Document:

Exhibit 10.1

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                     MEMBERSHIP INTEREST PURCHASE AGREEMENT

                                      among

                        CITIZENS COMMUNICATIONS COMPANY,

                                 CU CAPITAL LLC

                                       and

                         INTEGRA TELECOM HOLDINGS, INC.

                                February 6, 2006

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

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                                TABLE OF CONTENTS

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ARTICLE 1. DEFINITIONS; INTERPRETATION............................................................................1

     1.1      DEFINITIONS.........................................................................................1
     1.2      INTERPRETATION.....................................................................................11

ARTICLE 2. PURCHASE AND SALE.....................................................................................12

     2.1      PURCHASE AND SALE..................................................................................12
     2.2      PAYMENT OF THE PURCHASE PRICE......................................................................12
     2.3      PURCHASE PRICE ADJUSTMENT..........................................................................13
     2.4      ALLOCATION.........................................................................................14
     2.5      RETAINED ASSETS; ELIMINATION OF INTERCOMPANY DEBT..................................................15
     2.6      PURCHASE DEPOSIT...................................................................................15

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.............................................................15

     3.1      AUTHORITY OF SELLERS...............................................................................15
     3.2      CAPITALIZATION; OWNERSHIP..........................................................................16
     3.3      ORGANIZATION; SUBSIDIARIES.........................................................................16
     3.4      NO CONFLICTS; CONSENTS AND APPROVALS...............................................................16
     3.5      REAL PROPERTY; NETWORK AND CONDITION OF ASSETS.....................................................17
     3.6      INTELLECTUAL PROPERTY..............................................................................19
     3.7      FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES...........................................20
     3.8      NO MATERIAL ADVERSE CHANGE.........................................................................22
     3.9      TAX MATTERS........................................................................................22
     3.10     LITIGATION.........................................................................................23
     3.11     EMPLOYEE BENEFITS AND RELATED MATTERS..............................................................24
     3.12     MATERIAL CONTRACTS.................................................................................25
     3.13     COMMUNICATIONS LICENSES............................................................................26
     3.14     BROKERS AND FINDERS................................................................................27
     3.15     EMPLOYEES..........................................................................................27
     3.16     ENVIRONMENTAL......................................................................................27
     3.17     COMPLIANCE WITH LAWS; LICENSES.....................................................................28
     3.18     ABSENCE OF CHANGES.................................................................................28
     3.19     TRANSACTIONS WITH AFFILIATES.......................................................................29
     3.20     INSURANCE..........................................................................................29
     3.21     CUSTOMERS..........................................................................................29
     3.22     CONSTRUCTION-IN-PROGRESS...........................................................................29
     3.23     T1 LOOPS...........................................................................................29
     3.24     CIRCUIT LEASES.....................................................................................30
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................30

     4.1      AUTHORITY OF PURCHASER.............................................................................30
     4.2      CONSENTS AND APPROVALS.............................................................................30
     4.3      BROKERS, ETC.......................................................................................30
     4.4      SECURITIES.........................................................................................30
     4.5      FINANCING..........................................................................................31
     4.6      SOLVENCY...........................................................................................31
     4.7      FINANCIAL STATEMENTS...............................................................................31
     4.8      MATERIAL ADVERSE CHANGE............................................................................32
     4.9      INDEPENDENT INVESTIGATION..........................................................................32
     4.10     LEGAL QUALIFICATIONS...............................................................................32

ARTICLE 5. COVENANTS.............................................................................................32

     5.1      REASONABLE BEST EFFORTS; REGULATORY APPROVALS; THIRD PARTY CONSENTS................................32
     5.2      PRE-CLOSING ACCESS.................................................................................34
     5.3      OPERATION OF BUSINESS PRIOR TO CLOSING.............................................................34
     5.4      CONFIDENTIALITY....................................................................................36
     5.5      EMPLOYEE MATTERS...................................................................................37
     5.6      RECORDS; POST-CLOSING ACCESS TO INFORMATION........................................................39
     5.7      CONTINUED OPERATIONS...............................................................................39
     5.8      COMMUNICATIONS LICENSES............................................................................39
     5.9      NOTICE OF DEVELOPMENTS.............................................................................40
     5.10     COOPERATION IN LITIGATION..........................................................................41
     5.11     TRANSFER OF RETAINED ASSETS........................................................................41
     5.12     REASONABLE BEST EFFORTS TO OBTAIN FINANCING........................................................41
     5.13     EXCLUSIVITY........................................................................................42
     5.14     AUDIT..............................................................................................42
     5.15     ENVIRONMENTAL INVESTIGATION........................................................................42
     5.16     INSURANCE..........................................................................................43
     5.17     CONTINUED FINANCIALS...............................................................................43
     5.18     PURCHASER'S FINANCIALS.............................................................................43
     5.19     COVENANT NOT TO COMPETE; NON-SOLICITATION..........................................................43
     5.20     COOPERATION IN TRANSITION..........................................................................44
     5.21     NO ADDITIONAL REPRESENTATIONS......................................................................45
     5.22     LONG DISTANCE SERVICES.............................................................................45

ARTICLE 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER......................................................46

     6.1      WARRANTIES TRUE AS OF PRESENT DATE AND CLOSING DATE................................................46
     6.2      COMPLIANCE WITH AGREEMENTS AND COVENANTS...........................................................46
     6.3      COMPETITION LAW APPROVALS..........................................................................46
     6.4      TRANSACTION DOCUMENTS..............................................................................46
     6.5      CONSENTS...........................................................................................46
     6.6      INJUNCTIONS........................................................................................46
     6.7      CERTIFICATE........................................................................................46
     6.8      DELIVERIES BY SELLERS..............................................................................46
     6.9      FINANCING..........................................................................................46
     6.10     AUDITED FINANCIAL STATEMENTS.......................................................................46

ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS........................................................46

     7.1      WARRANTIES TRUE AS OF PRESENT DATE AND CLOSING DATE................................................47
     7.2      COMPLIANCE WITH AGREEMENTS AND COVENANTS...........................................................47
     7.3      COMPETITION LAW APPROVALS..........................................................................47
     7.4      TRANSFER OF RETAINED ASSETS........................................................................47
     7.5      TRANSACTION DOCUMENTS..............................................................................47
     7.6      INJUNCTIONS........................................................................................47
     7.7      CERTIFICATE........................................................................................47
     7.8      DELIVERIES BY PURCHASER............................................................................47

                                       ii
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ARTICLE 8. CLOSING; TERMINATION..................................................................................47

     8.1      CLOSING............................................................................................47
     8.2      DELIVERIES OF SELLERS..............................................................................47
     8.3      DELIVERIES OF PURCHASER............................................................................48
     8.4      TERMINATION........................................................................................48
     8.5      FURTHER ASSURANCES.................................................................................49

ARTICLE 9. SURVIVAL AND INDEMNIFICATION..........................................................................49

     9.1      SURVIVAL...........................................................................................49
     9.2      INDEMNIFICATION BY PARENT..........................................................................50
     9.3      INDEMNIFICATION BY PURCHASER.......................................................................50
     9.4      BASKET FOR CLAIMS..................................................................................50
     9.5      NET LOSSES; SUBROGATION; MITIGATION................................................................51
     9.6      CLAIMS.............................................................................................51
     9.7      NOTICE OF THIRD PARTY CLAIMS; ASSUMPTION OF DEFENSE................................................52
     9.8      SETTLEMENT OR COMPROMISE...........................................................................52
     9.9      LIMITATIONS ON LIABILITY...........................................................................53
     9.10     EXCLUSIVE REMEDY...................................................................................53
     9.11     PURCHASE PRICE ADJUSTMENTS.........................................................................53

ARTICLE 10. TAX MATTERS..........................................................................................53

     10.1     FILING TAX RETURNS; PAYMENT OF TAXES...............................................................53
     10.2     COOPERATION ON TAX MATTERS.........................................................................54
     10.3     TAX INDEMNIFICATION................................................................................54
     10.4     REFUNDS............................................................................................54
     10.5     AUDITS AND CONTESTS WITH RESPECT TO TAXES..........................................................55
     10.6     AUDIT ADJUSTMENTS..................................................................................56
     10.7     TAX WITHHOLDING....................................................................................56
     10.8     TAX SHARING AGREEMENTS.............................................................................57

ARTICLE 11. MISCELLANEOUS........................................................................................57

     11.1     EXPENSES...........................................................................................57
     11.2     AMENDMENT..........................................................................................57
     11.3     NOTICES............................................................................................57
     11.4     WAIVERS............................................................................................58
     11.5     COUNTERPARTS.......................................................................................58
     11.6     HEADINGS...........................................................................................58
     11.7     APPLICABLE LAW.....................................................................................58
     11.8     ASSIGNMENT.........................................................................................59

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     11.9     NO THIRD PARTY BENEFICIARIES.......................................................................59
     11.10    SCHEDULES..........................................................................................59
     11.11    INCORPORATION......................................................................................59
     11.12    COMPLETE AGREEMENT.................................................................................59
     11.13    PUBLIC ANNOUNCEMENTS...............................................................................59
     11.14    SEVERABILITY.......................................................................................59

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Exhibits
--------

         Exhibit A.........Retained Assets
         Exhibit B-1.......Transition Services Agreement (Option A)
         Exhibit B-2.......Transition Services Agreement (Option B)
         Exhibit C-1.......Lease
         Exhibit C-2.......Lease
         Exhibit D         Letter Agreement
         Exhibit E         [Reserved]
         Exhibit F.........Confidentiality Agreement
         Exhibit G.........Commitment Letters
         Exhibit H.........Purchaser's Severance Arrangements
         Exhibit I.........Purchaser's Financial Statements
         Exhibit J.........Regulatory Opinion

Schedules

         Schedule 1.1(a)     Indebtedness
         Schedule 1.1(b)     Permitted Liens
         Schedule 1.1(c)     State PUC Consents
         Schedule 2.4        Allocation of Purchase Price
         Schedule 3.2        Capitalization; Ownership
         Schedule 3.3        Organization; Subsidiaries
         Schedule 3.4        No Conflicts; Consents and Approvals
         Schedule 3.5        Real Property; Network and Condition of Assets
         Schedule 3.6        Intellectual Property
         Schedule 3.7        Financial Statements; Absence of Undisclosed
                             Liabilities
         Schedule 3.8        Material Adverse Change
         Schedule 3.9        Tax Matters
         Schedule 3.10       Litigation
         Schedule 3.11       Employee Benefits
         Schedule 3.12       Material Contracts
         Schedule 3.13       Communications Licenses
         Schedule 3.15       Employees
         Schedule 3.16       Environmental
         Schedule 3.17       Compliance with Laws; Licenses
         Schedule 3.18       Absence of Change
         Schedule 3.19       Transactions with Affiliates
         Schedule 3.20       Insurance
         Schedule 3.21       Customers
         Schedule 3.22       Construction-in-Progress
         Schedule 3.23       T1 Loops
         Schedule 3.24       Circuit Leases
         Schedule 5.3        Operation of Business Prior to Closing
         Schedule 5.20       Cooperation in Transition
         Schedule 6.5        Consents

                                       v
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                     MEMBERSHIP INTEREST PURCHASE AGREEMENT

     This MEMBERSHIP  INTEREST PURCHASE  AGREEMENT is entered into as of the 6th
day of  February,  2006  between  Citizens  Communications  Company,  a Delaware
corporation  ("Parent"),  CU Capital LLC, a Delaware limited  liability  company
("CU Capital" and  collectively  with Parent,  "Sellers"),  and Integra  Telecom
Holdings, Inc., an Oregon corporation ("Purchaser").

     WHEREAS,  Parent  is the sole  member of CU  Capital,  and owns 100% of the
outstanding membership interests in CU Capital;

     WHEREAS,  CU  Capital  is the sole  member of  Electric  Lightwave,  LLC, a
Delaware  limited  liability  company  (together with its corporate  predecessor
entity, the "Company"), and owns 100% of the outstanding membership interests in
the Company;

     WHEREAS the Company is in the business of providing local telephone,  data,
network,  and long distance services to small and medium  enterprises as well as
wholesale   carrier  services  to  other   communications   companies  over  its
communications network (the "Business");

     WHEREAS,  subject to the terms and conditions set forth herein,  CU Capital
desires to sell,  assign and transfer to  Purchaser,  and  Purchaser  desires to
purchase and take  assignment and delivery from CU Capital of, all of the issued
and outstanding membership interests of the Company;

     WHEREAS,  prior to the Closing,  the Company shall transfer  certain assets
set forth on Exhibit A hereto (the "Retained Assets") to an entity designated by
Parent and such  Retained  Assets  shall not be included as part of the Business
being  acquired by Purchaser in connection  with the  transactions  contemplated
hereby;

     WHEREAS,  simultaneously with the Closing, Parent and Purchaser shall enter
into a  Transition  Services  and Network  Sharing  Agreement in either the form
attached  hereto as Exhibit B-1 or Exhibit B-2, as provided in Section 5.20 (the
form of such  agreement  actually  entered  into by Parent and  Purchaser  being
referred to as the "Transition  Services  Agreement"),  pursuant to which Parent
shall provide  Purchaser  with certain  transition  services and Purchaser  will
share its network  with Parent for a specified  period of time after the Closing
(as defined in Section 2.1);

     WHEREAS,  simultaneously with the Closing, Parent and Purchaser shall enter
into leases in the forms attached hereto as Exhibits C-1 and C-2  (collectively,
the "Lease")  pursuant to which Parent shall lease a portion of the Headquarters
(as  defined  below) to  Purchaser  for a  specified  period  of time  after the
Closing; and

     WHEREAS,  simultaneously  with the execution of this Agreement,  Parent and
Purchaser  are entering into a letter  agreement in the form attached  hereto as
Exhibit D (the "Letter Agreement").

     NOW,  THEREFORE,  in  consideration of the premises and the mutual promises
herein contained, Purchaser and Sellers agree as follows:

                                   ARTICLE 1.
                           DEFINITIONS; INTERPRETATION

     1.1 Definitions.  The following terms shall have the following meanings for
the purposes of this Agreement:
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     "Adjusted Purchase Price" shall have the meaning set forth in Section 2.3.

     "Affiliate"  means with respect to any specified  Person,  any other Person
directly or indirectly  controlling or controlled by or under direct or indirect
common control with such specified Person.  For the purposes of this definition,
"control"  when used with  respect to any  specified  Person  means the power to
direct the  management  and  policies  of such Person  directly  or  indirectly,
whether through ownership of voting  securities,  by contract or otherwise;  and
the terms  "controlling"  and  "controlled"  having meanings  correlative to the
foregoing.

     "Affiliated Group" means any affiliated group within the meaning of Section
1504 of the Code or any  similar  group  defined  under a similar  provision  of
state, local or foreign Law.

     "Agreement" means this Membership  Interest Purchase  Agreement,  including
all Appendices, Schedules and Exhibits hereto, as it may be amended from time to
time in accordance with its terms.

     "Agreement to Sell" shall have the meaning set forth in Section 3.2.

     "Another Transaction" shall have the meaning set forth in Section 5.13.

     "Assigning Party" shall have the meaning set forth in Section 11.8.

     "Audit" shall have the meaning set forth in Section 5.14.

     "Audited Financial  Statements" shall have the meaning set forth in Section
5.14.

     "Benefit Plans" means employee benefit plan, program,  policy,  arrangement
or agreement,  including  "employee welfare benefit plans" and "employee pension
benefit plans",  as defined in Sections 3(1) and 3(2),  respectively,  of ERISA,
(i)  sponsored,  maintained  or  contributed  to by the  Company or to which the
Company is a party,  (ii) covering or benefiting any current or former employee,
officer, director, or manager of the Company (or any dependent or beneficiary of
any such  individual),  or (iii) with respect to which the Company has (or could
have) any obligation or liability.

     "Business"  shall  have  the  meaning  set  forth in the  recitals  of this
Agreement.

     "Business  Day" means any day of the year other  than (a) any  Saturday  or
Sunday,  or (b) any other day on which  banks  located in New York,  New York or
Stamford, Connecticut generally are closed for business.

     "Carrier Agreement" shall have the meaning set forth in Section 3.5.

     "Closing" shall have the meaning set forth in Section 2.1.

     "Closing Balance Sheet" shall have the meaning set forth in Section 2.3.

     "Closing Cash" shall have the meaning set forth in Section 2.2.

     "Closing Date" shall have the meaning set forth in Section 8.1.

     "Closing Indebtedness" shall have the meaning set forth in Section 2.2.

     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and all
regulations,  rulings and other pronouncements  issued thereunder,  as in effect
from time to time.

                                       2
<PAGE>

     "Communications Act" shall mean the Communications Act of 1934, as amended,
and the FCC Rules.

     "Commitment Letters" shall have the meaning set forth in Section 4.5.

     "Communications Contracts" means all Network Agreements and all agreements,
joint venture  agreements,  purchase and sale  agreements,  service  agreements,
license  agreements,  technology  agreements,  manufacture or vendor agreements,
supply  agreements,  Licenses and any other agreements to which the Company is a
party or by which it is bound that are material to the operation of the Business
as   currently   operated  by  the  Company  and  that   involve  or  relate  to
Communications  Equipment,  including municipal  franchises and other contracts,
agreements, permits or Licenses granting the Company access to or use of private
or public rights-of-way and including software Licenses necessary to operate the
Communications Equipment, in each case that are material to the operation of the
Business  as  currently  operated  by the  Company,  other  than  Communications
Licenses. Communications Contracts shall not include any Retained Contracts.

     "Communications Equipment" means, whether owned or leased, the Metropolitan
Access  Network,  Long Haul Fiber  Route and any switch,  router,  node or other
electronic  equipment or software or other  equipment  used in  providing  local
telephone,  data,  network,  and long  distance  services  to small  and  medium
enterprises  or providing  wholesale  carrier  services to other  communications
companies over its communications network.

     "Communications  Licenses"  means  the  FCC  Licenses  and  the  State  PUC
Licenses.  Municipal  franchises  and other  contracts,  agreements,  permits or
Licenses  granting the Company access to or use of public  rights-of-way are not
included within the term Communications Licenses.

     "Company"  shall  have  the  meaning  set  forth  in the  recitals  of this
Agreement.

     "Company Benefit Plan" shall have the meaning set forth in Section 3.11.

     "Company Employee" shall have the meaning set forth in Section 3.15.

     "Competing Business" shall have the meaning set forth in Section 5.19.

     "Confidentiality  Agreement"  means  that  certain  confidentiality  letter
agreement,  dated October 27, 2005, between Parent and Integra Telecom,  Inc., a
copy of which is attached as Exhibit F hereto.

     "Controlled  Group  Liability"  shall have the meaning set forth in Section
3.11.

     "CU Capital" shall have the meaning set forth in the preamble hereof.

     "Damages" shall have the meaning set forth in Section 9.2(a).

     "Deposit" shall have the meaning set forth in Section 2.6.

     "Dispute Notice" shall have the meaning set forth in Section 2.3(a).

     "EBITDA"  means  earnings  before   interest,   taxes,   depreciation   and
amortization.

     "Environment" shall mean any of the following media:

                                       3
<PAGE>

          (i) land,  including  surface land,  sub-surface  strata,  sea bed and
     river bed under water (as defined in clause (ii) hereof) and any natural or
     man-made structures;

          (ii) water,  including  coastal  and inland  waters,  surface  waters,
     ground  waters,  drinking  water  supplies and waters in drains and sewers,
     surface and sub-surface strata; and

          (iii) air, including indoor and outdoor air.

     "Environmental   Laws"  means  all  Laws  relating  to  protection  of  the
Environment and Releases of Hazardous  Substances,  including the  Comprehensive
Environmental  Response,   Compensation  and  Liability  Act,  as  amended,  the
Superfund   Amendments  and  Reauthorization   Act,  as  amended,  the  Resource
Conservation and Recovery Act, as amended,  the Toxic Substances Control Act, as
amended, the Clean Water Act, as amended, the Clean Air Act, as amended, and any
applicable  United States  federal,  state or local Law having a similar subject
matter.

     "Environmental Matter" shall mean:

          (i) pollution or contamination  of the Environment,  including soil or
     groundwater  contamination  or the  occurrence  or the  existence of or the
     continuation of the existence of a Release;

          (ii) the treatment, disposal or Release of any Hazardous Substance;

          (iii) exposure of any person to any Hazardous Substance; or

          (iv)  the  material   violation  of  any   Environmental  Law  or  any
     Environmental Permit.

     "Environmental  Permit" shall mean any License issued,  granted or required
under  Environmental  Laws,  including  Licenses  relating  to the  disposal  of
batteries.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended,  and  all  regulations,   rulings  and  other   pronouncements   issued
thereunder, as in effect from time to time.

     "ERISA Affiliate" shall have the meaning set forth in Section 3.11.

     "Estimated Balance Sheet" shall have the meaning set forth in Section 2.2.

     "Estimated Purchase Price" shall have the meaning set forth in Section 2.2.

     "Estimated  Working  Capital"  shall have the  meaning set forth in Section
2.2.

     "Excluded Cash" shall have the meaning set forth in Section 2.2.

     "Exclusivity Period" shall have the meaning set forth in Section 5.13.

     "FCC" means the Federal  Communications  Commission or any successor agency
thereof.

     "FCC Consent" means the grant by the FCC of its consent in connection  with
the consummation of the transactions contemplated hereby.

     "FCC  Licenses"  means all  Licenses  issued or  granted  by the FCC to the
Company.

                                       4
<PAGE>

     "FCC Rules" means all rules, regulations,  published policies and decisions
of the FCC  promulgated  under the  Communications  Act of 1934, as amended,  or
other statutory authority.

     "FICA" means the Federal Insurance Contributions Act.

     "Final Closing Cash" shall have the meaning set forth in Section 2.3.

     "Final  Closing  Indebtedness"  shall have the meaning set forth in Section
2.3.

     "Final Order" means a written  action,  decision or order issued by the FCC
or a State PUC  setting  forth the consent of the FCC or the State PUC (a) which
has not been reversed,  stayed,  enjoined set aside, annulled or suspended,  and
(b) with respect to which (i) no requests have been filed for  administrative or
judicial  review,  reconsideration,  appeal or stay, and the applicable time for
filing  any such  requests  and for the FCC or the  State  PUC to set  aside the
action  on its own  motion  (whether  upon  reconsideration  or  otherwise)  has
expired, or (ii) in the event of review, reconsideration or appeal, the time for
further review, reconsideration or appeal has expired.

     "Final Working Capital" shall have the meaning set forth in Section 2.3.

     "Financial  Statements"  means,  collectively,  (a)  (i)  the  consolidated
unaudited  statements of earnings,  cash flows and owners' equity of the Company
and  the  Subsidiary  for the  year  ended  December  31,  2004,  and  (ii)  the
consolidated  unaudited  balance  sheet of the Company and the  Subsidiary as of
December  31,  2004,  and (b)  (i)  the  consolidated  unaudited  statements  of
earnings,  cash flows and owners'  equity of the Company and the  Subsidiary for
the year ended December 31, 2005, and (ii) the  consolidated  unaudited  balance
sheet of the Company and the  Subsidiary  as of December 31, 2005,  (the "Latest
Balance  Sheet" and  collectively  with the items  referred  to in  (b)(i),  the
"Latest Financial Statements") all of which are attached hereto as Schedule 3.7.

     "Financing" shall have the meaning set forth in Section 4.5.

     "Franchise  Agreements"  means the municipal  franchises that are necessary
for the  operation  of the  Business as  currently  conducted by the Company and
other material contracts,  agreements,  permits or Licenses granting the Company
access to or use of public rights-of-way.

     "FSAs" shall have the meaning set forth in Section 5.5.

     "GAAP" means United  States  generally  accepted  accounting  principles in
effect from time to time.

     "GAAP Exceptions" shall have the meaning set forth in Section 3.7.

     "Governmental  Authority" means any U.S. federal, state or municipal entity
or government  and any political  subdivision or other  executive,  legislative,
administrative,  judicial or other governmental department,  commission,  court,
board, bureau, agency or instrumentality.

     "Governmental  Required  Consents" means (i) all applicable waiting periods
under the HSR Act shall have expired or been  terminated,  (ii) the FCC Consents
and (iii) the State PUC Consents.

     "Gross Purchase Price" shall have the meaning set forth in Section 2.2.

                                       5
<PAGE>

     "Hazardous  Substance"  shall  mean,  collectively,  any (a)  petroleum  or
petroleum  products,  or derivative or fraction thereof,  radioactive  materials
(including radon gas),  asbestos in any form that is friable,  urea-formaldehyde
foam insulation ("UFI"), lead paint and polychlorinated  biphenyls ("PCBs"), and
(b) any  chemical,  material,  substance  or waste,  which is now  defined as or
included  in the  definition  of  "hazardous  substances,"  "hazardous  wastes,"
"hazardous  materials,"  "toxic  substances,"   "restricted  hazardous  wastes,"
"contaminants," or "pollutants",  in each case as regulated under  Environmental
Laws,   including   materials  that  are  deemed   hazardous   pursuant  to  any
Environmental Laws.

     "Headquarters"  shall mean the  building  currently  used as the  Company's
headquarters located at 4400 NE 77th Avenue, Vancouver, Washington.

     "HSR Act" means the Hart-Scott-Rodino  Antitrust  Improvements Act of 1976,
as amended.

     "Income Taxes" means federal,  state,  local or foreign income or franchise
Taxes or other  Taxes  measured in whole or in part by income or profits and any
interest and penalties or additions thereon.

     "Income Tax  Returns"  means any Tax  Returns of or with  respect to Income
Taxes.

     "Indebtedness"  means (a) any indebtedness for borrowed money or guarantees
of any  such  indebtedness  (excluding  any  intercompany  indebtedness  that is
extinguished as provided for in Section 2.5) and (b) any liabilities relating to
any capital  lease  obligation  of the Company  arising out of any agreement set
forth on Schedule 1.1(a).

     "Indemnified  Party"  means  a  Seller  Indemnified  Party  or a  Purchaser
Indemnified Party, as applicable.

     "Indemnifying Party" means the Person or Persons claimed by the Indemnified
Party to be obligated to provide indemnification under Article 9.

     "Intellectual Property" means United States and foreign: (a) registered and
unregistered trade names, trademarks and service marks, (b) patent registrations
and  patent  applications,   (c)  copyrights  and  copyright  registrations  and
copyright  applications therefor and (d) know-how,  trade secrets,  confidential
information,  database  rights,  domain names, IP numbering  blocks,  autonomous
system  numbers,  customer lists,  inventions,  designs,  drawings,  blueprints,
proprietary  software and all other intellectual and industrial  property rights
and equivalent or similar forms of protection, other than off-the-shelf computer
software.

     "Interconnection  Agreement"  shall have the  meaning  set forth in Section
3.5.

     "Interim Conversion Work" shall have the meaning set forth in Section 5.20.

     "IRS" means the Internal Revenue Service.

     "IRU" means an irrefutable or indefeasible right of use agreement.

     "Latest Balance Sheet" shall have the meaning referred to in the definition
of Financial Statements.

     "Latest  Financial  Statements"  shall have the meaning  referred to in the
definition of Financial Statements.

                                       6
<PAGE>

     "Law" means any law,  statute,  regulation,  published  policy,  ordinance,
rule,  order,  decree,  judgment,  consent  decree or  governmental  requirement
enacted, promulgated, entered into or imposed by any Governmental Authority.

     "LD" means long distance originating traffic services,  terminating traffic
services,  operator  assistance,  directory  assistance  and any  other  related
services currently provided to the Company by the Company's or Parent's existing
LD carriers.

     "Leased Real Property" shall have the meaning set forth in Section 3.5(b).

     "Letter Agreement" shall have the meaning set forth in the recitals of this
Agreement.

     "License"  means all  licenses,  franchises,  permits,  consents,  waivers,
registrations,  certificates,  and other  permits,  authorizations  or approvals
issued  or  granted  or  required  to be  issued or  granted  by a  Governmental
Authority for the operation of the Business  and/or for the ownership,  lease or
operation of the  Company's  properties.  Except when used  specifically  in the
context of the  Communications  Licenses,  the term  License  shall  exclude any
Communications License.

     "Lien"  means  any  lien,  security  interest,   charge,  claim,  mortgage,
servitude,  easement,  right of way, equitable  interest,  possessory  interest,
pledge,   preference,   priority,  deed  of  trust,  option,  interest  under  a
conditional sale agreement, assignment, lease or other encumbrance.

     "Long-Haul Agreement" shall have the meaning set forth in Section 3.5.

     "Long Haul Fiber  Route"  means the fiber  network used by the Company that
connects the Metropolitan Access Network.

