Document:

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                                                                   Exhibit 10.18

                              CONSULTING AGREEMENT

      This CONSULTING AGREEMENT is made and entered into this 9th day of
November, 1999, by and between Medical Resources, Inc., a Delaware corporation
with its principal place of business at 125 State Street, Suite 200, Hackensack,
New Jersey, on behalf of itself and each of its subsidiaries (hereinafter,
individually and collectively, the "Company") and Duane C. Montopoli, an
individual residing at 108 Campion Road, North Andover, Massachusetts
(hereinafter, "Consultant").

      WHEREAS, the Company and Consultant have entered into an Employment
Agreement dated as of January 30, 1998 and as amended (as amended, the
"Employment Agreement"); and

      WHEREAS, pursuant to Section 10 (b) of the Employment Agreement, the
Employment Agreement may be amended or modified only by a written agreement
executed by the parties thereto; and

      WHEREAS, the Company and Consultant have mutually agreed that, as of the
Effective Date (as defined below), the Consultant's services as an employee
under the Employment Agreement shall terminate and Consultant shall be retained
by the Company as a consultant, as set forth herein; and

      WHEREAS, the Company now desires that Consultant provide advisory and
consulting services to the Company including, in particular, services related to
the Company's pursuit of strategic alternatives; and

      WHEREAS, the Company and Consultant have mutually agreed that, as of the
Effective Date and except as expressly set forth herein, this Consulting
Agreement shall supersede and render null and void the Employment Agreement in
its entirety and all other agreements, plans or policies pursuant to which
Consultant may have any compensatory or other claims against the Company, in
their entirety; and

      WHEREAS, the Company and Consultant have mutually agreed that they shall
be bound by this Consulting Agreement.

      NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions hereinafter set forth, the parties do hereby agree as follows:

 1.   EFFECTIVE DATE, TERMINATION DATE AND TERM. This Consulting Agreement is
effective as of November 10, 1999 (the "Effective Date"). The term of this
Consulting Agreement shall commence on the Effective Date and shall end on the
"Termination Date" which shall be February 9, 2001. For purposes of this
Consulting Agreement, the period commencing on the Effective Date and ending on
the Termination Date shall be referred to as the "Term."

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 2.   CONSULTING SERVICES AND RELATIONSHIP.

      2.1   SERVICES. During the Term, Consultant shall provide consulting and
advisory services to the Company as may be mutually agreed upon by Consultant
and the Company from time to time; PROVIDED THAT, any failure of the parties to
agree to the specific consulting and advisory services to be performed by
Consultant hereunder shall not constitute a breach of this Consulting Agreement
by either party.

      2.2   RELATIONSHIP. Consultant shall be an independent contractor, and not
an employee of the Company, within the meaning of all federal, state and local
laws and regulations governing employment insurance, workers' compensation,
industrial accidents, labor and taxes. From and after the Effective Date, except
as provided in Section 3.3 hereof, Consultant shall not, by reason of this
Consulting Agreement, acquire any additional benefits, privileges or rights
under any benefit plan operated by the Company or its subsidiaries or affiliates
for the benefit of their employees, including, without limitation, (a) any
pension or profit-sharing plans or (b) any "employee welfare plans" (as defined
in Section 3 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")).

3.    COMPENSATION AND BENEFITS.

      3.1   BASE COMPENSATION. During the Term of this Consulting Agreement, the
Company shall pay to Consultant the sum of $23,500 per month (or a pro-rata
portion of such amount for the months during which the Term commences or
expires), on or before the fifteenth day of each month, PROVIDED THAT,
Consultant must immediately advise the Company of any and all of his gross
earnings from personal services during the Term, whether earned as consultant,
proprietor, employee or agent (hereinafter, "Interim Earnings"), and such
Interim Earnings, when and as earned, shall be offset against and deducted from,
on a dollar-for-dollar basis, the amounts otherwise prospectively due and
payable to Consultant solely pursuant to this Section 3.1. Notwithstanding the
foregoing, Interim Earnings shall not include directors fees, stock-based gains
and compensation and employer-provided fringe benefits conveyed to Consultant in
any form other than cash and whether taxable or not. The first payment to
Consultant under this Section 3.1, if such amount shall become due and payable
hereunder, shall be due on December 15, 1999.

      3.2   PARTIAL BONUS. If, and only if, the Company pays cash bonuses to one
or more of its corporate officers with respect to, in whole or in part, the 1999
calendar year, the Company shall pay to Consultant an amount of cash bonus
determined by the Company's Board of Director's, acting in good faith, to have
been earned by Consultant, in his capacity as an executive and senior officer of
the Company, for the portion of the 1999 calendar year that Consultant was
employed by the Company.

      3.3   HEALTH INSURANCE. During the Term, the Company shall continue to
provide benefits to Consultant under the Company's health and dental insurance
plans at the same levels as such benefits shall have been provided to Consultant
in his capacity as an employee of the

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Company immediately prior to the Effective Date and, in connection therewith,
Consultant shall periodically pay to the Company amounts equivalent to that
which he paid as required employee contributions immediately prior to the
Effective Date; PROVIDED THAT, the Company shall not be required to provide any
such benefit if the effect thereof would be to violate the terms of any law,
plan or insurance policy or jeopardize the tax benefit associated with such
benefit to which the Company otherwise would be entitled, but in such event, the
Company shall pay to Consultant, in cash, an amount equal to the Company's
contribution to the cost of providing such benefit for Consultant as of the
Effective Date; AND PROVIDED FURTHER THAT, if Consultant becomes eligible to
receive health and/or dental insurance benefits under another group insurance
plan, the corresponding benefits described herein shall be terminated. Any such
benefits provided under another group insurance plan shall be promptly reported
by Consultant to the Company as Consultant becomes eligible therefor.

      3.4   EXPENSE REIMBURSEMENT. Consultant shall be reimbursed in accordance
with the Company's current Travel And Entertainment Policy (the "T&E Policy")
for all reasonable "out-of-pocket" business expenses which are incurred both,
(a) during the Term, and (b) in connection with the performance of his duties
under this Consulting Agreement (hereinafter, "Reimbursable Expenses").
Reimbursable Expenses shall include, but shall not be limited to, expenses
incurred by Consultant traveling to and from the Hackensack, New Jersey area in
connection with the performance of his duties under this Consulting Agreement;
in this regard, round trip automobile mileage will be reimbursed at the rate of
$.31 per mile and round trip air travel will be reimbursed at coach class air
fare rates. Reimbursable Expenses shall also include temporary lodging expenses
incurred in the Hackensack, New Jersey area in connection with the performance
of his duties under this Consulting Agreement during any period that temporary
housing is not available to Consultant pursuant to Section 3.5 of this
Consulting Agreement. The reimbursement of Consultant's business expenses
pursuant to this Section 3.4 shall be upon presentation to and approval by the
Company of valid receipts and other appropriate documentation for such expenses.

      3.5   TEMPORARY HOUSING. During the Term of this Consulting Agreement, the
Company shall reimburse Consultant for his actual cost of renting and
maintaining an apartment in the Hackensack, New Jersey area (including charges
for the telephone therein), up to a maximum of $3,500 per month, PROVIDED THAT,
the Company may terminate this benefit, at any time and at its discretion, upon
its giving Consultant at least one calendar month's advance notice.

      3.6   CONTINUED USE OF COMPANY EQUIPMENT. During the Term of this
Consulting Agreement, Consultant may retain in his possession, for his business
and personal use and at no charge, that Company-owned portable computer,
dictation and cell phone equipment which he had the use of while an employee of
the Company immediately prior to the Effective Date. In connection therewith,
during the Term, Consultant shall be provided with Company-paid internet access
(i.e., an ISP account) and Company-paid cell phone usage services, PROVIDED
THAT, the Company-paid cost of such cell phone usage services shall be limited
to $100. per month. Cell phone service charges exceeding $100. per month shall
be reimbursable to the Company by Consultant when and as incurred and reasonably
after the presentation of an invoice by the Company to Consultant. As of the
Termination Date, all of the equipment described in this Section 3.6 shall be
returned by Consultant to the Company.

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4.    TERMINATION.

      4.1   BREACH. In the event that either party materially breaches any
obligation under this Consulting Agreement, and such breach is not remedied by
the breaching party within five (5) business days of receipt of written notice
from the other party hereto, such non-breaching party shall have no further
obligations hereunder.

      4.2   DEATH. In the event of Consultant's death during the Term,
Consultant's services hereunder shall immediately terminate and the Company
shall, until the expiration of the Term, (a) pay to Consultant's estate, the
amounts described in Section 3.1 hereof, and (b) provide to or for Consultant's
family members those benefits specified in Section 3.3 hereof, PROVIDED THAT,
any cash payments that otherwise would be made to Consultant in accordance with
the first proviso in Section 3.3 hereof, shall instead be paid to Consultant's
estate, heirs or devisees, as appropriate under the circumstances. Except as
expressly set forth in this Section 4.2, in the event of Consultant's death, the
Company shall have no further obligations to Consultant under this Consulting
Agreement.

5.    CONFIDENTIALITY OF TRADE SECRETS AND OTHER MATERIALS.

      5.1   TRADE SECRETS. Other than in the performance of his duties
hereunder, Consultant agrees not to disclose, either during the Term or at any
time thereafter, to any person, firm or corporation any information concerning
the business affairs, the trade secrets or the customer lists and similar
confidential information of the Company including, but not limited to, trade
secrets, lists of past or present clients or customers, (which for purposes of
this Consulting Agreement shall include referring physicians and referring
medical entities such as managed care organizations), client or consultant
contracts, product or service development plans, marketing plans, pricing
policies, business acquisition plans (including acquisition targets) or any
portion or phase of any technical information, technique, method, process,
procedure, or technology used by the Company or any portion or phase of any
technical information, ideas, discoveries, designs, computer programs (including
source or object codes), processes, procedures, formulae or improvements of the
Company that is or are valuable (whether or not in written or tangible form) and
including all memoranda, notes, plans, reports, records, documents and other
evidence thereof and any other information of whatever nature gives the Company
an opportunity to obtain an advantage over its competitors who do not have
access or know-how to use such information shall be considered a "trade secret"
for the purposes of this Consulting Agreement.

      5.2   OWNERSHIP OF TRADE SECRETS; ASSIGNMENT OF RIGHTS. Consultant hereby
agrees that all know-how, documents, reports, plans, proposals, marketing and
sales plans, client lists, client files and materials made by him or by the
Company are the property of the Company and shall not be used by him in any way
adverse to the Company's interests. Consultant shall not deliver, reproduce or
in any way allow such documents or things to be delivered or used by any third
party without specific direction or consent of the Board of Directors of the
Company. Consultant hereby assigns to the Company any rights which he may have
in any such trade secrets or proprietary information.

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6.    AGREEMENT NOT TO COMPETE; AGREEMENT NOT TO BENEFIT.

      6.1   AGREEMENT NOT TO COMPETE. In consideration of the compensation (and
other benefits) provided and to be provided to Consultant as set forth
hereunder, Consultant hereby covenants and agrees that during the Term and for a
period of six (6) months after the Termination Date (such period not to include
any period(s) of violation of this Section 6 or period(s) of time required for
litigation to enforce its provisions), Consultant will not, directly or
indirectly, engage in, enter into or participate in, at any place within the
United States of America, any business or commercial activity that competes with
or is reasonably likely to compete with or adversely affect the businesses or
services of the Company, either as an individual for his own account, or as a
partner or a joint venturer, or as an officer, director, independent contractor
or holder of more than a five percent equity interest in any other person, firm,
partnership or corporation, or as an employee, agent or salesperson for any
person.

      6.2   AGREEMENT NOT TO BENEFIT. In consideration of the compensation (and
other benefits) provided and to be provided to Consultant as set forth
hereunder, Consultant covenants and agrees that during the Term and for a period
of six (6) months after the Termination Date (such period not to include any
period(s) of violation of this Section 6 or period(s) of time required for
litigation to enforce its provisions), Consultant will not, directly or
indirectly: (i) solicit, induce or influence, or otherwise have business contact
with, any person or entity who has, within the two-year period immediately prior
to the Effective Date, been a client, customer, supplier or service provider
(including, without limitation, a provider of radiology and/or consulting
services) of or to the Company, and with whom Consultant had any business
relationship or about whom Consultant acquired any significant knowledge during
the course of Consultant's employment by the Company, if such contact could
directly or indirectly divert business from or adversely affect the business of
the Company; (ii) interfere with the contractual relations between the Company
and any of its employees; or (iii) employ or cause to be employed in any
capacity, or retain or cause to be retained as a consultant, any person who was
employed by the Company at any time during the six (6) month period ended on the
Effective Date.

7.    EMPLOYMENT AGREEMENT PROVISIONS INCORPORATED HEREIN BY REFERENCE. The
provisions of Section 9 (a) through (i), inclusive, of Consultant's Employment
Agreement, which covers INDEMNIFICATION, and the provisions of Section 4 (d) (A)
through (C), inclusive, of Consultant's Employment Agreement, which covers
CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY, are incorporated herein by reference
and made an integral part hereof in their entirety, PROVIDED THAT, for purposes
of this Consulting Agreement, the term "Executive" in each place where it
appears therein shall be replaced by and substituted with the term "Consultant"
herein and, PROVIDED FURTHER THAT, the scope of the provisions covering
INDEMNIFICATION herein shall be extended to cover Consultant's services to the
Company as a consultant under the terms of this Consulting Agreement.

8.    INJUNCTIVE RELIEF. Consultant acknowledges and agrees that, in the event
of any breach or likely breach of any of the covenants of Sections 5 or 6
herein, the Company and any relevant affiliate(s) would incur damages in an
amount difficult to ascertain and/or be irreparably harmed and could not be made
whole solely by monetary damages. It is accordingly agreed that such persons, in
addition to any other remedy to which they may be entitled at law or in equity,
shall be entitled to injunctive relief in respect of such breach or likely
breach as may be ordered by any court of competent jurisdiction including, but
not limited to, an injunction restraining any violation of Sections 5 or 6
herein and without the proof of actual damages. It is intended to grant full
third party rights under this provision.

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9.    INDEPENDENCE AND SEVERABILITY OF COVENANTS. Consultant acknowledges and
agrees that the covenants and other provisions set forth in Sections 5 and 6
herein are reasonable, including with respect to duration and subject matter,
and that he is receiving valuable and adequate consideration for such covenants
under this Consulting Agreement. The parties acknowledge that it is their
intention that all such covenants and provisions be enforceable to the fullest
extent possible under applicable law. If any of the provisions set forth in
Sections 5 or 6 are found to be unenforceable in any instance, such finding
shall not preclude any other enforcement of such provisions and reference is
made to Section 11. If any of the provisions set forth in Sections 5 or 6 are
found to be invalid, such finding or invalidity shall not effect the validity of
the remaining provisions and the provisions of Section 11 will apply.

10.   ASSIGNMENT. This Consulting Agreement shall not be assigned or transferred
by either party hereto without the prior written consent of the other party.
This Consulting Agreement shall be binding upon and inure to the benefit of all
of the parties hereto and their respective permitted heirs, personal
representatives, successors and assigns.

