nature of its business requires
such qualification; (iii) has all requisite legal and corporate, partnership or
limited liability company power (as applicable) to own and operate its assets
and to carry on its business and to enter into and perform its obligations under
the Loan Documents to which it is a party; and (iv) has duly and lawfully
obtained and maintained all licenses, certificates, permits, authorizations,
approvals, and the like which are necessary in the conduct of its business, or
which may be otherwise required by law, which if not obtained and maintained,
could have a Material Adverse Effect (as hereinafter defined) on the Borrower.
The term "MATERIAL ADVERSE EFFECT" when used with reference to any entity shall
mean a material adverse effect on the financial condition, operations,
properties or business of such entity or on the ability of such entity to
perform its obligations under the Loan Documents to which it is a party.

                  (D) DUE AUTHORIZATION; NO VIOLATIONS; ETC. The execution and
delivery by the Borrower and each of its Subsidiaries of, and the performance by
the Borrower and each such Subsidiary of its obligations under, the Loan
Documents to which it is a party have been duly authorized by all requisite
corporate, partnership or limited liability company action (as applicable) and
do not and will not (i) violate its articles or certificate of incorporation,
articles or certificate of organization or articles or certificate of formation
(as applicable), its bylaws, partnership agreement or operating agreement (as
applicable), any provision of any law, rule or regulation, any judgment, order
or ruling of any court or Governmental Authority any material agreement or any
indenture, mortgage, or other instrument to which the Borrower or such
Subsidiary is a party or by which the Borrower or such Subsidiary or any of
their respective properties are bound, or (ii) be in conflict with, result in a
breach of, or constitute with the giving of notice or lapse of time, or both, a
default under any such agreement, indenture, mortgage, or other instrument. All
actions on the part of the shareholders, partners or members (as applicable) of
the Borrower and each of its Subsidiaries necessary in connection with the
execution and


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Master Loan Agreement/Warwick Valley Telephone Company
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delivery by the Borrower or such Subsidiary of, and the performance by the
Borrower or such Subsidiary of their respective obligations under, the Loan
Documents to which it is a party have been taken and remain in full force and
effect.

                  (E) BINDING AGREEMENT. Each of the Loan Documents to which the
Borrower or any of its Subsidiaries is a party is, or when executed and
delivered will be, the legal, valid, and binding obligation of the Borrower or
such Subsidiary, enforceable against the Borrower or such Subsidiary in
accordance with its terms, subject only to limitations on enforceability imposed
by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar
laws affecting creditors' rights generally, and (ii) general equitable
principles.

                  (F) FINANCIAL STATEMENTS, BUDGETS, PROJECTIONS, ETC. All
financial statements of any entity submitted to CoBank in connection with, or to
induce CoBank to enter into, this Agreement or such Supplement fairly and fully
present the financial condition of such entity in all material respects and the
results of such entity's operations for the periods covered thereby, and are
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied. There are no material liabilities of such entity, fixed or
contingent, not reflected in such financial statements or the notes thereto.
Since the date of such Supplement or request for advance, there has been no
material adverse change in the financial condition or operations of such entity.
All budgets, projections, feasibility studies, and other documentation, if any,
submitted by the Borrower to CoBank in connection with, or to induce CoBank to
enter into, such Supplement were based upon assumptions that are reasonable and
realistic, and as of the date of such Supplement or request for advance, no fact
has come to light, and no event or transaction has occurred, which would cause
any such assumption not to be reasonable or realistic.

                  (G) CONSENTS AND APPROVALS. No consent, permission,
authorization, order or license of any Governmental Authority or of any party to
any agreement to which the Borrower or any of its Subsidiaries is a party or by
which they or any of their respective property may be bound or affected, is
necessary in connection with the project, acquisition or other activity being
financed by such Supplement, the execution, delivery, performance or enforcement
of the Loan Documents or the creation and perfection of the liens and security
interests granted thereby, except those that either (i) are not currently
required, (ii) have been obtained and are in full force and effect, or (iii) are
required in connection with the exercise of remedies hereunder.

                  (H) COMPLIANCE. The Borrower and each of its Subsidiaries is
in compliance with all of the terms of the Loan Documents to which it is a party
and no Event of Default or Potential Default exists.

                  (I) COMPLIANCE WITH LAWS. The Borrower and each of its
Subsidiaries is in compliance in all material respects with all laws, rules,
regulations, ordinances, codes, orders, and the like (collectively, "Laws"), the
failure to comply with which could have a Material Adverse Effect on the
Borrower.

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                  (J) ENVIRONMENTAL COMPLIANCE. Without limiting the provisions
of Subsection 6(I), all property owned or leased by the Borrower and each of its
Subsidiaries and all operations conducted by them are in compliance in all
material respects with all Laws relating to environmental protection, the
failure to comply with which could have a Material Adverse Effect on the
Borrower.

                  (K) LITIGATION. Except as described on Schedule 6(K), there
are no pending legal, arbitration, or governmental actions or proceedings to
which the Borrower or any of its Subsidiaries is a party or to which any their
respective properties are subject which, if adversely determined, could have a
Material Adverse Effect on the Borrower, and to the best of the Borrower's
knowledge, no such actions or proceedings are threatened or contemplated.

                  (L) PRINCIPAL PLACE OF BUSINESS; RECORDS. The principal place
of business and chief executive office of the Borrower and the place where the
records required by Subsection 7(F) are kept is at the address of the Borrower
shown in Section 14.

                  (M) EMPLOYEE BENEFIT PLANS. The Borrower and each of its
Subsidiaries is in compliance in all material respects with the applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the regulations and published interpretations thereunder, the
failure to comply with which could have a Material Adverse Effect on the
Borrower.

                  (N) TAXES. The Borrower and each of its Subsidiaries has filed
or caused to be filed all federal, state and local tax returns that are required
to be filed, and has paid and shall continue to pay when due all taxes as shown
on such returns, and has paid and shall continue to pay when due all other
taxes, assessments and governmental charges or levies upon it and its property,
income, profits and assets which are due and payable, except where the payment
of such tax, assessment, government charge or levy is being contested in good
faith and by appropriate proceedings and adequate reserves in compliance with
GAAP have been set aside on the Borrower's books therefor.

                  (O) INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. Neither the Borrower nor any of its Subsidiaries is an "investment company"
as that term is defined in, or is otherwise subject to regulation under, the
Investment Company Act of 1940, as amended (the "Investment Company Act").
Neither the Borrower nor any of its Subsidiaries is a "holding company" as that
term is defined in, or is otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.

                  (P) USE OF PROCEEDS. The funds to be borrowed under this
Agreement and each Supplement will be used only as contemplated thereby. No part
of such funds will be used to purchase any "margin securities" or otherwise in
violation of the regulations of the Federal Reserve System.

                  (Q) SUBSIDIARIES. The Borrower has no Subsidiaries other than
as set forth on Schedule 6(Q) to this Agreement. The Borrower is the registered
and beneficial owner of the specified percentage of the shares of issued and
outstanding capital stock or other equity interests


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Master Loan Agreement/Warwick Valley Telephone Company
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of each of the Subsidiaries as set forth on Schedule 6(Q), which stock and other
equity interests are owned free and clear of all liens, warrants, options,
rights to purchase, rights of first refusal and other interests of any person.
The stock or other equity interests of each such Subsidiary has been duly
authorized and validly issued and is fully paid and non-assessable. For purposes
of this Agreement, the term "Subsidiary" means an entity a majority of the
voting stock or equity interest of which is directly or indirectly owned by the
Borrower.

                  (R) LICENSES; PERMITS; ETC. The Borrower and each of its
Subsidiaries is the valid holder of all franchises, licenses, certificates,
permits, authorizations, approvals and the like which are material to the
conduct of its business or which may be required by law, including, without
limitation, all licenses and permits of the Federal Communications Commission
(the "FCC"), the New York Public Service Commission (the "PSC"), the New Jersey
Board of Public Utilities (the "NJBPU") and the public utility commissions of
any other states in which the Borrower operates, and all such franchises,
licenses, certificates, permits, authorizations, approvals, and the like are in
full force and effect on the date of such Supplement and request for advance.

                  (S) CREDIT AGREEMENTS, ETC. Set forth on Schedule 6(S) hereto
is a complete and correct list of all loan agreements, incentives, guarantees,
Capital Leases (as defined in Subsection 8(A)), and other credit agreements
(including agreements for the issuance of letters of credit) in effect on the
date of this Agreement in respect of which the Borrower or any Subsidiary is in
any manner directly or contingently obligated.