     "Material Adverse Effect" means a material adverse change or effect (or any
development that is reasonably likely to result in any such change or effect) on
the  assets,  operations,  results  of  operation  or  condition  (financial  or
otherwise) of the Company;  provided,  that, for purposes of this  Agreement,  a
Material Adverse Effect shall not include changes or effects  resulting from (a)
changes to the U.S. or global economy, as a whole, or the industry or markets in
which the  Company  operates,  unless in case of this  clause  (a),  the changes
adversely effect the Company in a  disproportionate  manner,  (b) changes in the
financial,  banking or securities  market  conditions  (including any disruption
thereof and any decline in the price of any security  (including any security of
Parent)  or any  market  index),  (c)  the  announcement  or  disclosure  of the
transactions contemplated herein, (d) military action or any act of terrorism or
any worsening thereof,  unless in case of this clause (d), the changes adversely
effect the Company in a  disproportionate  manner,  (e) changes in regulatory or
political  conditions  generally  unless in case of this clause (e), the changes
adversely  effect the Company in a  disproportionate  manner,  or (f) compliance
with specific  instructions  from Purchaser in accordance with the terms of this
Agreement.

     "Material   Contracts"  means  (other  than  the  Retained  Contracts)  all
agreements,  joint venture  agreements,  purchase and sale  agreements,  service
agreements,  license agreements,  technology  agreements,  manufacture or vendor
agreements, supply agreements, debt agreements and any other agreements (and any
amendments or  supplements  thereto) to which the Company is a party or by which
it is bound that is or involves:

          (a)  aggregate  payments by or to the Company in excess of $500,000 in
               any given year or has an  aggregate  future  liability or payment
               from or to any Person in excess of $2,500,000;

                                       7
<PAGE>

          (b)  employment of any person or non-employee sales  representative or
               agent  to  the  extent,   with  respect  to  non-employee   sales
               representatives  or agents,  there has been more than $150,000 in
               payments  under the  agreement in either of the last two calendar
               years;

          (c)  a  covenant  not to  compete  or other  covenant  of the  Company
               restricting the Company from engaging in any business;

          (d)  any manager, member or Affiliate of the Company or any current or
               former  officer  or  employee  of  the  Company  or  any  of  its
               Affiliates  (other  than the  employment  agreements  covered  by
               sub-clause (b) above);

          (e)  the  granting of a Lien  (other  than a Permitted  Lien) upon any
               material Company asset;

          (f)  indemnification   of  any  Person  with  respect  to  liabilities
               relating to any current or former  business of the Company or any
               predecessor Person;

          (g)  an agreement not made in the ordinary course of business and that
               is material to the Business;

          (h)  any Governmental Authority that is material to the Business;

          (i)  a joint venture or partnership;

          (j)  any Real  Property  Agreement,  Network  Agreement  and any other
               Communication Contract; or

          (k)  a license,  sublicense,  option or other  agreement  relating  in
               whole or in part to the material Intellectual Property of or used
               by the Company.

     "Metropolitan  Access  Network" means the fiber network used by the Company
within each of the Company's business market areas.

     "Network  Agreement"  means  each  Franchise   Agreement,   Interconnection
Agreement, Carrier Agreement, material Metropolitan Access Network Agreement and
material Long Haul Agreement.

     "New Plans" shall have the meaning set forth in Section 5.5.

     "Non-assigning Party" shall have the meaning set forth in Section 11.8.

     "Option Agreement" shall have the meaning set forth in Section 3.2.

     "Owned Real Property" shall have the meaning set forth in Section 3.5(a).

     "Parent" shall have the meaning set forth in the preamble hereof.

     "Parent Plan" shall have the meaning set forth in Section 3.11.

                                       8
<PAGE>

     "Permitted  Liens" means: (a) Liens in respect of liabilities to the extent
shown or reflected as Liens on the Latest Balance Sheet or disclosed on Schedule
1.1(b),  (b) Liens  arising by operation of Law for Taxes or other  governmental
charges not yet due and payable or due but not delinquent or being  contested in
good faith by appropriate proceedings, (c) Liens arising by operation of Law, in
the ordinary course of business, including Liens arising by virtue of the rights
of customers,  suppliers and  subcontractors  in the ordinary course of business
under general principles of commercial Law that do not detract from the value of
the property or the use thereof in any material respect and that are for amounts
not due and payable,  (d) Liens  securing  rental  payments  under capital lease
arrangements   disclosed   on  Schedule   1.1(a),   (e)   restrictions   on  the
transferability  of securities  arising under  applicable  securities  Laws, (f)
restrictions  arising  under  applicable  zoning and other land use Laws that do
not,  individually or in the aggregate,  materially detract from the present use
or occupancy of the property subject thereto,  (g) defects in title,  easements,
rights of way,  restrictions,  covenants,  or  similar  items  relating  to real
property that do not, individually or in the aggregate,  materially detract from
the present use or occupancy  of, or  materially  detract from the value of, the
real property subject thereto,  and (h) Liens arising under leases to lessees of
a portion of the Owned Real Property that are disclosed in the Schedules to this
Agreement.

     "Person"  means  any  individual,  corporation,  partnership,  association,
limited liability company, trust,  governmental or quasi-governmental  authority
or body or other entity or organization.

     "Portland  Franchise  Dispute" shall have the meaning set forth on Schedule
3.10.

     "Pre-Closing  Tax  Periods"  shall  have the  meaning  set forth in Section
10.1(a).

     "Proposed  Final Balance Sheet" shall have the meaning set forth in Section
2.3.

     "Proposed  Final  Statements"  shall have the  meaning set forth in Section
2.3.

     "Proposed  Final  Working  Capital"  shall  have the  meaning  set forth in
Section 2.3.

     "Purchase Price" shall have the meaning set forth in Section 2.2(a).

     "Purchased  Business  Markets"  shall have the meaning set forth in Section
5.20.

     "Purchased Interests" shall have the meaning set forth in Section 2.1.

     "Purchaser" shall have the meaning set forth in the preamble hereof.

     "Purchaser  Flexible  Spending  Plan"  shall have the  meaning set forth in
Section 5.5.

     "Purchaser  Indemnified  Party(ies)"  shall have the  meaning  set forth in
Section 9.2.

     "Purchaser's  knowledge," or variations thereof, means the actual knowledge
of Dudley Slater, Deborah Harwood, Matt Fahey, and Jim Huesgen.

     "Purchaser's  Severance  Arrangements"  shall have the meaning set forth in
Section 5.5.

     "Real Property" means the Owned Real Property and the Leased Real Property.

     "Real  Property  Agreement"  shall  have the  meaning  set forth in Section
3.5(b).

     "Records" shall have the meaning set forth in Section 5.6(b).

     "Regulations"  shall mean the Treasury  Regulations  promulgated  under the
Code.

     "Release"  shall  mean any  release,  spill,  emission,  leaking,  pumping,
injection, deposit, disposal, discharge, dispersal, migration or leaching of any
Hazardous  Substances into the  Environment,  and "Released"  shall be construed
accordingly.

                                       9
<PAGE>

     "Required Cash Amount" shall have the meaning set forth in Section 4.5.

     "Retained  Assets"  shall mean those  assets set forth on Exhibit A to this
Agreement.

     "Retained  Contracts" means those contracts to which the Company is a party
that are included in the Retained Assets on Exhibit A hereto.

     "Retained Employees" shall have the meaning set forth in Section 5.5(a).

     "Reviewing Accountant" shall have the meaning set forth in Section 2.3.

     "Schedules" means the schedules attached to this Agreement and forming
part of this Agreement.

     "Scott-Rice"  shall  have the  meaning  set forth in the  recitals  of this
Agreement.

     "Securities  Act" means the  Securities  Act of 1933,  as amended,  and the
rules and regulations promulgated thereunder.

     "Sellers" shall have the meaning set forth in the preamble hereof.

     "Seller Flexible Spending Plan" shall have the meaning set forth in Section
5.5.

     "Seller Indemnified Party(ies)" shall have the meaning set forth in Section
9.3.

     "Seller Savings Plan" means the Citizens 401(k) Savings Plan.

     "Sellers' knowledge," or variations thereof,  means the actual knowledge of
Daniel McCarthy,  Melinda White, Chuck Best, Michael Golob,  Hilary Glassman and
Rob Larson.

     "Settlement Proposal" shall have the meaning set forth in Section 5.10(b).

     "State PUC" means any state or local governmental  department or commission
having regulatory authority over the Business, as conducted in any jurisdiction.

     "State PUC Consents" means the grant by any State PUC to the Company of its
consent in each applicable  jurisdiction in connection with the  consummation of
the transactions contemplated hereby, as set forth on Schedule 1.1(c).

     "State  PUC  Licenses"  means  all  Licenses  issued  by a State PUC to the
Company in each applicable jurisdiction.

     "Straddle  Period" means any Tax Period  beginning  before the Closing Date
and ending after the Closing Date.

     "Subsidiary" shall have the meaning set forth in Section 3.3.

     "Tax" or "Taxes" mean (i) all taxes, charges, fees, duties, levies or other
assessments,  including income, gross receipts,  capital stock, net proceeds, ad
valorem,  turnover, real, personal and other property (tangible and intangible),
sales,  use,  franchise,  excise,  value added,  stamp,  leasing,  lease,  user,
transfer, fuel, excess profits,  occupational,  interest equalization,  windfall
profits, unitary, severance and employees' income withholding,  unemployment and
Social Security taxes, duties,  assessments and charges (including the recapture
of any tax items  such as  investment  tax  credits),  which are  imposed by any
Governmental  Authority,  including any interest,  penalties or additions to tax
related  thereto  imposed by any  Governmental  Authority  with  respect to such
Taxes,  (ii) liabilities in respect of any items described in clause (i) payable
by reason of being a member of an  Affiliated  Group for any  period,  and (iii)
liabilities in respect of any items described in clause (i) or (ii) payable as a
result of any express or implied  obligation  to indemnify any other Person with
respect to such amount by reason of contract, assumption,  transferee liability,
operation  of  Law  or  otherwise,  including  any  liability  for  Taxes  of  a
predecessor or transferor entity.

                                       10
<PAGE>

     "Tax  Advantage"  means the amount of any refund,  credit or  reduction  in
otherwise   required  Tax  payments  (net  of  any  reduction  of  depreciation,
amortization  or other  deductions  as a result of an adjustment to the Purchase
Price)  actually  realized in the Tax year in which the event occurs giving rise
to the related Damages.

     "Tax Benefits" shall have the meaning set forth in Section 10.6(a).

     "Tax Detriments" shall have the meaning set forth in Section 10.6(a).

     "Tax  Period"  or  "Taxable  Period"  means any  period  prescribed  by any
Governmental  Authority  for which a Tax Return is required to be filed or a Tax
is required to be paid.

     "Tax Return" means any return, report, information return or other document
(including any related or supporting  information) filed or required to be filed
with any Governmental Authority in connection with the determination, assessment
or  collection  of any Tax or the  administration  of any Laws,  regulations  or
administrative requirements relating to any Tax.

     "Third Party Claim" shall have the meaning set forth in Section 9.9.

     "Transaction  Documents"  means,  when used in reference  to Sellers,  this
Agreement,  the Transition Services  Agreement,  the Lease, the Letter Agreement
and the certificate  delivered by Sellers pursuant to Section 6.7 and, when used
in reference to Purchaser,  this Agreement,  the Transition  Services Agreement,
the Lease,  the Letter  Agreement  and the  certificate  delivered  by Purchaser
pursuant to Section 7.7.

     "Transition  Services  Agreement"  shall have the  meaning set forth in the
recitals of this Agreement.

     "Working Capital" shall have the meaning set forth in Section 2.2.

     1.2   Interpretation.   The  parties  have  participated   jointly  in  the
negotiation  and  drafting  of this  Agreement.  In the  event an  ambiguity  or
question of intent or interpretation  arises,  this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise  favoring or  disfavoring  any party by virtue of the authorship of any of
the provisions of this  Agreement.  The headings  preceding the text of Articles
and Sections  included in this Agreement and the headings to Schedules  attached
to this Agreement are for convenience  only and shall not be deemed part of this
Agreement or be given any effect in interpreting this Agreement.  The use of the
masculine,  feminine  or neuter  gender or the  singular or plural form of words
herein  shall not limit any  provision of this  Agreement.  The use of the terms
"including"  or  "include"  shall in all cases herein mean  "including,  without
limitation" or "include,  without  limitation,"  respectively.  Reference to any
Person  includes  such  Person's  successors  and  assigns  to the  extent  such
successors and assigns are permitted by the terms of any  applicable  agreement.
Reference to any agreement  (including this  Agreement),  document or instrument
means such  agreement,  document or  instrument  as amended or  modified  and in
effect  from  time to  time  in  accordance  with  the  terms  thereof  and,  if
applicable,  the terms  hereof.  References  to any federal,  state,  local,  or
foreign  statute  or Law shall be  deemed to refer to all rules and  regulations
promulgated  thereunder,  unless the  context  requires  otherwise.  Underscored
references to Articles,  Sections,  paragraphs,  clauses,  Exhibits or Schedules
shall  refer  to  those  portions  of  this  Agreement.  The  use of  the  terms
"hereunder,"  "hereof," "hereto" and words of similar import shall refer to this
Agreement as a whole and not to any particular  Article,  Section,  paragraph or
clause of, or Exhibit or Schedule to, this Agreement.  "As presently  conducted"
or "as currently  conducted"  with respect to the Company or the Business  means
the  consistent  conduct of the Business or Company as of and since December 31,
2004.

                                       11
<PAGE>

                                    ARTICLE 2.
                                PURCHASE AND SALE

     2.1 Purchase and Sale.  Subject to the terms and conditions  hereof, at the
closing of the  transactions  contemplated  hereby (the  "Closing"),  CU Capital
shall  sell,  assign and deliver to  Purchaser  free and clean of any Lien other
than those related to  transferability  under  applicable  securities  Laws, and
Purchaser  shall  purchase  and  take  assignment  and  delivery  of  all of the
membership  interests of the Company  (the  "Purchased  Interests")  owned by CU
Capital,  representing all of the issued and outstanding membership interests of
the Company.

     2.2 Payment of the Purchase Price.

          (a) Subject to the  provisions of Section 2.3, the purchase price (the
     "Purchase  Price")  payable by  Purchaser by wire  transfer of  immediately
     available  funds  to  Parent,  on  behalf  of  Sellers,  for the  Purchased
     Interests shall be that amount equal to:

               (i) $247,286,922 (the "Gross Purchase Price"), minus

               (ii) that amount equal to all  Indebtedness  of the Company as of
          the Closing Date (the "Closing  Indebtedness")  based on the Estimated
          Balance Sheet;

               (iii) if the  Estimated  Working  Capital (as  defined  below) is
          greater than zero, then plus the amount by which the Estimated Working
          Capital exceeds zero, or if the Estimated Working Capital is less than
          zero, then minus the amount by which the Estimated  Working Capital is
          less than zero.

     Immediately  prior to the  Closing,  Sellers  shall  cause the  Company  to
distribute  all of  its  cash  and  cash  equivalents  as of  the  Closing  Date
(excluding cash or cash equivalents (i) supporting  payment or performance bonds
or similar  instruments or deposits or (ii) reserved for the Portland  Franchise
Dispute,  if any, such amount referred to as "Excluded Cash") (the cash and cash
equivalents  to be  distributed  as aforesaid  being referred to as the "Closing
Cash"),  based on the Estimated  Balance Sheet (as defined below) but subject to
adjustment as set forth below.

          (b) Sellers  shall cause the Company to deliver to  Purchaser at least
     three (3) Business  Days prior to the Closing  Date,  an estimated  balance
     sheet (the "Estimated  Balance  Sheet"),  showing the estimated  amounts of
     Closing Cash and Closing  Indebtedness,  along with a reasonable estimation
     of Working Capital as of the Closing Date (the "Estimated Working Capital")
     prepared in good faith and in accordance with GAAP (applied on a consistent
     basis with the  Financial  Statements  but not subject to the exception set
     forth in Section  3.7(a)(ii)(z)),  and a notice  specifying  the "Estimated
     Purchase  Price" after giving effect to such  deductions from and additions
     to the Gross Purchase Price based on the Estimated Balance Sheet (including
     the estimates of Closing  Indebtedness and Closing Cash reflected  therein)
     and the Estimated  Working Capital.  Purchaser shall have an opportunity to
     review and object to the Estimated  Balance Sheet, such review to be prompt
     and any objection to be reasonable and in good faith. Parent shall consider
     such objections in good faith but Parent's reasonable  determination of the
     Estimated  Working  Capital  shall be final and  binding  for  purposes  of
     Closing.

                                       12
<PAGE>

          (c) Working Capital. For purposes of this Agreement, "Working Capital"
     means the excess of  "current  assets" of the Company  (other than  Closing
     Cash) over "current  liabilities" of the Company,  determined in good faith
     using the same accounting principles,  practices,  procedures, policies and
     methods that were employed by the Company in  preparation  of the Financial
     Statements;  provided,  however,  that (1) "current  liabilities" shall (x)
     exclude the current  portion of any pre-paid IRU obligation and the current
     portion of any  Closing  Indebtedness,  (y)  include an accrual of $200,000
     with respect to the  Company's  paid time off  obligations,  and (z) to the
     extent  provided  in Section  5.10(b),  reduce  the  accrual  for  interest
     associated with the Portland  Franchise  Dispute,  and (2) "current assets"
     shall (x) exclude Excluded Cash relating to the Portland  Franchise Dispute
     to the extent there is not a corresponding  liability  included in "current
     liabilities" and (y) exclude  pre-paid  licenses to the extent the pre-paid
     licenses become assets of the Company in connection with Section 5.20(b).

     2.3 Purchase Price Adjustment.  The Purchase Price shall be adjusted as set
forth in this Section 2.3.

          (a) Calculation of Final Working Capital. On or before forty-five (45)
     Business Days after the Closing  Date,  Parent shall deliver to Purchaser a
     balance sheet,  dated as of the Closing Date, in reasonable detail (and, in
     any event,  in no less detail than the Latest  Balance  Sheet)  prepared in
     good faith and in accordance with GAAP (applied on a consistent  basis with
     the  Financial  Statements  but not subject to the  exception  set forth in
     Section  3.7(a)(ii)(z))  (the "Proposed  Final Balance  Sheet") showing the
     amounts of Closing Cash and Closing Indebtedness,  along with a calculation
     of the Working  Capital as of the Closing Date (the "Proposed Final Working
     Capital"  and  collectively  with the Proposed  Final  Balance  Sheet,  the
     "Proposed Final Statements") based on the Proposed Final Balance Sheet. The
     Proposed Final Statements shall be accompanied by an officer's  certificate
     of Parent  certifying  that the Proposed Final  Statements were prepared in
     good faith in a manner consistent with this Agreement.  Upon receipt of the
     Proposed Final Statements, Purchaser shall have timely access to all of the
     books and records of the  Company or Parent with  respect to or relating to
     the Company  related to the  calculation of the Proposed Final  Statements,
     including all of the detail and work papers used in Parent's preparation of
     the  Proposed  Final  Statements.  Within  twenty  (20)  Business  Days  of
     Purchaser's  receipt of such Proposed Final Statements,  Purchaser may give
     written notice to Parent that it disputes certain items contained in any of
     the Proposed Final Statements (the "Dispute Notice") which shall specify in
     reasonable  detail the dollar amount,  if known, of any objection and basis
     therefor;  provided,  however, that if Purchaser does not deliver a Dispute
     Notice  by such  date,  Purchaser  will be  deemed  to have  accepted  such
     Proposed Final  Statements and the Proposed Final Statements shall be final
     and binding on Purchaser and Sellers.  Upon timely  delivery of the Dispute
     Notice,  Purchaser  and Parent agree to confer in good faith with regard to
     the disputed  items and an  appropriate  adjustment  to the Proposed  Final
     Statements shall be made to the extent agreed upon by Purchaser and Parent.
     If within  twenty (20) Business  Days after  delivery of a Dispute  Notice,
     Purchaser  and Parent are unable to resolve the matter,  either of them may
     within twenty (20) Business Days after the end of the previous  twenty (20)
     Business Day period notify in writing (i) the other party and (ii) Deloitte
     & Touche LLP or another firm of independent accountants selected jointly by
     Purchaser and Parent (the  "Reviewing  Accountant"),  who shall  adjudicate
     only those  items  still in dispute  with  respect  to the  Proposed  Final
     Statements.  Purchaser  and Parent  shall have the  opportunity  to provide
     written  submissions  regarding  their  positions on the disputed  matters,
     which written submissions shall be provided to the Reviewing Accountant, if
     at all, no later than fifteen (15) Business Days after the date of referral
     of the disputed matters to the Reviewing  Accountant.  The determination of
     the Reviewing  Accountant shall be based solely on the written  submissions
     by Purchaser and Parent and their respective  representatives and shall not
     be by independent review. The Reviewing  Accountant shall deliver a written
     report  resolving only the disputed matters and setting forth the basis for

                                       13
<PAGE>

     such resolution within thirty (30) Business Days after Purchaser and Parent
     have submitted in writing (or have had the opportunity to submit in writing
     but have not  submitted)  their  positions  as to the disputed  items.  The
     determination  of the Reviewing  Accountant with respect to the correctness
     of each  matter in  dispute  shall be final and  binding on  Purchaser  and
     Sellers.  The fees, costs and expenses of the Reviewing Accountant shall be
     borne  entirely by the party whose  assertions  regarding the Final Working
     Capital,  Final Closing Cash and Final Closing  Indebtedness  differ in the
     aggregate  by the greatest  amount from the Final  Working  Capital,  Final
     Closing  Cash  and  Final  Closing  Indebtedness,   in  the  aggregate,  as
     determined by the Reviewing  Accountant.  The closing  balance sheet agreed
     upon by Purchaser and Parent (or deemed  accepted by Purchaser)  under this
     subsection,  as adjusted, if necessary based on a decision by the Reviewing
     Accountant hereunder,  is referred to herein as the "Closing Balance Sheet"
     and the final  calculation of the Closing Cash,  Closing  Indebtedness  and
     Working  Capital  reflected on such Closing Balance Sheet shall be referred
     to as the "Final  Closing Cash," "Final  Closing  Indebtedness"  and "Final
     Working Capital," respectively.

          (b) Purchase Price Adjustment.

               (i) If the  Final  Working  Capital  is less  than the  Estimated
          Working  Capital,  then the  Purchase  Price shall be decreased by the
          difference.

               (ii) If the Final  Working  Capital is greater than the Estimated
          Working  Capital,  then the  Purchase  Price shall be increased by the
          difference.

               (iii) If the Final Closing  Indebtedness is less than the Closing
          Indebtedness  reflected  on the  Estimated  Balance  Sheet,  then  the
          Purchase Price shall be increased by the difference.

               (iv) If the  Final  Closing  Indebtedness  is  greater  than  the
          Closing  Indebtedness  reflected on the Estimated  Balance Sheet, then
          the Purchase Price shall be decreased by the difference.

               (v) If the  Final  Closing  Cash is less  than the  Closing  Cash
          reflected on the  Estimated  Balance  Sheet,  then the Purchase  Price
          shall be decreased by the difference.

               (vi) If the Final  Closing  Cash is greater than the Closing Cash
          reflected on the  Estimated  Balance  Sheet,  then the Purchase  Price
          shall be increased by the difference.

     If the Purchase Price,  adjusted as provided above (the "Adjusted  Purchase
Price"),  is greater than the Purchase Price paid by Purchaser at Closing,  then
Purchaser shall pay to Parent the difference between the Adjusted Purchase Price
and the Purchase Price paid at Closing.  If the Adjusted  Purchase Price is less
than the Purchase  Price paid by Purchaser at Closing,  then Parent shall pay to
Purchaser the  difference  between the Adjusted  Purchase Price and the Purchase
Price paid at Closing.  Any payment due pursuant to this Section 2.3(b) shall be
made within ten (10) Business Days after the Closing Balance Sheet becomes final
and  binding as  provided  in Section  2.3(a) by wire  transfer  of  immediately
available funds.

     2.4 Allocation. Schedule 2.4 sets forth an allocation of the Purchase Price
(and all  liabilities  of the Company  treated as assumed by Purchaser and other
capitalized  costs  includible  in the amount  deemed paid for such assets,  for
Income Tax purposes;  provided,  however,  that for the avoidance of doubt,  any
pre-paid IRU  obligations  shall not be includible in the amount deemed paid for
the assets of the  Company)  among the  assets of the  Company  (other  than the
Retained  Assets) in  accordance  with Section 1060 of the Code and the Treasury
regulations thereunder (and any similar provision of state, local or foreign Tax
Law, as  appropriate).  Purchaser  and Sellers and their  respective  Affiliates
shall report, act and file Tax Returns (including,  but not limited to IRS Forms
8594) in all respects and for all purposes consistent with Schedule 2.4. Neither
Purchaser,  Sellers  nor any of  their  respective  Affiliates  shall  take  any
position  (whether in audits,  Tax Returns or otherwise)  which is  inconsistent
with such allocation unless required to do so by applicable Law.

                                       14
<PAGE>

     2.5 Retained Assets; Elimination of Intercompany Debt. It is understood and
agreed by Purchaser that the Company shall transfer all of the Company's  right,
title and interest in, to and under the Retained Assets to an entity  designated
by Parent prior to the Closing and  Purchaser  shall not acquire any interest in
the  Retained   Assets  (or  any  interest   therein)  in  connection  with  the
transactions contemplated hereby.  Immediately prior to the Closing, in order to
extinguish  all  intercompany  indebtedness  owed to or by the  Company by or to
Sellers or any Affiliate of Sellers,  Sellers shall contribute to the capital of
the Company all intercompany  indebtedness owed by the Company to Sellers or any
Affiliate  of  Sellers,  and the  Company  shall  distribute  to CU Capital as a
Retained Asset all intercompany  indebtedness  owed to the Company by Sellers or
any  Affiliate of Sellers.  Parent shall pay and be solely  responsible  for any
Taxes  that  may  result  from  the  transfer  of  the  Retained  Assets  or the
cancellation and extinguishment of the intercompany indebtedness.

     2.6 Purchase  Deposit.  Concurrently  with the execution of this Agreement,
Purchaser has deposited $1.5 million with Parent to be held as provided  herein.
At the Closing,  Sellers shall credit the amount of such deposit,  along with an
amount  equal to 4.3% per annum on the deposit  calculated  from the date of the
deposit to the  application  of the deposit in  accordance  with this  Agreement
(such amount, along with the $1.5 million deposit, the "Deposit") as part of the
Purchase  Price,  and such amount shall  reduce the amount  payable by Purchaser
pursuant to Section 2.2(a). If this Agreement is terminated  pursuant to Section
8.4(c) (if such  termination is a result of  Purchaser's  failure to fulfill any
obligation  under this  Agreement  or the failure to satisfy the  condition  set
forth in Section 6.9),  8.4(d),  or 8.4(f) then Parent shall retain such amount.
If this Agreement is terminated for any other reason,  the Deposit shall be paid
by Parent to Purchaser within ten (10) Business Days of such termination.

                                   ARTICLE 3.
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers each  represent and warrant to Purchaser as follows,  except as set
forth  on the  Schedules  hereto,  on the  date  of  this  Agreement  (and  such
representations  and warranties  shall be deemed made on the Closing Date except
to the extent that any such  representation or warranty is made solely as of the
date hereof or as of another date earlier than the Closing Date):

     3.1 Authority of Sellers.  Parent is validly  existing and in good standing
under the laws of the State of Delaware,  and has all requisite  corporate power
and  authority to enter into this  Agreement  and to carry out the  transactions
contemplated  herein.  CU Capital is validly existing and in good standing under
the laws of the  State of  Delaware,  and has all  requisite  limited  liability
company  power and  authority to enter into this  Agreement and to carry out the
transactions  contemplated  herein.  The execution,  delivery and performance of
this  Agreement by Sellers has been duly  authorized by all necessary  corporate
action in the case of Parent and all necessary  limited liability company action
in the case of CU Capital. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes the legal, valid and binding obligation
of each Seller,  enforceable  against such Seller in accordance  with its terms,
except as may be limited by (a) applicable bankruptcy,  insolvency,  moratorium,
reorganization  or  similar  Laws  from  time  to time in  effect  which  affect
creditors'  rights  generally,  or (b) legal and  equitable  limitations  on the
availability of specific remedies.