11.   SEVERABILITY/CONSTRUCTION. Nothing contained herein shall be construed to
require the commission of any act contrary to law. If any provision of this
Consulting Agreement, including all the covenants and agreements set forth
herein, or the application thereof to any person or circumstance, shall for any
reason and to any extent be unenforceable, including without limitation by
reason of such provision extending for too great a period of time or by reason
of its being too extensive in any other respect, such provision, to the specific
extent that it is unenforceable, shall be interpreted to extend only over the
maximum period of time and to the maximum extent as to which it is enforceable,
in order to effectuate the parties' intention, as represented hereby, to the
greatest extent possible. Any such interpretation shall have no effect on the
validity or enforceability of any remaining provision. If any material provision
or material portion of a material provision of this Consulting Agreement is
found to be void or invalid, the parties will use best efforts to maintain its
continuing effect, validity and enforceability in every other instance or, if
deemed necessary or appropriate by the party for whose benefit the provision was
intended, will endeavor to substitute a replacement having as far as possible
the same legal and economic effect.

12.   GOVERNING LAW. This Consulting Agreement is made under and shall be
construed pursuant to the laws of the State of New Jersey, without regard to its
conflict-of-laws rules.

13.   DISPUTE RESOLUTION.

      (a)   Without limiting the Company's rights and remedies set forth in
Section 8 herein, disputes relating to this Consulting Agreement shall be
settled by arbitration conducted in accordance with the CPR Non-Administered
Arbitration Rules, as more particularly described in

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this Section 10.4 (the "Arbitration Rules"). The arbitration shall be governed
by the United States Arbitration Act, 9 U.S.C. ss.ss.1-16, and (notwithstanding
anything herein to the contrary) judgment upon the award rendered by the
Arbitrator(s) may be entered by any court having competent jurisdiction. The
place of the arbitration shall be New York, New York.

      (b)   There will be three neutral arbitrators ("Arbitrators") who will be
practicing attorneys and will be selected as follows: one (1) by the Consultant,
one (1) by the Company, and one (1) by mutual agreement of the parties to the
arbitration and, in the absence of such agreement, will be chosen from the
professional staff of J.A.M.S./Endispute or, if it is not then in existence,
from the professional staff of another reputable dispute resolution firm agreed
to by the parties.

      (c)   The parties intend that the Arbitrators shall resolve any dispute
arising hereunder based upon the language of this Consulting Agreement and the
usual rules of contract interpretation. All awards and orders of the Arbitrators
may be enforced by any court of competent jurisdiction.

      (d)   The parties intend that the arbitration proceeding be conducted as
expeditiously as possible and that appropriate rights of discovery be granted to
each party to such arbitration (as determined by the Arbitrators). In that
regard, the parties to such arbitration agree to work together in good faith to
arrive upon mutually acceptable procedures regarding the time limits for, and
type and degree of, such rights of discovery and the periods of time within
which the matters submitted to arbitration must be heard and determined by the
Arbitrators. If the parties to such arbitration are unable to so agree, such
issues will be submitted to the Arbitrators for their determination. If proper
notice of any hearing has been given, the Arbitrators will have full power to
proceed to take evidence or to perform any other acts necessary to arbitrate the
matter in the absence of any party who fails to appear. The Arbitrators,
attorneys, parties to the arbitration, witnesses, experts, court reporters, or
other persons present at the arbitration shall agree in writing to maintain the
strict confidentiality of the arbitration proceedings.

      (e)   The parties to any arbitration, by written stipulation, may expand
or contract the rights, duties or obligations provided above, or otherwise
modify the arbitration procedures as suit their convenience, consistent with
what is otherwise permitted and feasible within the framework of the Arbitration
Rules.

      (f)   Any decision or award of the Arbitrators shall be final and binding
upon the parties to the arbitration proceeding, except to the extent otherwise
expressly provided by New Jersey law. The parties hereto hereby waive to the
extent permitted by law any rights to appeal or to a review of such award by any
court or tribunal. The parties agree that the award of the Arbitrators may be
enforced against the parties to the proceeding or their assets wherever they may
be found.

14.   COUNTERPARTS. This Consulting Agreement may be executed in several
counterparts and all documents so executed shall constitute one agreement,
binding on all of the parties hereto, notwithstanding that all of the parties
did not sign the original or the same counterparts.

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15.   ENTIRE AGREEMENT. This Consulting Agreement constitutes the entire
agreement and understanding of the parties with respect to the subject matter
hereof and supersedes all prior oral or written agreements, arrangements, and
understandings with respect thereto. No representation, promise, inducement,
statement or intention has been made by any party hereto that is not embodied
herein, and no party shall be bound or liable for any alleged representation,
promise, inducement, or statement not so set forth herein.

16.   MODIFICATION. This Consulting Agreement may be modified, amended,
superseded, or canceled, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument
executed by the party or parties to be bound by any such modification,
amendment, supersession, cancellation, or waiver.

17. WAIVER. The waiver by either of the parties, express or implied, of any
right under this Consulting Agreement or any failure to perform under this
Consulting Agreement by the other party, shall not constitute or be deemed as
a waiver of any other right under this Consulting Agreement or any other
failure to perform under this Consulting Agreement by the other party,
whether of a similar or dissimilar nature.

18.   CUMULATIVE REMEDIES. Each and all of the several rights and remedies
provided in this Consulting Agreement, or by law or in equity, shall be
cumulative, and no one of them shall be exclusive of any other right or remedy,
and the exercise of any one or such rights or remedies shall not be deemed a
waiver of, or an election to exercise, any other such right or remedy.

19.   HEADINGS. The section and other headings contained in this Consulting
Agreement are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Consulting Agreement.

20.   NOTICES. Any notice under this Consulting Agreement must be in writing,
may be telecopied, sent by express 24 hour guaranteed courier, or
hand-delivered, or may be served by depositing the same in the United States
mail, addressed to the party to be notified, postage-prepaid and registered or
certified with a return receipt requested. The addresses of the parties for the
receipt of notice shall be as follows:

If to the Company:                      If to Consultant:

Medical Resources, Inc.                 Duane C. Montopoli
125 State Street,  Suite 200            108 Campion Road
Hackensack, NJ 07601                    North Andover, MA 01845
Attn: CEO

Each notice given by registered or certified mail shall be deemed delivered and
effective on the date of delivery as shown on the return receipt, and each
notice delivered in any other manner shall be deemed to be effective as of the
time of actual delivery thereof. Each party may change its address for notice by
giving notice thereof in the manner provided above.

21.   SURVIVAL. Any provision of this Consulting Agreement which imposes an
obligation after termination or expiration of this Consulting Agreement shall
survive the termination or expiration of this Consulting Agreement and be
binding on Consultant and the Company.

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            IN WITNESS WHEREOF, the parties hereto have caused this Consulting
Agreement to be executed as of the date first set forth above.

    Medical Resources, Inc.                       Consultant

By:    /s/ D. Gordon Strickland         By:      /s/   Duane   C. Montopoli
       ------------------------                  --------------------------
Name:      D. Gordon Strickland         Name:          Duane C. Montopoli

Title: Chairman

                                       9<PAGE>

                                                                   Exhibit 10.25

================================================================================

                             STOCKHOLDERS' AGREEMENT

                                       OF

                            MJD COMMUNICATIONS, INC.

                         Dated as of January 20, 2000

================================================================================
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

1.  Restrictions on Transfers of Shares by Founders and Management
    Stockholders...............................................................1
         1.1.  Restrictions Generally..........................................1
         1.2.  Treatment of Certain Bergstein Family Members...................3
         1.3.  Treatment of JED................................................3
         1.4.  Right of First Refusal..........................................3
         1.5.  Tag-Along Rights................................................5

2.  Restrictions on Transfers of Shares by Investor Stockholders...............5
         2.1.  Restrictions Generally..........................................5
         2.2.  Right of First Offer............................................6
         2.3.  Tag-Along Rights................................................8
         2.4.  Drag-Along Rights...............................................8

3.  Management Stockholders...................................................10
          3.1.  Right of the Company to Purchase..............................10
         3.2.  Notice to Management Stockholders..............................11
         3.3.  Payment........................................................11
         3.4.  Appraisal......................................................11
         3.5.  Fair Market Value..............................................11
         3.6.  Acknowledgment of Status.......................................12
         3.7.  Prohibited Purchases...........................................12

4.  Involuntary Transfers.....................................................13

5.  Auction Sale Procedure....................................................13
         5.1.  General........................................................13
         5.2.  Retention of Investment Bank...................................14
         5.3.  Preparation of Confidential Memorandum.........................14
         5.4.  Auction Procedures.............................................14
         5.5.  Selection of Bid...............................................14
         5.6.  Negotiation of Sale Agreement..................................14
         5.7.  Right of Remaining Stockholders to Bid.........................15
         5.8.  Cooperation....................................................15
<PAGE>

6.  Issuance of Additional Equity Securities..................................15
         6.1.  Preemptive Rights of the Stockholders..........................15
         6.2.  Investments....................................................16
         6.3.  Participation by the Stockholders..............................16

7.  Corporate Governance......................................................17
         7.1.  Election of Directors..........................................17
         7.2.  Five Year Plan and Annual Budget...............................19
         7.3.  Records and Reports, etc.......................................19
         7.4.  Board Meetings, Committees, etc................................20
         7.5.  Directors' and Officers' Insurance.............................21

8.  Actions Requiring Approval of the Investor Stockholders...................21
         8.1.  General........................................................21

9.  Stock Certificate Legends.................................................23

10.  Absence of Other Arrangements............................................24

11.  New Management Stockholders..............................................24

12.  Parties..................................................................24
         12.1.  Assignment by the Company.....................................24
         12.2.  Assignment Generally..........................................25
         12.3.  Termination...................................................25
         12.4.  Agreements to Be Bound........................................25
         12.5.  THL Related Parties, THL Holders, Kelso Holders...............26

13.  Defined Terms............................................................27

14.  Miscellaneous............................................................32
         14.1.  Recapitalizations, Exchanges, etc. Affecting the Shares.......32
         14.2.  Non-Competition Agreement.....................................32
         14.3.  No Third Party Beneficiaries..................................32
         14.4.  Further Assurances............................................32
         14.5.  Amendment and Modification....................................33
         14.6.  Governing Law.................................................33
         14.7.  Invalidity of Provision.......................................33
         14.8.  Notices.......................................................33
         14.9.  Headings; Execution in Counterparts...........................35
         14.10.  Injunctive Relief............................................36

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         14.11.  Entire Agreement.............................................36
         14.12.  Transfer of Shares from MJD Partners.........................36

SCHEDULES

Schedule A   THL Related Parties
Schedule B   Management Stockholders
Schedule C   Kelso Holders

EXHIBITS

Exhibit A    Five Year Plan
Exhibit B    Spousal Waiver

ANNEXES

Annex A      Kelso Approval Rights

                                      iii
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                             STOCKHOLDERS' AGREEMENT

                  STOCKHOLDERS' AGREEMENT, dated as of January 20, 2000, among
MJD Communications, Inc., a Delaware corporation (the "COMPANY"), Kelso
Investment Associates V, L.P., a Delaware limited partnership ("KIA V"), Kelso
Equity Partners V, L.P., a Delaware limited partnership ("KEP V"; together with
KIA V, "KELSO"), Thomas H. Lee Equity Fund IV, L.P., a Delaware limited
partnership ("THL FUND IV"), those parties listed on Schedule A attached hereto
(collectively, the "THL RELATED PARTIES"; together with THL Fund IV, "THL" and
each of them together with Kelso, the "INVESTOR STOCKHOLDERS"), JED
Communications Associates, Inc., a Delaware corporation (formerly named Bugger
Associates, Inc. ("JED"), Daniel G. Bergstein ("BERGSTEIN"), Joel Bergstein,
Michael Bergstein, Lindy Sobel Bergstein, Meyer Haberman ("HABERMAN"; together
with JED, and Bergstein, Joel Bergstein, Michael Bergstein and Lindy Sobel
Bergstein, the "FOUNDERS"), Jordan Bergstein, Elizabeth Heller, and those
employees of the Company listed on Schedule B attached hereto, as the same shall
be amended from time to time in accordance with Section 12 (collectively, the
"MANAGEMENT STOCKHOLDERS"). For purposes of this Agreement, KIA V and KEP V
shall be deemed to be a single Investor Stockholder and THL Fund IV and each of
the THL Related Parties shall be deemed to be a single Investor Stockholder. The
Investor Stockholders, the Founders and the Management Stockholders are
hereinafter referred to collectively as the "STOCKHOLDERS".

                  Capitalized terms used herein without definition are defined
in Section 13.

                  The parties hereto agree as follows:

                  1. RESTRICTIONS ON TRANSFERS OF SHARES BY FOUNDERS AND
MANAGEMENT STOCKHOLDERS. 1.1. RESTRICTIONS GENERALLY. (a) Prior to such time as
each Investor Stockholder (and the Kelso Holders or THL Holders, as applicable),
each own less than 50% of the number of Shares owned by such Investor
Stockholder on the Closing Date (the "50% CONDITION"), no Founder or Management
Stockholder may Transfer any Shares or any interest therein now or hereafter
owned by such Founder or Management Stockholder, except for (I) any (A)
involuntary Transfer to a third party in accordance with Section 4, (B) sale to
one or more third parties pursuant to Section 2.3 ("Tag-Along Rights"), Section
2.4 ("Drag-Along Rights") or Section 5 ("Auction Sale Procedure") or (C) sale
pursuant to a Registration in accordance with the Registration Rights Agreement,
(ii) any Transfer for estate-planning purposes of such Founder or
<PAGE>

Management Stockholder, authorized by the prior written approval (not to be
unreasonably withheld) of the Board (excluding such Founder or Management
Stockholder and any other interested Board members), and PROVIDED that the
restrictions contained in this Section 1 shall continue to be applicable to the
Shares after any such Transfer and PROVIDED further that the transferees of such
Shares shall have complied with Section 12.4, (A) a trust under which the
distribution of the Shares may be made only to beneficiaries who are such
Founder or Management Stockholder, his or her spouse, his or her parents,
members of his or her immediate family or his or her lineal descendants, (B) a
charitable remainder trust, the income from which will be paid to such Founder
or Management Stockholder during his or her life, (C) a corporation, the
stockholders of which are only such Founder or Management Stockholder, his or
her spouse, his or her parents, members of his or her immediate family or his or
her lineal descendants or (D) a partnership or limited liability company, the
partners or members of which are only such Founder or Management Stockholder,
his or her spouse, his or her parents, members of his or her immediate family or
his or her lineal descendants, (III) any Transfer in case of the death of such
Founder (other than JED) or Management Stockholder, by will or by the laws of
intestate succession, to his or her executors, administrators, testamentary
trustees, legatees or beneficiaries and PROVIDED that the restrictions contained
in this Section 1 shall continue to be applicable to the Shares after any such
Transfer and PROVIDED further that the transferees of such Shares shall have
complied with Section 12.4, or (IV) Transfer by JED, authorized by the prior
written approval (not to be unreasonably withheld) of the Board (excluding
interested Board members), to an Affiliate of JED that agrees to be bound by the
terms of this Agreement pursuant to Section 12.4.