         SECTION 7. AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing
by CoBank, while this Agreement is in effect, the Borrower will, and will cause
each of its Subsidiaries to:

                  (A) EXISTENCE, LICENSES. ETC. (i) Preserve and keep in full
force and effect its existence and good standing in the jurisdiction of its
incorporation, organization or formation (as applicable); (ii) qualify and
remain qualified to transact business in all jurisdictions where such
qualification is required by applicable Laws; and (iii) obtain and maintain all
franchises, licenses, certificates, permits, authorizations, approvals and the
like, which if not obtained and maintained, could have a Material Adverse Effect
on the Borrower.

                  (B) COMPLIANCE WITH LAWS AND AGREEMENTS. Comply in all
material respects with (i) all Laws, the failure to comply with which could have
a Material Adverse Effect on the Borrower, and (ii) all agreements, indentures,
mortgages, and other instruments to which the Borrower or any Subsidiary is a
party or by which it or any of its property is bound, the failure to comply with
which could have a Material Adverse Effect on the Borrower.

                  (C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limiting the
provisions of Subsection 7(B), comply in all material respects with, and cause
all persons occupying or present on any properties owned or leased by it to so
comply with, all Laws relating to environmental protection, the failure to
comply with which could have a Material Adverse Effect on the Borrower.

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                  (D) INSURANCE. Maintain insurance with insurance companies or
associations reasonably acceptable to CoBank in such amounts and covering such
risks as are usually carried by companies engaged in the same business and
similarly situated, and make such increases in the type or amount of coverage as
CoBank may reasonably request. All such policies insuring any collateral for the
Borrower's obligations to CoBank contemplated by any Supplement shall have
lender or mortgagee loss payable clauses or endorsements in form and substance
acceptable to CoBank. Such proceeds shall be applied to the extent applicable as
provided in the Loan Documents governing such collateral. At CoBank's request,
the Borrower agrees to deliver to CoBank such proof of compliance with this
Subsection 7(D) as CoBank may require.

                  (E) PROPERTY MAINTENANCE. Maintain and preserve all of its
property and each and every part and parcel thereof that is necessary to or
useful in the proper conduct of its business in good repair, working order, and
condition, ordinary wear and tear excepted, and in compliance with all
applicable Laws, and make all alterations, replacements, and improvements
thereto as may from time to time be necessary in order to ensure that its
properties remain in good working order and condition and compliance. Upon the
occurrence of an Event of Default, at CoBank's request, but not more than once a
year, the Borrower will furnish to CoBank a report on the condition of the
Borrower's and any of its Subsidiaries' property prepared by a professional
engineer satisfactory to CoBank.

                  (F) BOOKS AND RECORDS. Keep adequate records and books of
account in which complete and accurate entries will be made in accordance with
GAAP consistently applied.

                  (G) INSPECTION. Permit CoBank or its representatives, upon
reasonable notice and during normal business hours or at such other times as the
parties may agree, to examine the Borrower's properties, books, and records, and
to discuss the Borrower's affairs, finances, and accounts, with the Borrower's
officers, directors, employees, and independent certified public accountants.

                  (H) REPORTS AND NOTICES. Furnish, or cause to be furnished, to
CoBank:

                           (1) ANNUAL FINANCIAL STATEMENTS. As soon as
                  available, but in no event later than 90 days after the end of
                  each fiscal year of the Borrower, annual consolidated
                  financial statements of the Borrower prepared in accordance
                  with GAAP consistently applied and in a format that
                  demonstrates any accounting or formatting change that may be
                  required by the various jurisdictions in which the business of
                  the Borrower is conducted (to the extent not inconsistent with
                  GAAP). Such financial statements shall: (i) be audited by
                  independent certified public accountants selected by the
                  Borrower and acceptable to CoBank; (ii) be accompanied by a
                  report of such accountants containing an opinion thereon
                  acceptable to CoBank; (iii) be prepared in reasonable detail,
                  and in comparative form; and (iv) include a balance sheet, a
                  statement of income, a statement of retained earnings, a
                  statement of cash flows, and all notes and schedules relating
                  thereto.
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                           (2) QUARTERLY FINANCIAL STATEMENTS. As soon as
                  available but in no event later than 45 days after the end of
                  each fiscal quarter of each fiscal year of the Borrower,
                  excluding that fiscal quarter consisting of the final 3 months
                  of each fiscal year, unaudited quarterly consolidated
                  financial statements of the Borrower, in each case prepared in
                  accordance with GAAP consistently applied (except for the
                  omission of footnotes and for the effect of normal year-end
                  audit adjustments) and in a format that demonstrates any
                  accounting or formatting change that may be required by
                  various jurisdictions in which the business of the Borrower is
                  conducted (to the extent not inconsistent with GAAP). Each of
                  such financial statements shall (i) be prepared in reasonable
                  detail and (ii) include a balance sheet, a statement of income
                  for such quarter and for the period year-to-date, and such
                  other quarterly statements as CoBank may specifically request,
                  which quarterly statements shall include any and all
                  supplements thereto.

                           (3) NOTICE OF DEFAULT. Promptly after becoming aware
                  thereof, notice of (i) the occurrence of any Potential Default
                  or Event of Default under any of the Loan Documents; and (ii)
                  the occurrence of any breach, default, event of default, or
                  other event which with the giving of notice or lapse of time,
                  or both, could become a breach, default, or event of default
                  under any agreement, indenture, mortgage, or other instrument
                  (other than the Loan Documents) to which it is a party or by
                  which it or any of its property is bound or affected;
                  provided, however, that the failure to give such notice shall
                  not affect the right and power of CoBank to exercise any and
                  all of the remedies specified herein.

                           (4) NOTICE OF NON-ENVIRONMENTAL LITIGATION. Promptly
                  after the commencement thereof, notice of the commencement of
                  all actions, suits, or proceedings before any court,
                  arbitrator, or governmental department, commission, board,
                  bureau, agency, or instrumentality affecting the Borrower or
                  any of its Subsidiaries which, if determined adversely, could
                  have a Material Adverse Effect on the Borrower.

                           (5) NOTICE OF ENVIRONMENTAL LITIGATION. Without
                  limiting the provisions of Subsection 7(H)(6), promptly after
                  receipt thereof, notice of the receipt of all pleadings,
                  orders, complaints, indictments, or any other communication
                  alleging a condition that may require the Borrower or any of
                  its Subsidiaries to undertake or to contribute to a cleanup or
                  other response under all Laws relating to environmental
                  protection, or which seek penalties, damages, injunctive
                  relief, or criminal sanctions related to alleged violations of
                  such Laws, or which claim personal injury or property damage
                  to any person as a result of environmental factors or
                  conditions or which, if adversely determined, could have a
                  Material Adverse Effect on the Borrower.

                           (6) REGULATORY AND OTHER NOTICES. Promptly after
                  filing, receipt or becoming aware thereof, copies of any
                  filings or communications sent to and notices or other
                  communications received by the Borrower or any of its
                  Subsidiaries from any Governmental Authority, including,
                  without limitation, the Securities and Exchange Commission
                  (the "SEC"), the FCC, the PSC, the BPU, or any other state
                  utility commission relating to any material noncompliance by
                  the Borrower or any of its



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                  Subsidiaries with any Laws or with respect to any matter or
                  proceeding the effect of which, if adversely determined, could
                  have a Material Adverse Effect on the Borrower.

                           (7) MATERIAL ADVERSE CHANGE. Promptly after becoming
                  aware thereof, notice of any matter which has had or could
                  reasonably be expected to have a Material Adverse Effect on
                  the Borrower.

                           (8) COMPLIANCE CERTIFICATES. Concurrently with each
                  statement required to be furnished pursuant to Subsection
                  7(H)(1) or (2), a compliance certificate in the form attached
                  hereto as Exhibit A executed by the Chief Financial Officer of
                  the Borrower.

                           (9) MANAGEMENT LETTERS. Promptly after receipt
                  thereof, a copy of any management letters submitted to the
                  Borrower or any of its Subsidiaries by its independent
                  certified public accountants.

                           (10) ERISA REPORTABLE EVENTS. Within 30 days after it
                  becomes aware of the occurrence of any Reportable Event (as
                  defined in Section 4043 of ERISA) applicable to the Borrower
                  or any of its Subsidiaries, a statement describing such
                  Reportable Event and the actions it proposes to take in
                  response to such Reportable Event.

                           (11) OTHER INFORMATION. Such other information
                  regarding the condition, financial or otherwise, or operations
                  of the Borrower or any of its Subsidiaries as CoBank may, from
                  time to time, reasonably request.

                  (I) TOTAL LEVERAGE RATIO. The Borrower shall maintain at all
times, measured on a consolidated basis for the Borrower and its Subsidiaries
and reported as of the last day of each fiscal quarter of the Borrower (each a
"QUARTERLY DATE"), a Total Leverage Ratio not exceeding 3.00:1.00.