                                       15
<PAGE>

     3.2 Capitalization; Ownership. All the issued and outstanding ownership and
membership  interests  in CU Capital  are issued to and owned by Parent and have
been duly authorized and validly issued. The Purchased  Interests,  all of which
are issued to and owned by CU Capital,  constitute all the outstanding ownership
and  membership  interests in the Company.  All of the Purchased  Interests have
been duly  authorized and validly  issued.  Except as set forth on Schedule 3.2,
neither of Sellers nor the Company is a party to or bound by any (referred to as
an "Agreement to Sell")  contract,  agreement or arrangement  to issue,  sell or
otherwise  dispose of or redeem,  purchase or otherwise  acquire any  membership
interests  in the  Company  or any other  security  of the  Company or any other
security  exercisable or  exchangeable  for or  convertible  into any membership
interests in the Company or any other  security of the Company,  and,  except as
set forth in this  Agreement  or on  Schedule  3.2,  neither of Sellers  nor the
Company is a party to or bound by any outstanding option, warrant or other right
to subscribe for or purchase, or contract, agreement or arrangement with respect
to, any  membership  interests or any other security of the Company or any other
security  exercisable or  exchangeable  for or  convertible  into any membership
interests  or any other  security  of the  Company  (referred  to as an  "Option
Agreement").  The Company is not a party to or bound by any agreement to provide
funds to or make any investment (in the form of a loan, capital  contribution or
otherwise)  in any other  entity.  No ownership or  membership  interests of the
Company were issued in  violation or  contravention  of any  securities  Laws or
regulations  or in violation of any  preemptive  rights of any person or entity.
The Purchased Interests are not represented by certificates.

     3.3 Organization; Subsidiaries.

          (a) The Company is a limited liability company validly existing and in
     good  standing  under the laws of the State of Delaware and has the limited
     liability  company  power  and  authority  to own,  lease and  operate  its
     properties and carry on its business as now being conducted. The Company is
     duly qualified to do business and is in good standing in each  jurisdiction
     where the conduct of its business or ownership of its  properties  requires
     such  qualification,  except  where the  failure  to so  qualify  would not
     reasonably be expected to have a Material Adverse Effect.

          (b) Except  for  Electric  Lightwave  NY,  LLC (the  "Subsidiary"),  a
     Delaware limited liability company, and as set forth on Schedule 3.3(b)(i),
     the Company does not own or control,  directly or indirectly,  any interest
     in any entity.  As of the date hereof,  the Company owns all the issued and
     outstanding  ownership and membership interests in the Subsidiary.  None of
     Sellers,  the  Company  or the  Subsidiary  is a party  to or  bound by any
     Agreement to Sell or Option  Agreement with respect to the Subsidiary.  The
     Subsidiary  is a limited  liability  company  validly  existing and in good
     standing  under  the laws of the  State  of  Delaware  and has the  limited
     liability  company  power  and  authority  to own,  lease and  operate  its
     properties and carry on its business as now being conducted. The Subsidiary
     is duly  qualified to do business  and is in good  standing in the State of
     New York.  The  Subsidiary  has no assets  other than the assets  listed on
     Schedule 3.3(b)(ii) and does not engage in any business.

     3.4 No  Conflicts;  Consents and  Approvals.  The execution and delivery of
this  Agreement by Sellers does not, and the  consummation  of the  transactions
contemplated   hereby  and  the  performance  by  Sellers  of  their  respective
obligations  hereunder,  assuming  the  receipt  of  the  Governmental  Required
Consents and the consents,  approvals  and waivers  listed on Schedule 3.4, will
not:  (a) violate or conflict  with any term,  condition or provision of (i) the
charter,  operating agreement,  by-laws or analogous  organizational document of
either  of  Sellers  or the  Company,  (ii) any  agreement,  lease,  instrument,
mortgage,  License or  franchise  to which either of Sellers or the Company is a
party or by which any of their respective  properties are bound (other than with
respect  to the  Retained  Assets),  or (iii)  any Law  applicable  to either of
Sellers or the Company and which  violation  would,  in the case of clauses (ii)
and (iii),  reasonably  be expected to have a Material  Adverse  Effect;  or (b)
result in the  creation of any Lien upon any of the  properties  material to the

                                       16
<PAGE>

Company  (or any  interest of Sellers in the  Company) or give to others  (other
than to  Purchaser)  any interest or right in any of their  respective  material
properties, including a right to purchase any of such properties. Except for the
Governmental  Required  Consents,  and for  such  consents,  authorizations  and
approvals as set forth on Schedule 3.4, no authorization,  consent,  or approval
of, or filing with, any  Governmental  Authority is required in connection  with
the execution  and delivery of, or  performance  by Sellers of their  respective
obligations under, this Agreement.  Except for the consents,  authorizations and
approvals set forth on Schedule 3.4, any consents,  authorizations and approvals
in connection with the Retained  Assets,  and those, the failure to obtain which
would  not  result  in  the  loss  of  a  material  right  of  the  Company,  no
authorization,  consent or approval of, or filing with, any third-party  that is
not a  Governmental  Authority is required in connection  with the execution and
delivery of, or performance by Sellers of their  respective  obligations  under,
this Agreement.

     3.5 Real Property; Network and Condition of Assets.

          (a) Owned Real  Property.  Schedule  3.5(a)  lists each parcel of real
     property owned by the Company (other than the Retained Assets) along with a
     corresponding  street address for each parcel (the "Owned Real  Property").
     The  Company is the sole owner in fee simple  title of each parcel of Owned
     Real Property.  The Company has good and marketable title to each parcel of
     Owned  Real  Property,  free and clear of any Liens  other  than  Permitted
     Liens.  No  Owned  Real  Property,  including  buildings  and  improvements
     thereon,  is in material  violation  of any  material  zoning,  land use or
     similar Laws. To Sellers'  knowledge,  there are no Laws requiring material
     repair, alteration or correction of any existing condition on any parcel of
     Owned Real Property.  To Sellers'  knowledge,  the premises  located on the
     Owned Real Property are in good condition and repair and are sufficient for
     the Business being conducted  thereon,  ordinary wear and tear excepted and
     subject  to  normal  maintenance  and  repair  in the  ordinary  course  of
     business.

          (b) Leased Real  Property.  Schedule  3.5(b)  describes  all  material
     leases, subleases,  licenses,  easements, rights of way and other occupancy
     agreements,  including network and line leases,  (each of the foregoing,  a
     "Real Property  Agreement" and the premises leased thereunder,  the "Leased
     Real  Property,"  which is referred to herein  collectively  with the Owned
     Real Property as the "Real  Property") to which the Company is a party. The
     Real  Property  Agreements  are  the  only  leases,  subleases,   licenses,
     easements, rights-of-way or other occupancy agreements that are material to
     the operation of the Business in the ordinary course as presently conducted
     by the  Company.  The  Company  does not use or occupy  any  material  Real
     Property,  including  buildings,  improvements and points of presence,  for
     which the Company does not have a right to use or occupy such material Real
     Property pursuant to a Real Property Agreement.  The Company has a good and
     valid  leasehold  interest  in and to, and is in  occupancy  of, all of the
     Leased Real Property  under which it is a tenant or lessee,  free and clear
     of any Liens other than  Permitted  Liens.  All Leased Real Property of the
     Company that is material to the Business is in all material respects in the
     condition  required  of such  property  by the  terms of the Real  Property
     Agreement  applicable  thereto and is in adequate condition for its current
     operation and use.

          (c) Certain Network  Agreements.  Schedule  3.5(c)(i) lists all of the
     Franchise Agreements, including each modification, amendment and supplement
     thereto.  Schedule  3.5(c)(ii)  lists (i) each  interconnection  or similar
     agreement  that is necessary to the  operation of the Business as currently
     conducted  by the  Company,  including  each  modification,  amendment  and
     supplement  thereto  ("Interconnection   Agreement"),   together  with  the
     counterparty,   and  (ii)  each   material   telecommunications   and  data
     carrier/vendor  or similar  agreement (other than any Retained  Contracts),
     including each  modification,  amendment and supplement  thereto  ("Carrier
     Agreement"),   together  with  the   counterparty.   Each   Interconnection
     Agreement,  including each amendment or modification thereto and each other
     Communications Contract, including any access charge arrangements, that, in
     each  case,  are  required  to be  filed  by the  Company,  or to  Sellers'
     knowledge,  except as set forth on  Schedule  3.5(c)(iii),  the other party

                                       17
<PAGE>

     thereto, with a Governmental Authority, has been duly and timely filed with
     the  appropriate  Governmental  Authority.  Except as set forth on Schedule
     3.5(c)(iv), there are no written, or to Sellers' knowledge, other, disputes
     or claims of any kind over $100,000 (individually or in the aggregate) with
     respect to any of the Network  Agreements.  Except as set forth on Schedule
     3.5(c)(v), there are no written, or to Sellers' knowledge, other, claims or
     notices  from a third  party  alleging  or  advising  the  Company  that it
     considers  the  Company  liable for any tariff or other  payment of due but
     unpaid  interstate or intrastate  access charges or it believes the Company
     has  provided  services to Voice over IP services  providers  or other data
     service  providers  that are claimed to be in violation of federal or state
     Law or that  have  caused  the  Company  to be  liable  for  intrastate  or
     interstate access charges or other fees or charges that the Company has not
     paid.  Schedule 3.5(c)(vi) lists each payment or performance bond or letter
     of credit or other credit support for the Company's  obligations  under any
     Network Agreement (regardless of the Person providing such support).

          (d)  Metropolitan  Access Network.  Sellers have provided to Purchaser
     maps  showing  in  reasonable  detail  the  Metropolitan   Access  Network,
     including,  in reasonable  detail, (i) the switching and transport network,
     which  identifies  by type and location all of the  Company's  switching or
     concentrator sites where the Company has purchased and installed  switching
     assets,  (ii) the  routes of all fiber,  buried  conduit  and copper  plant
     installed  and  owned by the  Company,  (iii) the  routes of all  transport
     facilities which the Company leases or obtains from others,  (iv) the fiber
     routes or lines,  (v) approximate  number of fibers  available in each such
     fiber route,  and (vi) approximate  route miles in the Metropolitan  Access
     Network.  The Company owns or has a valid and existing right to use, attach
     or locate  (including  pole  attachments)  pursuant to a license,  lease or
     other written agreement  ("Metropolitan Access Network Agreement"),  all of
     the  equipment  and  fiber in the  Metropolitan  Access  Network.  Schedule
     3.5(d)(i) sets forth any material  Metropolitan  Access  Network  Agreement
     (not  otherwise  listed on Schedule 3.5),  together with the  counterparty.
     There are no other material agreements,  including maintenance  agreements,
     related to the  Metropolitan  Access Network,  other than those on Schedule
     3.5(d)(i) or otherwise  set forth in Schedule  3.5. The Company has paid or
     pre-paid,  among others,  the obligations  associated with the Metropolitan
     Access Network Agreements set forth on Schedule 3.5(d)(ii).

          (e) Long Haul Fiber  Route.  Sellers have  provided to Purchaser  maps
     showing in  reasonable  detail the Long Haul Fiber Route,  and which depict
     the number and location of all  regeneration  facilities in the route,  the
     fiber routes or lines,  approximate number of fibers available in each such
     fiber route, and approximate  route miles in the Long Haul Fiber Route. The
     Company has a valid and existing right to use,  pursuant to a lease, IRU or
     other  written  agreement   (including  any  swap  agreement,   "Long  Haul
     Agreement"),  all of the  equipment  and fiber  reflected  on the Long Haul
     Fiber  Route  maps.  Schedule  3.5(e)(i)  lists  each  material  Long  Haul
     Agreement,  together  with the  counterparty.  There are no other  material
     agreements,  including  maintenance  agreements,  related  to the Long Haul
     Fiber Route,  other than those on Schedule 3.5(e).  The Company has paid or
     pre-paid,  among  others,  the  obligations  associated  with the Long Haul
     Agreements set forth on Schedule 3.5(e)(ii).

          (f) Fiber. The fiber reflected on the Metropolitan Access Network maps
     and the  Long  Haul  Fiber  Route  maps are all of the  fiber  used for the
     conduct of the Business as presently  conducted by the Company.  All of the
     fiber  owned by the  Company  is free and  clear of any  Lien,  other  than
     Permitted Liens.  The  Metropolitan  Access Network and the Long Haul Fiber
     Route  comply,  and have  been  maintained  and  perform,  in all  material
     respects,  with  applicable  Bellcore,  Underwriters'  Laboratory,  Network
     Equipment   Building   Standards  and   Electronic   Industry   Alliance  -
     Telecommunications Industry Association standards or equivalents. All fiber
     in the  Metropolitan  Access Network and the Long Haul Fiber Route has been
     built and installed substantially in accordance with applicable permits and
     the Metropolitan Access Network and the Long Haul Fiber Route are currently
     operational.

                                       18
<PAGE>

          (g) Equipment and Other Assets.  Schedule 3.5(g) lists, as of December
     31, 2005, all personal  property of the Company,  including  Communications
     Equipment (other than fiber or equipment  otherwise  referenced in Schedule
     3.5),  which is  material to the  operation  of the  Business as  presently
     conducted by the Company,  such Schedules setting forth the location of the
     assets as of such date. Except as set forth on Schedule 3.5(g), the Company
     owns or has a valid right to use all items of Communications  Equipment and
     other  personal  property  assets  used in the  conduct of the  Business as
     presently conducted by the Company. The assets of the Company necessary for
     the conduct of the  Business as presently  conducted by the Company  (other
     than the Retained Assets) are in good working order (ordinary wear and tear
     excepted),  are, to Sellers'  knowledge,  free from any material defect and
     have been  maintained in all material  respects in accordance with the past
     practice of the Company. The Company has good and transferable title to all
     of its  Communication  Equipment and other material  personal  property and
     assets  (other  than  (i) the  Retained  Assets  and (ii)  leased  personal
     property  and assets,  with respect to which the Company has good and valid
     leasehold  interests  other than set forth on  Schedule  3.5(g)),  free and
     clear of all Liens, except Permitted Liens. The Sellers have made available
     to Purchaser  true,  correct and complete  copies of the material  personal
     property leases, together with all amendments, modifications or supplements
     thereto.  Each of the material personal  property leases is valid,  binding
     and  enforceable  against each Company and, to the knowledge of the Company
     and the Sellers,  the other parties  thereto in accordance  with its terms.
     All  leased  personal  property  of the  Company  that is  material  to the
     Business  is in all  material  respects in the  condition  required of such
     property by the terms of the lease applicable thereto.

     3.6 Intellectual Property.

          (a) Except as set forth on Schedule  3.6(a),  the Company  owns or has
     the  right to use  (exclusive  of  Sellers)  pursuant  to  valid  licenses,
     sublicenses, agreements or permissions, obtained either directly or through
     Parent,  all material  items of  Intellectual  Property  necessary  for the
     operation of the Business as presently  conducted,  including  Licenses for
     software  for   Communications   Equipment.   At  Closing,   each  item  of
     Communications  Equipment will operate under a CALEA compliant version (for
     the purposes for which the Company is using such Communications  Equipment)
     of the software used to operate the Communications Equipment.

          (b) Except as set forth on Schedule  3.6(b),  since December 31, 2002,
     the Company has not received any written  notice  alleging that the Company
     has infringed upon any  Intellectual  Property rights of third parties.  To
     Sellers'  knowledge,  the Company has not infringed  upon any  Intellectual
     Property  rights of third  parties,  except  for  matters  that  would not,
     individually  or in the  aggregate,  have a  Material  Adverse  Effect.  To
     Sellers' knowledge,  except as set forth on Schedule 3.6(b), since December
     31,  2002,  no third party has  infringed  upon any  Intellectual  Property
     rights of the Company,  except for matters that (i) would not, individually
     or in the aggregate,  have a Material  Adverse Effect and/or (ii) relate to
     Intellectual Property rights included in the Retained Assets.

          (c) Schedule 3.6(c)  identifies each issued patent and each registered
     trademark,  service  mark,  domain name,  IP numbering  blocks,  autonomous
     system  numbers  and  copyright  owned by the  Company  (other  than  those
     included  in the  Retained  Assets)  and  identifies  each  pending  patent
     application or other  application for registration  that has been made with
     respect to any  Intellectual  Property owned by the Company (other than the
     Retained Assets).  With respect to each item of Intellectual Property owned
     by the Company, except for matters set forth in Schedule 3.6(c):

               (i) the Company possesses all right, title and interest in and to
          the item, free and clear of any Lien, except for Permitted Liens; and

                                       19
<PAGE>

               (ii)  no  proceeding  is  pending  or,  to  Sellers'   knowledge,
          threatened  which challenges the legality,  validity,  enforceability,
          use or ownership of the item.

          (d) Schedule  3.6(d)  identifies  each material  item of  Intellectual
     Property that any third party (including,  for this purpose, Parent and its
     other  Affiliates)  owns and that the Company  uses  pursuant to a license,
     sublicense, agreement or with permission, such Schedule listing the license
     or  agreement  and any related  maintenance  agreement.  Sellers  have made
     available to Purchaser copies of all such licenses, sublicenses, agreements
     and permissions and any related maintenance  agreement,  each as amended to
     date. With respect to each such item of Intellectual Property identified on
     Schedule 3.6(d):

               (i) the license, sublicense, agreement or permission covering the
          item is in full force and effect;

               (ii) the Company has not received  written  notice  regarding any
          actual or alleged material breach, violation or failure to comply with
          any such license, sublicense,  agreement or permission and the Company
          is in material compliance with any such license, sublicense, agreement
          or permission and any related maintenance agreement;

               (iii)  neither  Seller  has  knowledge  of any  material  breach,
          violation  or failure to comply  under any such  license,  sublicense,
          agreement or permission by the other party or parties thereto;

               (iv)  to  Sellers'   knowledge,   no  proceeding  is  pending  or
          threatened which challenges the legality,  validity or  enforceability
          of the underlying item of Intellectual Property;

               (v) the Company has not granted any  sublicense  or similar right
          with respect to the license, sublicense, agreement or permission;

               (vi)  except  as set  forth  on  Schedule  3.6(d),  there  are no
          maintenance  fees, "right to use" fees,  license fees, taxes,  annuity
          fees or other costs with respect to any license, sublicense, agreement
          or permission covering the item in excess of $25,000 per month.

     (e) There are no  outstanding  or unpaid  (whether or not billed) "right to
use" or similar fees for any Intellectual  Property that the Company owns, has a
right to use or uses,  including  those arising out of or related to an audit of
"right to use" fees associated with switches.

     3.7 Financial Statements; Absence of Undisclosed Liabilities.

          (a) The Financial  Statements,  which are attached  hereto as Schedule
     3.7, and the Audited  Financial  Statements,  when  delivered to Purchaser,
     will:

               (i) have been  prepared  from,  and are in accordance  with,  the
          books and records of the Company,

               (ii) have been  prepared  in  accordance  with GAAP  applied on a
          consistent  basis during the periods  involved (except with respect to
          the Financial Statements (x) for the absence of footnotes, (y) for the
          absence  of  normal  year-end  adjustments,  and (z) with  respect  to
          determining materiality for purposes of GAAP, the Financial Statements
          were prepared based on materiality  relating to the Parent rather than
          materiality   relating  to  the  Company  and  the   Subsidiary  on  a
          stand-alone basis (collectively the "GAAP Exceptions")),

                                       20
<PAGE>

               (iii) present fairly,  in all material  respects (with respect to
          the  Company),  the  financial  position  of  the  Company  as of  the
          referenced  dates and the results of operations  and cash flows of the
          Company for the periods presented.

     (b) The books of account and other  financial  records of the Company:  (i)
reflect all  material  items of income and expense and all  material  assets and
liabilities  required to be reflected therein in accordance with GAAP applied on
a consistent basis during the periods covered by the Financial  Statements,  and
(ii) are in all material respects complete and correct.

     (c) Schedule  3.7(c) sets forth the detailed  profit and loss statements of
the Company and each  territory of  operation  for each of the nine months ended
September 30, 2005 (the "Internal P&L Statements").  The Internal P&L Statements
were  derived from the books and records of the Company and reflect what Sellers
believe to be a reasonably  appropriate  allocation of revenue and expense among
the Company's territories, which allocation methodologies have been applied on a
consistent basis through the periods referred to above and on a basis consistent
with past  preparation of such  statements by the Company and Parent.  Given the
allocation  methodologies referred to above, the Internal P&L Statements,  taken
as a whole, fairly present, in all material respects,  the information set forth
therein. The Internal P&L Statements eliminate, or do not reflect,  intercompany
revenue.

     (d)  Schedule  3.7(d) sets forth the churn,  renewals  and new sold monthly
recurring  revenue by channel of the Company  for (i) each of the twelve  months
ended  December  31, 2004 and (ii) each of the nine months ended  September  30,
2005 and the twelve months ended December 31, 2005. Such  information is derived
directly  from the  Company's  billing  systems and is presented on a consistent
basis through the periods referred to above and consistent with past preparation
by the Company and Parent.

     (e) The Company has no liability or obligation (whether absolute,  accrued,
contingent  or  otherwise)  ("Liability"),   including  any  Liability  for  any
Indebtedness,  except: (i) Liabilities  reflected or reserved against in, or set
forth on, the Latest Balance Sheet;  (ii)  liabilities that are disclosed in the
Schedules;  and (iii)  Liabilities that either (A) were incurred in the ordinary
course of business since the Latest Balance Sheet,  (B) would not be required to
be  reflected  on,  reserved  against  or set forth on a balance  sheet or notes
thereto,  prepared in accordance  with GAAP (with respect to the Company) or (C)
are not material in amount or  significance  to the Company.  The Company has no
capital lease obligations, other than as set forth on Schedule 1.1(a).

     (f) Parent maintains internal controls over financial reporting  ("Internal
Controls") which are designed to provide reasonable assurance,  but not absolute
assurance,  that (i) records are maintained in reasonable  detail, to accurately
and  fairly  reflect  the  transactions  and  dispositions  of the assets of the
Company;  (ii)  transactions are recorded as necessary to permit  preparation of
financial statements in accordance with GAAP, and that receipts and expenditures
of the  Company  are  being  made  only in  accordance  with  authorizations  of
management  and  directors  of the Company;  and (iii)  access to the  Company's
assets is permitted  only in  accordance  with  management's  authorization.  No
representation  or warranty  is made in this  Section  3.7(f) that the  Parent's
Internal Controls will prevent all error or all fraud.

     (g) The notes and accounts receivable of the Company are reflected properly
in all  material  respects  on its books and records and have arisen out of bona
fide sales and  deliveries of goods,  performance of services and other business
transactions in the ordinary course of business consistent with past practice.

                                       21
<PAGE>

     3.8 No Material Adverse Change.  Except as set forth on Schedule 3.8, since
September 30, 2005 there has not occurred any change in the condition (financial
or  otherwise)  or results of  operations  of the Company  that has had or would
reasonably be expected to have a Material Adverse Effect.

     3.9 Tax Matters. Except as set forth in Schedule 3.9:

          (a) the Company and each  Affiliated  Group of which the Company is or
     has been a member (but only for the Taxable Period during which the Company
     has been a member thereof) has filed,  or has had filed on its behalf,  all
     Income Tax Returns  and other  material  Tax Returns  required to have been
     filed by or with respect to it and has directly,  or has had on its behalf,
     paid or withheld, all Income Taxes and other material Taxes (whether or not
     shown on any Tax Returns as owing) due and payable by it,  except for Taxes
     being  contested in good faith, in which case the Company has made adequate
     provision in the Financial Statements in accordance with GAAP (applied on a
     consistent  basis  with  the  Financial   Statements  and  subject  to  the
     exceptions set forth in Section  3.7(a)(ii))  for such Taxes.  All such Tax
     Returns were at the time they were filed true,  correct and complete in all
     material respects;

          (b)  there  have been no  waivers  or  extensions  of any  statute  of
     limitations filed with any Governmental Authority responsible for assessing
     or collecting Taxes of, or with respect to, the Company or the Business, or
     with respect to any Tax Return of, or which includes, the Company;

          (c) there is no  material  action,  suit,  proceeding,  investigation,
     audit, claim or assessment pending or, to Sellers' knowledge, proposed with
     respect to any liability for Tax of, or with respect to, the Company or the
     Business,  or with  respect to any Tax Return  of, or which  includes,  the
     Company.  No power of attorney  with respect to any Taxes has been executed
     or filed with any  Governmental  Authority  by or on behalf of the  Company
     that currently is in effect;

          (d) there are no material  Liens for Taxes on any of the assets of the
     Company other than Liens for Taxes not yet due and payable;

          (e) no claim has ever been made in writing,  or  otherwise to Sellers'
     knowledge,  by a  Governmental  Authority  in any  jurisdiction  where  the
     Company, or any of the Sellers with respect to the Company or the Business,
     does not file Tax Returns  that the  Company,  or any of the  Sellers  with
     respect to the Company or the Business, is or may be subject to Tax by that
     jurisdiction.  The  Company  (i) has never  been a member of an  Affiliated
     Group  (other than the  Affiliated  Group of which the Parent is the common
     parent),  and (ii) has no liability for the Taxes of any Person (other than
     itself) under Treasury  Regulations  Section 1.1502-6 (or any corresponding
     provision of state, local or foreign Law), or as a transferee or successor,
     or by  contract,  or  otherwise.  The  Company  is not a  party  to any Tax
     allocation, sharing, indemnification or similar agreement;

          (f) (i) the amount of the Company's liability for unpaid Taxes for all
     periods ending on or before the date of the Financial  Statements does not,
     in the  aggregate,  exceed by a material  amount the amount of the  current
     liability  accruals for Taxes (excluding  reserves for deferred Taxes) with
     respect  to the  Company,  as such  accruals  are  reflected  on the Latest
     Financial Statements,  (ii) from and after the date of the Latest Financial
     Statements  no  liability  for Taxes has been (or prior to Closing will be)
     incurred by the Company  other than in the ordinary  course of business and
     consistent  with past  practices,  and (iii)  the  amount of the  Company's
     liability for unpaid Taxes for all Pre-Closing Tax Periods and that portion
     of a Straddle  Period  relating to the period  ending on the  Closing  Date
     shall not, in the  aggregate,  exceed the amount of the  current  liability
     accruals  for  Taxes  (excluding  reserves  for  deferred  Taxes),  as such
     accruals are reflected in the Closing Balance Sheet;

                                       22
<PAGE>

          (g) CU Capital has been properly  classified  as a "domestic  eligible
     entity" disregarded as an entity separate from Parent within the meaning of
     Treasury  Regulations  Section  301.7701-3(b)(1)(ii)  (and  any  comparable
     provisions  of state,  local or foreign  Law) since  February 4, 2003.  The
     Company  has been  properly  classified  as a  "domestic  eligible  entity"
     disregarded  as an entity  separate  from  Sellers  within  the  meaning of
     Treasury  Regulations  Section  301.7701-3(b)(1)(ii)  (and  any  comparable
     provisions of state,  local or foreign Law) since December 31, 2002 and the
     Subsidiary has made a valid election,  effective as of January 20, 2004, to
     be classified as a corporation  within the meaning of Treasury  Regulations
     Section  301.7701-3(c)  (and any comparable  provisions of state,  local or
     foreign Law) and will  continue to be properly  classified as a corporation
     through the Closing Date;

          (h) the Company has withheld and paid all Taxes  required to have been
     withheld and paid in connection with amounts paid or owing to any employee,
     stockholder,  independent  contractor,  creditor or other third party.  The
     Company is not obligated to make any payment or payments and is not a party
     to (or a  participating  employer  in) any  agreement  or Benefit Plan that
     could  obligate it or Purchaser to make any payment or payments  that would
     not be deductible  because of the  application  of Section 280G of the Code
     (or any similar  provision of state,  local or foreign  Law), or that would
     give rise to  additional  Taxes or interest  under Section 409A of the Code
     (or any similar provision of state, local or foreign Law);

          (i) the  Purchaser  will not be required to include any item of income
     in, or exclude any item of deduction  from,  taxable income for any Taxable
     Period (or portion  thereof)  ending  after the Closing Date as a result of
     any:  (i)  change  made  on or  prior  to the  Closing  Date in  method  of
     accounting  for a Taxable  Period  ending on or prior to the Closing  Date;
     (ii)  "closing  agreement" as described in Section 7121 of the Code (or any
     similar provision of state, local or foreign Income Tax Law) executed on or
     prior to the Closing Date; (iii) intercompany  transactions occurring at or
     prior to the Closing or any excess  loss  account in  existence  at Closing
     described in Treasury  Regulations  under  Section 1052 of the Code (or any
     similar  provision  of state,  local or foreign  Income  Tax Law);  or (iv)
     installment  sale or open  transaction  disposition made on or prior to the
     Closing Date; and

          (j) the Company has not  engaged in, or has any  commitment  to engage
     in,  a  "reportable  transaction"  as  set  forth  in  Treasury  Regulation
     1.6011-4(b) or any transaction that is the same as or substantially similar
     to one of the types of transactions  that the Internal  Revenue Service has
     determined  to be a tax  avoidance  transaction  and  identified by notice,
     regulation,  or other form of published guidance as a "listed transaction,"
     as set forth in Treasury Regulations Section 1.6011-4(b)(2).

     3.10  Litigation.  Except  as set forth on  Schedule  3.10 and  except  for
administrative agency proceedings of general applicability,  there is no demand,
claim,  suit, action,  arbitration or legal,  administrative or other proceeding
pending or, to Sellers' knowledge,  any pending investigation or audit or any of
the foregoing  threatened against the Company or any of its officers,  managers,
directors,  employees,  assets,  properties  or  businesses  and relating to the
Business or properties of the Company that:

          (a) relates to or is reasonably  likely to involve more than $100,000;

          (b) seeks any material injunctive relief; or

          (c) seeks to enjoin or obtain damages with respect to the consummation
     of the transactions contemplated hereby.