                  (b) After the 50% Condition has been satisfied, the Founders
and Management Stockholders may Transfer any Shares or any interest therein now
or hereafter owned by such Founder or Management Stockholder, PROVIDED that such
sale is made in compliance with the provisions of Section 1.4 ("Right of First
Refusal") and Section 1.5 ("Tag-Along Rights"), or such sale is made pursuant to
Section 2.4 ("Drag-Along Rights") or Section 5 ("Auction Sale Procedure"), or
such sale is pursuant to a Registration effected in accordance with the
Registration Rights Agreement.

                  (c) Notwithstanding anything in this Agreement to the
contrary, a Founder or Management Stockholder may pledge any or all Shares now
or hereafter owned by such Founder or Management Stockholder or grant a security
interest therein to secure indebtedness of such Founder or Management
Stockholder owing to a bank or other financial institution on terms and
conditions approved by the Board (excluding such Founder or Management
Stockholder and other members of the Board who are designees of the Founders and
Management Stockholders), PROVIDED, however, that any pledgee pursuant to this
subsection (c) shall acquire only a security interest in such

                                       2
<PAGE>

Shares entitling such pledgee to (I) the proceeds from any sale of such Shares
made in compliance with the terms of this Agreement and (II) any proceeds of any
distribution to stockholders on account of the Shares in any liquidation as a
result of any bankruptcy proceeding or the winding up of affairs of the Company
and in no event shall such pledgee be entitled to receive title to such Shares
or any other rights incident thereto other than those specified above. The
pledge agreements or other related financing agreements of any Founder or
Management Stockholder shall be subject to and acknowledge the rights of the
Company and the other Stockholders set forth herein and shall acknowledge the
restrictions imposed on the pledgee's security interest pursuant to this Section
1.1(c), such acknowledgment being in form and substance reasonably satisfactory
to the Board.

                  1.2. TREATMENT OF CERTAIN BERGSTEIN FAMILY MEMBERS. Each of
Joel Bergstein, Michael Bergstein and Lindy Sobel Bergstein (collectively, the
"BERGSTEIN FAMILY MEMBERS") hereby acknowledges that all Shares and all
interests therein now or hereafter owned by such Person shall for all purposes
of this Agreement be treated as if such shares and interests were owned by JED
and each such Person has as of the date hereof granted JED an irrevocable power
of attorney directing JED to exercise all rights and perform all obligations
hereunder and under the Registration Rights Agreement in respect of such
Person's Shares and interests so long as this Agreement shall remain in full
force and effect.

                  1.3. TREATMENT OF JED. Notwithstanding anything in this
Agreement to the contrary, Bergstein, together with Jordan Bergstein and
Elizabeth Heller, shall continue to own 100% of JED and shall not Transfer any
Shares in JED or any direct or indirect interest therein until such time as JED
no longer owns any Shares, except for any Transfer to or from any Bergstein
Family Member or Jordan Bergstein or Elizabeth Heller or any Transfer made for
estate-planning purposes pursuant to Section 1.1(a)(ii) or any Transfer of
shares of JED, in case of the death of a stockholder of JED, by will or by the
laws of intestate succession, to such stockholder's executors, administrators,
testamentary trustees, legatees or beneficiaries, all of whom shall be subject
to the restrictions set forth in this Section 1.3 and PROVIDED further that the
transferees of such Shares shall have complied with Section 12.4.

                  1.4. RIGHT OF FIRST REFUSAL. (a) If at any time after the 50%
Condition has been satisfied, any of the Founders or Management Stockholders
shall have received a BONA FIDE offer or offers from a third party or parties to
purchase any Shares, then prior to selling such Shares to such third party or
parties the relevant Founder or Management Stockholder shall deliver to the
Company and the Investor Stockholders a letter signed by the relevant Founder or
Management Stockholder setting forth in reasonable detail:

                                       3
<PAGE>

                   (i) the name(s) of such third party or parties;

                  (ii) the purchase price per share of the Shares offered by
         such third party or parties;

                  (iii) all material terms and conditions contained in the offer
         of the third party or parties;

                  (iv) the relevant Founder or Management Stockholder's offer
         (irrevocable by its terms for 30 days following receipt) to sell to the
         Company all (but not less than all) of the Shares covered by the offer
         of the third party or parties, for a purchase price per share and on
         other terms and conditions not less favorable to the Company than those
         contained in the offer of the third party or parties (the "OFFER"); and

                  (v) closing arrangements and a closing date not less than 60
         nor more than 90 days following the delivery of such letter (or such
         later date as is necessary to obtain all requisite governmental and
         regulatory approvals and consents, PROVIDED the relevant Founder or
         Management Stockholder covenants to use commercially reasonable efforts
         to obtain such approvals and consents) for any purchase and sale that
         may be effected by the Company.

                  (b) After the receipt of the Offer, the Company shall have a
30-day period in which to determine whether to purchase the Shares covered by
the Offer on the terms set forth therein (or assign the right to purchase such
Shares, or that portion of the right not being exercised by the Company, to the
Investor Stockholders or any Kelso Holder or THL Holder in accordance with
Section 1.4(c)).

                  (c) If the Company does not exercise its rights with respect
to all of the Shares covered by the Offer under Section 1.4(b), then the Company
shall, within five days following the date of the Offer, notify the Investor
Stockholders of such Offer and make available to each of them the right to
purchase all of the Shares covered by the Offer which are not being purchased by
the Company on a pro rata basis (based on their relative ownership of the
Company) or (II) such other portion of such Shares as the Investor Stockholders
may mutually agree upon. The Investor Stockholders shall have the right to
assign to any of the Kelso Holders or THL Holders all or any of their rights to
purchase Shares pursuant to this Section 1.4(c). Notwithstanding the foregoing,
in no event shall the Company, the Investor Stockholders or any Kelso Holder or
THL Holder be entitled to purchase any Shares pursuant to this Section 1.4
unless all of the Shares covered by the Offer are purchased. Any purchases made
by

                                       4
<PAGE>

the Investor Stockholders or any Kelso Holder or THL Holder hereunder shall be
made in accordance with Section 1.4(b).

                  (d) If the Company (or the Investor Stockholders or any Kelso
Holder or THL Holder pursuant to Section 1.4(c)) fails to accept the Offer
within the 30-day period or fails to consummate the closing of the purchase of
all of the Shares covered by the Offer within the time period set forth therein,
then the relevant Founder or Management Stockholder shall have the right to sell
to the third party or parties identified in such Offer all (but not less than
all) of the Shares covered by the Offer, for a purchase price not less than the
purchase price contained in the Offer and on the other terms and conditions no
less favorable to the relevant Founder or Management Stockholder than those
contained in the Offer. If the relevant Founder or Management Stockholder has
not signed a binding purchase agreement (subject to customary closing
conditions) with such third party or parties within 45 days after the expiration
of such 30-day period or if such sale has not been completed within 120 days (or
such later date as is necessary to obtain all requisite governmental and
regulatory approvals and consents) after the expiration of such 30-day period,
the Shares covered by such Offer may not thereafter be sold by the relevant
Founder or Management Stockholder unless the procedures set forth in this
Section 1.4 shall have again been complied with.

                  1.5. TAG-ALONG RIGHTS. If none of the Company, the Investor
Stockholders, the Kelso Holders or the THL Holders, either singly or in the
aggregate, shall have accepted the Offer pursuant to Section 1.4, and any of the
Founders or Management Stockholders shall have agreed to sell to a third party
or parties the Shares covered by the Offer, then such Founder or Management
Stockholder must offer each other Stockholder a PRO RATA right to participate in
such sale with respect to such Stockholder's Shares, for a purchase price per
Share equal to the purchase price per Share being paid for such Founder or
Management Stockholder's Shares and on other terms and conditions not less
favorable to such Stockholder than those applicable to such Founder or
Management Stockholder.

                  2. RESTRICTIONS ON TRANSFERS OF SHARES BY INVESTOR
STOCKHOLDERS. 2.1. RESTRICTIONS GENERALLY. (a) Prior to December 31, 2002, no
Shares or any interest therein now or hereafter owned by either Investor
Stockholder (or any Kelso Holder or THL Holder) may be Transferred without the
written consent of the other Investor Stockholder, and then subject to Sections
2.2 and 2.3, except for any (I) involuntary Transfer to a third party in
accordance with Section 4 ("Involuntary Transfers") or (II) Transfer from Kelso
to a Kelso Holder, from a Kelso Holder to Kelso or to another Kelso Holder, from
THL to a THL Holder, or from a THL Holder to THL or to another THL Holder,
provided that such Kelso Holder or THL Holder, as the case may be, agrees to be
bound by the terms of this Agreement pursuant to Section 12.4.

                                       5
<PAGE>

Notwithstanding anything in this Agreement to the contrary, prior to the earlier
of the fifth anniversary of the Closing Date and an IPO, (I) no Shares may be
Transferred by KIA V or KEP V to any of their respective limited partners
without the prior consent of THL, and no Shares may be Transferred by THL Fund
IV or any of the THL Related Parties to any of their respective limited partners
without the prior consent of Kelso, and (II) no THL Individual or Kelso
Individual may pledge any Shares other than pursuant to Section 2.1(c) without
the consent of Kelso or THL, respectively.

                  (b) After December 31, 2002, each Investor Stockholder (and
any Kelso Holder or THL Holder) may sell any Shares held by it, PROVIDED that if
such sale is not pursuant to Section 2.1(a)(i) or (ii), such sale must be either
(I) made in compliance with the provisions of Section 2.2 ("Right of First
Offer") and Section 2.3 ("Tag-Along Rights"), (II) pursuant to Section 2.4
("Drag-Along Rights") or Section 5 ("Auction Sale Procedure"), or (III) pursuant
to a Registration effected in accordance with the Registration Rights Agreement.

                  (c) Notwithstanding anything in this Agreement to the
contrary, a Kelso Holder or THL Holder may pledge any or all Shares now or
hereafter owned by such Kelso Holder or THL Holder or grant a security interest
therein to secure indebtedness of such Kelso Holder or THL Holder owing to a
bank or other financial institution, PROVIDED, however, that any pledgee
pursuant to this subsection (c) shall acquire only a security interest in such
Shares entitling such pledgee to (I) the proceeds from any sale of such Shares
made in compliance with the terms of this Agreement and (II) any proceeds of any
distribution to stockholders on account of the Shares in any liquidation as a
result of any bankruptcy proceeding or the winding up of affairs of the Company
and in no event shall such pledgee be entitled to receive title to such Shares
or any other rights incident thereto other than those specified above. The
pledge agreements or other related financing agreements of any Kelso Holder or
THL Holder shall be subject to and acknowledge the rights of the Company and the
other Stockholders set forth herein and shall acknowledge the restrictions
imposed on the pledgee's security interest pursuant to this Section 2.1(c).

                  2.2. RIGHT OF FIRST OFFER. (a) PROCEDURE. If at any time after
the date hereof (I) either Investor Stockholder desires to sell any of the
Shares held by it (the "OFFERING INVESTOR STOCKHOLDER"), (II) such sale is
permitted under Section 2.1, (III) such sale is a sale which, pursuant to
Section 2.1, is subject to this Section 2.2, and (IV) the other Investor
Stockholder, the Founders or the Management Stockholders continue to own at
least 20% of the aggregate number of Shares owned by such Investor Stockholder,
the Founders or the Management Stockholders, as the case may be, on the Closing
Date (any and all parties meeting such 20% condition, an "ELIGIBLE
STOCKHOLDER"), then prior to selling such Shares, the Offering Investor
Stockholder

                                       6
<PAGE>

shall deliver to each Eligible Stockholder a letter signed by it setting forth
the number of Shares the Offering Investor Stockholder desires to sell (the
"SALE NOTICE"). Within 30 days of receipt of the Sale Notice, the Eligible
Stockholders may make offers to purchase in the aggregate, all of the shares
covered by the Sale Notice, and (I) individually, that portion of such Shares
offered by the Offering Investor Stockholder equal to their PRO RATA interest in
the Company relative to each other (based on the percentage of outstanding
Shares owned by each of them on the date of the Sale Notice) or (II) such other
portion of such shares as the Eligible Stockholders collectively may agree upon,
by delivering written notice to the Offering Investor Stockholder setting forth:

                  (i) the number of Shares to be purchased and the prospective
         purchase price per Share;

                  (ii) any other material terms and conditions to such purchase;

                  (iii) evidence reasonably satisfactory to such Offering
         Investor Stockholder for the financing of such purchase; and

                  (iv) closing arrangements and a closing date not less than 30
         nor more than 90 days following the delivery of such notice (or such
         later date as is necessary to obtain all requisite governmental and
         regulatory approvals and consents).

                  (b) If, upon the expiration of 30 days following receipt by
the Eligible Stockholders of the Sale Notice, the Eligible Stockholders shall
not have made an offer to purchase all (but not less than all) of the Shares
covered by the Sale Notice, the Offering Investor Stockholder may sell the
Shares covered by the Sale Notice at a price per share and on other terms and
conditions not less favorable to the Offering Investor Stockholder than those
set forth in the Sale Notice, PROVIDED that the Offering Investor Stockholder
and the third party execute a binding purchase agreement (subject to customary
closing conditions) within 120 days after the expiration of such 30 day period
and consummate the closing thereunder within 120 days (or such later date as is
necessary to obtain all requisite governmental and regulatory approvals and
consents) from the execution of the binding purchase agreement. If the Eligible
Stockholders shall have made an offer to purchase all of the Shares covered by
the Sale Notice, then the Offering Investor Stockholder may either (I) accept
such offer and the sale of such Shares shall be consummated as soon as
practicable after the delivery of a notice of acceptance by the Offering
Investor Stockholder, but in any event within 90 days of the delivery of the
Sale Notice (or such later date as is necessary to obtain all requisite
governmental and regulatory approvals and consents), or (II) reject such offer,
by

                                       7
<PAGE>

written notice delivered to the Eligible Stockholders within 20 days of the
delivery to the Offering Investor Stockholder of such offer, in which case the
Offering Investor Stockholder shall have the right to sell all (but not less
than all) of the Shares covered by the Sale Notice, for a purchase price and on
other terms and conditions no less favorable to the Offering Investor
Stockholder than those contained in the Eligible Stockholders' offer, PROVIDED
that the Offering Investor Stockholder and the purchasers execute a binding
purchase agreement (subject to customary closing conditions) within 120 days of
the Eligible Stockholders' offer and consummate the closing thereunder within
120 days (or such later date as is necessary to obtain all requisite
governmental and regulatory approvals and consents) from the execution of the
binding purchase agreement. If the Offering Investor Stockholder and such
purchasers do not execute such a purchase agreement or close such transaction
within the time periods set forth in the proviso of the preceding sentence, then
the Shares covered by such Sale Notice may not thereafter be sold by the
Offering Investor Stockholder unless the procedures set forth in this Section
2.2 shall have again been complied with. Any offer by the Eligible Stockholders
pursuant to this Section 2.2(b) shall not preclude any of them from making
additional offers for such Shares outside of this Section 2.2, which offers may
be rejected in the Offering Investor Stockholder's sole discretion, or
participating in any auction relating to the sale of any such Shares.