The term "TOTAL LEVERAGE RATIO" shall mean the ratio of Indebtedness to
Operating Cash Flow (as each such term is hereinafter defined). "INDEBTEDNESS"
shall mean (i) obligations for borrowed money, (ii) obligations representing the
deferred purchase price of property or services other than accounts payable
arising in connection with the purchase of goods or services on terms customary
in the trade, (iii) obligations, whether or not assumed, secured by liens or a
pledge of or an encumbrance on the proceeds or production from property now or
hereafter owned or acquired, (iv) obligations which are evidenced by notes,
acceptances or other instruments, (v) leases of real or personal property which
are required to be capitalized under GAAP or which are treated as operating
leases under regulations applicable to them but which otherwise would be
required to be capitalized under GAAP (each a "CAPITAL LEASE"), and (vi) fixed
payment obligations under guarantees that are due and remain unpaid. For
purposes of this Agreement, the term "OPERATING CASH FLOW" (i) shall mean the
sum of (a) net income or deficit, as the case may be (excluding extraordinary
gains and losses and the write-up or down of any asset), (b) total interest
expense (including non-cash interest), (c) depreciation and amortization expense
and (d) cash taxes, federal and state, imposed on income, to the extent


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deducted in determining income and (ii) shall be measured for the then most
recently completed four fiscal quarters, adjusted to give effect to any
acquisition, sale or other disposition, directly or through a Subsidiary, of any
business (or any portion thereof) during the period of calculation as if such
acquisition, sale or other disposition occurred on the first day of such period
of calculation.

                  (J) INDEBTEDNESS TO TOTAL CAPITALIZATION RATIO. Maintain at
all times, measured at each Quarterly Date, an Indebtedness to Total
Capitalization Ratio (as hereinafter defined) not exceeding 0.50:1.00. The term
"INDEBTEDNESS TO TOTAL CAPITALIZATION RATIO" shall mean the ratio derived by
dividing (i) Indebtedness by (ii) Total Capitalization (as hereinafter defined).
The term "TOTAL CAPITALIZATION" shall mean that amount equal to Indebtedness
plus the difference of (x) total assets minus (y) total liabilities.

                  (K) DEBT SERVICE COVERAGE RATIO. The Borrower shall maintain
at all times, measured on a consolidated basis for the Borrower and its
Subsidiaries and reported as of each Quarterly Date, during the periods set
forth below, a Debt Service Coverage Ratio greater than or equal to 1.50:1:00.

The term "DEBT SERVICE COVERAGE RATIO" shall mean, as of the date of
calculation, the ratio derived by dividing (i) Operating Cash Flow minus cash
taxes measured for the then most recently completed four fiscal quarters by (ii)
the sum of: (a) all principal payments scheduled to be made on Indebtedness (or
scheduled reductions in commitments on lines of credit to the extent such
reductions would cause the repayment of principal amounts then outstanding under
such lines) plus (b) cash interest expense, each measured in the same manner as
Operating Cash Flow set forth in Subsection (I) above.

                  (L) CAPITAL. Acquire non-voting participation certificates in
CoBank in such amounts and at such times as CoBank may from time to time require
in accordance with its Bylaws and Capital Plan (as each may be amended from time
to time), except that the maximum amount of non-voting participation
certificates that the Borrower may be required to purchase in connection with a
Loan may not exceed the maximum amount permitted by the Bylaws at the time the
Supplement relating to such Loan is entered into or such Loan is renewed or
refinanced by CoBank. The rights and obligations of the parties with respect to
such non-voting participation certificates and any patronage or other
distributions made by CoBank shall be governed by CoBank's Bylaws. The Borrower
hereby consents and agrees that the amount of any distributions with respect to
its patronage with CoBank that are made in qualified written notices of
allocation (as defined in 26 U.S.C. 1388) and that are received by the Borrower
from CoBank, will be taken into account by the Borrower at their stated dollar
amounts whether the distribution be evidenced by a participation certificate or
other form of written notice that such distribution has been made and recorded
in the name of the Borrower on the records of CoBank.

         SECTION 8. NEGATIVE COVENANTS. Unless otherwise agreed to in writing by
CoBank, while this Agreement is in effect the Borrower will not and will cause
its Subsidiaries not to:

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                  (A) BORROWINGS. Create, incur, assume, or allow to exist,
directly or indirectly, any Indebtedness except for (i) obligations to CoBank,
(ii) unsecured Indebtedness and Indebtedness under purchase money security
agreements and Capital Leases not to exceed $2,500,000 in the aggregate for the
Borrower and its Subsidiaries at any one time and (iii) Indebtedness in an
amount not to exceed $4,000,000 under the first mortgage bonds issued by the
Borrower, existing on the date hereof and having a maturity date of December 1,
2003 (collectively the "SERIES J BONDS").

                  (B) LIENS. Create, incur, assume, or allow to exist any
mortgage, deed of trust, pledge, lien (including the lien of an attachment,
judgment, or execution), security interest, or other encumbrance of any kind
upon any of its property, real or personal. The foregoing restrictions shall not
apply to (i) liens in favor of CoBank; (ii) liens for taxes, assessments, or
governmental charges that are not past due, unless the same are being contested
in good faith and by appropriate proceedings and then only if and to the extent
reserves required by GAAP have been set aside therefor; (iii) liens, pledges,
and deposits under workers' compensation, unemployment insurance, social
security and similar laws; (iv) liens, deposits, and pledges to secure the
performance of bids, tenders, contracts (other than contracts for the payment of
money), and like obligations arising in the ordinary course of its business; (v)
liens imposed by law in favor of mechanics, materialmen, warehousemen, lessors
and like persons that secure obligations that are not past due, unless the same
are being contested in good faith and by appropriate proceedings and then only
if and to the extent reserves required by GAAP have been set aside therefor;
(vi) liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property of
the Borrower that, in the sole judgment of CoBank, do not materially detract
from the value of such real property or impair the use thereof in the Borrower's
business; (vii) judgment liens, provided enforcement thereof is effectively
stayed and the claims secured thereby are being contested in good faith by
appropriate proceedings and for which reserves have been established in
accordance with GAAP; (viii) purchase money security interests and leases
securing Indebtedness permitted under Subsection 8(A)(ii), provided that such
security interests and leases do not encumber any property other than the items
purchased with the proceeds thereof or leased thereby; and (ix) liens existing
on the date hereof securing the Series J Bonds.

                  (C) FUNDAMENTAL CHANGES. (i) Unless, and only to the extent
required by law, amend, modify or waive any provision of its articles or
certificate of incorporation, articles or certificate of organization, articles
or certificate of formation, bylaws, partnership agreement or operating
agreement (as applicable) other than an amendment, modification or waiver that
is solely ministerial or administrative in nature; provided, however, Borrower
shall promptly give CoBank notice of any such amendment, modification or waiver,
(ii) merge or consolidate with any other entity, acquire all or substantially
all of the assets of any person or entity, or (iii) form or create any
Subsidiary or affiliate or (iv) commence operations under any other name,
organization, or entity, including any joint venture.

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                  (D) TRANSFER OF ASSETS. Sell, transfer, lease, enter into any
contract for the sale, transfer or lease of, or otherwise dispose of, any of its
assets, except (i) in the ordinary course of its business and (ii) all other
dispositions of assets if all of the following conditions are met: (a) the
aggregate market value of assets sold in any one transaction or series of
related transactions for any calendar year does not exceed $2,500,000 for
Borrower and its Subsidiaries; (b) the consideration received is at least equal
to the fair market value of such assets; (c) the sole consideration received is
cash; (d) after giving effect to the sale or other disposition of such assets,
Borrower, on a consolidated basis with its Subsidiaries, is in compliance on a
pro forma basis with the covenants set forth in Subsections 7(I), (J) and (K)
recomputed for the earlier of the most recently ended month for which
information is available or the most recently ended month which is more than 45
days prior to the date of such asset disposition; and (e) no Event of Default
then exists or shall result from such sale or other disposition.

                  (E) LOANS AND INVESTMENTS. After the date hereof, make any
loan or advance to, invest in, purchase or make any commitment to purchase any
stock, bonds, notes, or other securities of, or guarantee, assume, or otherwise
become obligated or liable with respect to the obligations of any person or
entity (each, whether made directly or indirectly, an "INVESTMENT") other than
(i) stock or other securities of, or investments in CoBank or CoBank investment
services or programs, (ii) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(iii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Rating Service or at least P-1 from Moody's Investors Service, Inc.; (iv)
certificates of deposit or bankers' acceptances maturing within one (1) year
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; (v) time deposits
maturing no more than thirty (30) days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts at any one such institution not exceeding the lesser of $100,000 or
the maximum amount of insurance applicable to the aggregate amount of Borrower's
deposits at such institution, (vi) Investments in 100% wholly owned subsidiaries
not to exceed $11,475,000; and (vii) other Investments not to exceed $2,500,000
in the aggregate at any time.

                  (F) CHANGE IN BUSINESS. Engage in any business activity or
operation different from or substantially unrelated to telecommunications.