     The Company has no liability  to Qwest with respect to the dispute  covered
by that certain letter agreement described on Schedule 3.10 hereto.

                                       23
<PAGE>

     3.11 Employee Benefits and Related Matters.

          (a) Set forth on Schedule  3.11(a) is a list of all Benefit Plans that
     are sponsored or maintained or  contributed  to by Parent (each,  a "Parent
     Plan").  Neither  the  Company  nor the  Purchaser  will have any  material
     liability of any kind (whether direct or contingent) after the Closing with
     respect to any Parent Plan.

          (b) Set forth on Schedule  3.11(b) is a list of all Benefit Plans that
     are  sponsored  or  maintained  by the Company  (each,  a "Company  Benefit
     Plan").  With  respect  to each  Company  Benefit  Plan,  the  Company  has
     delivered or made available to Purchaser a true,  correct and complete copy
     of each writing  constituting  a part of such Company  Benefit Plan (or, in
     the case of  unwritten  Company  Benefit  Plans,  a complete  and  accurate
     description of each such Company  Benefit Plan). No Company Benefit Plan is
     intended to be a "qualified  plan" within the meaning of Section  401(a) of
     the Code.  Except  as  specifically  provided  in the  foregoing  documents
     delivered or made  available to  Purchaser,  there are no amendments to any
     Company Benefit Plan that have been adopted or approved nor has the Company
     undertaken  to make any such  amendments  or to  adopt or  approve  any new
     Company Benefit Plan. There has been no amendment,  interpretation or other
     announcement  (written or oral) by the Company, any of its ERISA Affiliates
     or any other  Person  relating to, or change in  participation  or coverage
     under,  any Company Benefit Plan that,  either alone or together with other
     such items or events,  could materially increase the expense to the Company
     of  maintaining  such Company  Benefit Plan (or the Company  Benefit  Plans
     taken as a whole) above the level of expense  incurred with respect thereto
     for the most recent fiscal year included in the Financial Statements.

          (c) All of the Company  Benefit  Plans comply (and have,  at all times
     complied)  in form  and in  operation  in all  material  respects  with all
     applicable  requirements  of Law and  each  Company  Benefit  Plan has been
     administered  at all times and in all material  respects in accordance with
     its terms. All of the Parent Plans comply (and have, at all times complied)
     in form and in operation with all applicable requirements of Law, including
     the Code and ERISA and have been  administered in all material  respects in
     accordance  with their terms,  except,  in each case,  for such  compliance
     failures and/or administration failures that would not result in a material
     liability  to  the  Company.   There  has  been  no  nonexempt  "prohibited
     transactions" (as described in Section 406 of ERISA and Section 4975 of the
     Code) with respect to any of the Company Benefit Plans that could result in
     a material liability to the Company.

          (d) Each Benefit Plan that is intended to be qualified  under  Section
     401(a)  of  the  Code  (i)  is  the  subject  of  an  unrevoked   favorable
     determination  letter  from the IRS with  respect to its  qualified  status
     under the Code, as amended by the Tax Reform Act of 1986 and all subsequent
     legislation,  including,  without  limitation,  that  legislation  commonly
     referred  to as "GUST" and  "EGTRRA,"  (ii) has  remaining a period of time
     under the Code or applicable Treasury  regulations or IRS pronouncements in
     which to  request,  and make any  amendments  necessary  to obtain,  such a
     letter from the IRS, or (iii) is a prototype or volume  submitter plan that
     is  entitled,  under IRS  Announcement  2001-77,  to rely on the  favorable
     opinion or advisory  letter  issued by the IRS to the  prototype  or volume
     submitter plan sponsor of the Seller Savings Plan. Nothing has occurred, or
     is  reasonably  expected by the Company or any of its ERISA  Affiliates  to
     occur,  that could adversely  affect the  qualification or exemption of the
     Seller Savings Plan or its related trust or group annuity contract.

          (e) With  respect to each  Benefit Plan  sponsored  or  maintained  or
     contributed  to (or required to be sponsored or maintained  or  contributed
     to) by the  Company or any of its ERISA  Affiliates  at any time during the
     last six  years  that is  subject  to Title IV or  Section  302 of ERISA or
     Section  601 et seq.  of ERISA or Section  412,  4971 or 4980B of the Code,
     there does not now exist, nor, to Sellers' knowledge,  do any circumstances
     exist that could  result in, any  Controlled  Group  Liability  (as defined

                                       24
<PAGE>

     below) that would be a  liability  of the Company  following  the  Closing.
     "Controlled  Group  Liability"  means any  liability  (i) under Title IV or
     Section 302 of ERISA or Section 412 or 4971 of the Code or (ii) as a result
     of the failure to comply with the  continuation  coverage  requirements  of
     Section 601 et seq.  of ERISA or Section  4980B of the Code,  and,  without
     limiting the foregoing, neither the Company nor any of its ERISA Affiliates
     has engaged in any transaction described in Section 4069 or Section 4204 or
     4212 of ERISA.  For purposes of this Agreement,  "ERISA  Affiliate"  means,
     with respect to any entity,  trade or business,  any other entity, trade or
     business that is a member of a group described in Section 414(b),  (c), (m)
     or (o) of the Code or Section  4001(b)(1)  of ERISA that includes the first
     entity,  trade or  business,  or that is a member  of the same  "controlled
     group"  as  the  first  entity,  trade  or  business  pursuant  to  Section
     4001(a)(14) of ERISA.  Neither the Company nor any of its ERISA  Affiliates
     has sponsored or maintained or  contributed to (or been required to sponsor
     or maintain or contribute  to) any Benefit Plan that is (or was) subject to
     Title IV of ERISA or  Section  302 of ERISA or  Section  412 or 4971 of the
     Code and that covered  employees of the Company at any time during the last
     six years.

          (f) Except as set forth on Schedule  3.11(f)  and for the  accelerated
     vesting  under the Seller  Savings  Plan  contemplated  by Section  5.5(c),
     neither the execution and delivery of this  Agreement nor the  consummation
     of the transactions contemplated by this Agreement will (either alone or in
     conjunction with any other event) result in, cause the accelerated vesting,
     funding or delivery  of, or increase the amount or value of, any payment or
     benefit to any employee,  officer or director of the Company,  or result in
     any  limitation on the right of the Company to amend,  merge,  terminate or
     receive a reversion of assets from any Company  Benefit Plan or Parent Plan
     or related  trust.  The terms of each Company  Benefit Plan and Parent Plan
     permit the Company or Seller,  as  applicable,  to amend and terminate such
     Benefit Plan or permit the Company to terminate its  participation  therein
     at any  time  and for any  reason  without  penalty  and  without  material
     liability  or  expense.  None of the  rights  of the  Company  or any ERISA
     Affiliate  under  any  Benefit  Plan  will be  impaired  in any way by this
     Agreement or the  consummation  of the  transactions  contemplated  by this
     Agreement.

          (g) Except as set forth on Schedule 3.11(g),  none of the Company, any
     of its ERISA  Affiliates or any Benefit Plan provides or has any obligation
     to  provide  (or  contribute  toward  the  cost  of)   post-employment   or
     post-termination benefits of any kind, including, without limitation, death
     and  medical  benefits,  with  respect to any  current  or former  officer,
     employee,  agent, director or independent  contractor of the Company, other
     than (i)  continuation  coverage  mandated by  Sections  601 through 608 of
     ERISA and Section 4980B(f) of the Code, (ii) retirement  benefits under any
     Benefit Plan that is qualified  under Section 401(a) of the Code, and (iii)
     deferred  compensation  that  is  accrued  as a  current  liability  on the
     Financial Statements.

          (h) There are no actions,  suits or claims (other than routine  claims
     for benefits) pending or, to Sellers' knowledge, threatened with respect to
     (or against the assets of) (i) any Company Benefit Plan, or (ii) any Parent
     Plan that would  result in a material  liability  to the  Company,  nor, to
     Sellers'  knowledge,  is there a basis for any such action,  suit or claim.
     None of the Company  Benefit Plans nor the Seller Savings Plan is currently
     under  investigation,  audit or  review,  directly  or  indirectly,  by any
     Governmental  Authority,  and,  to  Sellers'  knowledge,  no such action is
     contemplated  or under  consideration  by any  Governmental  Authority.  No
     Parent Benefit Plan is currently  under  investigation,  audit or review by
     any Governmental  Authority,  and, to Sellers' knowledge, no such action is
     contemplated or under consideration by any Governmental  Authority, in each
     case,  to the extent  that  would  result in a  material  liability  to the
     Company.

     3.12 Material Contracts. Schedule 3.12 lists all of the Material Contracts.
Except as set forth on  Schedule  3.12,  the  Company  is not in  receipt of any
written claim (or to Sellers' knowledge,  oral claim) of breach of or failure to
comply with any, and the Company is not in material breach of and is in material
compliance with each,  Material  Contract.  To Sellers'  knowledge,  each of the

                                       25
<PAGE>

other parties to the Material  Contracts has performed all material  obligations
required to be performed by such party,  and is not in material  default  under,
any Material Contract, and except as set forth on Schedule 3.12(b), no event has
occurred  that,  with  notice and lapse of time,  or both,  would  constitute  a
material  default  or give  rise  to a  right  in the  counterparty  thereto  to
terminate such Material  Contract prior to the stated term thereof.  Each of the
Material Contracts is a valid and binding obligation of the Company,  is in full
force and effect,  and to Sellers'  knowledge,  is enforceable by the Company in
accordance  with  its  terms,  except  as  may  be  limited  by  (i)  applicable
bankruptcy, insolvency, moratorium,  reorganization or similar Laws from time to
time in effect  which  affect  creditors'  rights  generally,  or (ii) legal and
equitable  limitations on the availability of specific  remedies.  True, correct
and complete  copies of all Material  Contracts,  including  all  modifications,
amendments and  supplements,  have been provided or made available to Purchaser.
No counterparty to any Material Contract has notified the Company in writing or,
to Sellers'  knowledge,  otherwise,  of its intent to  terminate  such  Material
Contract.

     3.13 Communications Licenses. Schedule 3.13 lists all of the Communications
Licenses,  which include any renewals,  extensions or modifications thereof, and
any pending  applications for any  Communications  Licenses.  The Company is the
authorized   legal   holder  of  the   Communications   Licenses.   All  of  the
Communications  Licenses  are  valid  and  in  full  force  and  effect  and  no
Communications  License is subject to any condition or  requirement  that is not
generally imposed on such  authorizations.  The Company holds all Communications
Licenses  required  under  applicable  Law  for  the  current  operation  of the
Business.  Except as set forth on  Schedule  3.13,  the  Company  (i) is and has
operated  in  all  material  respects  in  compliance  with  all  terms  of  the
Communications  Licenses;  (ii) is in compliance in all material  respects with,
and the conduct of the Business by the Company is in  compliance in all material
respects with, the  Communications  Act and any applicable  state or local Laws,
including  those of State  PUCs,  and  (iii) has  filed  all  registrations  and
renewals and all other material  reports and other  applicable  documents (which
are complete and accurate in all material  respects) and paid all required fees,
including any renewal  applications,  required by the  Communications Act or any
applicable state or local Laws,  including those of State PUCs. There is not now
pending or, to Sellers'  knowledge,  threatened,  any action or proceeding by or
before the FCC or any State PUC in which the requested remedy is the revocation,
suspension,   cancellation,   rescission   or   modification   of   any  of  the
Communications  Licenses or the  imposition of a monetary fine or other penalty.
To  Sellers'  knowledge,  no Person has  asserted  in writing to a  Governmental
Authority,  and no  Governmental  Authority  has  asserted in writing,  that any
Communications License should be suspended,  cancelled,  revoked or modified, or
that the  Company  is not in  compliance  with any  Communications  License.  To
Sellers'  knowledge,   no  event  has  occurred  that  permits  the  suspension,
cancellation,  or revocation of any Communications License, or the imposition of
any restriction  thereon or that would prevent any  Communications  License from
being  renewed on a routine  basis in the ordinary  course.  The  execution  and
delivery of this  Agreement  by Sellers does not,  and the  consummation  of the
transactions  contemplated  hereby  and the  performance  by  Sellers  of  their
respective  obligations  hereunder,  assuming  the  receipt of the  Governmental
Required  Consents,  will not violate or conflict  with any term,  condition  or
provision  of  any  material  Communication  License,  will  not  result  in any
revocation,  cancellation,  suspension, or material modification of any material
Communications  License, or give rise to the right of any Governmental Authority
to take any such action or fail to renew any material Communications License.

     Except for the  representations  and  warranties  of Sellers  expressly set
forth in this  Section  3.13 or as  specifically  referred to  elsewhere in this
Agreement,  neither of Sellers nor any other Person  makes any other  express or
implied representation or warranty with respect to Communications  Licenses, and
none of the other  representations  and  warranties  contained in this Agreement
shall be deemed to be given in relation to Communications Licenses.

                                       26
<PAGE>

     3.14  Brokers and  Finders.  Except for J.P.  Morgan  Securities  Inc.  and
Greenbridge  Partners  LLC,  the  fees  and  expenses  of  which  shall  be  the
responsibility  of Sellers,  no broker or investment  banker acting on behalf of
Sellers  or the  Company  or under  the  authority  of any of them is or will be
entitled to any broker's or finder's fee or any other  commission or similar fee
directly or indirectly  from either of Sellers or the Company in connection with
any of the transactions contemplated herein.

     3.15  Employees.  Except as set forth on Schedule  3.15, (a) the Company is
not a party to a collective  bargaining agreement having provisions covering its
employees and is not currently  negotiating such an agreement,  (b) no complaint
against the Company is currently pending or, to Sellers'  knowledge,  threatened
before the National Labor  Relations Board or the Equal  Employment  Opportunity
Commission or before any other  analogous  entity in the United States,  and (c)
there are no labor strikes, disputes, requests for representation, slowdowns, or
stoppages  actually  pending  or,  to  the  Company's  or  Sellers'   knowledge,
threatened  against the Company.  Sellers have made  available to Purchaser true
and correct copies of any written  material  relating to the material  personnel
policies of the Company. Sellers have provided to Purchaser a list setting forth
each individual,  along with position,  salary and hire date, who is employed by
the Company as of the end of the most recent payroll period prior to the date of
this Agreement (each such individual, a "Company Employee").

     3.16 Environmental.

          (a)  Sellers  have  disclosed  and made  available  to  Purchaser  all
     material Records and correspondence in the possession of the Company, or of
     which the Company is aware,  relating to Environmental Matters with respect
     to the Real Property  (other than the Retained  Assets) and/or the Business
     of the Company,  including  those  prepared for or submitted to  applicable
     Governmental Authorities and any reports or assessments prepared by outside
     consultants or otherwise;

          (b) Except as set forth in Schedule  3.16,  neither of Sellers nor the
     Company has received  written  notice  within the last five years  alleging
     that the Company might be potentially  responsible for any material Release
     of Hazardous  Substances  with respect to the Real Property or the Business
     of the  Company  or for any  material  costs  arising  under,  or  material
     violation of,  Environmental Laws with respect thereto or any Environmental
     Permit;

          (c) The Company is and has been in compliance in all material respects
     with Environmental Laws and Environmental Permits, including those relating
     to underground and/or above ground storage tanks and including obtaining or
     having required  Environmental  Permits,  except as would not reasonably be
     expected to result in any material costs under,  or material  violation of,
     Environmental Laws or any Environmental Permit. To Sellers' knowledge,  all
     batteries and  underground  and/or above ground  storage tanks are in sound
     condition and not leaking.

          (d) Except as set forth in Schedule 3.16,  there is not pending or, to
     the Sellers' knowledge, threatened against the Company any actions, orders,
     decrees,   suits,   demands,    notices,    directives,    claims,   Liens,
     investigations,  proceedings  or notices  of  noncompliance,  liability  or
     violation by any Governmental Authority or other Person alleging liability,
     whether  contingent or otherwise  (including  investigation  or remediation
     costs, administrative oversight costs and natural resource damages) arising
     out of, based on or related to Environmental Matters.

          (e) Except as would not result in any  material  cost to the  Company,
     the  Company  has not caused and is not aware of any  Release of  Hazardous
     Substances,  or that any Hazardous  Substances  had been  Released,  at any
     property currently or formerly owned or operated by the Company, or, except
     in  compliance  with  Environmental  Laws,  the  Company  has not caused or
     arranged for any Release of Hazardous  Substances at any off-site  disposal
     location in connection with the current or past  operations of Company.  To
     Sellers'  knowledge  and except as set forth on Schedule  3.16, no property
     owned,  leased or used by the Company contains or had contained asbestos in
     any form, lead paint, UFI or any PCBs (including transformers,  capacitors,
     ballasts or other  equipment  which  contain  dielectric  fluid  containing
     PCBs).

                                       27
<PAGE>

     Except for the  representations  and  warranties  of Sellers  expressly set
forth on this  Section  3.16,  neither of Sellers nor any other Person makes any
other   express  or  implied   representation   or  warranty   with  respect  to
Environmental  Matters,  and none of the other  representations  and  warranties
contained  in this  Agreement  shall  be  deemed  to be  given  in  relation  to
Environmental Matters.

     3.17 Compliance with Laws; Licenses.  Except as set forth on Schedule 3.17:
(a) the Company is currently in  compliance  with all  applicable  Laws,  except
where the  failure  to so comply  would not  reasonably  be  expected  to have a
Material  Adverse  Effect,  and (b) the Company is in possession of all Licenses
required  under  applicable  Law  for the  current  operation  of the  Business,
including construction permits,  highway crossing licenses and permits and other
similar licenses and permits, and right-of-way  licenses to own, operate and use
its  network,  and are in  compliance  with  the  requirements  and  limitations
included  in such  Licenses,  except  where the  failure to so possess or comply
would not reasonably be expected to have a Material Adverse Effect.

     3.18  Absence  of  Changes.  Except as set forth in  Schedule  3.18,  since
December  31,  2004,  the  business  of the Company  has been  conducted  in the
ordinary course of business and in  substantially  the same manner as previously
conducted and has made  reasonable  efforts  consistent  with past  practices to
preserve  the   relationships   of  the  Company  with   customers,   suppliers,
Governmental  Authorities and others with whom the Company deals.  Except as set
forth in Schedule 3.18, since September 30, 2005, there has not been:

          (a) any  granting  by the  Company to any  officer or  employee of the
     Company of (i) any increase in  compensation,  severance or termination pay
     or (ii) any  right to  participate  in (by way of bonus or  otherwise)  the
     profits of the Company,  except,  in each case,  in the ordinary  course of
     business  consistent with past practice or as was required under employment
     agreements  or  salary  or  wage  policies  referred  to and  disclosed  in
     accordance with this Agreement;

          (b) any  damage,  destruction  or  loss,  whether  or not  covered  by
     insurance,  to any  material  property  of  the  Company  or  any  material
     Communications Equipment;

          (c) any assets or rights of the Company  sold,  removed,  transferred,
     distributed,  assigned or diverted  directly or indirectly to either Seller
     or any  Affiliate  of  Sellers,  other  than cash  sweeps to Parent (or its
     designee)  in  the   ordinary   course  of  business  and  the  payment  of
     intercompany  payables  with  cash  in  the  ordinary  course  of  business
     consistent with past practice and reflected in the Financial Statements and
     other than the transfer of the Retained Assets pursuant hereto;

          (d) any  termination or amendment to any Company  Benefit Plan (or the
     adoption  of any plan that  would be a Company  Benefit  Plan if  adopted),
     except in each case as required by Law;

          (e) any change in any method of accounting  or accounting  practice or
     policy other than those required by GAAP;

          (f) any acquisition by merging or consolidating with, or by purchasing
     a material  portion of the assets of, or by any other manner,  any business
     or any corporation, partnership, association or other business organization
     or division  thereof or  otherwise  acquire  any assets  (other than in the
     ordinary  course of business)  that are  material,  individually  or in the
     aggregate, to the Company; or

                                       28
<PAGE>

          (g) any entry into,  amendment,  modification  or  termination  of any
     Material Contract,  other than any such entry,  amendment,  modification or
     termination (A) that is in the ordinary course of business  consistent with
     past practice and (B) the effect of which is not materially  adverse to the
     Business.

     3.19 Transactions with Affiliates.  Except as set forth on Schedule 3.19(a)
and except for (a) normal  advances to employees  consistent with past practice,
(b) payment of  compensation  for employment to employees  consistent  with past
practice,  (c)  participation  in Parent Plans by  employees,  (d)  intercompany
Indebtedness  set forth on the face of the  Latest  Balance  Sheets or to be set
forth on any financial  statement to be delivered  pursuant to Section 5.17, (e)
the  provision of benefits and services by Parent to the Company  necessary  for
the operation of the Business as conducted by the Company on the date hereof and
described in Schedule  3.19(a) and (f) the transfer or retention of the Retained
Assets,  the  Company  has not (i)  purchased,  acquired,  used  or  leased  any
property,  goods or services from, (ii) transferred or leased any property to or
provided  services  (with or without  compensation)  to, (iii) become an obligee
with respect to any Indebtedness of, or (iv) entered into or been subject to any
management,  consulting  or similar  agreement  with,  any officer,  director or
member  or  Affiliate  of  the  Company,   nor  has  the  Company  incurred  any
Indebtedness  payable  to or in favor of any such  Person.  After  the  Closing,
Sellers  and  their  Affiliates  will  have no  equity  interest  or,  except as
specifically  contemplated by this Agreement or set forth on Schedule 3.19(b) or
otherwise  agreed to by  Purchaser,  other  direct or  indirect  interest in the
Company and will have no arrangements of the type described in Schedule  3.19(a)
with the Sellers.

     3.20  Insurance.  The Company or Parent has maintained and will continue to
maintain until the Closing Date the insurance  described in Schedule 3.20, which
insurance covers the Company's  tangible real and personal  property and assets,
whether owned or leased,  against loss or damage by fire or other casualty.  All
such  insurance is in full force and effect on the date of this  Agreement.  The
Company has promptly and adequately  notified the Parent's or Company's,  as the
case may be,  insurance  carriers  of any and all claims  known to Sellers  with
respect to the  operations,  products  or  services of the Company for which the
Company is insured. The Company or the Parent, with respect to the Business, has
not been refused any insurance coverage by any insurance carrier to which either
has applied for insurance during the past three years.

     3.21 Customers.  Schedule 3.21 lists,  for the most recent completed fiscal
year, the 20 largest carrier  customers and 20 largest  enterprise  customers of
the Company,  in each case by revenues,  such Schedule including aggregate sales
per customer during the relevant periods.  Except as set forth in Schedule 3.21,
since December 31, 2004,  there has not been (i) any material  adverse change in
the business  relationship  with any customer named in Schedule 3.21 or (ii) any
material  change in any  material  term  (including  credit  terms) of the sales
agreements or related agreements with any such customer.

     3.22 Construction-in-Progress.  Schedule 3.22 sets forth, as of the date of
this Agreement,  a reasonably detailed  description of each project involving in
the  aggregate  $500,000  or more,  where the  Company is  constructing,  or has
contracted or otherwise  arranged for the construction  (through a joint venture
type of arrangement or otherwise), of any fiber or other network assets.

     3.23 T1 Loops.  Attached to Schedule  3.23 is the complete  agreement  with
Qwest  Communications  regarding  any  obligation  of the Company to purchase T1
loops from Qwest (the "Qwest  Regional  Commitment  Plan").  Schedule  3.23 sets
forth:  (i) the number and the associated  monthly  recurring cost or expense of
"special  access" T1 loops the Company  purchased or leased from Qwest,  and the
number and the associated  monthly recurring cost or expense of UNEs the Company
otherwise  purchased  or leased from Qwest,  in each case as of October 31, 2005
and (ii) the  minimum  aggregate  and monthly  number,  and  associated  monthly
recurring  cost or  expense,  of  "special  access"  T1 loops and  other  leased
circuits the Company is obligated to purchase or lease from Qwest.

                                       29
<PAGE>

     3.24 Circuit  Leases.  Schedule  3.24 lists all of the circuits the Company
leases as of January 25, 2006,  along with the  counterparty.  All such circuits
are leased for the sole operation of the Business as presently  conducted by the
Company.  The circuits listed on Schedule 3.24 are all of the circuits necessary
for the operation of the Business as presently conducted by the Company.  Except
for those  circuits  listed on Schedule  3.19(a)(1)  as Retained  Assets  (which
circuits  are used for the  operation of the  Parent's  business),  the circuits
listed on Schedule  3.24 that the Company  leases from Parent or an Affiliate of
Parent are used in or for the operation of the Company's  business as opposed to
the operation of Parent's business.

                                   ARTICLE 4.
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser represents and warrants to Sellers as follows on the date of this
Agreement (and such  representations  and warranties shall be deemed made on the
Closing Date):

     4.1 Authority of  Purchaser.  Purchaser is a  corporation  duly  organized,
validly  existing  and in good  standing  under  the  laws of  Oregon,  with all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Purchaser has all requisite
corporate  power and authority to enter into this Agreement and to carry out its
obligations  under this  Agreement.  The execution,  delivery and performance of
this Agreement by Purchaser has been duly authorized by all necessary  corporate
action.  This  Agreement  has been duly and validly  executed  and  delivered by
Purchaser and constitutes the legal,  valid and binding  obligation of Purchaser
enforceable  against  Purchaser in accordance  with its terms,  except as may be
limited by (a) applicable bankruptcy, insolvency, moratorium,  reorganization or
similar Laws from time to time in effect that affect creditors' rights generally
or (b) legal and equitable limitations on the availability of specific remedies.

     4.2  Consents  and  Approvals.  Assuming  the  receipt of the  Governmental
Required Consents of the Purchaser and consents in connection with its financing
of the transactions  contemplated by this Agreement,  the execution and delivery
of  this  Agreement  by  Purchaser  does  not,  and  the   consummation  of  the
transactions contemplated hereby and performance by Purchaser of its obligations
hereunder will not,  violate or conflict with any provision of: (i) the charter,
operating agreement,  by-laws or analogous organizational document of Purchaser;
(ii) any material agreement,  lease, instrument,  mortgage, license or franchise
to which  Purchaser is a party or by which any of its  properties  is bound;  or
(iii) any Law  applicable  to Purchaser  and which  violation or conflict  would
reasonably be expected to have a material adverse effect on Purchaser's  ability
to consummate the transactions  contemplated hereby. Except for the Governmental
Required  Consents of Purchaser,  no  authorization,  consent or approval of, or
filing  with,  any  Governmental  Authority is required in  connection  with the
execution and delivery of, or performance by Purchaser of its obligations under,
this Agreement.

     4.3  Brokers,  Etc.  Except for FTI  Consultants,  the fees and expenses of
which shall be the  responsibility of Purchaser,  no broker or investment banker
acting on behalf of Purchaser is or will be entitled to any broker's or finder's
fee or any other  commission or similar fee directly or indirectly in connection
with any of the transactions contemplated hereby.

     4.4 Securities.  Purchaser hereby acknowledges that the Purchased Interests
are not registered  under the Securities Act or registered or qualified for sale
under any applicable securities Law of the United States or any other country or
any state or  province of the United  States or any other  country and cannot be
resold  without  registration  thereunder or exemption  therefrom.  Purchaser is
acquiring  the  Purchased  Interests  for  its own  account  as  principal,  for
investment  purposes and has no present  intention  to dispose of the  Purchased
Interests, in whole or in part, or of any interest in the Purchased Interests to
any other Person  whether by public  distribution  or  otherwise.  Purchaser has
sufficient  knowledge and experience in financial and business matters to enable
it to evaluate the risks of investment  in the  Purchased  Interests and has the
ability to bear the economic risks of such investment.

                                       30
<PAGE>

     4.5  Financing.  Attached as Exhibit G are complete and accurate  copies of
the  commitment  letters (the  "Commitment  Letters")  executed by the financing
sources  thereto,  pursuant to which those  financing  sources  have  committed,
subject only to the terms and conditions set forth in the Commitment Letters, to
provide the  financing to  consummate  the purchase of the Company in accordance
with this Agreement (the  "Financing").  Purchaser has the financial  ability to
consummate the  transactions  contemplated  by this  Agreement,  subject only to
obtaining  the  Financing.  The  obligation  to fund  the  Financing  under  the
Commitment  Letters is not subject to any  condition  other than as set forth in
the Commitment Letters. The Commitment Letters are in full force and effect; all
commitment fees required to be paid thereunder have been paid in full or will be
duly  paid in full if and when due;  and the  Commitment  Letters  have not been
amended or terminated.  Purchaser has no reason to believe that any condition to
the  Commitment  Letters  that is within its control  will not be  satisfied  or
waived prior to Closing. As of the Closing,  subject to receiving the Financing,
Purchaser will have received cash in an aggregate  amount  sufficient to pay all
amounts required to be paid by it in connection with the Closing,  including the
Purchase Price and all payments,  fees and expenses related to or arising out of
the acquisition of the Purchased Interests (the "Required Cash Amount").