                  (c) SALE OF ASSETS. The provisions of Sections 2.2(a) and (b)
shall apply, MUTATIS MUTANDIS, in the event of a proposed sale of all or
substantially all of the assets of the Company and its subsidiaries.

                  2.3. TAG-ALONG RIGHTS. If the Eligible Stockholders shall not
have purchased, pursuant to Section 2.2(a), all of the Shares covered by the
Sale Notice, and the Offering Investor Stockholder shall have agreed to sell to
a third party or parties the Shares covered by the Sale Notice, and the Shares
proposed to be sold, together with all Shares previously sold by the Offering
Investor Stockholder, would represent more than 25% of the aggregate number of
Shares owned by the Offering Investor Stockholder on the Closing Date, then the
Offering Investor Stockholder must offer the other Stockholders a PRO RATA right
to participate in such sale with respect to the other Stockholders' Shares, for
a purchase price per Share equal to the purchase price per Share being paid for
the Offering Investor Stockholder's Shares and on other terms and conditions not
less favorable to the other Stockholders than those applicable to the Offering
Investor Stockholder.

                  2.4. DRAG-ALONG RIGHTS. (a) If either of the Investor
Stockholders proposes to sell to a third party or parties (a "PROPOSED
PURCHASER") Shares owned by such Investor Stockholder (other than a sale
pursuant to Section 2.1(a)(i) or (ii)) which, together with all Shares
previously sold by such Offering Investor Stockholder, would

                                       8
<PAGE>

represent more than 25% of the aggregate number of Shares owned by such Offering
Investor Stockholder on the Closing Date, and (I) such sale is permitted by
Section 2.1, (II) the Offering Investor Stockholder has previously complied with
Section 2.2 with respect to such proposed sale, (III) if the Proposed Purchaser
proposes to sell 100% of the Proposed Purchaser's Shares, such sale meets the
THL Requirements, if applicable, and (IV) if the Proposed Purchaser proposes to
sell less than 100% of the Proposed Purchaser's Shares, the other Investor
Stockholder approves such sale (any proposed sale meeting all such conditions, a
"PROPOSED SALE"), then the Offering Investor Stockholder may provide each other
Stockholder written notice (a "DRAG-ALONG NOTICE") of such Proposed Sale and the
material terms thereof not less than 20 business days prior to the proposed
closing date of the Proposed Sale and each of the other Stockholders hereby
agrees to sell to such Proposed Purchaser that number of Shares equal to the
product of (I) the number of Shares then held by each such other Stockholder and
(II) a fraction, the numerator of which shall be the number of Shares which the
Offering Investor Stockholder (together with the Kelso Holders or the THL
Holders as applicable) proposes to sell in the Proposed Sale and the denominator
of which shall be the number of Shares then owned by the Offering Investor
Stockholder (together with the Kelso Holders or the THL Holders as applicable).

                  (b) Shares which are subject to a Drag-Along Notice will be
included in the Proposed Sale pursuant hereto and to any agreement with the
Proposed Purchaser relating thereto, on the same terms and subject to the same
conditions applicable to the Shares which the Offering Investor Stockholder
proposes to sell in the Proposed Sale. Such terms and conditions shall include,
without limitation, (I) the sale consideration (which shall be reduced by the
fees and expenses incurred by the Offering Investor Stockholder in connection
with the Proposed Sale); (II) the provision of information, representations,
warranties, covenants and requisite indemnifications, PROVIDED, HOWEVER, that
any representations and warranties relating specifically to any Stockholder
shall only be made by that Stockholder and any indemnification provided by the
Stockholders shall be on a several and ratable, not joint, basis based on the
number of Shares being sold by each Stockholder in the Proposed Sale; PROVIDED,
FURTHER, HOWEVER, that the form of consideration to be received by the Offering
Investor Stockholder (or any Kelso Holder or THL Holder as applicable) in
connection with the Proposed Sale may be different from that received by the
other Stockholders so long as the value of the consideration to be received by
the Offering Investor Stockholder (or any Kelso Holder or THL Holder as
applicable) is the same or less than that to be received by the other
Stockholders (as reasonably determined by the Board in good faith, excluding
members of the Board who are designees of the Offering Investor Stockholder). No
other Stockholders shall exercise any dissenter's rights with respect to the
consummation of any such Proposed Sale pursuant to this Section 2.4.

                                       9
<PAGE>

                  (c) Each other Stockholder will, if requested by the Offering
Investor Stockholder, execute and deliver a custody agreement and power of
attorney in form and substance reasonably satisfactory to the Offering Investor
Stockholder with respect to the Shares which are to be included in the Proposed
Sale pursuant to this Section 2.4. The custody agreement and power of attorney
will provide, among other things, that the other Stockholders will deliver to
and deposit in custody with the custodian and attorney-in-fact named therein a
certificate or certificates representing such Shares (duly endorsed in blank by
the registered owner or owners thereof or accompanied by duly endorsed stock
powers in blank) and irrevocably appoint said custodian and attorney-in-fact as
such other Stockholder's agent and attorney-in-fact with full power and
authority to act under a custody agreement and power of attorney on behalf of
such other Stockholder with respect to the matters specified therein.

                  (d) Each other Stockholder agrees to execute such other
agreements as the Offering Investor Stockholder may reasonably request in
connection with the consummation of a Proposed Sale and Drag-Along Notice and
the transactions contemplated thereby, including, without limitation, any
purchase agreement, proxies, written consents in lieu of meetings or waiver of
appraisal rights.

                  3. MANAGEMENT STOCKHOLDERS. 3.1. RIGHT OF THE COMPANY TO
PURCHASE. Subject to all subsections of this Section 3, the Company shall have
the right to purchase from a Management Stockholder, and such Management
Stockholder shall have the obligation to sell to the Company, all (but not less
than all) of such Management Stockholder's Shares:

                  (a) at the Fair Market Value of the Shares to be purchased if
         such Management Stockholder's employment with the Company or any of its
         subsidiaries is terminated as a result of (I) the termination by the
         Company or any such subsidiary of such employment without Cause, (II)
         the death or Disability of such Management Stockholder, (III) the
         resignation of such Management Stockholder for Good Reason or (IV) the
         retirement of such Management Stockholder upon or after reaching the
         age of 65 ("RETIREMENT") ;

                  (b) at the lesser of the Fair Market Value and the Carrying
         Value of the Shares to be purchased if such Management Stockholder's
         employment with the Company or any of its subsidiaries is terminated by
         the Company or any such subsidiary for Cause; or

                  (c) at the Fair Market Value or the Carrying Value of the
         Shares to be purchased, in the sole discretion of the Board (excluding
         interested Board members), if such Management Stockholder's employment
         with the Company or

                                       10
<PAGE>

         any of its subsidiaries is terminated for any reason other than as a
         result of an event described in subparagraph (a)(i), (a)(ii), (a)(iii)
         or (a)(iv) or in paragraph (b) of this Section 3.1.

                  3.2. NOTICE TO MANAGEMENT STOCKHOLDERS. If the Company desires
to purchase Shares from a Management Stockholder pursuant to Section 3.1, it
shall notify such Management Stockholder (or his or her estate, as the case may
be) not more than 60 days after the occurrence of the event giving rise to the
Company's right to acquire such Management Stockholder's Shares.

                  3.3. PAYMENT. If at any time the Company purchases any Shares
pursuant to this Agreement, then within 30 days after the date that the Company
sends the notice to the Management Stockholder pursuant to Section 3.2, the
Company must pay the purchase price determined under this Agreement for the
Shares it purchases by wire transfer of funds or company check in the amount of
the purchase price, and upon receipt of payment of such purchase price or,
pursuant to Section 3.7, any portion thereof, the seller shall deliver the
certificates representing the number of Shares being purchased in a form
suitable for transfer, duly endorsed in blank, and free and clear of any lien,
claim or encumbrance. Notwithstanding anything in this Agreement to the
contrary, the Company shall not be required to make any payment for Shares
purchased hereunder until delivery to it of the certificates representing such
shares or evidence or an affidavit, in either case in form and substance
reasonably satisfactory to the Company of loss, theft or destruction of such
certificates.

                  3.4. APPRAISAL. The Company shall engage, from time to time at
the discretion of the Board, but not less often than within 90 days after every
fiscal year, an independent valuation consultant or appraiser of recognized
national standing reasonably satisfactory to the Investor Stockholders (the
"APPRAISER") to appraise the Fair Market Value of the Shares as of the last day
of the calendar year then most recently ended or, at the request of the Board,
as of any more recent date (the "APPRAISAL DATE"), and to prepare and deliver a
report to the Company describing the results of such appraisal (the
"APPRAISAL"). The Appraiser shall (A) exclude any premiums for control or
discounts for minority interests or restrictions on transfer; (B) appraise the
Shares on a fully-diluted basis, PROVIDED that it shall use its judgment as to
the extent to which any "out of the money" Share equivalents should be included;
and (C) value the Non-Voting Common Stock and Preferred Stock on an as-converted
basis. The Company shall bear the fees and expenses of each Appraisal. Promptly
after receipt of each Appraisal, the Company shall deliver to each Stockholder a
copy of the Appraisal.

                                       11
<PAGE>

                  3.5. FAIR MARKET VALUE. The "FAIR MARKET VALUE" of any Share
being purchased by or sold to the Company (or to Kelso, any Kelso Holder, THL or
any THL Holder if the right to purchase has been assigned thereto pursuant to
this Section 3) shall be derived from the most recent Appraisal pursuant to
Section 3.4, unless the Board in its sole discretion decides to obtain a more
recent Appraisal.

                  3.6. ACKNOWLEDGMENT OF STATUS. Each of Johnson and Thomas
hereby acknowledges that, except with respect to the Shares distributed to him
upon the dissolution of MJD Partners (with respect to which he shall be deemed a
Founder), he shall be deemed a "Management Stockholder" for all purposes of this
Agreement with respect to any Shares or hereafter owned directly by him.

                  3.7. PROHIBITED PURCHASES. Notwithstanding anything to the
contrary herein, the Company shall not be permitted to purchase any Shares under
this Section 3 to the extent (A) the Company is prohibited from purchasing such
shares by applicable law or by any debt instruments or agreements, including any
amendment, renewal, extension, substitution, refinancing, replacement or other
modification thereof (the "FINANCING DOCUMENTS") entered into by the Company or
any of its subsidiaries, (B) an event of default has occurred (or, with notice
or the lapse of time or both, would occur) under any Financing Document and is
(or would be) continuing, (C) the purchase of such Shares would, or in the
reasonable opinion of the Board (excluding such Management Stockholder and other
members of the Board who are designees of the Management Stockholders) might,
result in the occurrence of an event of default under any Financing Document or
create a condition which would or might, with notice or lapse of time or both,
result in such an event of default, or (D) the purchase of such Shares would, in
the reasonable opinion of the Board (excluding such Management Stockholder and
other members of the Board who are designees of the Management Stockholders), be
imprudent in view of the financial condition (present or projected) of the
Company or any of its subsidiaries or the anticipated impact of the purchase of
such shares on the Company's or any of its subsidiaries' ability to meet their
respective obligations under any Financing Document. If Shares that the Company
has the right to purchase on any date exceed the total amount permitted to be
purchased on such date pursuant to the preceding sentence (the "MAXIMUM
AMOUNT"), the Company shall purchase on such date only that number of Shares up
to the Maximum Amount (and shall not be required to purchase more than the
Maximum Amount) in such amounts as the Board (excluding such Management
Stockholder and other members of the Board who are designees of the Management
Stockholders) shall in good faith determine. Notwithstanding anything to the
contrary contained in this Agreement, if the Company is unable to make any
payment when due under this Agreement by reason of this Section 3.7, the Company
shall have the option to either: (I) make such payment at the earliest
practicable date permitted under this Section 3.7 and any such payment shall

                                       12
<PAGE>

accrue simple interest (or if such payment is accruing interest at such time,
shall continue to accrue interest) at a rate per annum of 8% from the date such
payment is due and owing to the date such payment is made, PROVIDED that all
payments of interest accrued hereunder shall be paid only at the date of payment
by the Company for the Shares being purchased, or (II) pay the purchase price
for such Shares with a subordinated note which is fully subordinated in right of
payment and exercise of remedies to the lenders' rights under the Financing
Documents and the maturity date of which is 30 days after the latest maturity
date on any debt of the Company which is outstanding (or reasonably expected to
become outstanding) as of the date such subordinated note is issued.

                  4. INVOLUNTARY TRANSFERS. Any transfer of title or beneficial
ownership of Shares upon default, foreclosure, forfeit, court order, or
otherwise than by a voluntary decision on the part of a Stockholder (an
"INVOLUNTARY TRANSFER") shall be void unless such Stockholder complies with this
Section 4 and enables the Company to exercise in full its rights hereunder. Upon
any Involuntary Transfer, the Company shall have the right to purchase such
Shares pursuant to this Section 4 and the Person to whom such Shares have been
transferred (the "INVOLUNTARY TRANSFEREE") shall have the obligation to sell
such Shares in accordance with this Section 4. Upon the Involuntary Transfer of
any Shares, such Stockholder shall promptly (but in no event later than five
business days after such Involuntary Transfer) furnish written notice to the
Company and the Investor Stockholders indicating that the Involuntary Transfer
has occurred, specifying the name of the Involuntary Transferee, giving a
detailed description of the circumstances giving rise to, and stating the legal
basis for, the Involuntary Transfer. Upon the receipt of such notice, and for 60
days thereafter, the Company shall have the right to purchase, and the
Involuntary Transferee shall have the obligation to sell, all (but not less than
all) of the Shares acquired by the Involuntary Transferee for a purchase price
equal to the lesser of (A) the Fair Market Value of such Shares and (B) the
amount of the indebtedness or other liability that gave rise to the Involuntary
Transfer plus the excess, if any, of the Carrying Value of such Shares over the
amount of such indebtedness or other liability that gave rise to the Involuntary
Transfer. Notwithstanding the provisions of Section 3, for purposes of this
Section 4, the Fair Market Value of any Share shall be calculated with reference
to the most recent Appraisal and as of the most recent Appraisal Date prior to
the date of the Involuntary Transfer, unless the Board in its sole discretion
decides to obtain a more recent Appraisal.