                  (G) DISPOSITION OF LICENSES. Sell, assign, transfer or
otherwise dispose of, or attempt to dispose of, in any way, any franchise,
license, certificates, permits, authorization, approvals and the like which may
be required by law or which are material to the conduct of its business, the
disposition of which could have a Material Adverse Effect on the Borrower.

                  (H) DIVIDENDS AND OTHER DISTRIBUTIONS. Provide, make, declare
or pay, directly or indirectly, any dividend or other distribution of assets to
shareholders of the Borrower, or retire, redeem, purchase or otherwise acquire
for value any capital stock or equity


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interests (as applicable) of the Borrower; provided, however, that so long as no
Event of Default exists before or will result under Subsection 7(I), (J) and (K)
in the succeeding 12 months after such dividend or other distribution, the
Borrower may, during any fiscal year, make, declare or pay lawful cash dividends
or distributions to the shareholders of the Borrower in an aggregate amount
which does not exceed 100% of the net income of the Borrower for the prior
fiscal year, determined in accordance with GAAP consistently applied.

                  (I) TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate (as
hereinafter defined) or with any director, officer or employee of the Borrower
or any Affiliate, except (i) transactions in the ordinary course of and pursuant
to the reasonable requirements of the business of the Borrower or any of its
Subsidiaries and upon fair and reasonable terms which are fully disclosed to
CoBank and are no less favorable to the Borrower or such Subsidiary than would
be obtained in a comparable arm's length transaction with a person or entity
that is not an Affiliate or are on such terms or conditions as are required by
any Governmental Authority or (ii) payment of compensation to directors,
officers and employees in the ordinary course of business for services actually
rendered in their capacities as directors, officers and employees, provided such
compensation is reasonable and comparable with compensation paid by companies of
like nature and similarly situated. Notwithstanding the foregoing, upon the
election of CoBank, no payments may be made with respect to any items set forth
in clause (i) of the preceding sentence upon the occurrence and during the
continuation of a Potential Default or Event of Default.

                  "AFFILIATE" means any person or entity: (i) directly or
indirectly controlling, controlled by, or under common control with, the
Borrower; (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in the Borrower; or (iii) five percent (5%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by the Borrower. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling," "controlled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities or by contract or otherwise.

                  (J) MANAGEMENT FEES AND COMPENSATION. Directly or indirectly
pay any management, consulting or other similar fees to any person, except legal
or consulting fees paid to persons or entities that are not Affiliates of the
Borrower or its Subsidiaries, for services actually rendered and in amounts
typically paid by entities engaged in the Borrower's or such Subsidiary's
business.

         SECTION 9. EVENTS OF DEFAULT. Each of the following shall constitute an
"EVENT OF DEFAULT" under this Agreement:

                  (A) PAYMENT DEFAULT. The Borrower should fail to make any
payment to CoBank when due hereunder, under any Note, or under any other Loan
Document to which it is a party, or should fail to make any investment in CoBank
required to be made hereunder when due.

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                  (B) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made herein, in any Supplement or in any other Loan Document, or any
factual statement made in any certificate delivered in connection therewith
shall prove to have been false or misleading in any material respect on or as of
the date made or deemed made.

                  (C) CERTAIN AFFIRMATIVE COVENANTS. The Borrower should fail to
perform or comply with any covenant set forth in Section 7 hereof (other than
Subsections 7(H)(3) through 7(H)(7)) and such failure continues for 30 days
after written notice thereof shall have been delivered by CoBank to the
Borrower.

                  (D) OTHER COVENANTS AND AGREEMENTS. The Borrower should fail
to perform or comply with Subsections 7(H)(3) through 7(H)(7) or any other
covenant or agreement contained herein or should use the proceeds of any Loan
for an unauthorized purpose.

                  (E) CROSS-DEFAULT. (i) The occurrence of an Event of Default
under any other Loan Document, (ii) the failure, after any applicable grace
period, on the part of the Borrower or any other entity, other than CoBank, to
observe, keep or perform any covenant or agreement contained in any other Loan
Document, or (iii) the failure, after any applicable grace period, on the part
of the Borrower or any of its Subsidiaries to observe, keep or perform any
covenant or agreement contained in any agreement (other than the Loan Documents)
between such entity and CoBank, including, without limitation, any guaranty,
loan agreement, security agreement, mortgage, deed to secure debt, or deed of
trust.

                  (F) OTHER INDEBTEDNESS. The Borrower or any of its
Subsidiaries or any guarantor of the Borrower's obligations hereunder should
fail to pay when due any Indebtedness to any other person or entity for borrowed
money or any long-term obligation for the deferred purchase price of property
(including any Capital Lease) in a principal amount, with respect to the
Borrower or any of its Subsidiaries, in excess of $50,000, or any other event
occurs which, under any agreement or instrument relating to such Indebtedness or
obligation, has the effect of accelerating or permitting the acceleration of
such Indebtedness or obligation, whether or not such Indebtedness or obligation
is actually accelerated or such person or entity commences the exercise of its
remedies against the Borrower or such Subsidiary or any of their respective
assets.

                  (G) JUDGMENTS. A judgment, decree, or order for the payment of
money in excess of $50,000 shall be rendered against the Borrower or any of its
Subsidiaries and either: (i) enforcement proceedings should have been commenced;
(ii) a lien prohibited under Subsection 8(B) hereof shall have been obtained; or
(iii) such judgment, decree, or order shall continue unsatisfied and in effect
for a period of 60 consecutive days without being vacated, discharged,
satisfied, or stayed pending appeal.

                  (H) INSOLVENCY, ETC. The Borrower or any of its Subsidiaries
should: (i) become insolvent or should generally not, or should be unable to, or
should admit in writing its inability to, pay its debts as they come due; or
(ii) with respect to the Borrower or any of its Subsidiaries the closure of
which could have a Material Adverse Effect on the Borrower, suspend its business
operations or a material part thereof or make an assignment for the benefit of
creditors; or (iii) apply for, consent to, or acquiesce in the appointment of a
trustee, receiver, or other custodian for it or any of its property or, in the
absence of such application, consent, or acquiescence, a trustee, receiver,


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or other custodian is so appointed; or (iv) commence or have commenced against
it any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation Law of any jurisdiction,
which, in the case of a proceeding commenced against the Borrower or any of its
Subsidiaries, is not dismissed within 45 days.

                  (I) MATERIAL ADVERSE CHANGE. Any material adverse change
occurs, as reasonably determined by CoBank, constituting a Material Adverse
Effect.

                  (J) SECURITY. Any security agreement or other agreement
executed by the Borrower or any other entity (other than CoBank) intended to
create a valid and perfected lien, security interest or security title in
property as described in a Supplement shall for any reason (other than upon
payment in full of the obligations secured thereby) fail (i) to create a valid
and perfected first-priority lien, security interest, or security title (subject
only to such exceptions as are therein permitted) as contemplated by the
Supplement, or (ii) to secure thereunder the obligations purported to be secured
thereby. Any guaranty described in a Supplement as guaranteeing the obligations
of the Borrower hereunder shall fail for any reason to be the valid and binding
obligation of the guarantor (other than upon payment in full of the obligations
guaranteed thereby), or the guarantor should in any way contest or dispute the
validity and binding effect of any such guaranty.

                  (K) CHANGE IN CONTROL OF THE BORROWER. Any person or entity
shall acquire, in its own name or beneficially, directly or indirectly, more
than 50% of the issued and outstanding voting and other capital stock of the
Borrower.

                  (L) LICENSES AND PERMITS. (i) The loss, suspension or
revocation of, or failure to renew, any franchise, license, permit,
authorization, approval or the like now held or hereafter acquired by the
Borrower or any of its Subsidiaries, if such loss, suspension, revocation or
failure to renew could reasonably be expected to have a Material Adverse Effect
on the Borrower or (ii) receipt of notice from any regulatory or Governmental
Authority to the effect that such authority intends to replace the management of
the Borrower or any of its Subsidiaries or assume control over the Borrower or
such Subsidiary.

         SECTION 10. REMEDIES. Upon the occurrence and during the continuance of
an Event of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Borrower under any Supplement and may
discontinue doing so at any time without prior notice. Upon the occurrence of an
Event of Default under Subsection 9(H) hereof, the entire unpaid principal
balance of the Loans, all accrued interest thereon, and all other amounts
payable under this Agreement, all Supplements, all Notes and all other Loan
Documents and all other agreements between CoBank and the Borrower shall become
immediately due and payable without protest, presentment, demand or further
notice of any kind, all of which are hereby expressly waived by the Borrower. In
addition, upon the occurrence and during the continuance of any Event of
Default, CoBank may:

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                  (A) TERMINATION AND ACCELERATION. Terminate any commitment and
declare the entire unpaid principal balance of the Loans, all accrued interest
thereon, and all other amounts payable under this Agreement, all Supplements,
and the other Loan Documents to be immediately due and payable. Upon such a
declaration, the unpaid principal balance of the Loans and all such other
amounts shall become immediately due and payable, without protest, presentment,
demand, or further notice of any kind, all of which are hereby expressly waived
by the Borrower.