     4.6  Solvency.   Immediately   after  giving  effect  to  the  transactions
contemplated  by this  Agreement and the closing of any financing to be obtained
by  Purchaser,  Purchaser  and its  subsidiaries  shall  be  able  to pay  their
respective  debts  as they  become  due and  shall  own  property  having a fair
saleable value greater than the amounts  required to pay their  respective debts
(including a reasonable  estimate of the amount of all contingent  liabilities).
Immediately  after  giving  effect  to the  transactions  contemplated  by  this
Agreement  and the closing of any financing to be obtained by Purchaser in order
to give effect to the transactions contemplated by this Agreement, Purchaser and
its  subsidiaries  shall  have  adequate  capital  to carry on their  respective
businesses.  No transfer of  property is being made and no  obligation  is being
incurred in connection with the transactions  contemplated by this Agreement and
the closing of any  financing to be obtained by Purchaser in order to effect the
transactions  contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of Purchaser.

     4.7 Financial Statements.

          (a) The (i) consolidated  audited  statements of earnings,  cash flows
     and owners' equity of Integra  Telecom,  Inc. and its  subsidiaries for the
     year ended December 31, 2004, (ii) the consolidated unaudited statements of
     earnings,  cash flows and owners' equity of Integra  Telecom,  Inc. and its
     subsidiaries  for the year ended December 31, 2005,  (iii) the consolidated
     audited balance sheet of Integra  Telecom,  Inc. and its subsidiaries as of
     December  31, 2004 and (iv) the  unaudited  consolidated  balance  sheet of
     Integra  Telecom,  Inc.  and its  subsidiaries  as of  December  31,  2005,
     attached as Exhibit I  ("Purchaser's  Financial  Statements)  (x) have been
     prepared  from,  and are in  accordance  with,  the  books and  records  of
     Purchaser,  (y) have been  prepared in  accordance  with GAAP  applied on a
     consistent basis during the periods involved and (z) present fairly, in all
     material respects, the financial position of Purchaser and its subsidiaries
     as of the referenced  dates and the results of operations and cash flows of
     Purchaser and its subsidiaries for the periods presented.

          (b)  Purchaser  has no  Liability,  including  any  Liability  for any
     indebtedness,  except: (i) Liabilities reflected or reserved against in, or
     set forth on, the Purchaser's  Financial  Statements;  and (ii) Liabilities
     that either (A) were incurred in the ordinary  course of business since the
     date of the Purchaser's Financial Statements,  (B) would not be required to
     be reflected on, reserved  against or set forth on a balance sheet or notes
     thereto,  prepared  in  accordance  with GAAP,  or (C) are not  material in
     amount or significance to Purchaser.

                                       31
<PAGE>

     4.8  Material  Adverse  Change.  Since  September  30,  2005  there has not
occurred any change in the  condition  (financial  or  otherwise)  or results of
operations of the Company that has had or would reasonably be expected to have a
Material  Adverse Effect on Purchaser or its  subsidiaries (as if the definition
of Material Adverse Effect applied to Purchaser instead of the Company).

     4.9  Independent  Investigation.  In making the decision to enter into this
Agreement and to consummate the  transactions  contemplated  hereby,  other than
reliance  on the  representations,  warranties,  covenants  and  obligations  of
Sellers  set forth in this  Agreement,  Purchaser  has relied  solely on its own
independent  investigation,  analysis and  evaluation of the Company  (including
Purchaser's  own estimate and appraisal of the value of the Business,  financial
condition,  assets, operations and prospects of the Company). Purchaser confirms
to Sellers that Purchaser is sophisticated  and knowledgeable in the Business of
the Company and is capable of evaluating the matters set forth above.

     4.10 Legal Qualifications.  Purchaser is qualified under the Communications
Act of 1934,  as  amended,  and FCC  Rules,  to  control  the  Company.  Neither
Purchaser  nor any entity  holding 5% or more of the direct or  indirect  voting
equity in Purchaser  has been  determined by the FCC not to be qualified to hold
an FCC License or to control a holder of an FCC License,  and no  proceeding  in
which such qualifications are at issue is pending, or to Purchaser's  knowledge,
threatened,  before the FCC or on appeal of an FCC order.  Neither Purchaser nor
any  entity  holding  5% or more of the  direct  or  indirect  voting  equity in
Purchaser  has been  determined  by any State PUC not to be  qualified to hold a
State  PUC  License  or to  control  a holder  of a State  PUC  License,  and no
proceeding in which such qualifications are at issue is pending before any State
PUC or on appeal of a State PUC order.

                                    ARTICLE 5.
                                    COVENANTS

     5.1 Reasonable Best Efforts; Regulatory Approvals; Third Party Consents.

          (a) On the terms and subject to the conditions of this Agreement, each
     party  shall use  commercially  reasonable  efforts to cause the Closing to
     occur,  including  taking all  reasonable  actions  necessary (i) to comply
     promptly  with all legal  requirements  that may be imposed on it or any of
     its  Affiliates   with  respect  to  the  Closing,   (ii)  to  obtain  each
     Governmental  Required Consent of such party and each other consent of, and
     make  necessary  filings  with,  a  Governmental  Authority,  which  if not
     obtained or made is reasonably  likely to have a material adverse effect on
     the ability of the parties to consummate the  transactions  contemplated by
     this  Agreement or result in a Material  Adverse  Effect and (iii) to cause
     the occurrence or meeting of the conditions precedent set forth in Articles
     6 and 7.

          (b) In  furtherance  of and not in  limitation  of the  provisions  of
     Section  5.1(a),  Sellers  shall,  and shall  cause  the  Company  to,  and
     Purchaser  shall,  cooperate  with the other with respect to obtaining  the
     Governmental  Required  Consents and other consents,  approvals and waivers
     required to be obtained to consummate the transactions contemplated by this
     Agreement.  In particular,  where permitted by the applicable  Governmental
     Authority, Sellers shall, and shall cause the Company to, and Purchaser, or
     persons  nominated  thereby,  will,  promptly  provide  drafts to the other
     party,  allow  reasonably  adequate time for comment by the other party and
     agree promptly, to the extent the same are accurate and reasonable,  to the
     contents of all notifications,  filings, submissions, further documentation
     and  evidence to be submitted  to all  relevant  Governmental  Authorities.

                                       32
<PAGE>

     Sellers shall, and Sellers shall cause the Company to, and Purchaser shall,
     in each case where permitted by the relevant Governmental Authority,  allow
     individuals  nominated by each of the other  parties to attend all meetings
     with  Governmental  Authorities  and,  where  appropriate,   to  make  oral
     submissions at such meetings. Purchaser shall, and Sellers shall, and shall
     cause the Company to, (i) furnish to the other such  necessary  information
     and reasonable  assistance as the other may require in connection  with its
     preparation   of  any   notification,   filing,   submission   or   further
     documentation  or evidence  that is  necessary  in  obtaining  Governmental
     Required Consents, and (ii) where permitted by the applicable  Governmental
     Authority,  promptly disclose to the other all correspondence received from
     or sent to any relevant  Governmental  Authority in connection herewith and
     shall keep the other fully informed of any other related  communication  in
     whatever form with any of the relevant Governmental Authorities.  Purchaser
     shall,  and Sellers shall, and shall cause the Company to, use commercially
     reasonable  efforts to comply  promptly  with any  inquiry  or request  for
     additional   information  from  any  relevant  Governmental   Authority  in
     connection  herewith  and  shall use  commercially  reasonable  efforts  to
     promptly provide any supplemental  information requested in connection with
     the  notifications,  filings  and/or  submissions  made  hereunder  for the
     purposes of obtaining the Governmental  Required Consents.  Notwithstanding
     the foregoing, the provisions of this Section 5.1(b) are subject to Section
     5.4 hereof and the Confidentiality  Agreement and any other confidentiality
     or  privilege  limitations  applicable  to the  parties  hereto  and  their
     Affiliates.

          (c) In  furtherance  of and not in  limitation  of the  provisions  of
     Sections  5.1(a) and (b), each of Sellers and Purchaser  shall, as promptly
     as  practicable,  but in no event later than  fifteen  (15)  Business  Days
     following the execution and delivery of this  Agreement,  file, or cause to
     be filed with the United  States  Federal Trade  Commission  and the United
     States  Department  of Justice the  notification  and report form,  if any,
     required  for the  transactions  contemplated  hereby and any  supplemental
     information  requested in connection therewith pursuant to the HSR Act. Any
     such notification and report form and supplemental  information shall be in
     substantial  compliance with the  requirements of the HSR Act.  Sellers and
     Purchaser shall, to the extent each is able, seek early  termination of the
     applicable  waiting period under the HSR Act.  Notwithstanding  anything in
     this Agreement to the contrary, Purchaser shall not be required to take any
     action in connection with any  competition  laws (including HSR) that would
     require  Purchaser or any of its Affiliates to agree to, or proffer to, not
     compete  in any  market  or  divest or hold  separately  any  assets or any
     portion of any business of Purchaser or its  Affiliates,  or the Company or
     its Subsidiary.

          (d) In  furtherance  of and not in  limitation  of the  provisions  of
     Sections  5.1(a) and (b), each of Sellers and Purchaser  shall, as promptly
     as  practicable,  but in no event  later than  twenty  (20)  Business  Days
     following the execution and delivery of this  Agreement,  file, or cause to
     be filed:

               (i)  with  the  FCC the  necessary  application  or  applications
          seeking the FCC Consents.

               (ii) with the applicable State PUCs the necessary  application or
          applications  seeking  the  State  PUC  Consents.  The  parties  shall
          cooperate to make any notice filings  required in connection with this
          matter on a timely basis.

          (e) Prior to the Closing  Date,  Parent shall cause the Company to use
     commercially  reasonable  efforts to obtain all  consents  and waivers from
     third parties in respect of contracts and other obligations,  in each case,
     of the Company,  to the extent such contracts and other obligations require
     such  consents  and  waivers as a result of the  transactions  contemplated
     hereby, such consents being set forth on Schedule 3.4. Parent shall pay all
     of the costs of  obtaining  the  consents  referred  to in this clause (e),
     including all fees, charges, costs and expenses levied by a counterparty in
     granting  its  consent,  including  assignment  fees.  Purchaser  shall use
     commercially  reasonable  efforts to provide  cooperation and assistance in
     this  regard  including  providing  to any such third  party all  necessary
     information  (including  financial  information) and agreeing to enter into
     guarantees  or similar  arrangements  in favor of any such third party,  in

                                       33
<PAGE>

     each  case,  as  required  by any such  third  party in order to secure the
     necessary   consents   and   waivers,   subject   to  the   agreements   on
     confidentiality   contained  in  this  Agreement  and  the  Confidentiality
     Agreement.  Prior to the Closing  Date,  Purchaser  shall use  commercially
     reasonable efforts to obtain all consents and waivers from third parties in
     respect of contracts and other obligations,  in each case, of Purchaser, to
     the extent such contracts and other  obligations  require such consents and
     waivers as a result of the transactions  contemplated hereby.  Parent shall
     use commercially  reasonable efforts to provide  cooperation and assistance
     in this regard  including  providing to any such third party all  necessary
     information.   From  and  after  the  Closing  Date,   Purchaser  shall  be
     responsible  for  obtaining  all  consents  and  waivers  referred to above
     (including those consents and waivers pursuant to contracts and obligations
     of the  Company) and Parent shall use  commercially  reasonable  efforts to
     provide cooperation and assistance in that regard.

     5.2 Pre-Closing Access. From the date hereof to the Closing,  except to the
extent  prohibited or limited by applicable Law, Sellers shall cause the Company
to  permit   representatives  of  Purchaser   (including   financial  and  legal
representatives)  to have  reasonable  access,  at all  reasonable  times during
normal  business hours and on reasonable  prior notice and in a manner that does
not disrupt normal business operations, to all personnel,  accountants,  counsel
and other  representatives  of  Sellers  associated  with the  Business  and the
Company (provided Purchaser shall not unreasonably interfere with the duties and
responsibilities  of such personnel and  representatives and shall obtain access
to such  personnel  only through  Daniel  McCarthy or other  representatives  of
Sellers designated by Parent who shall respond  reasonably  promptly to requests
for  access by  Purchaser)  and to all  premises,  properties,  books,  records,
contracts and documents of or pertaining to the Company.

     5.3  Operation  of Business  Prior to Closing.  Prior to the Closing  Date,
except  as set forth on  Schedule  5.3,  or as  otherwise  contemplated  by this
Agreement  (including,  without limitation this Section 5.3), and except for the
transfer of the Retained Assets to an entity  designated by Parent,  or with the
prior written  consent of Purchaser  (which  consent  shall not be  unreasonably
withheld  or  delayed),  Sellers  shall  cause the Company to be operated in the
ordinary  course  of  business  and  not  permit  the  Company  to do any of the
following:  (i) make any  change  in its  authorized  capitalization,  operating
agreement or other analogous  organizational document; or (ii) issue or sell any
membership interests or securities  convertible into or exchangeable for, or its
rights to, its membership  interests.  In furtherance of the foregoing,  Sellers
shall cause the Company not to do any of the following without the prior written
consent of  Purchaser  (which  consent  shall not be  unreasonably  withheld  or
delayed):

          (a)  adopt,  terminate or amend any Company  Benefit Plan (or any plan
               that would be a Company  Benefit  Plan if  adopted) or enter into
               any collective  bargaining  agreement or other agreement with any
               labor organization,  union or association, except in each case as
               required by Law;

          (b)  grant any officer or employee of the Company: (i) any increase in
               compensation,  severance or termination pay, or (ii) any right to
               participate  in (by way of bonus or otherwise) the profits of the
               Company, except, in each case, in the ordinary course of business
               consistent with past practice,  as was required under  employment
               agreements,  salary or wage policies referred to and disclosed in
               accordance with this Agreement;

          (c)  hire or terminate an officer, or make any material changes in the
               number or duties of the employees,  of the Company, or, except as
               agreed in writing with Purchaser,  transfer employees between the
               Company and other Affiliates of the Company, including Parent;

                                       34
<PAGE>

          (d)  incur or assume any liabilities,  obligations or indebtedness for
               borrowed money or guarantee any such liabilities,  obligations or
               indebtedness,  other than in the ordinary  course of business and
               consistent  with past  practice;  provided,  however,  that in no
               event   shall  the   Company   incur  or  assume  any   long-term
               indebtedness for borrowed money;

          (e)  waive any claims or rights of  substantial  value,  other than in
               the ordinary course of business consistent with past practice;

          (f)  except for  intercompany  transactions  in the ordinary course of
               business  consistent  with  past  practice  and the  transfer  of
               Retained Assets in accordance  with this Agreement,  pay, loan or
               advance  any  amount  to, or sell,  transfer  or lease any of its
               assets to or purchase or lease any assets from, or enter into any
               agreement  or   arrangement   with,   Sellers  or  any  of  their
               Affiliates;

          (g)  make  any  change  in any  method  of  accounting  or  accounting
               practice or policy other than those required by GAAP;

          (h)  acquire by merging or  consolidating  with,  or by  purchasing  a
               material  portion of the assets of, or by any other  manner,  any
               business or any  corporation,  partnership,  association or other
               business  organization or division  thereof or otherwise  acquire
               any assets (other than in the ordinary  course of business)  that
               are material, individually or in the aggregate, to the Company;

          (i)  make or incur any capital  expenditure not contained in a capital
               budget  made  available  to  Purchaser  prior to the date of this
               Agreement and that,  individually,  is in excess of $200,000,  or
               make or incur any such expenditures  that, in the aggregate,  are
               in excess of $500,000,  in each case, except to the extent deemed
               necessary by the Company in connection  with the operation of the
               Business in the ordinary course of business;

          (j)  sell,  lease,  license,  assign,  swap,  grant  a  right  to use,
               transfer  or  otherwise  dispose of any of its  material  assets,
               except  inventory  and obsolete or excess  equipment  sold in the
               ordinary course of business and consistent with past practice and
               except for the  transfer  of the  Retained  Assets as provided in
               this Agreement,  or sell, lease,  license,  assign, swap, grant a
               right to use, transfer or otherwise dispose of any of its fiber;

          (k)  except  for  cash  sweeps  to  Parent  (or its  designee)  in the
               ordinary  course of  business  and the  payment  of  intercompany
               payables with cash in the ordinary course of business  consistent
               with past  practice of the Company or as  otherwise  specifically
               contemplated by this Agreement, make any dividend,  distribution,
               transfer  or  other  distribution  of any cash or  assets  of the
               Company to Sellers or any other Affiliates of Sellers;

          (l)  enter into,  amend,  modify or terminate  any Material  Contract,
               other than any such entry, amendment, modification or termination
               (A) that is in the ordinary  course of business  consistent  with
               past  practice and  disclosed to Purchaser  and (B) the effect of
               which is not materially adverse to the Business;

                                       35
<PAGE>

          (m)  make any material change in the operation, function or components
               of the  network or  operations  of the  Company  from the present
               operation, function or components;

          (n)  sell,  lease,  license or otherwise grant a right to use any dark
               fiber or network services of the Company, where the terms of such
               sale,  lease,   license  or  other  right  to  use  includes  any
               prepayment  for the use or service or similar term that  provides
               for customer payments in advance of the use or service;

          (o)  sell,  lease,  license  or  otherwise  grant a  right  to use any
               material dark fiber of the Company;

          (p)  prepay in any way any  capital  lease of the  Company,  including
               those listed on Schedule 1.1(a);

          (q)  institute any proceeding with respect to, or otherwise materially
               change,  amend, or supplement any of its tariffs on file with the
               FCC or any State PUC,  except in the ordinary course of business,
               or as required by Law;

          (r)  with respect to the Company or any Affiliated  Group of which the
               Company (as distinguished  from any of the Sellers) is the common
               parent,  (i)  make  any  Tax  election   inconsistent  with  past
               practice, (ii) change any Tax election already made, (iii) settle
               or compromise any federal,  state, local or foreign Tax liability
               or agree to an extension of a statute of  limitations,  (iv) fail
               to file any Income Tax Return or other  material  Tax Return when
               due (or, alternatively, fail to file for available extensions) or
               fail to cause such  Income  Tax  Returns  or other  material  Tax
               Returns  when filed to be complete and  accurate,  or (v) fail to
               pay any Income  Taxes or other  material  Taxes when due, in each
               case, in any manner materially adverse to the Company;  provided,
               however,  nothing set forth in this clause (r) shall prohibit the
               Company from changing,  electing,  settling or  compromising  Tax
               liabilities to the extent required by Law; or

          (s)  authorize  any of,  or commit to agree,  whether  in  writing  or
               otherwise, to do any of, the foregoing.

     5.4 Confidentiality.

          (a) Purchaser  acknowledges  that the information being provided to it
     in connection with the transactions  contemplated  hereby is subject to the
     terms  of  the  Confidentiality  Agreement;  provided  that  Purchaser  may
     disclose such information concerning the Company as is reasonably necessary
     to  obtain  the  Financing,  including  through  the use of a  confidential
     private placement  memorandum or offering circular.  In no way limiting the
     generality of the  foregoing,  the terms of the  Confidentiality  Agreement
     shall not prevent the Company from using,  after Closing,  the confidential
     and proprietary information governed by the Confidentiality  Agreement that
     relates primarily to the Company; provided that Purchaser acknowledges that
     any and all other  information  provided  to it by  Sellers or any of their
     Affiliates or representatives concerning Sellers or any of their Affiliates
     (other than with respect to the Company)  shall remain subject to the terms
     and conditions of the  Confidentiality  Agreement and the Company shall, to
     the same extent as Purchaser, be subject to all confidentiality  provisions
     of the Confidentiality Agreement as though it were a party thereto.

                                       36
<PAGE>

          (b) At all times from and after the Closing  Date,  Sellers shall keep
     secret and maintain in  confidence,  and shall not use for their benefit or
     for the benefit of others,  any  confidential  or  proprietary  information
     relating  to the  Business or the  Company's  financial  or other  affairs,
     including all of the Company's  Intellectual Property and files and records
     (other than the Retained  Assets),  other than any of such information that
     is in the public domain  (unless and to the extent any of such  information
     enters the public  domain in whole or in part due to action or  inaction of
     Sellers  following  the Closing).  The foregoing  shall not prohibit use or
     disclosure  of such  information  (i) as is  required  by  Law,  (ii) as is
     necessary  to prepare Tax Returns  (including  Tax Returns of Sellers or of
     any of their Affiliates) or other filings with Governmental  Authorities or
     to defend or object to any reassessment of Taxes, (iii) as is necessary for
     Sellers  (or their  representatives)  to prepare  and  disclose,  as may be
     required,  accounting  or other  financial  statements or (iv) to assert or
     protect  any rights of Sellers  hereunder  or under any  applicable  Law or
     otherwise.

          (c) Sellers and Purchaser acknowledge and agree that in the event of a
     breach  of this  Section  5.4 by  either  party  or of the  Confidentiality
     Agreement by Purchaser,  the other party would suffer  irreparable harm for
     which it would be  difficult  to  determine  damages  and for  which  money
     damages  alone would be an inadequate  remedy for the injuries  suffered by
     such party,  and that such party shall be entitled to specific  performance
     and injunctive or other equitable relief to enforce this Section 5.4 and/or
     the Confidentiality  Agreement,  without any requirement to submit proof of
     the economic value of any confidential or proprietary information or post a
     bond or any  other  security.  Such  remedy  shall  not be deemed to be the
     exclusive  remedy for breach of this Section 5.4 or of the  Confidentiality
     Agreement but shall be in addition to all other  remedies  available at Law
     or equity.

     5.5 Employee Matters.

          (a) From and after the Closing Date,  Purchaser  shall, or shall cause
     the Company to, provide Company Employees  retained by the Purchaser or the
     Company  following  the  Closing  (each a  "Retained  Employee")  with  all
     employee  benefit  plans  (other  than  equity  compensation  plans) as are
     provided by Purchaser and its  subsidiaries  to their own employees who are
     similarly  situated  to such  Company  Employees  (the  "New  Plans").  The
     foregoing  shall not constitute any  commitment,  contract,  understanding,
     undertaking,  guarantee  (express or implied) on the part of  Purchaser  or
     Company to continue the  employment of any Company  Employee for any period
     of time or on any terms except as determined by Purchaser.

          (b) For  purposes of each New Plan that may provide  medical,  dental,
     pharmaceutical,  life,  disability  and/or vision  benefits to any Retained
     Employee,  Purchaser shall use commercially reasonable efforts to cause the
     relevant   insurer(s)  (i)  to  waive  all  eligibility   waiting  periods,
     pre-existing  condition  exclusions and  actively-at-work  requirements for
     such Retained  Employee and his or her covered  dependents and (ii) to take
     into account any eligible  expenses incurred by a Retained Employee and his
     or her covered dependents during the portion of the plan year of the Parent
     Plan  or  Company   Benefit  Plan  (ending  on  the  date  the   employee's
     participation  in the  corresponding  New  Plan  begins)  for  purposes  of
     satisfying   any   deductible,   coinsurance   and  maximum   out-of-pocket
     requirements  applicable  to the  Retained  Employee and his or her covered
     dependents  for the  applicable  plan year.  For all  purposes  (other than
     benefit  accrual under a defined  benefit pension plan) under the New Plans
     (including any Purchaser  severance plans) each Retained  Employee shall be
     credited  with his or her years of  service  with the  Company  to the same
     extent such  Retained  Employee  was  entitled to  eligibility,  vesting or
     benefit accrual credit,  as applicable,  for such service under any similar
     Parent  Plan or  Company  Benefit  Plan in  which  such  Retained  Employee
     participated immediately prior to the Closing.

          (c) Immediately prior to the Closing,  Parent shall cause each Company
     Employee to become  fully  vested in his or her accrued  benefit  under the
     Seller  Savings  Plan or other Parent Plan that is intended to be qualified
     under Section 401(a) of the Code.  After the Closing,  Purchaser and Seller
     shall cooperate to ensure that Retained Employees are permitted to rollover
     their account  balances  under the Seller Savings Plan,  including  in-kind
     rollovers of  participant  loans into  Purchaser's  401(k) plan;  provided,
     however,  that Purchaser shall not be required to permit any such rollovers
     by  Retained  Employees  if it  determines  that  any such  rollover  could
     jeopardize the tax-qualified status of Purchaser's 401(k) plan.

                                       37
<PAGE>

          (d) Prior to the Closing,  Sellers or the Company, as the case may be,
     shall pay in full all obligations owed under the 2005 Annual Incentive Plan
     Design (which shall not continue into 2006 unless Parent assumes all of the
     liabilities  under such plans or accrues  such  liabilities  on the Closing
     Balance  Sheet  and such  plans do not give  rise to any  liability  of the
     Company or Purchaser (excluding accrued amounts) following the Closing) and
     any other similar plan.

          (e)  Purchaser  shall provide  severance  benefits and payments to any
     Company Employee whose employment is terminated by Purchaser (i) within the
     first  six (6)  months  following  the  Closing,  in  accordance  with  the
     Company's  severance  programs  in  effect  immediately  prior to  Closing;
     provided that, such severance  program only provides for severance based on
     base salary and not any other pay or compensation  (except to the extent of
     subsidized COBRA payments as provided in the Company's  severance  programs
     in effect  immediately  prior to Closing),  and (ii) following such six (6)
     month  period,   in  accordance   with   Purchaser's   severance   programs
     ("Purchaser's Severance Arrangements"),  taking into account, to the extent
     relevant,  such Company Employee's  combined service with Seller and/or its
     Affiliates  prior to the  Closing  Date and  Purchaser  from and  after the
     Closing Date. A summary of Purchaser's Severance  Arrangements is set forth
     on Exhibit H.

          (f) Purchaser  shall  provide each Retained  Employee with any accrued
     and unused  days of paid time off that he or she is  eligible to take as of
     the Closing Date in accordance  with the applicable paid time off policy of
     the Company.  Notwithstanding  Section 5.5(a),  Purchaser in its discretion
     may maintain Retained  Employees on the paid time off policy of the Company
     until December 31, 2006.

          (g) (i)  Purchaser  shall  have in  effect  as of the  Closing  Date a
     flexible spending account plan qualified under Section 125 of the Code (the
     "Purchaser   Flexible  Spending  Plan"),  and  Purchaser  shall  cause  the
     Purchaser  Flexible  Spending  Plan to accept a spin-off  of the assets and
     liabilities  related to the Retained  Employees' flexible spending accounts
     ("FSAs")  from the flexible  spending  plan of Seller in which the Retained
     Employees  participate  immediately  prior  to  the  Closing  (the  "Seller
     Flexible  Spending Plan") and to honor and continue  through the end of the
     calendar year in which the Closing Date occurs the  elections  made by each
     Retained Employee under the Seller Flexible Spending Plan in respect of the
     FSAs that are in effect  immediately prior to the Closing Date; and (ii) as
     soon as practicable  following the Closing Date,  Seller shall (a) cause to
     be  transferred  from the Seller  Flexible  Spending  Plan to the Purchaser
     Flexible   Spending   Plan  the   excess  of  the   aggregate   accumulated
     contributions to the FSAs made prior to the Closing Date during the year in
     which the  Closing  Date occurs by Retained  Employees  over the  aggregate
     reimbursement  payouts  made prior to the  Closing  Date for such year from
     such accounts to the Retained  Employee,  and (b) provide Purchaser with an
     itemized schedule of each Retained  Employee's election amount and benefits
     paid prior to the Closing  Date  during the year in which the Closing  Date
     occurs. If the aggregate reimbursement payouts from such FSAs made prior to
     the Closing  Date  during the year in which the Closing  Date occurs to the
     Retained Employees exceed the aggregate  accumulated  contributions to such
     accounts prior to the Closing Date for such year by the Retained Employees,
     Purchaser  shall make a payment equal to the value of such excess to Seller
     as soon as practicable following the Closing Date. Seller Flexible Spending
     Plan  shall  be   responsible   for  any  covered   claims   submitted  for
     reimbursement  before the Closing Date. Except as provided in the preceding
     sentence,  on and after the Closing  Date,  Purchaser  shall  assume and be
     solely  responsible  for all unpaid claims by Retained  Employees under the
     Seller Flexible Spending Plan incurred at any time during the calendar year
     in which the Closing Date occurs,  including  claims  incurred prior to the
     Closing Date,  that have not been  submitted  before the Closing Date,  and
     following the Closing Date,  Purchaser shall hold Seller and its affiliates
     harmless from any and all claims for  reimbursement  by Retained  Employees
     under the Seller  Flexible  Spending  Plan  incurred at any time during the
     calendar year in which the Closing Date occurs but which were not submitted
     to the Seller Flexible  Spending Plan before the Closing Date. For purposes
     of this paragraph,  a claim for reimbursement  shall be deemed to have been
     incurred  on the date on which the  charge or expense  giving  rise to such
     claim is incurred.