                  5. AUCTION SALE PROCEDURE. 5.1. GENERAL. At any time after the
second anniversary of the Closing Date, either Investor Stockholder shall be
entitled to initiate the following procedure for the sale of the Company,
PROVIDED that such Investor Stockholder together with the Kelso Holders and the
THL Holders, as applicable,

                                       13
<PAGE>

continues to own, in the aggregate, at least 25% as many Shares as owned by such
Investor Stockholder on the Closing Date and FURTHER PROVIDED that such
procedure complies with the THL Requirements. The sale procedure (the "AUCTION
SALE PROCEDURE") set forth in this Section 5 shall be initiated by the Investor
Stockholders authorized pursuant to this Section 5.1, in any case, by delivering
to the Company and the Remaining Stockholders (as defined below) a written
notice that such Stockholder(s) has elected to initiate the Auction Sale
Procedure. For purposes of this Section 5, "SUPERVISING STOCKHOLDER" shall mean
both Investor Stockholders acting together, and "REMAINING STOCKHOLDERS" shall
mean all of the other Stockholders. Notwithstanding the foregoing, the Investor
Stockholders shall jointly be entitled to initiate the Auction Sale Procedure at
any time.

                  5.2. RETENTION OF INVESTMENT BANK. Within 45 days after the
initiation of the Auction Sale Procedure, the Supervising Stockholder shall in
good faith select an investment banking firm (the "INVESTMENT BANK") to assist
the Company and the Stockholders in connection with the Auction Sale Procedure.
All fees and expenses of the Investment Bank shall be borne by the Company.

                  5.3. PREPARATION OF CONFIDENTIAL MEMORANDUM. As soon as
practicable following the selection of the Investment Bank, the Investment Bank
shall prepare a confidential offering memorandum (the "CONFIDENTIAL MEMORANDUM")
for the purpose of soliciting prospective purchasers of all of the Shares. The
Company and each Stockholder shall provide all such assistance and cooperation
with respect to the preparation of the Confidential Memorandum as the Investment
Bank or any other Stockholder may reasonably request.

                  5.4. AUCTION PROCEDURES. If requested by the Supervising
Stockholder, the Investment Bank shall develop procedures for conducting the
auction of the Company, such procedures to be reasonably acceptable to the
Supervising Stockholder, and no more onerous to prospective purchasers than
procedures that are customary in the market place at the time of the initiation
of the Auction Sale Procedure.

                  5.5. SELECTION OF BID. The Confidential Memorandum and auction
procedures shall solicit prospective purchasers of all of the Shares. Based on
the advice of the Investment Bank, the Supervising Stockholder shall in good
faith select the best bid or bids.

                  5.6. NEGOTIATION OF SALE AGREEMENT. The Supervising
Stockholder and its counsel shall be entitled to negotiate the sale agreement or
agreements and any ancillary agreements on behalf of the Company with the
prospective purchaser or purchasers. The Remaining Stockholders and their
counsel shall be entitled to

                                       14
<PAGE>

participate in such negotiations, and the Supervising Stockholder shall consider
in good faith the Remaining Stockholders' comments. Without the Remaining
Stockholders' consent, which consent may be withheld for any reason, the
Supervising Stockholder shall not agree to any term in any sale agreement that
is more favorable to the Supervising Stockholder or its Affiliates, PROVIDED,
HOWEVER, that the form of consideration to be received by the Investor
Stockholders or the Kelso Holders or the THL Holders in connection with the
Auction may be different from that received by the other Stockholders so long as
the value of the consideration to be received by the Investor Stockholders or
the Kelso Holders or the THL Holders is the same or less than that to be
received by the other Stockholders (as reasonably determined by the Board in
good faith, excluding members of the Board who are designees of the Investor
Stockholders).

                  5.7. RIGHT OF REMAINING STOCKHOLDERS TO BID. No Stockholder
may participate as a bidder in the Auction Sale Procedure.

                  5.8. COOPERATION. Each Stockholder shall cooperate in all
respects in order to carry out the intent and accomplish the purposes of this
Section 5. No Stockholder shall exercise any dissenter's rights with respect to
the consummation of any such Auction pursuant to this Section 5. The provisions
of Section 14.4 ("Further Assurances") are specifically incorporated herein by
reference and the Stockholders' obligations thereunder, insofar as they relate
to this Section 5, shall include, without limitation, the obligation to deliver
stock certificates representing Shares, in a form suitable for transfer, duly
endorsed in blank, and the obligation to execute and deliver any stock purchase
agreement or approve any merger agreement or agreements negotiated pursuant to
Section 5.6. Each Stockholder agrees that its failure to strictly comply with
the provisions of this Section 5 and Section 14.4, insofar as it relates to this
Section 5, shall be deemed a material breach of this Agreement and shall entitle
the aggrieved Stockholders to institute and prosecute proceedings in any court
of competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of this Agreement. Such remedies shall be cumulative and not
exclusive, and shall be in addition to any other remedies which such
Stockholders may have.

                  6. ISSUANCE OF ADDITIONAL EQUITY SECURITIES. 6.1. PREEMPTIVE
RIGHTS OF THE STOCKHOLDERS. In the case of the proposed sale or issuance of, or
the proposed granting by the Company of, any equity securities of the Company to
any Person (other than any Excluded Shares) following the date hereof, then the
Stockholders shall have the right, exercisable within 20 days after the Company
has given notice to the Stockholders of such proposed sale, issuance or grant,
to purchase all of the equity securities proposed to be issued or granted on the
terms set forth in Sections 6.2 and 6.3; PROVIDED that the Founders shall only
have such right for any proposed sale or

                                       15
<PAGE>

issuance of, or the proposed granting by the Company of, any equity securities
of the Company to any Person (other than Excluded Shares) at less than fair
market value.

                  6.2. INVESTMENTS. Subject to Section 6.3, if the Company
proposes to sell, issue or grant any equity securities of the Company as
provided in Section 6.1, then each Stockholder, in such Stockholder's sole
discretion, shall be entitled to make one or more purchases of equity securities
for a purchase price per share as set forth in the Company's notice pursuant to
Section 6.1. The notice referred to in Section 6.1 shall state the number of
equity securities to be offered to each Stockholder, the aggregate consideration
to be paid for such equity securities by each Stockholder and the proposed date,
time and location of the closing of such purchase (which shall not be earlier
than 45 days or later than 120 days after the date of such notice). At the
closing of each such additional purchase, the Company shall issue and deliver to
each Stockholder stock certificates representing that number of fully paid and
nonassessable Shares (or executed agreements representing equity securities
other than Shares) that each such Stockholder has agreed to purchase pursuant to
this Section 6.2 and each such Stockholder shall pay to the Company by wire
transfer of immediately available funds the aggregate consideration for such
equity securities.

                  6.3. PARTICIPATION BY THE STOCKHOLDERS. (a) Subject to all
subsections of this Section 6.3, (I) each Stockholder shall be entitled to
purchase that portion of the equity securities covered by the notice referred to
in Section 6.1 equal to such Stockholder's PRO RATA interest in the Company
(based on the percentage of outstanding Shares owned by each Stockholder on the
date of such notice), and (II) if any Stockholder does not exercise such right
to purchase such Stockholder's PRO RATA portion of all of the equity securities
that the Company proposes to issue and sell pursuant to Section 6.1, then each
other Stockholder who elected to purchase pursuant to this Section 6.3(a) shall
have the right to purchase such Stockholder's respective PRO RATA portion of
such equity securities not elected to be so purchased by such Stockholder that
the Company proposes to issue and sell.

                  (b) Notwithstanding subsection (a) of this Section 6.3, the
Investor Stockholders may allocate any equity securities proposed to be sold to
them pursuant to Section 6.2 between themselves in whatever manner they choose
and, in any event, either Investor Stockholder may purchase any of the equity
securities not purchased by the other Investor Stockholder before the
application of Section 6.3(a)(ii).

                  (c) Any purchase by any Founder or Management Stockholder of
any Shares pursuant to this Section 6 may only be financed by personal funds or
borrowings made directly by such Founder or Management Stockholder, PROVIDED
that such financing arrangements must be authorized by the prior written
approval (not to be

                                       16
<PAGE>

unreasonably withheld) of the Board (excluding interested Board members) and no
funds may be provided by any third party investor.

                  7. CORPORATE GOVERNANCE. 7.1. ELECTION OF DIRECTORS. (a) Each
Stockholder shall vote all of such Stockholder's voting securities of the
Company over which such Stockholder has voting control and shall take all other
reasonably necessary or desirable actions within such Stockholder's control
(whether in such Stockholder's capacity as a stockholder, director, member of a
board committee or officer of the Company or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum, execution of written consents in lieu of meetings and
approval of amendments and/or restatements of the Company's Certificate of
Incorporation or bylaws), and the Company shall take all reasonably necessary
and desirable actions within its control (including, without limitation, calling
special board, stockholder meetings and approval of amendments and/or
restatements of the Company's Certificate of Incorporation or bylaws), so that:

                  (i) the authorized number of directors on the Board shall be
         seven;

                  (ii) two representatives designated for nomination by Kelso
         shall be elected to the Board;

                  (iii) two representatives designated for nomination by THL
         shall be elected to the Board;

                  (iv) Daniel G. Bergstein, Eugene B. Johnson and Jack H.
         Thomas;

PROVIDED HOWEVER, that after the conversion of the Preferred Stock and the
Non-Voting Common Stock, in each case into Common Stock after receipt of all
regulatory approvals for such conversion (the "CONVERSION DATE"), the three
representatives specified in Section 7.1(a)(iv) shall be designated for
nomination jointly by Kelso and THL;

                  (v) the Chief Executive Officer of the Company shall serve as
         the Board's Chairman;

                  (vi) any committees of the Board or the board of directors of
         any of the Company's subsidiaries shall be created only upon the
         approval of the Board;

                  (vii) the board of directors of each of the Company's
         subsidiaries shall be constituted consistently with Sections
         7(a)(i)-(iv);

                                       17
<PAGE>

                  (viii) the removal from the Board or the board of directors of
         any of the Company's subsidiaries (with or without cause) of any
         representative designated under this Section 7.1(a) by Kelso or THL
         shall be at the written request of Kelso or THL, as the case may be,
         or, after the Conversion Date, in the case of a representative
         designated under Section 7.1(a)(iv), Kelso and THL, but only upon such
         written request and under no other circumstances;

                  (ix) in the event that any representative designated under
         this Section 7.1(a) by Kelso or THL or, after the Conversion Date, by
         Kelso and THL jointly for any reason ceases to serve as a member of the
         Board or the board of directors of any of the Company's subsidiaries
         during his or her term of office, the resulting vacancy on the Board or
         such subsidiary board shall only be filled by a representative
         designated by Kelso, THL or, after the Conversion Date, by Kelso and
         THL jointly, as applicable.

                  (b) If Kelso or THL or Kelso and THL jointly fail to designate
a representative to fill a directorship pursuant to the terms of this Section
7.1, the election of a person to such directorship shall be accomplished in
accordance with the Company's bylaws and applicable law.

                  (c) Upon the Conversion Date, in order to secure the
obligation of each Founder and Management Stockholder to vote Shares and other
voting securities of the Company held by such Founder or Management Stockholder
in accordance with the provisions of this Section 7.1, each Founder and
Management Stockholder shall appoint each of the Investor Stockholders, and both
of them, as the true and lawful proxy and attorney-in-fact of such Founder or
Management Stockholder, with full power of substitution, to vote all of such
Person's Shares and other voting securities of the Company for the election and
removal of directors and all such other matters as expressly provided for in
this Section 7.1. Each of the Investor Stockholders may exercise the proxy to be
granted to it at any time any Founder or Management Stockholder fails to comply
with the provisions of this Section 7.1. The proxies and powers to be granted by
each Founder and Management Stockholder pursuant to this paragraph (c) are
coupled with an interest and are given to secure the performance of their
obligations under this Agreement. Such proxies and powers will be irrevocable
until the earlier of the termination of this Agreement or this Section 7
pursuant to Section 12.3(b) and will survive the death, incompetency, disability
or dissolution, as applicable, of each Founder or Management Stockholder and the
holders of each of such Founder's or Management Stockholder's respective Shares.

                  7.2. FIVE YEAR PLAN AND ANNUAL BUDGET. Attached hereto as
Exhibit A are the capital and operating budgets, together with the EBITDA
performance targets,

                                       18
<PAGE>

for the Company and its subsidiaries' competitive and rural local exchange
carrier business for the five year period ending December 31, 2004 (the "FIVE
YEAR PLAN"). The Company shall prepare and submit to the Board for its approval
at least 30 days prior to the first day of each Fiscal Year proposed capital and
operating budgets for the Company and its subsidiaries for the forthcoming
Fiscal Year. As revised and approved by the Board, such proposed capital and
operating budgets shall become the "ANNUAL BUDGET" for the Company and its
subsidiaries. Attached hereto as Exhibit B is the Annual Budget for the 2000
Fiscal Year.

                  7.3. RECORDS AND REPORTS, ETC. (a) The Company shall furnish
or cause to be furnished to the Investor Stockholders and each of the Founders
until such Founder shall have Transferred 50% or more of the number of Shares
held by such Founder on the Closing Date:

                  (i) within 120 days following the end of each Fiscal Year,
         audited consolidated financial statements of the Company and its
         subsidiaries, together with unaudited consolidating financial
         statements of the Company and its subsidiaries for such Fiscal Year;

                  (ii) within 45 days following of the end of each fiscal
         quarter, unaudited consolidated and consolidating financial statements
         of the Company and its subsidiaries;

                  (iii) monthly financial statements, together with a management
         overview and report with respect to the Company's and its subsidiaries'
         performance for such month; and

                  (iv) such other information or reports as either of the
         Investor Stockholders or any of the Founders may reasonably request.

                  (b) The Investor Stockholders and each of the Founders, until
such Founder shall have Transferred 50% or more of the number of Shares held by
such Founder on the Closing Date, shall each, upon reasonable notice, and using
their best efforts to minimize any interruption of the Company's and its
subsidiaries' business, be entitled to inspect and audit the books, records and
accounts of the Company and its subsidiaries during normal business hours and
make copies thereof.

                  (c) The Company shall deliver prompt written notice to each
Investor Stockholder of the occurrence of any of the following:

                                       19
<PAGE>

                  (i) the actual or threatened commencement of any suit, action
         or other legal or administrative proceeding affecting the Company or
         any of its subsidiaries which, if adversely determined, would involve
         in excess of $100,000;

                  (ii) any event of default under any Financing Document,
         whether or not any requirement for the giving of notice, the lapse of
         time, or both, or any other condition, has been satisfied; or

                  (iii) any other event that could reasonably be expected to
         have a material adverse effect on the business, assets, properties,
         liabilities, revenues, costs and expenses, operations, prospects or
         condition, financial or otherwise, of Company or any of its
         subsidiaries.

                  7.4. BOARD MEETINGS, COMMITTEES, ETC. (a) There shall be
regular meetings of the Board held at least once per calendar quarter, at such
times and in such places as the Board shall determine.

                  (b) At its first meeting after the Closing Date, the Board
shall designate a Compensation Committee (the "COMPENSATION COMMITTEE")
consisting of three members of the Board, one of whom shall be the Company's
chief executive officer, one of whom shall be designated by THL and one of whom
shall be designated by Kelso. The Compensation Committee shall act by a majority
of its members and its powers, subject to Section 8, shall include the power to
review and approve the salaries and other compensation of the executive officers
of the Company and its subsidiaries, including incentive compensation, deferred
compensation and stock plans and the power to administer the Stock Option Plans,
and such other powers as may be delegated to it by the Board. The Board may
designate an Executive Committee (the "EXECUTIVE COMMITTEE") consisting of three
members of the Board, one of whom shall be the Company's chief executive
officer, one of whom shall be designated by THL and one of whom shall be
designated by Kelso. The Executive Committee shall act by a majority of its
members and shall, subject to Section 8 and the Delaware General Corporation
Law, have such powers as may be delegated to it by the Board.