                  (B) ENFORCEMENT. Proceed to protect, exercise, and enforce
such rights and remedies as may be provided by this Agreement, any other Loan
Document or under applicable Laws. Each and every one of such rights and
remedies shall be cumulative and may be exercised from time to time, and no
failure on the part of CoBank to exercise, and no delay in exercising, any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
of any right or remedy shall preclude any other or future exercise thereof, or
the exercise of any other right. Without limiting the foregoing, CoBank may hold
and/or set off and apply against the Borrower's obligations to CoBank the
proceeds of any equity in CoBank, any cash collateral held by CoBank, or any
balances held by CoBank for the Borrower's account (whether or not such balances
are then due).

                  (C) APPLICATION OF FUNDS. Apply all payments received by it to
the Borrower's obligations to CoBank in such order and manner as CoBank may
elect in its sole discretion; provided that any payments received from any
guarantor or from any disposition of any collateral provided by such guarantor
shall only be applied against obligations guaranteed by such guarantor.

                  (D) DEFAULT RATE OF INTEREST. In addition to the rights and
remedies set forth in this Section 10 and notwithstanding any Note and
Supplement: (i) if prior to the maturity of any loan the Borrower fails to
purchase any equity in CoBank when required or fails to make any payment to
CoBank when due, then at CoBank's option in each instance, such obligation or
payment shall bear interest from the date due to the date paid at 4% per annum
in excess of the rate of interest that would otherwise be applicable to such
obligation or payment, (ii) upon the occurrence and during the continuance of an
Event of Default, at CoBank's option, the unpaid balances of the Loans shall
bear interest at 4% per annum in excess of the rate(s) of interest that would
otherwise be in effect on the Loans under the terms of the Note and Supplement
and (iii) after the maturity of any Loan, whether by reason of acceleration or
otherwise, the unpaid principal balance of the Loan (including without
limitation, principal, interest, fees and expenses) shall automatically bear
interest at 4% per annum in excess of the rate of interest that would otherwise
be in effect on the Loan under the terms of the Note and Supplement. All
interest provided for herein shall be payable on demand and shall be calculated
from the date such payment was due to the date paid on the basis of a year
consisting of 360 days.

Once CoBank has commenced the exercising of any remedies pursuant to this
Section 10 during the continuance of an Event of Default, CoBank may proceed
with the exercising of such remedies, notwithstanding any curative action by the
Borrower.

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         SECTION 11. COMPLETE AGREEMENT, AMENDMENTS. The Loan Documents are
intended by the parties to be a complete and final expression of their
agreement. No amendment, modification, or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrower herefrom or therefrom, shall be effective unless approved by CoBank and
contained in a writing signed by or on behalf of CoBank, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. In the event this Agreement is amended or restated,
each such amendment or restatement shall be applicable to all Supplements
hereto. Each Supplement shall be deemed to incorporate all of the terms and
conditions of this Agreement as if fully set forth therein. Without limiting the
foregoing, any capitalized term utilized in any Supplement (or in any amendment
to this Agreement or Supplement) and not otherwise defined in the Supplement (or
amendment) shall have the meaning set forth herein.

         SECTION 12. OTHER TYPES OF CREDIT. From time to time, CoBank may issue
letters of credit or extend other types of credit to or for the account of the
Borrower. In the event the parties desire to do so under the terms of this
Agreement, such extensions of credit may be set forth in any Supplement and this
Agreement shall be applicable thereto.

         SECTION 13. APPLICABLE LAW. Except to the extent governed by applicable
federal law, this Agreement and each Supplement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to choice of law doctrine.

         SECTION 14. NOTICES. All notices hereunder or under any Supplement
shall be in writing and shall be deemed to be duly given upon delivery if
personally delivered or sent by telegram or facsimile transmission, or 3 days
after mailing if sent by express, certified or registered mail, to the parties
at the following addresses (or such other address for a party as shall be
specified by like notice):


    If to CoBank, as follows:                If to the Borrower, as follows:

    CoBank, ACB                              Warwick Valley Telephone Company
    900 Circle 75 Parkway                    47 Main Street
    Suite 1400                               Warwick, New York 10990
    Atlanta, Georgia  30339                  Attn:  Chief Executive Officer
    Attn: Communications and Energy          Fax No.:  (845) 986-6699
          Banking Group
    Fax No.: (770) 618-3202
                                             With a copy to:

                                             John T. Pattison
                                             Harter, Secrest & Emery LLP
                                             1600 Bausch & Lomb Place
                                             Rochester, NY  14604
                                             Fax No.:  (583) 232-2152



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         SECTION 15. COSTS, EXPENSES AND TAXES. To the extent allowed by law,
the Borrower agrees to pay all reasonable out-of-pocket costs and expenses
(including the fees and expenses of counsel retained by CoBank) incurred by
CoBank in connection with the administration, collection, and enforcement of
this Agreement and the other Loan Documents, including, without limitation, all
costs and expenses incurred in maintaining, determining the priority of, and
releasing any security for the Borrower's obligations to CoBank, and any stamp,
intangible, transfer, or like tax payable in connection with this Agreement or
any other Loan Document or the recording hereof or thereof; provided, CoBank has
agreed that Borrower shall not be responsible for the fees and expenses of
CoBank's counsel in connection with the original closing of the "Loan" under the
First Supplement.

         SECTION 16. EFFECTIVENESS AND SEVERABILITY. This Agreement shall
continue in effect until: (i) all Indebtedness and obligations of the Borrower
under this Agreement, all Supplements, all Notes and all other Loan Documents
shall have been paid or satisfied; (ii) CoBank has no commitment to extend
credit to or for the account of the Borrower under any Supplement; and (iii)
either party sends written notice to the other terminating this Agreement. Any
provision of this Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or thereof.

         SECTION 17. REGULATORY APPROVALS. Upon any action by CoBank to commence
the exercise of remedies hereunder, or under the Supplements or other Loan
Documents, the Borrower hereby undertakes and agrees on behalf of itself to
cooperate and join with CoBank in any application to any regulatory body
(including the FCC, the PSC, the BPU or any other state commission),
administrative agency, court or other forum (any such entity, a "GOVERNMENTAL
AUTHORITY") with respect thereto and to provide such assistance in connection
therewith as CoBank may request, including, without limitation, the preparation
of filings and appearances of officers and employees of the Borrower before such
Governmental Authority, in each case in support of any such application made by
CoBank, and the Borrower shall not, directly or indirectly, oppose any such
action by CoBank before any such Governmental Authority.

         SECTION 18. SUCCESSORS AND ASSIGNS. This Agreement, each Supplement,
and the other Loan Documents shall be binding upon and inure to the benefit of
the Borrower and CoBank and their respective successors and assigns, except that
the Borrower may not assign or transfer its rights or obligations under this
Agreement, any Supplement or any other Loan Document without the prior written
consent of CoBank.

         SECTION 19. CONSENT TO JURISDICTION. To the maximum extent permitted by
law, the Borrower agrees that any legal action or proceeding with respect to
this Agreement or any of the other Loan Documents may be brought in the courts
of the State of Colorado, or of the United States of America for the District of
Colorado, all as CoBank may elect. By execution of this Agreement, the Borrower
hereby irrevocably submits to each such jurisdiction, expressly waiving any
objection it may have to the laying of venue by reason of its present or future
domicile. Nothing contained herein shall affect the right of CoBank to commence
legal



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proceedings or otherwise proceed against the Borrower in any other jurisdiction
or to serve process in any manner permitted or required by law.

         SECTION 20. WAIVER OF JURY TRIAL. THE BORROWER AND COBANK HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY SUPPLEMENT, ANY OTHER LOAN DOCUMENT,
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE BORROWER AND COBANK
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE BORROWER AND COBANK FURTHER WARRANT AND REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, EXCEPT IN A WRITING SIGNED BY BOTH THE BORROWER AND
COBANK, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. THE BORROWER AND COBANK
ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF COBANK.

         SECTION 21. COUNTERPARTS. This Agreement, each Supplement and any other
Loan Document may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original and shall be binding upon all parties and their
respective permitted successors and assigns, and all of which taken together
shall constitute one and the same agreement.

         SECTION 22. PARTICIPATIONS, ETC. From time to time, CoBank may sell to
one or more banks, financial institutions or other lenders a participation in
one or more of the Loans or other extensions of credit made pursuant to this
Agreement. However, no such participation shall relieve CoBank of any commitment
made to the Borrower hereunder. In connection with the foregoing, CoBank may
disclose information concerning the Borrower and its Subsidiaries, if any, to
any participant or prospective participant, provided that such participant or
prospective participant agrees to keep such information confidential. A sale of
a participation interest may


                                       63

<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886

include certain voting rights of the participants regarding the Loans hereunder
(including without limitation the administration, servicing and enforcement
thereof). CoBank agrees to give written notification to the Borrower of any sale
of a participation interest.