                                       38
<PAGE>

     5.6 Records; Post-Closing Access to Information.

          (a)  Notwithstanding  anything  to  the  contrary  contained  in  this
     Agreement,  Sellers  may retain  all (i)  original  agreements,  documents,
     books,  records and files  prepared  in  connection  with the  transactions
     contemplated  hereby,  including  bids  received  from  other  parties  and
     analyses relating to the Company and (ii) Tax Returns.

          (b) Subject to Section 10.2(a),  for a period of seven years after the
     Closing  Date,  Purchaser  shall use  commercially  reasonable  efforts  to
     preserve  and  retain,  or cause the Company to  preserve  and retain,  all
     material  agreements,  documents,  books,  records and files (including any
     documents relating to any governmental or non-governmental  actions, suits,
     proceedings or investigations)  relating to the conduct of the Business and
     operations  of  the  Company  prior  to  the  Closing  Date  (collectively,
     "Records").  Subject to Section 10.2(a),  for a period of seven years after
     the Closing Date,  Sellers  shall use  commercially  reasonable  efforts to
     preserve and retain all Records,  including all financial records, policies
     and  procedures  customarily  required for the completion of an audit by an
     independent accounting firm, in its and its Affiliates possession following
     the Closing, and shall provide Purchaser and the Company access to all such
     records at reasonable times upon reasonable notice.

          (c)  Subject  to Section  10.2(a),  from and after the  Closing  Date,
     Purchaser  shall  cause the Company to afford  Sellers  and their  counsel,
     accountants and other  authorized  representatives,  upon reasonable  prior
     notice,  reasonable  access during normal  business hours to the respective
     premises,  properties,  personnel, books and records of the Company and any
     other  assets  or  information  that  Sellers  reasonably  deem  necessary,
     including in connection  with the  preparation  of any report or Tax Return
     required to be filed by Sellers under  applicable  Law or otherwise (but so
     as not to unduly  disrupt the normal  course of operations of the Company),
     including  preparing or defending  any Tax Return and any interim or annual
     report or other  accounting  statements.  Personnel  of  Purchaser  and the
     Company shall assist Sellers in the preparation of Tax Returns  relating to
     the Pre-Closing Tax Periods in accordance with Article 10.

     5.7 Continued  Operations.  Purchaser shall be responsible for any costs in
connection with its termination of any Company Employee's employment on or after
the  Closing  Date,  and  Purchaser  shall  assume  and be  responsible  for any
liability arising under the Worker  Adjustment and Retraining  Notification Act,
and/or any other  plant or mass  layoff  closing  Law,  in  connection  with its
termination of any Company Employee's employment on or after the Closing Date.

     5.8  Communications  Licenses.  Prior to the  Closing,  the  Company  shall
maintain the validity of the Communications  Licenses and Franchise  Agreements,
including those set forth on Schedule 6.5, comply in all material  respects with
all requirements of the Communications  Licenses,  Franchise  Agreements and the
Communications  Act and any applicable  state or local Laws,  including those of
State PUCs. Prior to the Closing, the Company shall use commercially  reasonable
efforts to (a) refrain from taking any action that would jeopardize the validity
of any of the  Communications  Licenses,  (b)  prosecute  with due diligence any
pending applications with respect to the Communications Licenses,  including any
renewals  thereof  and  applications  seeking  FCC  Consents  and the  State PUC
Consents as set forth on  Schedule  6.5 and (c) with  respect to  Communications
Licenses,  file all  registrations,  reports,  renewal  applications,  and other
documents and pay all required fees and  contributions,  in each case,  that are
required  by the  Communications  Act or any  applicable  state or  local  Laws,
including  those of State PUCs as and when such filings or reports are necessary
or appropriate.

                                       39
<PAGE>

     5.9 Notice of Developments.

          (a) Each party shall promptly notify the other party in writing of all
     events, circumstances, facts and occurrences arising subsequent to the date
     of  this  Agreement  that  could  result  in  any  material   breach  of  a
     representation  or warranty by or covenant of such party in this  Agreement
     or that could have the effect of making any  representation  or warranty by
     such party in this Agreement untrue or incorrect in any material respect.

          (b) Each party shall,  in each case as soon as possible  upon becoming
     aware,  from time to time prior to the Closing Date,  supplement in writing
     the  Schedules  hereto  with  respect to any event,  circumstance,  fact or
     occurrence  hereafter  arising  that,  if  existing  as of the date of this
     Agreement,  would have been  required to be set forth or  described  in the
     Schedules; provided, however, that (i) except as and to the extent provided
     in this Section 5.9(b), none of such disclosures shall be deemed to modify,
     amend or supplement the representations and warranties by such party or the
     Schedules for the purposes of this Agreement,  unless the other party shall
     have  consented  thereto  in  writing  and (ii)  upon  consummation  of the
     Closing,  regardless  of any other  provisions  of this Section  5.9,  such
     disclosures  shall  automatically be deemed to modify the Schedules for all
     purposes,  including for purposes of Article 9 hereof.  The party receiving
     such supplemented Schedules must notify the party that has supplemented the
     Schedules  within  twenty-one  (21) days of  receipt  of such  supplemented
     Schedules whether the supplemental  information  disclosed  therein,  taken
     together with all other supplemental  information provided pursuant to this
     Section  5.9(b),  constitutes  facts  or  circumstances  giving  rise  to a
     Material  Adverse  Effect or  otherwise  giving  rise to a  failure  of the
     condition  set forth in Section 6.1 or Section 7.1 hereto,  as the case may
     be. If no such notice is given  within such  twenty-one  (21)  Business Day
     period, then such disclosure shall be deemed to modify, amend or supplement
     the  representations  and warranties by such party and the Schedules and to
     have  cured  any  misrepresentation  or  breach  of any  representation  or
     warranty  that  might  have  existed  by  reason  of the  development.  The
     supplementing  party agrees to cooperate in good faith in timely  providing
     complete and correct  documents or other information  reasonably  necessary
     for the receiving party to have a basis for determining  whether to deliver
     the notice referred to above.

          (c) Without limiting any other provision of this Agreement, subject to
     applicable Laws and the  instructions of any  Governmental  Authority,  the
     parties shall keep each other apprised of the status of matters relating to
     completion of the  transactions  contemplated  hereby,  including  promptly
     furnishing  the  other  with  copies  of  notices  or other  communications
     received by such party from any Governmental Authority or other Person with
     respect to the  transactions  contemplated  by this  Agreement.  Each party
     shall  give  prompt  notice  to the other  parties  of any  failure  of any
     condition  to  such  party's   obligations   to  effect  the   transactions
     contemplated by this Agreement.

          (d)   Notwithstanding   the  foregoing,   with  respect  to  Schedules
     3.19(a)(1)  and  3.24,  Parent  shall  provide  Purchaser  with  up to date
     schedules  of circuits  leased by the Company in effect as of a date within
     three (3)  Business  Days of the  Closing  Date that shall be prepared in a
     manner  consistent with Schedules  3.19(a) and 3.24 attached  hereto.  Such
     updated schedules shall indicate, among other things, those circuits leased
     by the Company to be retained by Parent as Retained Assets (that shall have
     the effect of amending  Exhibit A hereto),  which leased  circuits shall be
     the responsibility of Parent following the Closing Date. The circuits noted
     on Attachment 3.19(a) to Schedule 3.19(a)(1) shall identify (1) circuits to
     be retained by Parent as circuits  that are used in or for the operation of
     the Parent's business as opposed to the operation of the Company's business
     and (2) circuits not to be retained by Parent as circuits  that are used in
     or for the operation of the Company's  business as opposed to the operation
     of the  Parent's  business in the same manner as  currently  identified  on
     Attachment  3.19(a).  Purchaser  shall have the  opportunity  to review the
     updated  schedules  provided  pursuant to this clause (d) and consult  with
     Parent regarding thereto. Such updated schedules shall be deemed to modify,
     amend and  supplement  Schedules  3.19(a) and 3.24 and Exhibit A hereto and
     the corresponding  representations  and warranties for all purposes of this
     Agreement.

                                       40
<PAGE>

     5.10 Cooperation in Litigation.

          (a) Each  party  hereto  will  fully  cooperate  with the other in the
     defense or prosecution of any litigation or proceeding  already  instituted
     or which may be instituted  hereafter  against or by such party relating to
     or arising out of the  conduct of the  Business  prior to the Closing  Date
     (other than litigation arising out of the transactions contemplated by this
     Agreement).  Subject to the indemnity  obligations  set forth in Article 9,
     the party requesting such cooperation shall pay the out-of-pocket  expenses
     (including  legal  fees and  disbursements)  of the  party  providing  such
     cooperation and of its officers, directors,  managers, employees and agents
     reasonably  incurred in connection  with  providing such  cooperation,  but
     shall not be responsible to reimburse the party providing such  cooperation
     for such party's time spent in such cooperation or the salaries or costs of
     fringe  benefits  or  similar  expenses  paid by the party  providing  such
     cooperation  to its  officers,  managers,  directors,  employees and agents
     while  assisting in the defense or  prosecution  of any such  litigation or
     proceeding.  The Company has maintained,  and, to the extent required to do
     so, will continue to escrow and maintain, a cash escrow with respect to the
     Portland  Franchise  Dispute that is  sufficient to pay in full all amounts
     (other than statutory  interest thereon) that may be required to be paid in
     respect of such matter,  and, subject to Section  5.10(b),  will reserve an
     amount  on  the  Closing  Balance  Sheet  necessary  to pay  any  statutory
     interest.

          (b)  Notwithstanding  Section  5.10(a)  above,  the Company  shall not
     settle the Portland  Franchise  Dispute prior to Closing  without the prior
     written  consent of  Purchaser.  If Parent seeks  Purchaser's  consent to a
     written,  definitive  settlement proposal acceptable to Parent and the City
     of Portland (the "Settlement Proposal") and Purchaser refuses to consent to
     such Settlement Proposal,  then for purposes of determining Working Capital
     as of the Closing Date,  the parties agree that the Company's  accrual with
     respect to the  Portland  Franchise  Dispute  shall be reduced by an amount
     equal to the difference (if a positive  number) between (x) the amount that
     the Company has accrued for the interest related to the Portland  Franchise
     Dispute  through  the date  Parent  presents  the  Settlement  Proposal  to
     Purchaser  in writing and (y) the amount the Company  and/or  Parent  would
     have to pay to the City of Portland in interest  pursuant to the Settlement
     Proposal.   In  addition,   under  such  circumstances,   for  purposes  of
     determining  Working Capital as of the Closing Date, the parties agree that
     the  Company  shall not be  obligated  to accrue any  additional  statutory
     interest  with respect to the  Portland  Franchise  Dispute  after the date
     Parent presents the Settlement Proposal to Purchaser in writing through the
     Closing Date.

     5.11 Transfer of Retained Assets. Sellers shall use commercially reasonable
efforts to transfer the Retained Assets to an entity  designated by Parent prior
to the Closing.  Sellers shall be responsible  for any costs,  and shall provide
for  the  assumption  of any  liabilities,  associated  with  the  transfer  and
retention of, and otherwise in connection with, the Retained Assets.

     5.12 Reasonable Best Efforts to Obtain  Financing.  Purchaser shall use its
reasonable  best efforts to complete the Financing  and satisfy its  obligations
under the Commitment Letters in accordance with and by the date specified in the
terms and  conditions of the  Commitment  Letters.  Purchaser  shall keep Parent
reasonably  informed  of  all  material  developments,  positive  and  negative,
concerning  the status of the  Financing  described in the  Commitment  Letters.
Without limiting the foregoing,  Purchaser agrees to notify Parent promptly, and
in any event within two (2) Business  Days,  if at any time prior to the Closing
(i) any  Commitment  Letter shall have expired or be terminated  for any reason,
(ii) any  financing  source that is a party to any  Commitment  Letter  notifies
Purchaser that such source no longer  intends to provide  financing to Purchaser
on the terms set forth therein,  or (iii)  Purchaser no longer  believes in good

                                       41
<PAGE>

faith, subject to receipt of said Financing,  that it will be able to obtain the
Required Cash Amount.  Purchaser  shall not amend or alter, or agree to amend or
alter, any Commitment  Letter in any manner that could reasonably be expected to
impair,  delay or  prevent  the  transactions  contemplated  by this  Agreement,
without the prior written consent of Parent.  If any Commitment  Letter shall be
terminated or modified in a manner materially adverse to Purchaser's  ability to
consummate  the  transactions  contemplated  by this  Agreement  for any reason,
Purchaser shall use its commercially  reasonable  efforts to obtain  alternative
financing as promptly as practical in any amount that,  together  with  existing
cash resources, will equal the Required Cash Amount. If obtained, Purchaser will
provide Parent with a copy of the new financing commitment letters.

     5.13  Exclusivity.  Sellers  agree that until this  Agreement is terminated
under the terms hereof or until the Closing (the "Exclusivity Period"),  Sellers
shall not, and shall not permit the Company or any of its  respective  officers,
directors, managers, agents or Affiliates to: (A) enter into any written or oral
agreement or understanding with any Person (other than Purchaser)  regarding the
sale (whether by sale of membership interests,  merger,  consolidation,  sale of
assets (other than the Retained Assets) or other disposition) of all or any part
of the Company or any  material  portion of its assets or  membership  interests
("Another  Transaction");  (B)  enter  into  or  continue  any  negotiations  or
discussion with any Person (other than  Purchaser)  regarding the possibility of
Another  Transaction;  or (C) except as  otherwise  required by Law,  order of a
Governmental Authority or similar compulsion, provide any nonpublic financial or
other confidential or proprietary  information  regarding the Company (including
this  Agreement,  any materials  containing  Purchaser's  proposal and any other
financial  information,  projections or proposals  regarding the Company) to any
Person (other than Purchaser and its representatives).

     5.14 Audit.

          (a) Parent shall use commercially reasonable efforts to cause KPMG LLP
     or  such  other  accounting  firm  of  international  recognition  mutually
     acceptable to Parent and Purchaser (the  "Auditors") to audit (the "Audit")
     as promptly as practicable  following the date hereof (i) the  consolidated
     statements  of earnings,  cash flows and owners'  equity of the Company and
     the  Subsidiary for the years ended December 31, 2005 and December 31, 2004
     and (ii) the consolidated  balance sheets of the Company and the Subsidiary
     as of December 31, 2005 and December 31, 2004.

          (b) To the extent the financial statements to be audited in accordance
     with clause (a) above include the Retained Assets and the results  relating
     thereto,  Parent  shall  prepare  and deliver to  Purchaser  as promptly as
     practicable  following  completion  of  the  Audit,   unaudited  pro  forma
     financial  statements  of the Company  and the  Subsidiary  reflecting  the
     impact of the exclusion of all of the Retained Assets as if their carve-out
     had occurred on January 1, 2005.

          (c) Upon  completion of the Audit,  Parent shall cause the Auditors to
     deliver to Parent an audit report stating (without  qualification)  that in
     its opinion the financial  statements  described in Section  5.14(a)(i) and
     (ii)  (including  the notes thereto) (the "Audited  Financial  Statements")
     have been  prepared  in  accordance  with GAAP and present  fairly,  in all
     material respects, the financial position of the Company and the Subsidiary
     on December 31, 2005 and  December  31, 2004 and the results of  operations
     for the periods  covered  thereby.  Immediately  following  receipt of such
     report,  Parent  shall  deliver to  Purchaser  such  report and the Audited
     Financial Statements. In the event the Auditors refuse, decline or indicate
     that they are  unwilling  to deliver  the audit  report  referred to above,
     Parent  shall  promptly  notify  Purchaser  of that fact and the  events or
     circumstances  giving rise  thereto.  Purchaser  and Parent  shall each pay
     one-half the cost of the Audit.

                                       42
<PAGE>

     5.15  Environmental  Investigation.  Prior to the Closing,  Purchaser shall
have the right,  at its sole cost and  expense,  to (a)  inspect  non-privileged
records,   reports,   permits,   applications,   monitoring  results,   studies,
correspondence   data  and  any  other  information  or  documents  relevant  to
environmental  conditions or  environmental  noncompliance,  (b) conduct Phase 1
environmental audits regarding the facilities of the Company and, with the prior
written  consent of Sellers  (such  consent not to be  unreasonably  withheld or
delayed), conduct tests of the soil surface or subsurface waters and air quality
at, in, on, beneath or about the facilities of the Company,  and to conduct such
other  procedures,  in each  case,  as may be  recommended  by an  environmental
consultant engaged by Purchaser based on its professional  judgment, in a manner
consistent  with good  engineering  practice;  provided  that  Purchaser and the
Company  shall seek and obtain  appropriate  permission to conduct such tests on
third-party  property,  and (c)  inspect  all  buildings  and  equipment  at the
facilities of the Company including,  without limitation,  the visual inspection
of the physical plants for asbestos-containing  construction materials; provided
that in each case, such tests and inspections shall be conducted only (i) during
regular  business hours and upon reasonable prior notice to the Company and (ii)
in a manner  that  will not  materially  interfere  with  the  operation  of the
business  of the  Company  and/or  the use of,  access  to or  egress  from  the
facilities of the Company.

     5.16  Insurance.  Sellers shall cause the Company to maintain in full force
and  effect all  insurance  coverage  for the  Company's  properties  and assets
substantially comparable to coverage existing on the date hereof.

     5.17  Continued  Financials.  Within  twenty (20) days of the close of each
month,  Sellers  shall,  or shall cause the Company  to,  deliver to  Purchaser,
monthly  financial  statements for the Company's most recently  completed month,
prepared in good faith and in  accordance  with GAAP (except (i) for the absence
of  footnotes,  and (ii) for the  absence of normal year end  adjustments),  and
applied on a consistent basis with the Financial Statements,  except materiality
shall be based on materiality  of the Company and not the Parent.  Within twenty
(20)  days of the  close of each  quarter,  Sellers  shall,  or shall  cause the
Company  to,  deliver  to  Purchaser,  quarterly  financial  statements  for the
Company's  most  recently  completed  quarter,  prepared  in good  faith  and in
accordance with GAAP (except (i) for the absence of footnotes,  and (ii) for the
absence of normal year end  adjustments)  and applied on a consistent basis with
the Financial  Statements,  except  materiality shall be based on materiality of
the Company and not Parent.

     5.18 Purchaser's Financials.

          (a) As promptly as  practicable  following the date hereof,  Purchaser
     shall  deliver  to  Parent,  (i) the  consolidated  audited  statements  of
     earnings,  cash flows and owners' equity of Purchaser and its  subsidiaries
     for the year ended December 31, 2005, (ii) the consolidated audited balance
     sheet of Purchaser and its  subsidiaries  as of December 31, 2005 and (iii)
     an audit report of  PricewaterhouseCoopers  LLP or other accounting firm of
     international  recognition that such audited financial statements have been
     prepared in accordance with GAAP, consistently applied, and present fairly,
     in all material  respects,  the  financial  position of  Purchaser  and its
     subsidiaries  on December  31, 2005 and the results of  operations  for the
     period covered thereby.

          (b) Within thirty-five (35) days of the close of each month, Purchaser
     shall deliver to Parent, (i) Purchaser's  monthly financial  statements for
     the most recently  completed month prepared in good faith and in accordance
     with GAAP and applied on a consistent basis with the Purchaser's  Financial
     Statements and (ii) a statement  setting forth  Purchaser's  EBITDA for the
     previous twelve (12) month period ending with the month end covered by such
     monthly  financial  statement,  such  statement  in the  form  provided  to
     Purchaser's lenders.

     5.19 Covenant Not to Compete; Non-Solicitation.

                                       43
<PAGE>

          (a) Except in connection with their  performance  under the Transition
     Services  Agreement,  Sellers and their Affiliates  shall not,  directly or
     indirectly,  engage or participate in, acquire, manage, operate, control or
     participate in the  management,  operation or control of, or own or possess
     an interest  in,  either  alone or jointly,  any Person that engages in the
     business of operating a Competitive Local Exchange  Carrier,  including any
     long haul business that originates in the areas  currently  serviced by the
     Company on its Metropolitan Access Network (a "Competing  Business") in the
     markets in which the Company  operates  on the date hereof (the  "Purchased
     Business  Markets")  for a period of eighteen (18) months after the Closing
     Date; provided,  however, that Sellers and their Affiliates (other than the
     Company)  shall not be  restricted  from engaging or  participating  in any
     business  or  activity   in  which  such   entity   currently   engages  or
     participates.  If the final  judgment of a court of competent  jurisdiction
     declares  that any term or  provision  of this  Section  5.19 is invalid or
     unenforceable, the parties agree that the court making the determination of
     invalidity  or  unenforceability  shall have the power to reduce the scope,
     duration,  or area of the term or provision,  to delete  specific  words or
     phrases,  or to replace any invalid or unenforceable term or provision with
     a term or provision that is valid and enforceable and that comes closest to
     the intention of the invalid or unenforceable  term or provision,  and this
     Agreement shall be enforceable as so modified after  expiration of the time
     within which the judgment may be appealed.

          (b) Sellers  covenant  and agree that they shall not (and shall assure
     that none of their Affiliates),  directly or indirectly,  for a period from
     the date hereof until  eighteen  (18) months after the Closing Date solicit
     to hire or hire, any employee of the Business  employed by Purchaser or any
     of Purchaser's  Affiliates after the Closing Date or any employee currently
     employed by Purchaser or  Purchaser's  Affiliates  as of the date hereof or
     employed by  Purchaser  or  Purchaser's  Affiliates  on the  Closing  Date;
     provided,  however,  that the  foregoing  shall not  prohibit (i) a general
     solicitation to the public of general advertising or (ii) a solicitation of
     any  employee  that  has  been   terminated  by  Purchaser  or  Purchaser's
     Affiliates and provided  further that nothing in this Section 5.19(b) shall
     prohibit  the  Sellers or any of Sellers'  Affiliates  from  employing  any
     person  who  contacts  them  on his or her  own  initiative  (including  in
     response  to a general  solicitation)  and  without  any direct or indirect
     solicitation  or  encouragement  or  inducement  by the  Sellers  or any of
     Sellers' Affiliates.

          (c) Purchaser covenants and agrees that it shall not (and shall assure
     that none of its Affiliates), directly or indirectly, for a period from the
     date hereof  until  eighteen  (18) months after the Closing Date solicit to
     hire or hire,  any  employee  of  Sellers  or any of  Sellers'  Affiliates;
     provided, however, that the foregoing shall not prohibit (i) Purchaser from
     hiring any of the Company Employees;  or (ii) a general solicitation to the
     public of general  advertising;  and provided  further that nothing in this
     Section shall prohibit Purchaser and Purchaser's  Affiliates from employing
     any person who contacts  them on his or her own  initiative  (including  in
     response  to a general  solicitation)  and  without  any direct or indirect
     solicitation by Purchaser or Purchaser's Affiliates.

     5.20 Cooperation in Transition.

          (a) The parties to this Agreement agree that Parent and Purchaser will
     need  to  work  together  prior  to  Closing  to  prepare  for  appropriate
     transition of operations and support provided by Parent to the Company.  In
     furtherance  thereof and until the effectiveness of the Transition Services
     Agreement,  Parent  shall,  and shall  cause  the  Company  to,  reasonably
     cooperate  with  Purchaser  and  assist and  facilitate  the  analysis  and
     preparation  for  the  conversion  of the  systems  data,  information  and
     functionality   from  Parent's   operating   systems  and  applications  to
     Purchaser's operating systems and applications ("Interim Conversion Work").
     In  addition,  Parent  shall,  and shall cause the  Company to,  reasonably
     cooperate  with  Purchaser,   and  assist  and  facilitate  Purchaser,   in
     developing the collection and remittance capabilities currently provided to
     the Company by Parent.  Parent shall designate a Project Manager(s) for the
     purpose  of  working  with   Purchaser  to  provide  the  necessary   data,
     information  and functions as reasonably  requested by Purchaser to perform
     the Interim  Conversion Work. The Project Manager(s) shall meet weekly with
     a representative of Purchaser or on a mutually agreed upon schedule.

                                       44
<PAGE>

          (b)  Parent  shall use  commercially  reasonable  efforts to cause the
     vendors of the  software  that are listed on Schedule  5.20(b),  during the
     twenty-one (21) day period  immediately  following the date hereof to agree
     to enter into separate  software licenses with the Company on substantially
     the same terms as apply to the Company  currently  pursuant to the licenses
     with such  vendors  now in effect  with the  Parent,  except to the  extent
     Parent  and  Purchaser  determine  to enter  into the  Transition  Services
     Agreement attached as Exhibit B-2 to this Agreement. Such separate licenses
     will be fully paid  through the  periods  indicated  on  Schedule  5.20(b).
     Purchaser will be responsible for any future  payments  relating to periods
     after the Closing (including  maintenance  obligations) under such separate
     licenses, and Parent will be responsible for any fees or charges associated
     with such vendors agreeing to enter into separate  licenses for the benefit
     of the  Company.  If Parent is able to cause each of such  vendors to enter
     into such a separate  license on such terms as  outlined  above,  then,  if
     Purchaser and Parent shall agree, Parent and Purchaser shall enter into the
     Transition Services Agreement attached as Exhibit B-1 to this Agreement. If
     (i)  Parent is unable to cause  each of such  vendors  to enter into such a
     separate  license on such terms as outlined above and/or (ii) Purchaser and
     Parent  do not  agree  to  enter  into the  Transition  Services  Agreement
     attached as Exhibit B-1 to this Agreement, in either case within twenty-one
     (21) days following the date hereof,  or if Parent otherwise  elects,  then
     Parent and Purchaser  shall enter into the  Transition  Services  Agreement
     attached as Exhibit B-2 to this Agreement.

          (c) If,  pursuant to Section  5.20(b),  Parent and Purchaser  agree to
     enter into the Transition  Services Agreement attached as Exhibit B-1, then
     Purchaser shall, or shall cause the Company to, effective at Closing, offer
     employment to  approximately  15 of Parent's IT personnel who are listed on
     Schedule  5.20(c)  and who are  qualified  to  support  the  Company's  OSS
     applications.  Parent  shall,  and shall cause the  Company to,  reasonably
     cooperate with Purchaser in providing Purchaser information with respect to
     such  personnel's  capabilities in order to assist Purchaser in determining
     which  of  such   personnel   are  suited  to  support  the  Company's  OSS
     applications following the Closing.

     5.21 No Additional Representations. Purchaser acknowledges that (i) neither
of the Sellers nor any other  Person has made any  representation  or  warranty,
expressed  or implied,  as to the Company or the  Business,  or the  accuracy or
completeness of any information  regarding the Company or the Business furnished
or made available to Purchaser and its representatives,  except as expressly set
forth in this Agreement and (ii) Purchaser has not relied on any  representation
or warranty from Sellers or any other Person in  determining  to enter into this
Agreement, except as expressly set forth in this Agreement.

     5.22 Long Distance Services. Parent and Purchaser shall seek agreement with
the  Company's  existing  LD  carriers to augment  those  carrier's  services to
accommodate the additional  capacity and/or services currently being provided to
the  Company  by  Parent's  LD  carriers  by the 60th day after the date of this
Agreement. If an agreement is timely reached with the LD carriers,  Parent shall
provide the facilities,  equipment,  manpower and services  necessary to augment
the Company's LD switches to accommodate  uninterrupted  LD services at Closing.
If Parent and Purchaser fail to reach  agreement with the Company's  existing LD
carriers by the 60th day after the date of this  Agreement,  Parent shall timely
provide the facilities,  equipment,  manpower and services  necessary to augment
the Company's LD switches to  accommodate  uninterrupted  LD services at Closing
using Purchaser's LD carriers. In each case, Parent shall not charge any mark-up
or fee or seek reimbursement for any costs except  pass-through  charges from LD
carriers.

                                       45
<PAGE>

                                   ARTICLE 6.
                CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER

     The obligation of Purchaser to purchase the Purchased Interests as provided
herein and to consummate the other transactions  contemplated  hereby is, at the
option of Purchaser, subject to satisfaction of each of the following conditions
precedent on or before the Closing Date:

     6.1   Warranties   True  As  of  Present   Date  and  Closing   Date.   The
representations  and  warranties  of Sellers  contained  herein  shall have been
accurate,  true and correct in all material respects (other than representations
and warranties qualified as to materiality, which shall have been accurate, true
and correct in all  respects) on and as of the date hereof,  and,  except to the
extent  that any such  representation  or warranty is made solely as of the date
hereof or as of  another  date  earlier  than the  Closing  Date,  shall also be
accurate,  true and  correct in all  material  respects on and as of the Closing
Date with the same force and  effect as though  made by Sellers on and as of the
Closing Date.