                  (c) Members of the Board shall not be entitled to receive
compensation for their service as such, except (I) for members of the Board who
are not affiliated with any Stockholder or (II) as may be provided in the
Financial Advisory Agreements. Members of the Board shall be entitled to
reimbursement for their reasonable out-of-pocket expenses incurred in connection
with their service as such.

                                       20
<PAGE>

                  7.5. DIRECTORS' AND OFFICERS' INSURANCE. The Company shall
maintain directors' and officers' liability insurance in an amount and with
other terms approved by the Board.

                  8. ACTIONS REQUIRING APPROVAL OF THE INVESTOR STOCKHOLDERS.
8.1. GENERAL. Prior to the Conversion Date, Kelso shall have only those approval
rights it had under Section 10.1 of the Amended and Restated Stockholders'
Agreement, dated as of July 21, 1999, by and among the Company, KIA V, KEP V and
the other stockholders party thereto (which agreement was terminated on the
Closing Date). For ease of reference, such rights are listed on Annex A hereto.
On and after the Conversion Date, as long as an Investor Stockholder owns at
least 10% of the issued and outstanding Shares owned by such Investor
Stockholder as of the Closing Date, no Stockholder shall cause the Company or
any of its subsidiaries to take, and the Company shall not take and shall cause
each of its subsidiaries not to take, any of the following actions without the
prior written approval of each of the Investor Stockholders who still own 10% of
the Shares owned by such Investor Stockholder as of the Closing Date or their
designees on the Board:

                  (a) any issuance, sale, delivery, or any entry into an
         agreement to issue, sell or deliver, any capital stock, warrants,
         options or similar rights (other than issuances with respect to those
         options and warrants outstanding as of the date hereof or issuable
         under the Stock Option Plans as in effect on date hereof), other
         securities convertible into any capital stock or other securities which
         contain any voting or equity participation rights of which the Company
         or any of its subsidiaries is the issuer or grantor, or any grant or
         issuance, or any agreement to grant or issue, any options, warrants,
         incentive awards or similar rights calling for the issuance of such
         securities;

                  (b) any repurchase or redemption of any shares of capital
         stock of the Company or any of its subsidiaries, including pursuant to
         Sections 2, 3 and 4 (other than pursuant to the Stock Redemption
         Agreement);

                  (c) (I) any merger or consolidation with or into any other
         Person (whether or not the Company or any of its subsidiaries survives
         such merger or consolidation), (II) any conveyance, sale, lease or
         other disposal, in any transaction or related series of transactions,
         of 25% or more of the property, business or assets of the Company
         (including the capital stock or assets of any of the Company's
         subsidiaries) or (iii) any acquisition by the Company or any of its
         subsidiaries of any Person for which the price paid by the Company or
         any such subsidiary exceeds $5,000,000;

                                       21
<PAGE>

                  (d) any recapitalization of the capital stock of the Company
         or its subsidiaries or any amendment, whether by merger, consolidation
         or otherwise, to the articles of incorporation or the by-laws of the
         Company or any of its subsidiaries;

                  (e) any IPO;

                  (f) any liquidation or dissolution of the Company or any of
         its subsidiaries;

                  (g) entry into any business not substantially similar or
         reasonably related to the business of the Company and its subsidiaries
         as of the date hereof;

                  (h) termination of the Company's Chief Executive Officer or
         any employee who reports directly to the Company's Chief Executive
         Officer (including, for the avoidance of doubt, Jack H. Thomas, Eugene
         B. Johnson, John P. Duda and Walter E. Leach, Jr.) or termination of
         Fairpoint Communication Corp.'s Chief Executive Officer or any employee
         who reports directly to Fairpoint Communication Corp.'s Chief Executive
         Officer;

                  (i) establishment of or material change to any incentive or
         bonus program of the Company or any of its subsidiaries, including the
         Stock Option Plans;

                  (j) any approval of or material change to the Annual Budget;

                  (k) incurrence or guarantee by the Company or any of its
         subsidiaries of indebtedness in excess of $5 million in the aggregate;

                  (l) declaration or payment of dividends or other distributions
         in respect of the capital stock of the Company or any of its
         subsidiaries;

                  (m) enter into any transaction or modify any existing
         arrangement between the Company or any of its subsidiaries, on the one
         hand, and any Founder or any of their respective Affiliates, on the
         other hand; or

                  (n) selection or replacement of the Company's and its
         subsidiaries' independent public accountants;

PROVIDED, HOWEVER, that any transactions that would otherwise be permitted or
required by Section 2.3 ("Tag-Along Rights"), Section 2.4 ("Drag-Along Rights")
or Section 5

                                       22
<PAGE>

("Auction Sale Procedure") will not be subject to the approval requirements of
this Section 8.1.

                  9. STOCK CERTIFICATE LEGENDS. A copy of this Agreement shall
be filed with the Secretary of the Company and kept with the records of the
Company. Each certificate representing Shares owned by the Stockholders shall
bear upon its face the following legends, as appropriate:

         (a)      "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
                  ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD,
                  ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
                  DISPOSED OF UNLESS AND UNTIL REGISTERED UNDER THE
                  ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR
                  UNLESS, IN THE OPINION OF COUNSEL TO THE
                  STOCKHOLDER, WHICH COUNSEL MUST BE, AND THE FORM
                  AND SUBSTANCE OF WHICH OPINION ARE, SATISFACTORY
                  TO THE ISSUER, SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
                  HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS
                  EXEMPT FROM REGISTRATION OR IS OTHERWISE IN
                  COMPLIANCE WITH THE ACT, SUCH LAWS AND THE
                  STOCKHOLDERS' AGREEMENT OF THE ISSUER, DATED AS OF
                  JANUARY [__], 2000 (THE "STOCKHOLDERS' AGREEMENT")."

         (b)      "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
                  SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS
                  SPECIFIED IN THE STOCKHOLDERS' AGREEMENT, COPIES OF WHICH ARE
                  ON FILE AT THE OFFICE OF THE ISSUER AND WILL BE FURNISHED
                  WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN
                  REQUEST."

         (c)      "THE ISSUER WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER
                  WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND
                  RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF
                  EACH CLASS OR SERIES OF SHARES AUTHORIZED TO BE ISSUED AND THE
                  QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
                  PREFERENCES AND/OR RIGHTS."

                                       23
<PAGE>

In addition, certificates representing Shares owned by any permitted transferees
who are residents of certain states shall bear any legends required by the laws
of such states.

                  Each Stockholder shall be bound by the requirements of such
legends. Upon a Registration of any Shares, the certificate representing the
registered shares shall be replaced, at the expense of the Company, with
certificates not bearing the legends required by this Section 9.

                  10. ABSENCE OF OTHER ARRANGEMENTS. Each of the parties hereto
hereby represents and warrants to each other party hereto that it has not
entered into or agreed to be bound by any other arrangements or agreements of
any kind with any other Person with respect to the Shares, including, but not
limited to, arrangements or agreements with respect to the acquisition,
disposition or voting of Shares or any interest therein (whether or not such
arrangements or agreements are with the Company or any Investor Stockholder,
Founder, Management Stockholder or holder of Shares that is not party to this
Agreement), except for (A) the Stock Purchase Agreement and (B) the Registration
Rights Agreement.

                  11. NEW MANAGEMENT STOCKHOLDERS. The Company and each of the
Stockholders hereby agrees that any employee of the Company or any of its
subsidiaries who after the date of this Agreement is offered Shares or holds
stock options exercisable into Shares shall, as a condition precedent to the
acquisition of such Shares or the exercise of such stock options, as the case
may be, (A) become a party to this Agreement by executing the same and (B) if
such employee is a resident of a state with a community property system, cause
his or her spouse to execute a Spousal Waiver in the form of Exhibit B attached
hereto and deliver such Agreement and Spousal Waiver, if applicable, to the
Company at its address specified in Section 14.8. Upon such execution and
delivery, such employee shall be a Management Stockholder for all purposes of
this Agreement.

                  12. PARTIES. 12.1. ASSIGNMENT BY THE COMPANY. The Company
shall have the right to assign to the Investor Stockholders all or any portion
of its rights and obligations under Sections 2, 3 and 4, PROVIDED that any such
assignment or assumption is accepted by the Investor Stockholders. If the
Company has not exercised its right to purchase Shares pursuant to any such
Section within 15 days of receipt by the Company of the letter, notice or other
occurrence giving rise to such right, then the Investor Stockholders shall have
the right to require the Company to assign such right. The Investor Stockholders
shall have the right to assign to one or more Kelso Holders or THL Holders all
or any of their rights to purchase Shares pursuant to this Section 12.1,
PROVIDED that any such Kelso Holder or THL Holder becomes a party to this
Agreement

                                       24
<PAGE>

pursuant to a joinder agreement in form and substance satisfactory to the
Company and the Investor Stockholders and otherwise complies with Section 12.4.

                  12.2. ASSIGNMENT GENERALLY. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, permitted successors and assigns,
PROVIDED that neither any Founder nor any Management Stockholder shall be
permitted to assign any of its rights or cause a third party to assume any of
its obligations under this Agreement, unless such assignment or assumption is in
connection with a Transfer explicitly permitted by this Agreement and, prior to
such assignment or assumption, such assignee complies with the requirements of
Section 12.4 ("Agreements to Be Bound").

                  12.3. TERMINATION. (a) Any party to, or Person who is subject
to, this Agreement which ceases to own any Shares or any interest therein shall
cease to be a party to, or Person who is subject to, this Agreement and
thereafter shall have no rights or obligations hereunder; PROVIDED, however,
that a Transfer of Shares not explicitly permitted under this Agreement shall
not relieve any Stockholder of any of its obligations hereunder. Notwithstanding
the foregoing, in connection with a Transfer to an Affiliate explicitly
permitted by this Agreement, prior to any such Person ceasing to be an Affiliate
of the Stockholder from whom such Person acquired its Shares, such Person shall
be obligated to transfer such Shares back to such original Stockholder and such
original Stockholder shall thereupon be subject to this Agreement again.

                  (b) All rights and obligations pursuant to Section 1
("Restrictions on Transfers of Shares by Founders or Management Stockholders"),
Section 2 ("Restrictions on Transfers of Shares by Investor Stockholders"),
Section 3 ("Management Stockholders"), Section 4 ("Involuntary Transfers"),
Section 5 ("Auction Sale Procedure"), Section 6 ("Issuance of Additional Equity
Securities"), Section 7 ("Corporate Governance"), Section 8 ("Actions Requiring
Approval of the Investor Stockholders"), Section 10 ("Absence of Other
Arrangements"), Section 11 ("New Management Stockholders"), Section 12.4
("Agreements to Be Bound") and Section 14.2 ("Non-Competition Agreement") shall
terminate upon an IPO. In the event that an Investor Stockholder ceases to own
at least 10% of the Shares owned by it on the Closing Date, all rights of such
Investor Stockholder pursuant to Section 2.4 ("Drag-Along Rights"), Section 7
("Corporate Governance") and Section 14.2 ("Non-Competition Agreement") shall
terminate.

                  12.4. AGREEMENTS TO BE BOUND. Notwithstanding anything to the
contrary contained in this Agreement, any Transfer of Shares by a Stockholder
(other than pursuant to a Registration) shall be permitted under the terms of
this Agreement only if (A), such Stockholder shall cause the transferee of such
Shares to execute the

                                       25
<PAGE>

Spousal Waiver in the form attached hereto as Exhibit B, if such transferee is
an individual who resides in a state with a community property system, and (B)
the transferee of such Shares shall agree in writing to be bound by the terms
and conditions of this Agreement pursuant to an instrument of assignment and
assumption reasonably satisfactory in substance and form, (I) in the case of a
Transfer by an Investor Stockholder, to the other Investor Stockholder and the
Company, (II) in the case of a Transfer by a Founder, to the Investor
Stockholders and the Company, and (III) in the case of a Transfer by a
Management Stockholder, to the Investor Stockholders and the Company. Upon the
execution of the Spousal Waiver and the instrument of assignment and assumption
by such transferee, such transferee shall be deemed to be the relevant
Stockholder, for all purposes of this Agreement, including, in the case of a
Transfer by a Management Stockholder, the provisions of Section 3.

                  12.5. THL RELATED PARTIES, THL HOLDERS, KELSO HOLDERS. (a) To
facilitate the arrangements, understandings and agreements contemplated by this
Agreement, each THL Related Party and THL Holder (and its successors and
assigns) hereby irrevocably consents to the appointment of, and does hereby
appoint and empower, THL Equity Advisors IV, LLC (and THL Equity Advisors IV,
LLC does hereby accept such appointment) as the sole and exclusive
representative (the "THL REPRESENTATIVE") of the THL Related Parties and THL
Holders (and their successors and assigns) to make all decisions and
determinations on behalf of them (and their successors and assigns) that the THL
Representative may deem necessary or appropriate in connection with this
Agreement. All decisions of the THL Representative shall be final and binding on
all of the THL Related Parties and THL Holders (and their successors and
assigns). The parties to this Agreement other than THL (and their successors and
assigns) shall be entitled to rely upon, without independent investigation, any
decision of the THL Representative and shall be fully protected in connection
with any action or inaction taken or omitted to be taken in reliance thereon.
                    (b) To facilitate the arrangements, understandings and
agreements contemplated by this Agreement, each Kelso Holder (and its successors
and assigns) hereby irrevocably consents to the appointment of, and does hereby
appoint and empower, Kelso & Company, L.P. (and Kelso & Company, L.P. does
hereby accept such appointment) as the sole and exclusive representative (the
"KELSO REPRESENTATIVE") of the Kelso Holders (and their successors and assigns)
to make all decisions and determinations on behalf of them (and their successors
and assigns) that the Kelso Representative may deem necessary or appropriate in
connection with this Agreement. All decisions of the Kelso Representative shall
be final and binding on all of the Kelso Holders (and their successors and
assigns). The parties to this Agreement other than Kelso (and their successors
and assigns) shall be entitled to rely upon, without independent investigation,
any decision of the Kelso Representative and shall be

                                       26
<PAGE>

fully protected in connection with any action or inaction taken or omitted to be
taken in reliance thereon.

                  13. DEFINED TERMS. As used in this Agreement, the following
terms shall have the meanings ascribed to them below:

                  "AFFILIATE": A Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified, including the spouse, parents and children
of natural persons, general partners of a partnership and managing members of a
limited liability company.

                  "BOARD": The Board of Directors of the Company.

                  "CARRYING VALUE": With respect to any Share owned by any
Management Stockholder as of the Closing Date, "Carrying Value" shall mean
$262.33. With respect to any Share acquired by any Management Stockholder after
the Closing Date, Carrying Value shall mean the price paid for such Share by the
relevant Management Stockholder.