                        [Signatures follow on next page.]




                                       64

<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886


         IN WITNESS WHEREOF, the Borrower has caused this Agreement to be
executed and delivered, and CoBank has caused this Agreement to be executed and
delivered, each by their respective duly authorized officers as of the date
first shown above.

                                    WARWICK VALLEY TELEPHONE COMPANY


                                    By: /s/ Philip A. Grybas
                                       -----------------------------------
                                         Philip A. Grybas
                                         Vice President, CFO & Treasurer




                       [Signatures continue on next page.]


                                       65
<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886

                     [Signatures continue from previous]


                                      COBANK, ACB



                                      By:  /s/ Christopher J. Motl
                                          --------------------------
                                           Christopher J. Motl
                                           Vice President


                                       66
<PAGE>
                                    EXHIBIT A

                      COMPLIANCE CERTIFICATE - MLA NO. 0886


         THIS COMPLIANCE CERTIFICATE is given by Philip A. Grybas, Chief
Financial Officer of WARWICK VALLEY TELEPHONE COMPANY (the "BORROWER"), pursuant
to Subsection 7(H)(8) of that certain Master Loan Agreement, dated as of
February 18, 2003 (the "MLA"), by and between the Borrower and CoBank .

         Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the MLA.

         I hereby certify as follows:

1.       I am the Chief Financial Officer of the Borrower and as such possess
         the knowledge and authority to certify to the matters set forth in this
         Compliance Certificate;

2.       Attached hereto as Annex A are the [AUDITED/UNAUDITED]
         [ANNUAL/QUARTERLY] financial statements of Borrower for the fiscal
         [YEAR/QUARTER] ended ______________, as required by Subsection
         [7(H)(1)/(2)] of the MLA. Such financial statements were prepared in
         accordance with GAAP consistently applied (except for the omission of
         footnotes and for the effect of normal year-end audit adjustments) and
         in a format that demonstrates any accounting or formatting changes that
         may be required by various jurisdictions in which the business of the
         Borrower is conducted (to the extent not inconsistent with GAAP);

3.       The representations and warranties contained in Section 6 of the MLA
         are true and correct in all material respects as of the date of this
         Certificate, except as disclosed on Annex C hereto; and

4.       I have reviewed the activities of the Borrower during the fiscal
         [YEAR/QUARTER] ended ______________, and consulted with appropriate
         representatives of the Borrower and all other parties (other than
         CoBank) to the Loan Documents, and reviewed the Loan Documents (as
         defined in the MLA). As of the date of this Compliance Certificate,
         except as disclosed on Annex D hereto, I am not aware of any condition,
         event or act which constitutes a Potential Default or an Event of
         Default under the MLA.


                                       67
<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886

         IN WITNESS WHEREOF, I have executed this Compliance Certificate as of
_____________, _____.


                           ____________________________________
                           [NAME], Chief Financial Officer of  Warwick
                           Valley Telephone Company



                                       68
<PAGE>


                                  SCHEDULE 6(K)
                                       TO
                              MASTER LOAN AGREEMENT
                                 (MLA NO. 0886)

                                   LITIGATION

         The Company was served with a complaint dated September 18, 2002 filed
by a shareholder with the U.S. District Court for the Southern District of New
York. The complaint alleges, among other things, that the Company is required to
either register as an investment company or divest the O-P interest. The
management of the Company believes that the complaint is without merit.
Proceedings had been voluntarily stayed pending the final outcome of the
Company's SEC application for an exemption from the requirements of the
Investment Company Act of 1940. Because the Company has now withdrawn its SEC
exemption application as unnecessary, the parties have agreed to petition the
court to lift the voluntary stay and proceed with consideration of the Company's
pending Motion to Dismiss the complaint.


                                       69
<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886

                                  SCHEDULE 6(Q)
                                       TO
                              MASTER LOAN AGREEMENT
                                 (MLA NO. 0886)

                                  SUBSIDIARIES


<TABLE>
<CAPTION>

                                                       Number and Type                           Percentage of
                 Name of                             of Equity Interests                  Outstanding Equity Interests
                Subsidiary                           Beneficially Owned                              Owned
                 -------                             -------------------                  ----------------------------

<S>                                       <C>                                                       <C>
1.       Hometown Online, Inc.              200 shares common stock, no par value                     100%
                                                   [100 shares authorized]

2.       Warwick Valley Mobile               1 share common stock, no par value                       100%
           Telephone Co., Inc.                     [100 shares authorized]

3.       Warwick Valley Long                 1 share common stock, no par value                       100%
           Distance Co., Inc.                      [1 share authorized]

4.       Warwick Valley Networks,            200 shares common stock, no par value                    100%
           Inc.                                    [100 shares authorized]
</TABLE>

                                       70
<PAGE>
Master Loan Agreement/Warwick Valley Telephone Company
MLA No. 0886

                                  SCHEDULE 6(S)
                                       TO
                              MASTER LOAN AGREEMENT
                                 (MLA NO. 0886)

                           EXISTING CREDIT AGREEMENTS

         WARWICK VALLEY SAVINGS BANK LINE OF CREDIT

1.       Borrowings on a demand basis up to a maximum of $4,000,000. Minimum
         borrowing is $100,000. Loan balance on February 13, 2003 is at zero.

2.       Interest Rate is Prime plus .75%.   Current rate is 3.5%.

3.       Renewable annually.  Unsecured line of credit.  No guarantees.


         BANK OF NEW YORK- SHORT-TERM NOTE PAYABLE

1.       $3,000,000 Short-Term Note, renewable every 30, 60 or 90 days, at the
         Bank's option. Interest rate is LIBOR plus 1.75%. Current rate is
         3.1875%. Note matures on February 20, 2003.

2.       $1,000,000 Short-Term Note, renewable every 30, 60 or 90 days, at the
         Bank's option. Interest rate is LIBOR plus 1.75%. Current rate is
         3.125%. Note matures on April 16, 2003.

3.       $1,000,000 Short-Term Note, renewable every 30, 60 or 90 days, at the
         Bank's option. Interest rate is LIBOR plus 1.75%. Current rate is
         3.125%. Note matures on May 5, 2003.


         BANK OF NEW YORK 7.05% FIRST MORTGAGE BOND, SERIES J

1.       Aggregate principal amount is $4,000,000 dated October 1, 1993 and
         maturing on December 1, 2003. Bonds may not be redeemed prior to the
         due date and interest is paid semiannually on June 1 and December 1 of
         each year.

2.       Debt is secured with a lien on all capital and other revenue producing
         assets of the Company.


                                       71
<PAGE>
                                                             LOAN NO. ML 0886-T1

                                FIRST SUPPLEMENT
                          TO THE MASTER LOAN AGREEMENT


         This FIRST SUPPLEMENT TO THE MASTER LOAN AGREEMENT (this "FIRST
SUPPLEMENT"), is entered into as of February 18, 2003, by and between COBANK,
ACB ("CoBANK") and WARWICK VALLEY TELEPHONE COMPANY (the "BORROWER"), and
supplements the Master Loan Agreement, dated as of the date hereof, by and
between CoBank and the Borrower (as the same may be amended, modified,
supplemented, extended or restated from time to time, the ("MLA"). Capitalized
terms used and not otherwise defined in this First Supplement shall have the
meanings assigned to them in the MLA.

         SECTION 1. THE TERM LOAN. On the terms and conditions set forth in the
MLA and this First Supplement, CoBank agrees to make a loan to the Borrower (the
"LOAN"), by means of one or more advances, from time to time during the period
commencing on the Closing Date (as defined in Section 3) and ending on September
30, 2004 (the "TERMINATION DATE"), or on such later date as CoBank may, in its
sole discretion, authorize in writing, in an aggregate principal amount not to
exceed $18,475,000 (the "COMMITMENT"). Under the Commitment, subject to Section
3 of this Supplement, amounts borrowed and repaid may be reborrowed.

         SECTION 2. PURPOSE. The proceeds of the Loan shall be used by the
Borrower to (A) refinance approximately $4,000,000 in long-term indebtedness of
the Borrower and repay $3,000,000 under a line of credit of the Borrower, (B)
finance capital expenditures, working capital and general corporate expenditures
of the Borrower and (C) pay the expenses and fees incurred by the Borrower in
connection with the closing of the Loan. The Borrower agrees that the proceeds
of the Loan shall be used only for the purposes set forth in this Section 2.

         SECTION 3. AVAILABILITY. Subject to Section 2 of the MLA, Section 8
hereof and the conditions set forth in the MLA, advances will be made up to the
Termination Date as provided in Section 1 hereof on a date selected by the
Borrower (each such date, a "FUNDING DATE").