     6.2 Compliance  with  Agreements  and Covenants.  Sellers shall have in all
material  respects  performed  and  complied  with  all  of  its  covenants  and
obligations  contained in this Agreement to be performed and complied with by it
on or prior to the Closing Date.

     6.3 Competition  Law Approvals.  The waiting period under the HSR Act shall
have expired or been terminated.

     6.4 Transaction Documents.  Parent, and any applicable Affiliate of Parent,
shall have entered into the Transaction Documents.

     6.5 Consents.  Purchaser shall have received (i) the FCC Consents and State
PUC  Consents  set forth on  Schedule  6.5 and such FCC  Consents  and State PUC
Consents   shall  have  become  Final  Orders  and  (ii)  the  other   consents,
authorizations and approvals set forth on Schedule 6.5.

     6.6  Injunctions.  As of the Closing Date,  no court or other  Governmental
Authority  shall have issued an order which shall then be in effect  restraining
or prohibiting the completion of the transactions  contemplated  hereby,  and no
suit shall have been  instituted  by a  Governmental  Authority  with at least a
reasonable possibility of success seeking the same.

     6.7  Certificate.  Purchaser shall have received a certificate from each of
Sellers signed on behalf of such Seller by authorized officers of such Seller to
the effect set forth in Sections 6.1 and 6.2.

     6.8  Deliveries  by Sellers.  Sellers  shall have  effected the  deliveries
required  pursuant  to  Section  8.2,  each in  form  and  substance  reasonably
satisfactory to Purchaser.

     6.9 Financing.  The closing  conditions set forth in the Commitment Letters
shall have been satisfied or waived and the Financing shall have been obtained.

     6.10 Audited Financial Statements.  Sellers shall have received the Audited
Financial Statements and delivered a copy thereof to Purchaser.

                                   ARTICLE 7.
                 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

                                       46
<PAGE>

     The  obligation  of Sellers to sell the  Purchased  Interests  as  provided
herein and to consummate the other transactions  contemplated  hereby is, at the
option  of  Sellers,  subject  to the  satisfaction  of  each  of the  following
conditions precedent on or before the Closing Date:

     7.1   Warranties   True  as  of  Present   Date  and  Closing   Date.   The
representations  and  warranties of Purchaser  contained  herein shall have been
accurate,  true and correct in all material respects (other than representations
and warranties qualified as to materiality, which shall have been accurate, true
and correct in all  respects)  on and as of the date  hereof,  and shall also be
accurate,  true and  correct in all  material  respects on and as of the Closing
Date with the same force and effect as though made by Purchaser on and as of the
Closing Date.

     7.2  Compliance  with  Agreements  and  Covenants.  Purchaser  shall in all
material  respects  have  performed  and complied  with all of its covenants and
obligations  contained in this Agreement to be performed and complied with by it
on or prior to the Closing Date. Notwithstanding the foregoing,  Purchaser shall
have paid the Purchase Price in accordance with Section 2.2 on the Closing Date.

     7.3 Competition  Law Approvals.  The waiting period under the HSR Act shall
have expired or been terminated.

     7.4  Transfer of  Retained  Assets.  The  Retained  Assets  shall have been
transferred to an entity designated by Parent.

     7.5   Transaction   Documents.   Purchaser  shall  have  entered  into  the
Transaction Documents.

     7.6  Injunctions.  As of the Closing Date,  no court or other  Governmental
Authority  shall have issued an order which shall then be in effect  restraining
or prohibiting the completion of the transactions  contemplated  hereby,  and no
suit shall have been  instituted  by a  Governmental  Authority  with at least a
reasonable possibility of success seeking the same.

     7.7  Certificate.  Sellers shall have received a certificate from Purchaser
signed on behalf of  Purchaser  by an  authorized  officer of  Purchaser  to the
effect set forth in Sections 7.1 and 7.2.

     7.8 Deliveries by Purchaser.  Purchaser  shall have effected the deliveries
required  pursuant  to  Section  8.3,  each in  form  and  substance  reasonably
satisfactory to Sellers.

     Any party Closing the  transactions  contemplated  by this Agreement in the
absence of the satisfaction of a closing condition set forth in Articles 6 and 7
shall not be deemed to have waived the  underlying  representation  or agreement
related to the closing condition not satisfied.

                                   ARTICLE 8.
                              CLOSING; TERMINATION

     8.1  Closing.  The Closing  shall take place at the offices of Perkins Coie
LLC,  1120 N.W.  Couch Street,  Tenth Floor,  Portland,  Oregon,  at 12:00 noon,
eastern time, on the second  Business Day after the date on which all conditions
precedent set forth in Article 6 and Article 7 have been  satisfied or waived by
the parties (other than those that by their terms cannot be satisfied  until the
time of  Closing),  or such other date as is mutually  agreeable  to Sellers and
Purchaser (the "Closing Date").

     8.2  Deliveries  of  Sellers.  At the  Closing,  Sellers  shall  deliver to
Purchaser:

                                       47
<PAGE>

          (a) such instrument or instruments of sale,  transfer,  conveyance and
     assignment  as  Purchaser  and  its  counsel  may  reasonably   request  in
     connection with the transfer of the Purchased Interests;

          (b) the minute book of the Company;

          (c)  the  Transaction  Documents,  duly  executed  by  Parent  or  its
     Affiliate;

          (d) the certificate pursuant to Section 6.7;

          (e) a Certificate  of Non-Foreign  Status in accordance  with Treasury
     Regulations Section 1.445-2(a)(2) duly executed by Parent;

          (f) opinions of regulatory  counsel  dated the Closing Date  regarding
     telecommunications  regulatory matters, in form and substance, set forth on
     Exhibit J hereto; and

          (g) any other items  required  to be  delivered  by Sellers  under the
     terms and provisions of this Agreement.

     8.3  Deliveries of Purchaser.  At the Closing,  Purchaser  shall deliver to
Sellers:

          (a) confirmations of the wire transfers of immediately available funds
     required by Section 2.2;

          (b) the Transaction Documents, duly executed by Purchaser

          (c) the certificate pursuant to Section 7.7; and

          (d) any other items to be delivered  by Purchaser  under the terms and
     provisions of this Agreement.

     8.4 Termination. This Agreement shall terminate prior to Closing:

          (a) upon the mutual written agreement of Sellers and Purchaser;

          (b)  by  either  Purchaser  or  Sellers,   if  a  court  of  competent
     jurisdiction   or  other   Governmental   Authority  shall  have  issued  a
     nonappealable  final order,  decree or ruling or taken any other action, in
     each case  having  the  effect of  permanently  restraining,  enjoining  or
     otherwise  prohibiting the transactions  contemplated hereby, except if the
     party  relying  on such  order,  decree or ruling or other  action  has not
     complied with its obligations under this Agreement;

          (c) by either  Purchaser  or Sellers,  if the  Closing  shall not have
     occurred by September  30, 2006,  as such date may be extended from time to
     time to the extent the termination date in the Commitment  Letters has been
     extended in writing prior to September 30, 2006, such  termination  date to
     be no later than December 31, 2006;  provided,  however,  that the right to
     terminate this  Agreement  under this Section 8.4(c) shall not be available
     to any party whose failure to fulfill any  obligation  under this Agreement
     has been the cause of, or  resulted in the failure of, the Closing to occur
     on or before such date;

          (d) by  Sellers,  if there  has been a breach  of any  representation,
     warranty or covenant or  agreement  on the part of  Purchaser  set forth in
     this Agreement, which breach (i) causes the conditions set forth in Article
     7 not to be  satisfied  and (ii) shall not have been cured  within ten (10)
     Business  Days  following  receipt by Purchaser  of written  notice of such
     breach from Sellers;

                                       48
<PAGE>

          (e) by  Purchaser,  if there has been a breach of any  representation,
     warranty or covenant or  agreement on the part of Sellers set forth in this
     Agreement,  which breach (i) causes the  conditions  set forth in Article 6
     not to be  satisfied  and (ii)  shall not have been  cured  within ten (10)
     Business Days following receipt by Sellers of written notice of such breach
     from Purchaser; or

          (f) by Sellers,  if Purchaser has  delivered a notice  pursuant to the
     third  sentence  of  Section  5.12 and (i) has not  delivered  to Sellers a
     proposal letter with respect to alternative financing reasonably acceptable
     to Sellers  within  thirty  (30) days of  delivery  of the notice  provided
     pursuant  to the third  sentence  of  Section  5.12,  or (ii) if  Purchaser
     delivers such a proposal  letter(s) within such thirty day period,  has not
     delivered  to  Sellers  commitment  letters  with  respect  to  alternative
     financing  reasonably  acceptable to Sellers within thirty (30) days of the
     delivery of such proposal letter(s).

     If this  Agreement is terminated  pursuant to this Section 8.4, all further
obligations of the parties under this  Agreement  shall become null and void and
of no further force or effect,  except that (i) Sections  2.6,  5.4, 8.4,  11.1,
11.7,  and 11.13 will  survive,  and (ii) if this  Agreement is  terminated by a
party  because of the breach of the  Agreement by the other party or because one
or more of the  conditions to the  terminating  party's  obligations  under this
Agreement is not  satisfied as a result of the other  party's  failure to comply
with its  obligations  under this Agreement,  the  terminating  party's right to
pursue all legal remedies shall survive such termination unimpaired.

     Notwithstanding the foregoing,  if this Agreement is terminated pursuant to
Section 8.4(c),  8.4(d) or 8.4(f) based on the failure of the closing  condition
set forth in Section 6.9  (Financing) to occur,  Purchaser shall pay Parent as a
termination  fee, in addition to the deposit  referred to in Section  2.6,  $3.5
million,  such  payment  to be made to Parent on the  later of (i)  twenty  (20)
Business Days after  termination  and (ii)  December 31, 2006.  For avoidance of
doubt, the retention of the deposit and the amounts set forth in this paragraph,
as well as the rights  granted to Parent in the Letter  Agreement and the rights
granted to Parent as provided  herein,  shall be the  exclusive  remedy  against
Purchaser based on a failure to obtain financing.

     8.5 Further Assurances.  Each party agrees that it shall, from time to time
after the date of this  Agreement,  execute and deliver such other documents and
instruments  and take such other actions as may be  reasonably  requested by any
other party to carry out the transactions contemplated by this Agreement.

                                   ARTICLE 9.
                          SURVIVAL AND INDEMNIFICATION

     9.1 Survival.

          (a)  The   representations,   warranties,   covenants  and  agreements
     contained  in  this  Agreement  shall  survive  the   consummation  of  the
     transactions  contemplated  hereby solely for purposes of this Article 9 as
     follows: (i) the representations and warranties contained in this Agreement
     (other than the representations  and warranties  contained in Sections 3.1,
     3.2,  3.3,  3.9,  3.11 and 4.1) shall  survive  for  eighteen  (18)  months
     following the Closing; (ii) any representations and warranties contained in
     Sections  3.1,  3.2,  3.3 and 4.1  shall  survive  indefinitely;  (iii) any
     representations  and  warranties  contained  in Sections 3.9 and 3.11 shall
     survive  the  Closing  for  the  duration  of  the  applicable  statute  of
     limitations  plus sixty (60) days;  (iv) any  covenants  contained  in this
     Agreement  shall  survive the Closing in accordance  with their  respective
     terms;  and (v)  all  other  provisions  of this  Agreement  shall  survive
     indefinitely.

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<PAGE>

          (b) Any right to  indemnification or other recovery under this Article
     9 shall only apply to Damages (as defined  below) with respect to which the
     Indemnified  Party shall have  notified the  Indemnifying  Party within the
     applicable  time  period set forth in this  Section  9.1.  If any claim for
     indemnification  or other recovery is timely asserted under this Article 9,
     the  Indemnified  Party  shall have the right to bring an  action,  suit or
     proceeding  with  respect to such claim  within one year after first giving
     the Indemnifying  Party notice thereof,  but may not bring any such action,
     suit or proceeding thereafter.

     9.2 Indemnification by Parent.

          (a) Subject to the  limitations  set forth in this Article 9, from and
     after the Closing, Parent agrees to indemnify Purchaser, its Affiliates (in
     their  capacity  as such  and  not as  lendors)  and any of its  respective
     agents,  employees,  officers and directors (each, a "Purchaser Indemnified
     Party" and collectively, the "Purchaser Indemnified Parties"), against, and
     agrees to hold  Purchaser  Indemnified  Parties  harmless from, any and all
     losses,  costs,  damages,   penalties,   fines,  liabilities  and  expenses
     (including  reasonable legal fees and expenses and costs, fees and expenses
     incurred in pursuing  indemnification under this Agreement)  (collectively,
     "Damages") incurred or sustained by any Purchaser  Indemnified Party to the
     extent arising out of:

               (i) any  breach of any  representation  or  warranty  by  Sellers
          contained in this Agreement or in the certificate set forth in Section
          6.7; and

               (ii) a breach by Sellers  of any  covenants  or other  agreements
          contained herein that are to be performed following the Closing Date.

     Following  the  Closing,  solely  for  purposes  of  determining  whether a
representation or warranty that is qualified by reference to matters "that would
not,  individually  or in the  aggregate,  have a  Material  Adverse  Effect" or
language of similar  import has been breached for purposes of Section  9.2(a)(i)
only,  such Material  Adverse Effect  qualifier shall be disregarded and in lieu
thereof  such  representation  or warranty  shall be deemed to be  qualified  by
reference to matters "that would not,  individually  or in the  aggregate,  give
rise to Damages of  $1,000,000  or more";  provided,  however,  that the parties
acknowledge and agree that such $1,000,000 Damage threshold shall not be applied
for purposes of  determining  whether a Material  Adverse  Effect  exists or has
occurred.

          (b) The aggregate indemnification obligation for Damages under Section
     9.2(a)(i)  (other than in respect of Damages arising out of breaches of the
     representations and warranties contained in Sections 3.1, 3.2, 3.3 and 3.9)
     shall not exceed $30,000,000.00.

     9.3  Indemnification  by Purchaser.  From and after the Closing,  Purchaser
agrees  to  indemnify  Sellers,  their  Affiliates  and any of their  respective
agents,   employees,   officers,   managers,  and  directors  (each,  a  "Seller
Indemnified Party" and collectively,  the "Seller Indemnified Parties") against,
and agrees to hold Seller Indemnified Parties harmless from, any and all Damages
incurred or sustained by any Seller  Indemnified Party to the extent arising out
of any of the following:

          (a)  any  breach  of  any  representation  or  warranty  by  Purchaser
     contained in this Agreement or in the certificate set forth in Section 7.7;
     and

          (b) a breach by Purchaser of any covenant or other agreement contained
     herein that is to be performed following the Closing Date.

     9.4 Basket for Claims.

          (a) No claim for Damages arising out of any breach (except for Damages
     from a breach of a representation  and warranty  contained in Sections 3.1,
     3.2,  3.3 and  3.9)  shall  be made  under  Section  9.2(a)(i)  unless  the
     aggregate  amount  of  Damages  for which  claims  are made  under  Section
     9.2(a)(i) exceeds  $5,000,000.00  (the "Parent's  Basket"),  in which case,
     Purchaser  Indemnified  Parties shall be entitled to seek compensation only
     for  Damages in excess of such  amount,  subject to Section  9.2(b).  There
     shall be no Parent's  Basket for breaches of Sections  3.1,  3.2,  3.3, and
     3.9.

                                       50
<PAGE>

          (b)  Notwithstanding  anything  contained  in  this  Agreement  to the
     contrary,  Parent  shall  have no  obligation  to  provide  indemnification
     pursuant to Sections  9.2(a)(i)  (other than in respect of Damages  arising
     out of breaches of the representations and warranties contained in Sections
     3.1,  3.2, 3.3 and 3.9) (and no amount shall be deducted  from the Parent's
     Basket) with respect to any  individual  claim for  indemnification  by the
     Purchaser  Indemnified  Parties  except to the  extent  that the  amount of
     indemnification  to which the  Purchaser  Indemnified  Parties  shall  have
     become entitled to under Section 9.2 with respect to such individual  claim
     for  indemnification  shall exceed $100,000.  All such individual claims in
     amounts that exceed $100,000 shall be applied against the Parent's  Basket,
     and if  and  when  such  Parent's  Basket  is  exceeded,  Parent  shall  be
     obligated,  subject to the other  provisions  of this Article 9 (including,
     without  limitation,  Section  9.4(a)),  to  provide  indemnification  with
     respect to such individual claim.

     9.5 Net Losses; Subrogation; Mitigation.

          (a)  Notwithstanding  anything  contained herein to the contrary,  the
     amount of any Damages incurred or suffered by an Indemnified Party shall be
     calculated  after  giving  effect to (i) any  insurance  proceeds  actually
     received by the Indemnified  Party (or any of its Affiliates)  with respect
     to such Damages,  (ii) any Tax Advantage  realized by the Indemnified Party
     (or any of its Affiliates)  arising from the facts or circumstances  giving
     rise to such Damages,  and (iii) any  recoveries  actually  received by the
     Indemnified  Party (or any of its  Affiliates)  from any other third party.
     Each Indemnified Party shall exercise  commercially  reasonable  efforts to
     obtain  such  proceeds,  benefits  and  recoveries.  If any such  proceeds,
     benefits or recoveries are received by an Indemnified  Party (or any of its
     Affiliates)  with respect to any Damages  after an  Indemnifying  Party has
     made  a  payment  to  the  Indemnified  Party  with  respect  thereto,  the
     Indemnified  Party (or such Affiliate) shall pay to the Indemnifying  Party
     the amount of such  proceeds,  benefits or recoveries  (up to the amount of
     the Indemnifying Party's payment).

          (b) Upon making any payment to an Indemnified  Party in respect of any
     Damages,  and the  Indemnified  Party's  payment  in full of  Damages,  the
     Indemnifying Party shall, to the extent of such payment by the Indemnifying
     Party,  be  subrogated  to all  rights of the  Indemnified  Party  (and its
     Affiliates) against any third party in respect of the Damages to which such
     payment  relates.   Such   Indemnified   Party  (and  its  Affiliates)  and
     Indemnifying  Party shall execute upon request all  instruments  reasonably
     necessary to evidence or further perfect such subrogation rights.

          (c) Purchaser and Sellers shall use commercially reasonable efforts to
     mitigate any Damages,  including by asserting claims against a third party;
     provided,  that no party  shall be  required  to use such  efforts  if they
     reasonably  believe  such  actions  would be  detrimental  in any  material
     respect  to such  party.  For  avoidance  of doubt,  any costs or  expenses
     involved in undertaking mitigation shall be included in Damages.

          (d) To the extent  that any breach of any  representation  or warranty
     contained in this  Agreement  or any breach of any other  provision of this
     Agreement  that  arises  after  the  Closing  is  capable  of  remedy,  the
     Indemnified  Party  shall  afford  the  Indemnifying   Party  a  reasonable
     opportunity to remedy the matter complained of.

                                       51
<PAGE>

     9.6 Claims.  As promptly as is reasonably  practicable after becoming aware
of a claim for  indemnification  under this  Agreement  that does not  involve a
Third Party Claim (as defined in Section 9.7), the Indemnified  Party shall give
notice to the  Indemnifying  Party of such claim,  which  notice  shall,  to the
extent such information is reasonably  available,  specify in reasonable  detail
the facts alleged to constitute the basis for such claim,  the  representations,
warranties,  covenants  and  obligations  alleged to have been  breached and the
amount  that  the  Indemnified  Party  seeks  hereunder,   if  known,  from  the
Indemnifying  Party,  together  with  such  information,   to  the  extent  such
information is reasonably  available,  as may be reasonably  necessary to assist
the  Indemnifying  Party in determining that the limitations in Section 9.4 have
been satisfied or do not apply.  No failure to provide notice under this Section
9.6 or under Section 9.7 in the time frames  specified shall adversely affect an
Indemnified  Party's  rights  to  indemnification   except  to  the  extent  the
Indemnifying Party is actually prejudiced or harmed by such failure.

     9.7 Notice of Third Party Claims;  Assumption of Defense.  The  Indemnified
Party shall give notice as promptly  as is  reasonably  practicable,  but in any
event no later than fifteen (15) Business Days after  receiving  notice thereof,
to the Indemnifying  Party of the assertion of any claim, or the commencement of
any suit,  action or proceeding,  by any Person not a party hereto in respect of
which  indemnity  may be sought under this  Agreement  (a "Third  Party  Claim")
(which notice shall,  to the extent such  information  is reasonably  available,
specify in reasonable  detail the facts alleged to constitute the basis for such
claim, the  representations,  warranties,  covenants and obligations  alleged to
have been breached and the amount of such claim  together with such  information
as may be necessary for the Indemnifying Party to determine that the limitations
in Section 9.4 have been  satisfied  or do not apply).  The  Indemnifying  Party
shall have the right to defend the Indemnified Party against any such claim with
counsel of its choice  reasonably  satisfactory to the Indemnified Party so long
as the  Indemnifying  Party  notifies the  Indemnified  Party in writing  within
fifteen (15) days after the Indemnified Party has given notice of the claim that
the Indemnifying  Party shall assume the defense of such claim.  Notwithstanding
the  foregoing,  the  Indemnifying  Party  shall not be  entitled  to assume the
defense  of any such  claim if the  claim  seeks an order,  injunction  or other
equitable  relief or relief for other than money damages against the Indemnified
Party that the Indemnified  Party reasonably  determines,  after conferring with
its outside  counsel and the  Indemnifying  Party's outside  counsel,  cannot be
separated from any related claim for money damages.  If such equitable relief or
other  relief  portion of such claim can be so  separated  from that portion for
money damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.

     If the Indemnifying Party assumes such defense, the Indemnified Party shall
have the right (but not the duty) to participate  in the defense  thereof and to
employ counsel,  at its own expense,  separate from the counsel  employed by the
Indemnifying  Party.  To  the  extent  the  Indemnified  Party  is  entitled  to
indemnification  hereunder with respect to such claim,  if and to the extent the
Indemnifying  Party does not assume the defense of any such claim,  suit, action
or proceeding,  the Indemnifying  Party shall nonetheless be responsible for the
payment when due of all reasonable costs and expenses incurred in defense of the
claim, suit, action or proceeding. Whether or not the Indemnifying Party chooses
to defend or prosecute any such claim,  suit,  action or proceeding,  all of the
parties hereto shall cooperate in the defense or prosecution thereof.

     9.8 Settlement or Compromise.  Any settlement or compromise  made or caused
to be made by the Indemnified  Party or the Indemnifying  Party, as the case may
be, of any such claim,  suit,  action or  proceeding  of the kind referred to in
Section 9.7 shall also be binding upon the Indemnifying Party or the Indemnified
Party,  as the case may be, in the same manner as if a final  judgment or decree
had been  entered  by a court of  competent  jurisdiction  in the amount of such
settlement or compromise;  provided, that (i) no obligation or restriction shall
be imposed on the Indemnified Party as a result of such settlement or compromise
without  its  prior  written  consent  and no  Damage  shall be  imposed  on the
Indemnified Party as a result of such settlement or compromise without its prior
written consent,  which consent shall not be unreasonably withheld, and (ii) the
Indemnified  Party will not  compromise  or settle any  claim,  suit,  action or
proceeding  without the prior written consent of the Indemnifying  Party,  which
consent shall not be unreasonably withheld or delayed.

                                       52
<PAGE>

     9.9 Limitations on Liability. Notwithstanding any provision herein, neither
of  Sellers  nor  Purchaser  shall in any event be  liable to the other  parties
hereto,   Purchaser  Indemnified  Parties  or  Seller  Indemnified  Parties,  as
applicable,  on  account  of any  breach of this  Agreement  or any of the other
Transaction Documents for any indirect,  consequential,  special,  incidental or
punitive damages.  Each of Sellers and Purchaser  acknowledge and agree that for
purposes of this Article 9, any damages actually paid by or on behalf of them to
a third  party in respect of a Third  Party  Claim  shall be  considered  direct
damages rather than  indirect,  consequential,  special,  incidental or punitive
damages.

     9.10  Exclusive  Remedy.   Following  the  Closing,   the   indemnification
provisions  set  forth  in this  Article  9 and  Article  10 shall  provide  the
exclusive  remedy  for  breach of any  covenant,  agreement,  representation  or
warranty set forth in this Agreement, except that the indemnification provisions
set forth in this Article 9 and Article 10 do not limit (i) either parties right
to seek  equitable  relief in a court of  competent  jurisdiction  to prevent or
remedy a breach  of the  other  party's  obligations  hereunder,  including  the
obligations set forth in Section 5.4, (ii) any party's  remedies for breaches of
the non-competition and  non-solicitation  provisions contained in Section 5.19,
or (iii) any party's remedies with respect to fraud by the other party.

     9.11 Purchase Price  Adjustments.  Any amounts payable under Section 9.2 or
Section 9.3 shall be treated by Purchaser  and Sellers as an  adjustment  to the
Purchase Price.

                                   ARTICLE 10.
                                   TAX MATTERS

10.1     Filing Tax Returns; Payment of Taxes.

          (a) Sellers  shall cause to be prepared  and filed in a timely  manner
     all Tax  Returns  for Income  Taxes with  respect  to the  income,  assets,
     properties or operations of the Company for all periods ending on or before
     the  Closing  Date   ("Pre-Closing  Tax  Periods"),   including  for  those
     jurisdictions  and Governmental  Authorities that permit or require a short
     period Tax Return for Income  Taxes,  for the period  ending on the Closing
     Date.  All  such  Tax  Returns  shall  be  prepared  and  filed in a manner
     consistent  with  past  practice  of the  Company,  except as  required  by
     applicable Law.  Without undue disruption to the operations of the Company,
     Purchaser  shall  cause the  Company to  cooperate  fully and  promptly  in
     connection with Sellers'  preparation and filing of such returns. The books
     and records of the Company will be  maintained,  and the Tax Returns of the
     Company will be filed,  so as to accurately  reflect the  operations of the
     Company through the end of the Closing Date.

          (b) Purchaser  shall cause to be prepared and filed in a timely manner
     all other Tax  Returns  required  to be filed by the  Company  for  periods
     ending on or before the Closing Date and for Straddle Periods, after giving
     Sellers  the  opportunity  to review and  approve  (not to be  unreasonably
     withheld) any Tax Return relating to a Tax Period including any pre-Closing
     item;  provided,  however,  that Sellers shall be responsible for any Taxes
     shown on such Tax Returns  that are  attributable  to the  Pre-Closing  Tax
     Period or that portion of a Straddle  Period  relating to the period ending
     on the Closing Date except to the extent such Taxes have been  reserved for
     as a liability on the Closing  Balance Sheet and resulted in a reduction to
     the Purchase Price under Section 2.3 hereof.

          (c) None of  Purchaser  or any of its  Affiliates  shall (or after the
     Closing,  shall cause or permit the Company to) amend,  refile or otherwise
     modify (or grant an  extension of any statute of  limitations  with respect
     to) any Tax Return  relating  in whole or in part to the  Company  (i) with
     respect to any Pre-Closing Tax Period, or (ii) with respect to any Straddle
     Periods without the prior written  consent of Sellers,  which consent shall
     not be unreasonably withheld. If any position on any Tax Return filed after
     the Closing Date with  respect to the Company for Tax Periods  beginning on
     or after the Closing  Date could  reasonably  be expected to affect the Tax
     liability of Sellers,  Purchaser  shall notify  Sellers and shall take such
     position on such Tax Return only with the approval of Sellers,  which shall
     not be unreasonably withheld.

                                       53
<PAGE>

          (d) For purposes of this  Agreement,  Taxes for periods that  include,
     but do not end on the Closing  Date shall be  apportioned  as follows:  (i)
     Taxes that are based on or measured by income or gross  receipts or imposed
     in  connection  with any sale,  transfer or  assignment or any deemed sale,
     transfer or assignment of property, shall be determined based on an interim
     closing of the books as of the close of business on the Closing Date,  (ii)
     Taxes (other than those described in clause (i)),  shall be deemed equal to
     the amount of Taxes for the entire taxable period multiplied by a fraction,
     the  numerator of which is the number of days in the portion of the taxable
     period  ending on the Closing  Date,  and the  denominator  of which is the
     total number of days in the entire Taxable Period.

     10.2 Cooperation on Tax Matters.

          (a) Subject to the provisions of Section 10.5, Purchaser,  the Company
     and  Sellers  shall  cooperate  fully,  as  and to  the  extent  reasonably
     requested by the other party,  in connection with the filing of Tax Returns
     pursuant to this Article 10. Such  cooperation  shall include the retention
     and  (upon  the  other  party's  request)  the  provision  of  records  and
     information which are reasonably relevant to any such audit,  litigation or
     other  proceeding and making employees  available on a mutually  convenient
     basis to provide  additional  information  and  explanation of any material
     provided hereunder.  Personnel of the Company shall be available to execute
     Tax  statute of  limitation  waivers  and  amended  Tax Returns at Sellers'
     request for the Tax Returns for the Tax Period  prior to the Closing  Date.
     Purchaser  and Sellers  shall (i) retain all books and records with respect
     to Tax  matters  pertinent  to the Company  relating to any Taxable  Period
     beginning  before the Closing Date until the  expiration of the  applicable
     statute  of  limitations  (and,  to the extent  notified  by  Purchaser  or
     Sellers,  any extensions thereof) of the respective Taxable Periods, and to
     abide by all  record  retention  agreements  entered  into with any  taxing
     authority and (ii) give the other party reasonable  written notice prior to
     transferring,  destroying or discarding  any such books and records and, if
     the other party so  requests,  Purchaser  or  Sellers,  as the case may be,
     shall allow the other party to take possession of such books and records.