                  "CAUSE": The meaning as set forth in the employment agreement
between the Company and such Management Stockholder, or, if such Management
Stockholder is not a party to an employment agreement, a termination of such
Management Stockholder's employment by the Company or any of its subsidiaries
due to (I) the refusal or neglect of the Management Stockholder to perform
substantially his or her lawful employment-related duties, following written
notice from the Company describing in reasonable detail such refusal or neglect
and an opportunity for 30 days to cure the condition which is the subject of
such notice, (II) the Management Stockholder's personal dishonesty, willful
misconduct or breach of fiduciary duty, (III) the Management Stockholder's
conviction of or entering a plea of guilty or NOLO CONTENDERE to a crime
constituting a felony or his or her willful violation of any law, rule, or
regulation (other than a traffic violation or similar offense or violation which
in no way adversely affects the Company or its reputation or the ability of the
Management Stockholder to perform his or her employment-related duties or to
represent the Company) or (IV) the breach by the Management Stockholder of any
written covenant or agreement with the Company or any of its subsidiaries not to
disclose any material information pertaining to the Company or such subsidiary
or not to compete or interfere with the Company or such subsidiary.

                  "CLOSING DATE": The date on which the closing of the
transactions contemplated by the Stock Purchase Agreement occurs.

                                       27
<PAGE>

                  "COMMON STOCK": The Company's Class A Voting common stock, par
value $.01 per share.

                  "DISABILITY": With respect to a Management Stockholder, the
term "Disability" shall have the meaning set forth in the employment agreement
between the Company and such Management Stockholder, or, if such Management
Stockholder is not a party to an employment agreement, the termination of the
employment of any Management Stockholder by the Company or any of its
subsidiaries shall be deemed to be by reason of a "Disability" if, as a result
of such Management Stockholder's incapacity due to reasonably documented
physical or mental illness, such Management Stockholder shall have been unable
for more than six months within any 12-month period despite reasonable
accommodations made by the Company to perform his or her duties with the Company
or such subsidiary on a full-time basis and within 90 days after written notice
of termination has been given to such Management Stockholder, such Management
Stockholder shall not have returned to the full time performance of his or her
duties. The date of termination in the case of a termination for "Disability"
shall be deemed to be the last day of the aforementioned 90-day period.

                  "EXCLUDED SHARES": Any Shares issued or issuable (I) in
connection with an IPO or public offering of debt securities by the Company,
(II) to any employee of the Company or any of its subsidiaries in connection
with the Stock Option Plans or any other employee incentive or bonus program
duly authorized pursuant to this Agreement and by the Board or (iii) upon
exercise of any warrants to purchase Common Stock which are outstanding as of
the date hereof.

                  "FINANCIAL ADVISORY AGREEMENTS": The Amended and Restated
Financial Advisory Agreement, dated as of the Closing Date, as the same shall be
amended from time to time, between the Company and Kelso & Company, L.P. and the
Management Services Agreement, dated as of the Closing Date, as the same shall
be amended from time to time, between the Company and THL Equity Advisors IV,
LLC.

                  "FISCAL YEAR": A year beginning on January 1 of one calendar
year and ending on December 31 of the same calendar year, or such other fiscal
year as the Board may hereafter determine.

                  "GOOD REASON": The meaning as set forth in the employment
agreement between the Company and such Management Stockholder, or, if such
Management Stockholder is not a party to an employment agreement, a termination
of a Management Stockholder's employment with the Company or any of its
subsidiaries shall be for "Good Reason" if such Management Stockholder
voluntarily terminates his employment with the Company or any of its
subsidiaries as a result of either of the following:

                                       28
<PAGE>

                  (i) without the Management Stockholder's prior written
         consent, a reduction by the Company or such subsidiary of his or her
         current salary, other than any such reduction which is part of a
         general salary reduction or other concessionary arrangement affecting
         all employees or affecting the group of employees of which the
         Management Stockholder is a member (after receipt by the Company of
         written notice and a 20 day cure period), or a significant reduction in
         the level of authority theretofore exercised by the Management
         Stockholder, PROVIDED that the degree of acquisition activity by the
         Company and its subsidiaries shall not be taken into consideration when
         determining the Management Stockholder's level of authority; or

                  (ii) the taking of any action by the Company or such
         subsidiary that would substantially diminish the aggregate value of the
         benefits provided him or her under the Company's or any of its
         subsidiaries' accident, disability, life insurance and any other
         employee benefit plans in which he or she was participating on the date
         of his or her execution of this Agreement, other than any such
         reduction which is (A) required by law, (B) implemented in connection
         with a general concessionary arrangement affecting all employees or
         affecting the group of employees of which the Management Stockholder is
         a member or (C) generally applicable to all beneficiaries of such
         plans.

                  "IPO": A Registration that covers (together with any prior
effective Registrations) (I) Shares which are sold for an aggregate price of at
least $150 million or (II) Shares that, after the closing of such Registration,
will be traded on the New York Stock Exchange, the American Stock Exchange or
the National Association of Securities Dealers Automated Quotation System.

                  "KELSO HOLDER": (A) any general or limited partner of the
Kelso Entities (a "KELSO PARTNER"), and any corporation, partnership, or other
entity which is an Affiliate of the Kelso Entities or any Kelso Partner
(collectively, the "KELSO AFFILIATES"), (B) any managing director, general
partner, director, limited partner, officer or employee of the Kelso Entities or
a Kelso Affiliate, or the heirs, executors, administrators, testamentary
trustees, lifetime trustees, legatees or beneficiaries of any of the foregoing
persons referred to in this clause (B) (collectively, "KELSO ASSOCIATES"), (C) a
charitable institution as defined in Section 501(c) of the Internal Revenue Code
of 1986, as amended, which receives a bona fide gift by a Kelso Individual of
Shares, (D) a bank, financial institution or other lender which receives a bona
fide pledge by a Kelso Individual of Shares, (E) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which include only the
Kelso Entities, Kelso Affiliates, Kelso Associates, their spouses or their
lineal descendants, and (F) any of

                                       29
<PAGE>

the individuals or entities set forth on Schedule C hereto. "KELSO ENTITIES"
shall mean Kelso & Company, L.P. and its affiliated entities. "KELSO INDIVIDUAL"
shall mean any individual set forth on Schedule C hereto and any employee of
Kelso & Company, L.P..

                  "MJD PARTNERS": MJD Partners, L.P., a Delaware limited
partnership.

                  "NON-VOTING COMMON STOCK": The Company's Class B Non-Voting
common stock, par value $.01 per share.

                  "PERSON": An individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

                  "PREFERRED STOCK": The Company's Non-Voting Convertible Series
D Preferred Stock, par value $0.01 per share.

                  "REGISTRATION": The closing of a public offering pursuant to
an effective registration statement under the Securities Act of 1933, as
amended, and the rules and regulations thereunder.

                  "REGISTRATION RIGHTS AGREEMENT": The Registration Rights
Agreement, dated as of the date hereof, as the same shall be amended from time
to time, among the Company, the Investor Stockholders, the Founders and the
Management Stockholders.

                  "SHARES": Prior to the Conversion Date, shares of Common
Stock, Non- Voting Common Stock and Preferred Stock and after the Conversion
Date, shares of Common Stock. For purposes of any calculations hereunder, shares
of Non-Voting Common and Preferred Stock shall be calculated on an as-converted
basis.

                  "STOCK OPTION PLANS": The MJD Communications, Inc. 1995 and
1998 Stock Incentive Plans, as each may be amended from time to time, and any
other equity incentive plan of the Company.

                  "STOCK PURCHASE AGREEMENT": The Stock Purchase Agreement,
dated as of January 3, 2000, as the same shall be amended from time to time,
among the Company, THL and Kelso.

                  "THL HOLDER": (A) any general or limited partner of the THL
Entities (a "THL PARTNER"), and any corporation, partnership, or other entity
which is an Affiliate of the THL Entities, any THL Partner or Putnam
Investments, Inc. or any corporation,

                                       30
<PAGE>

partnership or other entity controlled by Putnam Investments, Inc.
(collectively, the "THL AFFILIATES"), (B) any managing director, general
partner, director, limited partner, officer or employee of the THL Entities or a
THL Affiliate, or the heirs, executors, administrators, testamentary trustees,
lifetime trustees, legatees or beneficiaries of any of the foregoing persons
referred to in this clause (B) (collectively, "THL ASSOCIATES"), (C) a
charitable institution as defined in Section 501(c) of the Internal Revenue Code
of 1986, as amended, which receives a bona fide gift by a THL Individual of
Shares, (D) a bank, financial institution or other lender which receives a bona
fide pledge by a THL Individual of Shares, (E) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which include only the
THL Entities, THL Affiliates, THL Associates, their spouses or their lineal
descendants, and (F) any of the individuals or entities set forth on Schedule A
hereto. "THL ENTITIES" shall mean Thomas H. Lee Partners, L.P. and its
affiliated entities. "THL INDIVIDUAL" shall mean each THL Related Party other
than Thomas H. Lee Foreign Fund IV, L.P. and Thomas H. Lee Foreign Fund IV-B,
L.P.

  [CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED WITH THE COMMISSION]

                                       31
<PAGE>

                  "TRANSFER (OR ANY VARIATION THEREOF USED HEREIN)": Any direct
or indirect sale, assignment, mortgage, transfer, pledge, hypothecation or other
disposal or any arrangement or agreement with respect to any of the foregoing.

                  14. MISCELLANEOUS.

                  14.1. RECAPITALIZATIONS, EXCHANGES, ETC. AFFECTING THE SHARES.
Except as otherwise provided herein, the provisions of this Agreement shall
apply to the full extent set forth herein with respect to (A) the Shares and (B)
any and all shares of capital stock of the Company or any successor or assign of
the Company (whether by merger, consolidation, sale of assets or otherwise)
which may be issued in respect of, in exchange for, or in substitution for the
Shares, by reason of any stock dividend, split, reverse split, combination,
recapitalization, reclassification, merger, consolidation or otherwise.

                  14.2. NON-COMPETITION AGREEMENT. In order to induce the
Investor Stockholders to enter into the Stock Purchase Agreement and this
Agreement and in consideration of the purchase by THL of certain of the Shares
of Eugene B. Johnson, Jack H. Thomas, John P. Duda and Walter E. Leach, Jr.
pursuant to the Stock Purchase Agreement, each of Eugene B. Johnson, Jack H.
Thomas, John P. Duda and Walter E. Leach, Jr. agrees that from the date of the
termination of his employment with the Company or any of its subsidiaries for
any reason until the second anniversary of such termination, such Person will
not become, directly or indirectly, associated in any way with any Person,
whether as principal, owner, partner, consultant, advisor, agent, employee,
director, independent contractor, member, stockholder or otherwise (other than a
holder of less than 5% of the outstanding shares of any class of equity
securities of a public company), that is actively engaged in the ownership,
management or operation of any telephone company, other access provider or other
Person, any of which competes or has any plans to compete with the Company or
any of its subsidiaries in regard to the activities of the Company or any of its
subsidiaries being conducted at the time of such termination or which are
planned at the time of such termination.

                                       32
<PAGE>

                  14.3. NO THIRD PARTY BENEFICIARIES. Except as otherwise
provided herein, this Agreement is not intended to confer upon any Person,
except for the parties hereto, any rights or remedies hereunder.

                  14.4. FURTHER ASSURANCES. Each party hereto or Person subject
hereto shall do and perform or cause to be done and performed all such further
acts and things and shall execute and deliver all such other agreements,
certificates, instruments and documents as any other party hereto or Person
subject hereto may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

                  14.5. AMENDMENT AND MODIFICATION. This Agreement may be
amended, modified or supplemented with the written consent of both Investor
Stockholders, PROVIDED HOWEVER, that (A) if such amendment, modification or
supplement would have an effect that uniquely impacts the economic or other
rights of the Founders as a class of holders of Shares, then the consent of a
majority in number of the Founders will also be required for such amendment,
modification or supplement and (B) if such amendment, modification or supplement
could reasonably be expected to adversely affect the Management Stockholders,
then the consent of a majority in interest of the Management Stockholders (based
on the number of Shares owned by each Management Stockholder at the time of such
amendment, modification or supplement) will also be required for such amendment,
modification or supplement.

                  14.6. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder and the persons subject hereto shall be
governed by, and construed and interpreted in accordance with, the law of the
State of Delaware, without giving effect to the choice of law principles
thereof.

                  14.7. INVALIDITY OF PROVISION. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction.

                  14.8. NOTICES. All notices, requests, demands, letters,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if (A)
delivered personally, (B) mailed, certified or registered mail with postage
prepaid, (C) sent by next-day or overnight mail or delivery or (D) sent by fax,
as follows:

                                       33
<PAGE>

(i)      If to the Company, to it at:

                  MJD Communications, Inc.
                  521 East Morehead Street, Suite 250
                  Charlotte, North Carolina  28202
                  Fax:  (704) 344-8121
                  Attention:  Mr. Walter E. Leach, Jr.
                  with a copy to:

                  Paul, Hastings, Janofsky & Walker LLP
                  399 Park Avenue
                  New York, New York  10022
                  Fax:  (212) 319-4090
                  Attention:  Neil A. Torpey, Esq.

                  and a copy to THL at its address set forth in (ii) below and a
                  copy to Kelso at its address set forth in (iii) below:

 (ii)             If to THL, to it at: Thomas H. Lee Partners, L.P. 75 State
                  Street Boston, Massachusetts 02109 Fax: (617) 227-3514
                  Attention: Anthony J. DiNovi
                             Kent R. Weldon

                  with a copy to:

                  Kirkland & Ellis
                  200 East Randolph Drive
                  Chicago, IL 60601
                  Fax:  (312) 861-2200
                  Attention:  William S. Kirsch, P.C.

                                       34
<PAGE>

(iii) If to Kelso, to it at:

                  Kelso & Company
                  320 Park Avenue, 24th Floor
                  New York, New York  10022
                  Attention:  James J. Connors, II, Esq.
                  Fax:  (212) 223-2379

                  with a copy to:

                  Debevoise & Plimpton
                  875 Third Avenue
                  New York, New York  10022
                  Attention:  Margaret A. Davenport, Esq.
                  Fax:  (212) 909-6836

(iv)     If to JED, a Bergstein Family Member, Jordan Bergstein or Elizabeth
         Heller, to JED, such Bergstein Family Member, Jordan Bergstein or
         Elizabeth Heller c/o Bergstein at his address set forth in (v) below.

(v)      If to Bergstein, to him at:

                  Paul, Hastings, Janofsky & Walker LLP
                  399 Park Avenue
                  New York, New York 10022
                  Fax: (212) 319-4090
                  Attention: Daniel G. Bergstein

(vi)     If to Meyer Haberman, to him at:

                  Interquest, Inc.
                  599 Lexington Avenue
                  New York, New York
                  Fax:  (212) 703-0596
                  Attention: Meyer Haberman

(vii)    If to a Management Stockholder, to him or her, as listed below his or
         her name on the signature pages hereto.