         SECTION 4. INTEREST.

         (A) RATE OPTIONS; ETC. The unpaid principal balance of the Loan shall
accrue interest at the rate or rates determined or selected by the Borrower in
accordance with this Section 4(A).

                  (1) WEEKLY QUOTED VARIABLE RATE. As to any portion of the
         unpaid principal balance of the Loan selected by the Borrower (any such
         portion, and any portion selected pursuant to Sections 4(A)(2) and
         4(A)(3), is hereinafter referred to as a "PORTION" of the Loan),
         interest shall accrue pursuant to this variable rate option at a
         variable annual interest rate (the "VARIABLE RATE") equal at all times
         to the rate of interest established by CoBank on the first Business Day
         of each week. The rate of interest so established by


                                       72
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         CoBank shall not exceed CoBank's Base Rate (as hereinafter defined) in
         effect on the date so established plus three percent (3%) and shall be
         effective from and including the first Business Day of each week to and
         excluding the first Business Day of the next week. Each change in the
         Variable Rate shall be applicable to the Portion of the Loan subject to
         this option and information about the then current Variable Rate shall
         be made available upon telephonic request. "BASE RATE" shall mean the
         rate of interest established by CoBank from time to time as its Base
         Rate, which rate is intended by CoBank to be a reference rate and not
         its lowest rate. The Base Rate will change on the date established by
         CoBank as the effective date of any change therein and CoBank agrees to
         notify the Borrower promptly after any such change.

                  (2) LONG-TERM FIXED QUOTED RATE OPTION. As to any Portion or
         Portions of the Loan selected by the Borrower, interest shall accrue
         pursuant to this quoted rate option at a fixed annual interest rate
         (the "QUOTED RATE") to be quoted by CoBank in its sole and absolute
         discretion. Under this option, the interest rate on such Portion or
         Portions of the Loan which are in excess of $100,000 in aggregate may
         be fixed for such Interest Periods (as hereinafter defined) as may be
         agreeable to CoBank in its sole discretion in each instance; provided,
         however, that such Interest Period shall not extend beyond the Maturity
         Date (as defined in Section 7 hereof) and such Interest Period may only
         expire on a Business Day.

                  (3) LIBOR OPTION. As to any Portion or Portions of the Loan
         selected by the Borrower, interest shall accrue pursuant to this LIBOR
         Option at a fixed rate per annum equal to LIBOR (as hereinafter
         defined) plus the LIBOR Margin (as hereinafter defined) applicable on
         the first day of the applicable "Interest Period" (as hereinafter
         defined) or applicable from time to time as otherwise provided herein.
         Under this option rates may only be fixed on a Banking Day (as
         hereinafter defined) or, at the option of the Borrower, on three (3)
         Banking Days' prior written notice. "LIBOR" shall mean the rate
         (rounded upward to the nearest thousandth) indicated by Telerate at
         Page 3750 as having been quoted by the British Bankers Association at
         11:00 a.m. London time on the date the Borrower elects to fix a rate
         under this option for the offering of U.S. dollar deposits in the
         London interbank market for the Interest Period designated by the
         Borrower. "BANKING DAY" shall mean a day on which CoBank is open for
         business, dealings in U.S. dollar deposits are being carried out in the
         London interbank market, and banks are open for business in New York
         City and London, England. "INTEREST PERIOD" shall mean the time period
         chosen by the Borrower during which the chosen fixed rate is to apply
         to a Portion of the Loan, which period commences on the day the
         Borrower elects to fix a rate under Section 4(A)(2) or under this
         Section 4(A)(3) (or, at the option of the Borrower, three (3) Banking
         Days later). The Interest Period for Portions accruing interest at the
         LIBOR Option rate shall be 1, 2, 3, 6 or 9 months, as selected by the
         Borrower, and the Interest Period shall end on the day in the next
         calendar month or in the month that is 2, 3, 6 or 9 months thereafter
         which corresponds numerically with the day the Interest Period
         commences; provided, however, that: (a) in the event such ending day is
         not a Banking Day, such period shall be extended to the next Banking
         Day unless such next Banking Day falls in the next calendar month, in
         which case it shall end on the preceding


                                       73
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         Banking Day; and (b) if there is no numerically corresponding day in
         the month, then such period shall end on the last Banking Day in the
         relevant month. In the event Telerate ceases to provide such quotations
         or materially changes the form or substance of such quotations (as
         determined by CoBank), then CoBank will notify the Borrower and the
         parties hereto will agree upon a substitute basis for obtaining such
         quotations.

         "LIBOR MARGIN" shall mean, for each Calculation Period (as defined
         hereafter), the applicable per annum percentage set forth in the
         pricing table below opposite the Total Leverage Ratio of the Borrower,
         measured on a consolidated basis:


                  Total Leverage Ratio:                 LIBOR Margin:
                  --------------------                  ------------

                        > 1.50: 1                          1.50%
                        -

                        < 1.50: 1                          1.25%

         "CALCULATION PERIOD" shall mean each period commencing on each
         Adjustment Date (as defined hereafter) and ending on the day preceding
         each subsequent Adjustment Date. "ADJUSTMENT DATE" shall mean each date
         which is the fifth Business Day after receipt by CoBank of (i) each
         Compliance Certificate delivered by the Borrower pursuant to Section
         7(H)(8) of the MLA and (ii) if a decrease in the LIBOR Margin is
         warranted, a written notice from the Borrower to decrease such margin.

                  (4) RATE COMBINATIONS. Notwithstanding the foregoing, at any
         one time there may be no more than a total of five Portions of the Loan
         accruing interest pursuant to any fixed rate option.

                  (5) SELECTION AND CHANGES OF RATES. The Borrower shall select
         the rate option or options applicable to the Loan at the time it
         requests the Loan. Thereafter, with respect to Portions of the Loan
         accruing interest at the Variable Rate, the Borrower may, on any
         Business Day, subject to Sections 4(A)(2) and 4(A)(3), elect to have
         one of the fixed rate options apply to such Portion. In addition, with
         respect to any Portion of the Loan accruing interest pursuant to a
         fixed rate option, the Borrower may, subject to Sections 4(A)(2) and
         4(A)(3), on the last day of the Interest Period for such Portion, elect
         to fix the interest rate accruing on such Portion for another Interest
         Period pursuant to one of the fixed rate options. From time to time the
         Borrower may elect, on a Business Day prior to the expiration of the
         Interest Period for any Portion of the Loan accruing interest pursuant
         to a fixed rate option, and upon payment of the applicable Surcharge
         (as defined in, and calculated pursuant to, Section 6 hereof) to
         convert all, but not part, of such Portion of the Loan so that it
         accrues interest at the Variable Rate or a combination of the Variable
         Rate and a fixed rate option, for a new Interest Period or Interest
         Periods selected in accordance with Sections 4(A)(2) or 4(A)(3). Except
         for the initial selection, all interest rate selections provided for
         herein shall be made by telephonic or written request of an authorized
         employee of the Borrower by 12:00 noon, Eastern time, on the relevant
         day; in the case of Loans under the LIBOR option, all such elections
         must be

                                       74
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         made in writing. In taking actions upon telephonic requests, CoBank
         shall be entitled to rely on (and shall incur no liability to the
         Borrower in acting upon) any request made by a person identifying
         himself or herself as one of the persons authorized by the Borrower to
         request the Loan or select interest rates hereunder so long as any
         funds advanced are wired to an account previously designated by the
         Borrower.

                  (6) ACCRUAL OF INTEREST. Interest shall accrue pursuant to the
         fixed rate options from and including the first day of the applicable
         Interest Period to but excluding the last day of the Interest Period.
         If the Borrower elects to refix the interest rate on any Portion of the
         Loan accruing interest pursuant to one of the fixed rate options
         pursuant to Section 4(A)(5), the first day of the new Interest Period
         shall be the last day of the preceding Interest Period. In the absence
         of any such election, interest shall accrue on such Portion at the
         Variable Rate from and including the last day of such Interest Period.
         If the Borrower elects to convert from a fixed rate option to the
         Variable Rate option pursuant to Section 4(A)(5) upon payment of the
         applicable Surcharge as provided in Section 6, interest at the
         applicable fixed rate shall accrue through the day before such
         conversion and either (i) the first day of any new Interest Period
         shall be the date of such conversion, or (ii) interest at the Variable
         Rate shall accrue on the Portion of the Loan so converted from and
         including the date of conversion.

         (B) PAYMENT AND CALCULATION. The Borrower shall pay interest on the
Loan quarterly in arrears on the 20th day of each January, April, July and
October, upon any prepayment (whether due to acceleration or otherwise) and on
the Maturity Date; provided, however, in the event that the Borrower elects to
fix all or a portion of the Loan under the LIBOR option, interest shall be
payable at the maturity of the applicable Interest Period, or, if such Interest
Period exceeds three (3) months, interest on such Portion shall be payable in
arrears on each quarterly anniversary date of the date such Portion was fixed
under the LIBOR option. Interest shall be calculated on the actual number of
days the Loan, or any part thereof, is outstanding on the basis of a year
consisting of 360 days. In calculating accrued interest, the date the Loan is
made shall be included and the date any principal amount of the Loan is repaid
or prepaid shall be excluded as to such amount.

         SECTION 5. LOAN FEES.

         (A) COMMITMENT FEE. During the period commencing on the date hereof and
ending on the Termination Date, the Borrower shall pay to CoBank a commitment
fee on the average daily unused portion of the Commitment at a rate of 0.375%
per annum (calculated on a 360-day basis), payable quarterly in arrears on the
20th day of each January, April, July and October, commencing on April 20, 2003;
provided, however, that the last such payment shall be due on October 20, 2004.

         (B) ORIGINATION FEE. In consideration of the Commitment, the Borrower
shall pay to CoBank a non-refundable origination fee in the amount of $125,000,
which shall be paid in full upon execution and delivery by CoBank and the
Borrower of this First Supplement.

                                       75
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         SECTION 6. PREPAYMENT AND SURCHARGE. The Borrower may, (i) on any
Business Day prepay in full or in part any Portion of the Loan accruing interest
at the Variable Rate, and (ii) on two (2) Business Day's prior written notice
prepay in full or in part any Portion of the Loan accruing interest at pursuant
to a fixed rate option. Notwithstanding the foregoing, the Borrower's right to
prepay any amount accruing interest at pursuant to a fixed rate option (whether
such payment is made voluntarily, as a result of an acceleration, or otherwise)
shall be conditioned upon the payment of a prepayment Surcharge as defined and
calculated below and shall be limited to prepayments in excess of $100,000.
Unless otherwise agreed, all prepayments will be applied to principal
installments in the inverse order of their maturity and to such Portions of the
Loan as CoBank shall specify. For purposes of calculating the Surcharge provided
for in this Section 6, early conversion of a Portion of the Loan accruing
interest pursuant to a fixed rate option so that it accrues interest at a
different rate pursuant to Section 4(A)(5) shall be deemed a prepayment in full
of that Portion of the Loan. Upon any such early conversion or any prepayment of
any Portion of the Loan accruing interest pursuant to a fixed rate option, and
as a condition to any voluntary prepayment, the Borrower shall pay to CoBank, on
the date of such prepayment or early conversion, a surcharge ("SURCHARGE") in an
amount equal to the greater of (a) the sum of: (i) the present value of any
funding losses incurred or imputed by CoBank to have been incurred as a result
of such prepayment for the period such amount was scheduled to have been
outstanding at such LIBOR Rate or Quoted Rate; plus (ii) 1/2 of 1 percent
(0.50%) of the amount prepaid or converted for the period such amount was
scheduled to have been outstanding at a Quoted Rate and (b) $300. Such
Surcharge, including the amount of any funding losses incurred by CoBank, shall
be determined and calculated in accordance with methodology established by
CoBank.

         SECTION 7. REPAYMENT. The outstanding principal balance of the Loan
shall be repaid in 32 consecutive equal quarterly principal payments due and
payable on the 20th day of each January, April, July and October (each such
date, a "PAYMENT DATE") commencing on October 20, 2004, with the last such
installment due and payable on July 20, 2012 (the "MATURITY DATE"). On the
Maturity Date, the amount of the then unpaid principal balance of the Loan and
any and all other amounts due and owing hereunder or under any other Loan
Document relating to this Loan shall be due and payable. If any Payment Date is
not a Business Day, then the installment then due shall be paid on the next
Business Day and shall continue to accrue interest until paid.

         SECTION 8. SECURITY. The Loan shall be unsecured, except with respect
to the equity of the Borrower in CoBank, as described in Section 4 of the MLA.

         SECTION 9. ADDITIONAL CONDITIONS PRECEDENT.

         (A) In addition to the conditions precedent set forth in the MLA,
CoBank's obligation to make the initial advance under the Loan is subject to the
satisfaction of the following conditions precedent on or before the date of such
advance:

                  (1) OPINION. That CoBank receive, in form and content
         acceptable to CoBank, an opinion of counsel (who shall be acceptable to
         CoBank) for the Borrower;


                                       76
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         provided, however, such opinions may take exception for limitations
         imposed by or resulting from bankruptcy, insolvency, moratorium,
         reorganization or other laws affecting creditors' rights generally and
         may conform to the generally recognized principles of opinions among
         practicing counsel in the States of New York and New Jersey or
         promulgated by a recognized national association of counsel; and

                  (2) DEBT PAYOFF. That CoBank shall have received evidence
         satisfactory to it that upon the first advance hereunder all
         outstanding indebtedness of the Borrower to Bank of New York and all
         other indebtedness required to be repaid by the Borrower pursuant to
         the order of the PSC, dated as of January 10, 2002, shall be paid in
         full.

        (B) In addition to the conditions precedent set forth in the MLA,
CoBank's obligation to make an advance under the Loan, including the initial
advance, is subject to the satisfaction of each of the following conditions
precedent on or before the date of such advance:

                  (1) NO MATERIAL ADVERSE CHANGE. That from June 30, 2002 to the
         date of such advance there shall not have occurred any event which has
         had or could reasonably be expected to have a Material Adverse Effect
         on the business or prospects of the Borrower;

                  (2) REPRESENTATIONS AND WARRANTIES. That the representations
         and warranties of the Borrower contained in the MLA, this First
         Supplement and any other Loan Document to which it is a party; be true
         and correct in all material respects on and as of the date of such
         advance, as though made on and as of such date;

                  (3) ADVANCE CERTIFICATE. That CoBank receive a certificate, in
         the form of Exhibit A attached hereto, dated as of the Funding Date,
         from an appropriate officer of the Borrower as to, among other things,
         the continuing truth and accuracy of the representations and warranties
         of the Borrower under the Loan Documents to which it is a party and the
         satisfaction of each of the conditions applicable to the making of the
         advance under the Loan; and

                  (4) OTHER INFORMATION. That CoBank receive such other
         information regarding the condition, financial or otherwise, and
         operations of the Borrower as CoBank shall request and such other
         opinions, certificates or documents as CoBank shall request.




                        [Signatures Follow on Next Page]

                                       77
<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

         IN WITNESS WHEREOF, the Borrower has caused this Agreement to be
executed and delivered, and CoBank has caused this Agreement to be executed and
delivered, each by their respective duly authorized officers as of the date
first shown above.


                                    WARWICK VALLEY TELEPHONE COMPANY



                                    By: /s/ Philip A. Grybas
                                       ------------------------------------
                                        Philip A. Grybas, Vice President,
                                        CFO & Treasurer






                       [Signatures Continue on Next Page]


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<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1



                    [Signatures Continued from Previous Page]





                                   COBANK, ACB



                                   By:  /s/ Christopher J. Motl
                                      ----------------------------------------
                                         Christopher J. Motl, Vice President

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<PAGE>
First Supplement to Master Loan Agreement/Warwick Valley Telephone Company
Loan No. 0886-T1

                                    EXHIBIT A


                     ADVANCE CERTIFICATE - LOAN NO. 0886-T1


         THIS ADVANCE CERTIFICATE is given by Philip A. Grybas, Chief Financial
Officer of Warwick Valley Telephone Company (the "BORROWER"), pursuant to
Section 9(B)(3) of that certain First Supplement to the Master Loan Agreement,
dated as of February 18, 2003 (the "First Supplement"), and under Section 5 of
that certain Master Loan Agreement, dated as of February 18, 2003 (the "MLA"),
by and between CoBank, ACB and the Borrower. Capitalized terms used herein and
not otherwise defined herein shall have the meanings ascribed to them in the MLA
and in the First Supplement.

         I hereby certify as follows:

         1. I am the Chief Financial Officer of the Borrower and as such possess
the knowledge and authority to certify to the matters herein set forth, and the
matters herein set forth are true and accurate to the best of my present
knowledge, information and belief after due inquiry;

         2. The representations and warranties of the Borrower contained in the
MLA are true and correct in all material respects on and as of the date hereof;

         3. No Potential Default or Event of Default exists as of the date
hereof or will result from the making of the advance; and

         4. Each of the conditions specified in Section 5 of the MLA and Section
9 of the First Supplement required to be satisfied on or prior to the date of
the making of the requested advance under the Loan has been fulfilled as of the
date hereof.

         IN WITNESS WHEREOF, I have executed this Advance Certificate as of
February 18, 2003.


                                        ____________________________________
                                        Philip A. Grybas, Chief Financial
                                        Officer of Warwick Valley
                                        Telephone Company


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