                                       35
<PAGE>

or to such other Person or address as any party shall specify by notice in
writing to the Company and the other parties hereto. All such notices, requests,
demands, letters, waivers and other communications shall be deemed to have been
received (W) if by personal delivery on the day after such delivery, (X) if by
certified or registered mail, on the fifth business day after the mailing
thereof, (Y) if by next-day or overnight mail or delivery, on the day delivered
or (Z) if by fax, on the next day following the day on which such fax was sent,
PROVIDED that a copy is also sent by certified or registered mail.

                  14.9. HEADINGS; EXECUTION IN COUNTERPARTS. The headings and
captions contained herein are for convenience and shall not control or affect
the meaning or construction of any provision hereof. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and which together shall constitute one and the same instrument.

                  14.10. INJUNCTIVE RELIEF. The Shares cannot readily be
purchased or sold in the open market, and for that reason, among others, the
parties hereto would be irreparably damaged in the event this Agreement is not
specifically enforced. Each of the parties therefore agrees that in the event of
a breach of any provision of this Agreement, the aggrieved party may elect to
institute and prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach of this
Agreement. Such remedies shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which any such party may have.

                  14.11. ENTIRE AGREEMENT. This Agreement, together with the
Stock Purchase Agreement and the Registration Rights Agreement, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings relating to the Shares,
other than those expressly set forth or referred to herein or as set forth in
the Stock Purchase Agreement or the Registration Rights Agreement. This
Agreement supersedes all prior agreements and understandings among the parties
with respect to such subject matter.

                  14.12. TRANSFER OF SHARES FROM MJD PARTNERS. The Founders
(other than the Bergstein Family Members) have caused MJD Partners to transfer
free and clear of any lien, claim or encumbrance all of the Shares held by MJD
Partners to such Founders in proportion to the ownership interests of each of
such Founders in MJD Partners. If the transfer of such Shares, or the
dissolution or winding up of MJD Partners has or will result in or give rise to
any lien, claim or encumbrance on any Shares by any creditor of MJD Partners or
otherwise, the Founders shall take all

                                       36
<PAGE>

actions necessary to remove or satisfy such lien, claim or encumbrance in order
to hold such Shares free and clear of any such lien, claim or encumbrance.

                                       37
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been signed by each of
the parties hereto, effective as of the date first above written.

                                           MJD COMMUNICATIONS, INC.

                                           By: /s/ WALTER E. LEACH, JR.
                                               ---------------------------------
                                               Name:
                                               Title:

                                           KELSO INVESTMENT ASSOCIATES V, L.P.

                                           By: Kelso Partners V, L.P.,
                                                 its general partner

                                           By: /s/ GEORGE E. MATELICH
                                               ---------------------------------
                                               Name:  George E. Matelich
                                               Title: General Partner

                                           KELSO EQUITY PARTNERS V, L.P.

                                           By: /s/ GEORGE E. MATELICH
                                               ---------------------------------
                                               Name:  George E. Matelich
                                               Title: General Partner

                                           THOMAS H. LEE EQUITY FUND IV, L.P.

                                           By: THL Equity Advisors IV, LLC,
                                                 its general partner

                                           By: /s/ ANTHONY J. DINOVI
                                               ---------------------------------
                                               Name:
                                               Title:

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           JED COMMUNICATIONS ASSOCIATES, INC.

                                           By: /s/ DANIEL G. BERGSTEIN
                                               ---------------------------------
                                               Name:
                                               Title:

                                           /s/ DANIEL G. BERGSTEIN
                                           -------------------------------------
                                           Daniel G. Bergstein
                                           [Address]

                                           /s/ JOHN P. DUDA
                                           -------------------------------------
                                           John P. Duda
                                           6733 N. Baltusrol Lane
                                           Charlotte, NC 28210

                                           /s/ MEYER HABERMAN
                                           -------------------------------------
                                           Meyer Haberman
                                           [Address]

                                           /s/ LISA R. HOOD
                                           -------------------------------------
                                           Lisa R. Hood
                                           P.O. Box 486
                                           Bucklin, KS 67834

                                           /s/ EUGENE B. JOHNSON
                                           -------------------------------------
                                           Eugene B. Johnson
                                           [Address]

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                              /s/ WALTER E. LEACH, JR.
                                           -------------------------------------
                                           Walter E. Leach, Jr.
                                           6419 Sharon Hills Road
                                           Charlotte, NC 28210

                                           /s/ PETER G. NIXON
                                           -------------------------------------
                                           Peter G. Nixon
                                           P.O. Box 302
                                           Westfield, NY 14787

                                           /s/ MICHAEL J. STEIN
                                           -------------------------------------
                                           Michael J. Stein
                                           3016 Toalson
                                           Dodge City, KS 67801

                                           /s/ JACK H. THOMAS
                                           -------------------------------------
                                           Jack H. Thomas
                                           [Address]

                                           /s/ TIMOTHY W. HENRY
                                           -------------------------------------
                                           Tim Henry
                                           [Address]

                                           /s/ PAT MORSE
                                           -------------------------------------
                                           Pat Morse
                                           [Address]

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           /s/ PAT EUDY
                                           -------------------------------------
                                           Pat Eudy
                                           [Address]

                                           /s/ JOEL BERGSTEIN
                                           -------------------------------------
                                           Joel Bergstein

                                           /s/ MICHAEL BERGSTEIN
                                           -------------------------------------
                                           Michael Bergstein

                                           /s/ LINDY SOBEL BERGSTEIN
                                           -------------------------------------
                                           Lindy Sobel Bergstein

                                           /s/ JORDAN BERGSTEIN
                                           -------------------------------------
                                           Jordan Bergstein

                                           /s/ ELIZABETH HELLER
                                           -------------------------------------
                                           Elizabeth Heller

                                           THOMAS H. LEE FOREIGN FUND IV, L.P.

                                           By: THL Equity Advisors IV, LLC,
                                               its general partner

                                           By: /s/ ANTHONY J. DINOVI
                                               ---------------------------------
                                               Name:
                                               Title:

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           THOMAS H. LEE FOREIGN FUND IV-B, L.P.

                                           By: THL Equity Advisors IV, LLC,
                                               its general partner

                                           By: /s/ C. HUNTER BOLL
                                               ---------------------------------
                                               Name:
                                               Title:

                                           1987 THOMAS H. LEE NOMINEE TRUST

                                           By: /s/ THOMAS H. LEE
                                               ---------------------------------
                                               Trustee:

                                           /s/ DAVID V. HARKINS
                                           -------------------------------------
                                           David V. Harkins

                                           THE HARKINS 1995 GIFT TRUST

                                           By: /s/ SHERYLL J. HARKINS
                                               ---------------------------------
                                               Trustee: Sheryll J. Harkins
                                                        Trustee

                                           /s/ SCOTT A. SCHOEN
                                           -------------------------------------
                                           Scott A. Schoen

                                           /s/ C. HUNTER BOLL
                                           -------------------------------------
                                           C. Hunter Boll

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           /s/ SCOTT M. SPERLING
                                           -------------------------------------
                                           Scott M. Sperling

                                           /s/ ANTHONY J. DINOVI
                                           -------------------------------------
                                           Anthony J. DiNovi

                                           /s/ THOMAS M. HAGERTY
                                           -------------------------------------
                                           Thomas M. Hagerty

                                           /s/ WARREN C. SMITH, JR.
                                           -------------------------------------
                                           Warren C. Smith, Jr.

                                           /s/ SETH W. LAWRY
                                           -------------------------------------
                                           Seth W. Lawry

                                           /s/ KENT R. WELDON
                                           -------------------------------------
                                           Kent R. Weldon

                                           /s/ TERRENCE M. MULLEN
                                           -------------------------------------
                                           Terrence M. Mullen

                                           /s/ TODD M. ABBRECHT
                                           -------------------------------------
                                           Todd M. Abbrecht

                                           /s/ CHARLES A. BRIZIUS
                                           -------------------------------------
                                           Charles A. Brizius

                                           /s/ SCOTT JAECKEL
                                           -------------------------------------
                                           Scott Jaeckel

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           /s/ SOREN OBERG
                                           -------------------------------------
                                           Soren Oberg

                                           /s/ THOMAS R. SHEPHERD
                                           -------------------------------------
                                           Thomas R. Shepherd

                                           /s/ JOSEPH J. INCANDELA
                                           -------------------------------------
                                           Joseph J. Incandela

                                           /s/ WENDY L. MASLER
                                           -------------------------------------
                                           Wendy L. Masler

                                           /s/ ANDREW D. FLASTER
                                           -------------------------------------
                                           Andrew D. Flaster

                                           ROBERT SCHIFF LEE 1988 IRREVOCABLE
                                               TRUST

                                           By: /s/ CHARLES W. ROBINS
                                               ---------------------------------
                                               Trustee:

                                           /s/ STEPHEN ZACHARY LEE
                                           -------------------------------------
                                           Stephen Zachary Lee

                                           /s/ CHARLES W. ROBINS
                                           -------------------------------------
                                           Charles W. Robins as Custodian for
                                           Jesse Lee

                                           /s/ CHARLES W. ROBINS
                                           -------------------------------------
                                           Charles W. Robins as Custodian for
                                           Nathan Lee

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           /s/ CHARLES W. ROBINS
                                           -------------------------------------
                                           Charles W. Robins

                                           /s/ JAMES WESTRA
                                           -------------------------------------
                                           James Westra

                                           THOMAS H. LEE CHARITABLE
                                              INVESTMENT L.P.

                                           By: Thomas H. Lee,
                                               its general partner

                                           By: /s/ THOMAS H. LEE
                                               ---------------------------------
                                               Name:
                                               Title:

                                           THL-CCI INVESTORS LIMITED PARTNERSHIP

                                           By: THL Investment Management Corp.
                                               its general partner

                                           By: /s/ WENDY L. MASLER
                                               ---------------------------------
                                               Name:
                                               Title:

                                           PUTNAM INVESTMENTS, INC.

                                           By: /s/ WILLIAM H. WOOLVERTON
                                               ---------------------------------
                                               Name:
                                               Title:

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                           For purposes of Section 12.5 only:

                                           THL EQUITY ADVISORS IV, LLC

                                           By: /s/ ANTHONY J. DINOVI
                                               ---------------------------------
                                               Name:
                                               Title:

                                           For purposes of Section 12.5 only:

                                           KELSO & COMPANY, L.P.

                                           By:     Kelso & Companies, Inc.,
                                                   its general partner

                                           By: /s/ JAMES J. CONNORS
                                               ---------------------------------
                                               Name: James J. Connors, II
                                               Title: Vice President and General
                                                      Counsel

                   [Signature Page to Stockholders' Agreement]
<PAGE>

                                                                      SCHEDULE A

                               THL Related Parties

Thomas H. Lee Foreign Fund IV, L.P.
Thomas H. Lee Foreign Fund IV-B, L.P.
1987 Thomas H. Lee Nominee Trust
David V. Harkins
The Harkins 1995 Gift Trust
Scott A. Schoen
C. Hunter Boll
Scott M. Sperling
Anthony J. DiNovi
Thomas M. Hagerty
Warren C. Smith, Jr.
Seth W. Lawry
Kent R. Weldon
Terrence M. Mullen
Todd M. Abbrecht
Charles A. Brizius
Scott Jaeckel
Soren Oberg
Thomas R. Shepherd
Joseph J. Incandela
Wendy L. Masler
Andrew D. Flaster
Robert Schiff Lee 1988 Irrevocable Trust
Stephen Zachary Lee
Charles W. Robins as Custodian for Jesse Lee
Charles W. Robins as Custodian for Nathan Lee
Charles W. Robins
James Westra
Thomas H. Lee Charitable Investment L.P.
THL-CCI Investors Limited Partnership
Putnam Investments, Inc.
<PAGE>

                                                                      SCHEDULE B

                             Management Stockholders

         John P. Duda
         Lisa R. Hood
         Eugene B. Johnson
         Walter E. Leach, Jr.
         Peter G. Nixon
         Michael J. Stein
         Jack H. Thomas
         Tim Henry
         Pat Morse
         Pat Eudy
<PAGE>

                                                                      SCHEDULE C

                                  Kelso Holders
<PAGE>

                                                                       EXHIBIT A

                                 Five Year Plan

                                  See attached.
<PAGE>

                                                                       EXHIBIT B

                       Annual Budget for 2000 Fiscal Year

                                  See attached.
<PAGE>

                                                                       EXHIBIT C

                                 Spousal Waiver

             _________________ [insert name of spouse] hereby waives and
releases any and all equitable or legal claims and rights, actual, inchoate or
contingent, which ___________ [insert he or she] may acquire with respect to the
disposition, voting or control of the Shares subject to the Stockholders'
Agreement of MJD Communications, Inc., dated as of December [__], 1999, as the
same shall be amended from time to time, except for rights in respect of the
proceeds of any disposition of such Shares.

                                            -------------------------
                                            [signature of spouse]
<PAGE>

                                                                         ANNEX A

             (a) any issuance, sale, delivery, or any entry into an agreement to
         issue, sell or deliver, any capital stock, warrants, options or similar
         rights, other securities convertible into any capital stock or other
         securities which contain any voting or equity participation rights of
         which the Company or any of its subsidiaries is the issuer or grantor,
         or any grant or issuance, or any agreement to grant or issue, any
         options, warrants, incentive awards or similar rights calling for the
         issuance of such securities;

             (b) any repurchase or redemption of any shares of capital stock of
         the Company or any of its subsidiaries, including pursuant to Section
         2.2 and Section 4;

             (c) (I) any merger or consolidation with or into any other Person
         (whether or not the Company or any of its subsidiaries survives such
         merger or consolidation) or (II) any conveyance, sale, lease or other
         disposal, in any transaction or related series of transactions, of 25%
         or more of the property, business or assets of the Company (including
         the capital stock or assets of any of the Company's subsidiaries);

             (d) any recapitalization of the capital stock of the Company or its
         subsidiaries or any amendment, whether by merger, consolidation or
         otherwise, to the articles of incorporation or the by-laws of the
         Company or any of its subsidiaries;

             (e) any liquidation or dissolution of the Company or any of its
         subsidiaries;

             (f) entry into any business not substantially similar or reasonably
         related to the business of the Company and its subsidiaries as of the
         date hereof;

             (g) establishment of or material change to any incentive or bonus
         program of the Company or any of its subsidiaries, including the Stock
         Option Plan;

             (h) any change to the EBITDA performance targets included in the
         Five Year Plan or approval of or material change to the Annual Business
         Plan;

             (i) incurrence or guarantee by the Company or any of its
         subsidiaries of indebtedness in excess of $5 million in the aggregate;
<PAGE>

             (j) declaration or payment of dividends or other distributions in
         respect of the capital stock of the Company or any of its subsidiaries;

             (k) enter into any transaction or modify any existing arrangement
         between the Company or any of its subsidiaries, on the one hand, and
         any MJD Principal or any of their respective Affiliates, on the other
         hand; or

             (l) selection or replacement of the Company's and its subsidiaries'
         independent public accountants.

                                       ii

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