          (b) Purchaser and Sellers, upon reasonable request by the other party,
     shall use all commercially  reasonable efforts to obtain any certificate or
     other document from any  Governmental  Authority or any other Person as may
     be necessary to mitigate, reduce or eliminate any Tax that could be imposed
     (including with respect to the transactions contemplated hereby).

     10.3 Tax Indemnification.  Without duplication,  Parent agrees to indemnify
Purchaser  Indemnified Parties against and agrees to hold Purchaser  Indemnified
Parties harmless from any and all Taxes imposed on the Company in respect of its
income, business, property or operations, or for which the Company may otherwise
be liable,  for any Pre-Closing Tax Period and that portion of a Straddle Period
relating  to the period  ending on the Closing  Date,  except to the extent such
Taxes have been  reserved  for as a liability on the Closing  Balance  Sheet and
resulted  in a  reduction  to the  Purchase  Price  under  Section  2.3  hereof.
Notwithstanding  any provision to the contrary  herein,  Parent's  obligation to
indemnify  Purchaser  Indemnified  Parties  under this Section 10.3 shall not be
subject to the limitations on indemnification under Section 9.4.

     10.4 Refunds.

                                       54
<PAGE>

          (a) Any  required  amended Tax Return  relating to a  Pre-Closing  Tax
     Period or that portion of a Straddle  Period  relating to the period ending
     on the Closing Date and any refund  claims  relating to a  Pre-Closing  Tax
     Period or that portion of a Straddle  Period  relating to the period ending
     on the Closing Date shall be prepared by Sellers.

          (b) Any refunds or credits of Taxes of the Company for any Pre-Closing
     Tax  Period or that  portion of a Straddle  Period  relating  to the period
     ending on the Closing  Date shall be for the benefit of Sellers  (except to
     the  extent  such  refunds  have been  accrued  as an asset on the  Closing
     Balance  Sheet and  resulted  in an increase  to the  Purchase  Price under
     Section  2.3  hereof)  and any  refunds or credits of the  Company for that
     portion of a Straddle  Period  beginning  on the day after the Closing Date
     shall be for the benefit of Purchaser.

          (c)  Purchaser  shall  promptly  pay over (or cause the Company to pay
     over) to Sellers all refunds  received by  Purchaser or its  Affiliates  to
     which Sellers are entitled under this Section 10.4 (including interest with
     respect  thereto),  and Sellers shall promptly pay or cause to be paid over
     to  Purchaser  (or the  Company)  all  refunds to which  Purchaser  (or the
     Company) is entitled  under this  Section  10.4  (including  interest  with
     respect thereto).

     10.5 Audits and Contests with Respect to Taxes.

          (a) So long as Taxable Periods of the Company ending on or before,  or
     including, the Closing Date remain open for an assessment of Tax, Purchaser
     and Sellers shall notify the other in writing  within fifteen (15) Business
     Days after receipt by Purchaser or Sellers of written or oral notice of:

               (i) any pending or threatened audit or assessment with respect to
          Taxes  of the  Company  relating  to any  Pre-Closing  Tax  Period  or
          Straddle Period, and

               (ii) any pending or threatened  audit or assessment  with respect
          to Taxes of  Purchaser  that may  affect  the Tax  liabilities  of the
          Company for any Pre-Closing Tax Period or Straddle Period.

          (b) Within  fifteen (15)  Business  Days after  Sellers'  receipt of a
     notice respecting an item or items for which it is responsible  pursuant to
     Section  9.2,  Sellers may elect,  so long as Parent has an  obligation  to
     indemnify  Purchaser  Indemnified  Parties  hereunder  with respect to such
     audit,  by written notice to Purchaser,  to contest the audit or assessment
     in the name of the Company. If Sellers so elect, Sellers, at their expense,
     shall be  responsible  for the  defense  of the  item or  items  at  issue;
     provided,  however,  that Purchaser shall have the right (but not the duty)
     to participate  in the defense  thereof and to employ  counsel,  at its own
     expense,  separate  from the counsel  employed  by  Sellers,  and agrees to
     cooperate,  and will cause the Company to cooperate, in the contest of such
     audit or assessment by making relevant documents and employees available to
     Sellers,  and to execute such documents  (including  powers of attorney) as
     may be  reasonably  necessary to allow  Sellers to conduct the defense.  If
     Sellers elect to conduct a defense,  then all decisions with respect to the
     negotiation,  settlement, or litigation of the item or items at issue shall
     be made by Sellers and shall be binding upon Purchaser, except that Sellers
     shall not agree to any adjustment, or making any Tax election, that will or
     may create an increase in Taxes for the Company or  Purchaser in respect of
     any period ending after the Closing Date without the prior written  consent
     of Purchaser, which consent shall not be unreasonably withheld and, subject
     to Section  9.10 hereof and so long as Sellers are  obligated  to indemnify
     Purchaser  Indemnified  Parties hereunder with respect to such audit, shall
     promptly indemnify Purchaser for, and hold Purchaser harmless against,  any
     such  increase and no payment  shall be made under this Section 10.5 to the
     extent that the related Tax Benefits or Tax Detriments have been accrued on
     the Closing  Balance  Sheet and resulted in an  adjustment  to the Purchase
     Price under Section 2.3 hereof.

                                       55
<PAGE>

     10.6 Audit Adjustments.

          (a) If as a result of the examination of the federal,  state, or local
     income  or  franchise  Tax  Returns  of  the  Company,   or  any  group  of
     corporations  that  includes  the Company  for a taxable  year ending on or
     before,  or  including,  the  Closing  Date,  there shall be made after the
     Closing Date any adjustment that increases  deductions,  losses, or credits
     against  Taxes or that  decreases  income,  gain or  recapture  of  credits
     against Taxes ("Tax Benefits") or that increases income, gain, or recapture
     of credits against Taxes or decreases deductions, losses or credits against
     Taxes ("Tax  Detriments") for any taxable year and that will permit Sellers
     or the  Company  (or any  entity  that is  included  in a Tax  Return  that
     includes Purchaser or the Company) to increase the Tax Benefits or decrease
     the Tax Detriments to which they would otherwise have been entitled for any
     taxable year  beginning on or after the Closing  Date,  Sellers will notify
     Purchaser of such adjustment and provide Purchaser with such information as
     may be  necessary  for  Purchaser  to take  account  of such  increases  or
     decreases  through the filing of a claim of refund or otherwise.  Purchaser
     shall take any reasonable  actions  necessary to secure the benefit of such
     increases or decreases. In any taxable year in which the net effect of such
     adjustments  is a Tax Benefit to the  Company,  Purchaser  shall  indemnify
     Sellers for such benefit (plus any interest  actually received by Purchaser
     from the relevant Tax authority,  less Purchaser's  reasonable net expenses
     incurred in securing such  benefit)  within thirty (30) Business Days after
     the Tax  Return  reflecting  those net Tax  Benefits  is filed;  if the net
     effect is a Tax Detriment to the Company, Sellers shall indemnify Purchaser
     for such detriment (plus any reasonable  expenses of Purchaser  incurred in
     attempting to mitigate such detriment) to the extent that such detriment is
     not indemnified  pursuant to this Section 10.6, within thirty (30) Business
     Days after the Tax Return reflecting those net Tax Detriments is filed. If,
     after Purchaser or Sellers have made a payment to the other in respect of a
     Tax  Benefit or Tax  Detriment,  there is a  subsequent  adjustment  in the
     amount of such Tax Benefit or Tax  Detriment as a result of an  examination
     by federal,  state, or local Tax authorities,  Purchaser or Sellers, as the
     case may be,  shall  make an  appropriate  payment  for the  amount of such
     adjustment  in such Tax Benefit or Tax  Detriment,  promptly  after the Tax
     Return  reflecting  such  adjustment  is filed.  Each  party  agrees to use
     commercially  reasonable efforts to defend against any such adjustment that
     is  a  decrease  in  Tax  Benefits  or  an  increase  in  Tax   Detriments.
     Notwithstanding  any other provision  contained  herein,  this Section 10.6
     shall be subject  to the  limitations  set forth in Section  9.10 and shall
     apply only so long as Sellers and  Purchaser  are  obligated  hereunder  to
     indemnify  Purchaser  Indemnified  Parties or Seller  Indemnified  Parties,
     respectively, with respect to such audit and no payment shall be made under
     this  Section  10.6 to the extent  that the  related  Tax  Benefits  or Tax
     Detriments  have been accrued on the Closing  Balance Sheet and resulted in
     an adjustment to the Purchase Price under Section 2.3 hereof.

          (b) In  calculating  any  amount to be  indemnified  pursuant  to this
     Section  10.6,  each  party  shall be  deemed to be  subject  to Tax at the
     combined effective Tax rate for the Taxable Period in question, taking into
     account the appropriate state apportionment  factors of the Company for the
     Taxable Period in question. Any payment pursuant to this Section 10.6 shall
     constitute an adjustment to the Purchase Price under this Agreement.

     10.7 Tax Withholding.  Sellers and Purchaser agree that for the purposes of
FICA Tax withholding  and any comparable  state or local Tax withholding (to the
extent permitted under  applicable state and local Laws),  Purchaser shall treat
all wages paid by the Company in 2005 to each current Company Employee,  if any,
who  becomes  employed  by  Purchaser  immediately  after the Closing as paid by
Purchaser pursuant to Section 3121 of the Code and any comparable  provisions of
applicable state and local Laws, and Sellers agree to provide Purchaser with all
related documentation,  including,  without limitation, a completed W-4 form for
each such Company Employee. Sellers and Purchaser agree to follow the "Alternate
Procedure for Predecessors and Successors" as set forth in IRS Revenue Procedure
2004-53. Sellers and Purchaser agree, in accordance with such procedure, to each
file with the Internal Revenue Service a Schedule D (Form 941) with the Form 941
for the first  quarter  of 2006.  Sellers  agree to provide  Purchaser  with all
information necessary for Purchaser to assume the Company's 2006 W-2 obligations
with respect to each current Company  Employee,  if any, who becomes employed by
Purchaser immediately after the Closing.

                                       56
<PAGE>

     10.8  Tax  Sharing  Agreements.  All  tax  sharing  agreements  or  similar
arrangements  with respect to or involving the Company shall be terminated as of
the Closing Date and,  after the Closing  Date,  the Company  shall not be bound
thereby or have any liability thereunder.

                                   ARTICLE 11.
                                  MISCELLANEOUS

     11.1 Expenses.  Except as provided  below or as otherwise  provided in this
Agreement,  each party hereto  shall bear its own expenses  with respect to this
transaction.  Purchaser  and Parent  shall each pay  one-half  of any HSR Act or
similar filing or reporting fee, and any fees in connection with obtaining State
PUC Consents or FCC Consents.  All fees  (including  notarial fees) or transfer,
conveyance,  sales,  use or  similar  Taxes on or with  respect  to the sale and
transfer of the  Purchased  Interests  (including  any Taxes with respect to the
transfer or deemed  transfer of the assets of the Company)  shall be paid by the
party legally obligated to pay (but not withhold) such amounts. Parent shall pay
any  transfer,  conveyance,  sales,  use or similar  Taxes  with  respect to the
transfer of the Retained Assets prior to the Closing.

     11.2  Amendment.  This Agreement may be amended,  modified or  supplemented
only in writing signed by each of the parties hereto.

     11.3 Notices.  Any written notice to be given  hereunder  shall be given in
writing and shall be deemed given: (a) when received if given in person,  (b) on
the date of transmission if sent by facsimile, e-mail or other wire transmission
(receipt  confirmed),  (c) three days after being  deposited  in the U.S.  mail,
certified  or  registered  mail,  postage  prepaid,   and  (d)  if  sent  by  an
internationally  recognized overnight delivery service, the second day following
the date given to such  overnight  delivery  service  (specified  for  overnight
delivery). All notices shall be addressed as follows:

         If to either Seller to:

         Citizens Communications Company
         3 High Ridge Park
         Stamford, Connecticut 06905
         Attention:........Daniel McCarthy
         Title:   .........Executive Vice President, Chief Operating Officer
         Telephone:........(203)-614-5080
         Fax:     .........(203)-614-4661

         with a copy to:

         Citizens Communications Company
         3 High Ridge Park
         Stamford, Connecticut 06905
         Attention:........Hilary E. Glassman, Esq.
         Title:   .........Senior Vice President, General Counsel and Secretary
         Telephone:........(203) 614-5059
         Fax:     .........(203) 614-4651

                                       57
<PAGE>

         and

         Finn Dixon & Herling LLP
         One Landmark Square, 14th Floor
         Stamford, Connecticut 06901
         Attention:        Michael J. Herling, Esq.
         Telephone:        (203) 325-5015
         Fax:              (203) 348-5777

         If to Purchaser, addressed as follows:

         Integra Telecom Holdings, Inc.
         1201 NE Lloyd Blvd., Suite 500
         Portland, Oregon 97232

         Attention:  Deborah Harwood, Vice President and General Counsel
         Telephone:(503)-453-8000
         Facsimile: (503)-453-8221

         with a copy to:

         Perkins Coie LLC
         1120 NW Couch Street, Tenth Floor
         Portland, Oregon 97209

         Attention:  Allan Abravanel
         Telephone:  (503)-727-2000
         Facsimile:  (503)-727-2222

     11.4  Waivers.  Subject  to the  limitations  contained  in this  Agreement
(including,  without limitation, those set forth in Section 9.1), the failure of
a party to require  performance  of any  provision  hereof  shall not affect its
right at a later  time to  enforce  the same.  No waiver by a party of any term,
covenant,  representation or warranty contained herein shall be effective unless
in  writing.  No such  waiver in any one  instance  shall be deemed a further or
continuing waiver of any such term, covenant,  representation or warranty in any
other instance.

     11.5 Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument.

     11.6 Headings.  The headings preceding the text of Articles and Sections of
this Agreement and the Schedules and Exhibits  thereto are for convenience  only
and shall not be deemed part of this Agreement.

     11.7  Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal Laws, and not the laws of conflicts, of
the State of  Delaware.  THE PARTIES  EACH  HEREBY  KNOWINGLY,  VOLUNTARILY  AND
INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION  OR  CAUSE  OF  ACTION  BASED  ON,  OR  ARISING  OUT OF,  UNDER OR IN
CONJUNCTION IN ANY MANNER WITH TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

                                       58
<PAGE>

     11.8  Assignment.  This  Agreement  shall be binding  upon and inure to the
benefit of the parties and their  respective  successors and assigns;  provided,
that no assignment of either party's  rights or obligations  may be made without
the written  consent of the other party and any such  assignment  shall  provide
that the assigning party will continue to be bound by all obligations  hereunder
as if such  assignment  had not  occurred and perform  such  obligations  to the
extent that its assignee fails to do so.  Notwithstanding  the  foregoing,  this
Agreement  may be  assigned by a party (the  "Assigning  Party")  after  Closing
without  the  consent  of the other  party  (the  "Non-assigning  Party")  to an
Affiliate of the Assigning Party, provided that advance notice of the assignment
is given to the  Non-assigning  Party,  such  Affiliate  enters  into a  written
agreement  with the  Non-assigning  Party to be bound by the  provisions of this
Agreement in all respects and to the same extent as the Assigning Party is bound
and  that the  Assigning  Party  will  continue  to be bound by all  obligations
hereunder as if such assignment had not occurred and perform such obligations to
the extent that such Affiliate fails to do so.

     11.9 No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties  hereto;  provided  that in  addition  to Sellers and  Purchaser,
Seller Indemnified  Parties and Purchaser  Indemnified  Parties, as the case may
be, shall also enjoy the benefits of indemnities made herein which are expressly
stated to be in their favor;  provided,  however,  that no Person other than the
parties hereto shall have the right to enforce the provisions of Section 5.5. In
this regard, the parties agree that such Persons shall have the right to enforce
those provisions directly against the applicable Indemnifying Party.

     11.10  Schedules.  Neither the  specification  of any dollar  amount in any
representation or warranty  contained in this Agreement nor the inclusion of any
specific item in any Schedule  hereto is intended to imply that such amount,  or
higher or lower amounts,  or the item so included or other items, are or are not
material,  and no  party  shall  use the fact of the  setting  forth of any such
amount or the inclusion of any such item in any dispute or  controversy  between
the parties as to whether any obligation, item or matter not described herein or
included in any Schedule is or is not  material for purposes of this  Agreement.
Unless this Agreement specifically provides otherwise, neither the specification
of any item or  matter  in any  representation  or  warranty  contained  in this
Agreement  nor the  inclusion  of any specific  item in any  Schedule  hereto is
intended to imply that such item or matter,  or other  items or matters,  are or
are not in the ordinary  course of business,  and no party shall use the fact of
the setting  forth or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in any Schedule is or is not in the ordinary course
of business for purposes of this Agreement.

     11.11  Incorporation.  The  respective  Schedules,  Exhibits and Appendices
attached hereto and referred to herein are incorporated  into and form a part of
this Agreement.

     11.12 Complete Agreement. The Transaction Documents and the Confidentiality
Agreement  constitute the complete  agreement of the parties with respect to the
subject  matter  hereof and supersede all prior  discussions,  negotiations  and
understandings.

     11.13 Public Announcements.  Sellers and Purchaser each agree that they and
their  Affiliates shall not issue any press release or otherwise make any public
statement or respond to any media inquiry with respect to this  Agreement or the
transactions  contemplated  hereby  without  the  prior  approval  of the  other
parties,  which shall not be unreasonably withheld or delayed,  except as may be
required by Law or by any stock  exchanges  having  jurisdiction  over  Sellers,
Purchaser or their respective Affiliates.

     11.14 Severability.  In the event that any provision of this Agreement,  or
the  application  thereof  becomes  or  is  declared  by a  court  of  competent
jurisdiction  to be  illegal,  void  or  unenforceable,  the  remainder  of this
Agreement  will  continue in full force and effect and the  application  of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect  the intent of the  parties  thereto.  The  parties  further  agree to

                                       59
<PAGE>

replace such void or unenforceable  provision of this Agreement with a valid and
enforceable  provision that will achieve, to the extent possible,  the economic,
business and other purposes of such void or unenforceable provision.

                                       60

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
executed and delivered on the date first set forth above.

                         SELLERS:

                         CITIZENS COMMUNICATIONS COMPANY

                         By: /s/ Jerry Elliott
                            -------------------------
                         Name: Jerry Elliott
                         Title: President

                         CU CAPITAL LLC
                         By Citizens Communications Company, its sole member

                         By: /s/ Jerry Elliott
                             -------------------------
                         Name: Jerry Elliott
                         Title: President

                         INTEGRA TELECOM HOLDINGS, INC.

                         By: /s/ Dudley R. Slater
                            ---------------------------
                         Name: Dudley R. Slater
                         Title: Chief Executive OfficerExhibit 10.7

Execution Counterpart

═══════════════════════════════════════

$130,000,000

REVOLVING CREDIT AGREEMENT

Dated as of December 1, 2005

Among

CAM NORTH AMERICA, LLC

as Borrower

CITICORP NORTH AMERICA, INC.,

as Lender

═══════════════════════════════════════

1

T A B L E   O F   C O N T E N T S

Section 

Page

SECTION 1.  DEFINITIONS

1

SECTION 2.  The loans, Etc.

4

2.01. The Loans

4

2.02.  Making the Loans, Evidence of Debt

4

2.03.  Reductions of the Commitments

4

2.04.  Repayment

5

2.05.  Interest

5

2.06.  Additional Interest on Eurodollar Rate Loans

5

2.07.  Interest Rate Determinations

5

2.08.  Prepayments of Loans

6

2.09.  Payments; Computations; Etc

6

2.10.  Increased Costs

7

2.11.  Taxes

8

2.12.  Mitigation Obligations

9

2.13.  Break Funding Payments

9

SECTION 3.  CONDITIONS OF LENDING

10

3.01.  Closing

10

3.02.  Conditions Precedent to Each Borrowing

11

SECTION 4.  REPRESENTATIONS AND WARRANTIES

11

SECTION 5.  COVENANTS

12

SECTION 6.  EVENTS OF DEFAULT

13

SECTION 7.  MISCELLANEOUS

14

7.01.  Amendments, Etc.

14

7.02.  Notices, Etc.

14

7.03.  No Waiver; Remedies; Setoff.

15

7.04.  Expenses; Indemnity; Damage Waiver.

15

7.05.  Binding Effect, Successors and Assigns.

16

7.06.  Governing Law; Jurisdiction; Etc.

17

7.07.  Severability.

17

7.08.  Counterparts; Integration; Effectiveness; Execution

18

7.09.  Survival

18

7.10.  Waiver of Jury Trial

18

7.11.  No Fiduciary Relationship

18

7.12.  Headings

19

7.13.  USA PATRIOT Act

19

EXHIBITS

Exhibit A

Form of Note

Exhibit B

Form of Notice of Borrowing

2

REVOLVING CREDIT AGREEMENT dated as of December 1, 2005 (this "Agreement") between CAM North America, LLC, a Delaware limited liability company (the "Borrower"), and CITICORP NORTH AMERICA, INC., as Lender (the "Lender").

Pursuant to Section 6.22 of the Transaction Agreement dated as of June 23, 2005 (as amended, the "Transaction Agreement") between Citigroup Inc. and Legg Mason, Inc. (the "Guarantor"), a Maryland corporation, the Lender has agreed to provide a Subsidiary of the Guarantor a $130,000,000 364-day revolving credit facility.

The parties hereto hereby agree as follows:

SECTION 1.  DEFINITIONS

.  Capitalized terms used herein have the same respective meanings as the corresponding terms as defined in the Syndicated Revolving Credit Agreement (as hereinafter defined), as in effect on the date hereof and without regard to whether said agreement is modified or amended or remains in effect among the parties thereto, provided that references in such definitions in the Syndicated Revolving Credit Agreement to any “Loans” shall, for purposes hereof, be deemed to refer to any Loan hereunder.  In addition, the following terms shall have the meanings specified below:

"Borrowing" means a borrowing by the Borrower pursuant to Section 2.01.

"Closing Date" has the meaning specified in Section 3.01.

"Commitment" means the commitment of the Lender to make Loans to the Borrower hereunder in an aggregate amount at any one time outstanding up to $130,000,000. 

"Default" means an event that, with notice or lapse of time or both, would become an Event of Default.

"Eurodollar Rate" means, for each Loan, the rate appearing on Telerate Page 3750 at approximately 11:00 A.M., London time, two Business Days prior to the date of such Loan, as the rate for U.S. Dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the "Eurodollar Rate" with respect to such Loan for such Interest Period shall be the rate equal to the rate per annum at which U.S. Dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal office of the Lender in London, England to prime banks in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the making of such Loan.

"Events of Default" has the meaning specified in Section 6.01.

"Guarantee Agreement" means the guarantee agreement dated as of the date hereof between the Guarantor and the Lender relating to (among other things) this Agreement, as from time to time amended.

3

"Guarantor" has the meaning specified in the introduction hereto.

"Interest Period" means (a) the period beginning on the date the Loans are made and ending on the last day of the period selected by the Borrower, subject to the provisions below.  The duration of each Interest Period shall be one, two, three, six or, with the consent of the Lender, nine or twelve months, as the Borrower may, upon notice received by the Lender not later than 12:00 noon (New York City time) on the third Business Day prior to the first day of such Interest Period, select.  Anything in herein to the contrary notwithstanding:

(i)  the Borrower may not select any Interest Period that ends after the Maturity Date;

(ii)  each Interest Period that begins on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last Business Day of the appropriate subsequent calendar month; and

(iii)  whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day.

"Loan" has the meaning specified in Section 2.01.

"Loan Documents" means, collectively, this Agreement, the Guarantee Agreement and the Note.

"Material Adverse Effect" means a material adverse effect on (i) the business, financial condition or operations of the Guarantor and its Subsidiaries, taken as a whole, (ii) the ability of the Guarantor to perform any of its material obligations under the Guarantee Agreement or (iii) the rights of or benefits available to the Lender under any Loan Document.

"Maturity Date" means the date 364 days after the Closing Date (as defined in the Transaction Agreement), provided that if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day. 

"Note" has the meaning specified in Section 2.02.

"Notice of Borrowing" has the meaning specified in Section 2.02.

"Process Agent" has the meaning specified in Section 7.06(d).

4

"Syndicated Revolving Credit Agreement" means the $500,000,000 Revolving Credit Agreement dated as of October 14, 2005 among the Guarantor, the lenders party thereto, and Citibank, N.A., as administrative agent for such lenders.

The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" mean "to but excluding".  The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation".  The word "will" shall be construed to have the same meaning and effect as the word "shall".  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Sections and Exhibits shall be construed to refer to Sections of, and Exhibits to, this Agreement.

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SECTION 2.  THE LOANS, ETC.

  

2.01. The Loans

.  The Lender agrees, on the terms and conditions hereinafter set forth, to make loans to the Borrower (each, a "Loan") from time to time on any Business Day from the Closing Date until the Maturity Date, in an aggregate amount at any one time outstanding up to but not exceeding the amount of the Commitment.  Within the limits of the Commitment, the Borrower may from time to time borrow under this Section 2.01, prepay Loans in whole or in part pursuant to Section 2.08 and reborrow under this Section 2.01, all on the terms and conditions of this Agreement.  The Borrower shall apply the proceeds of the Loans solely for working capital and general corporate purposes.

2.02.  Making the Loans, Evidence of Debt

.  Each Borrowing by the Borrower shall be in a minimum amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, and shall be made on notice, given not later than 11:00 a.m. (New York City time) on the second Business Day prior to the date of such Borrowing by the Borrower to the Lender.  Each such notice of a Borrowing (a "Notice of Borrowing") shall be irrevocable and binding on the Borrower and shall be in writing in substantially the form of Exhibit B, specifying therein the requested date and amount of such Borrowing.  The Lender shall, subject to the satisfaction of the applicable conditions set forth in Section 3, before 2:00 p.m. (New York City time) on the date of such Borrowing, make the amount of such Borrowing available to the Borrower, in same day funds, to the account of the Borrower maintained at the Lender's address referred to in Section 7.  The Lender shall maintain in accordance with its usual practice an account evidencing the indebtedness of the Borrower to the Lender resulting from each Loan made by the Lender, including the amounts of principal and interest payable and paid to the Lender from time to time hereunder.  The entries made in the account maintained pursuant to this Section 2.02 shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of the Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement.  The Lender may request that the Loans be evidenced by a promissory note of the Borrower substantially in the form of Exhibit A (the "Note") in the amount of the Commitment and dated the Closing Date, in which case the Borrower will execute and deliver the same on or prior to the Closing Date.

Section 2.03.  Fees

.  The Borrower agrees to pay to the Lender a facility fee on the daily average amount of the Commitment, whether or not utilized, for each day during the period from the date which is 90 days from the date hereof until the Maturity Date, at a rate per annum equal to 0.09%, payable in arrears on the last Business Day of each March, June, September and December of each year, on the Maturity Date and on the date of termination of the Commitment.

2.03.  Reductions of the Commitments

.  

(a)  The Commitment shall be automatically reduced to zero on the Maturity Date. 

(b)  In addition, the Borrower shall have the right, upon at least three Business Days' notice to the Lender, to terminate in whole or reduce ratably in part the unused portions of 

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the Commitment, provided that each partial reduction shall be in a minimum aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.  Once terminated or reduced, the Commitment may not be reinstated.

2.04.  Repayment

.  The Borrower agrees to repay the full principal amount of each Loan, and each Loan shall mature, on the Maturity Date.

2.05.  Interest

.  

(a)  Ordinary Interest.  The Borrower agrees to pay interest on the unpaid principal amount of each Loan, from the date of such Loan until such principal amount shall be paid in full, at a rate per annum equal to the sum of the Eurodollar Rate for such Loan (i) until the date which is 90 days after the date hereof, minus 0.25% and (ii) from and after the date which is 90 days after the date hereof, plus 0.18% per annum, payable on the last day of each Interest Period and on the Maturity Date.

(b)  Default Interest.  Notwithstanding the foregoing, if any Event of Default under Section 6.01(a) or (b) shall have occurred and be continuing, the Borrower shall pay interest on:

(i)  the unpaid principal amount of each Loan, payable on demand, at a rate per annum equal at all times to two percent (2%) per annum above the rate per annum required to be paid on such Loan pursuant to Section 2.05(a); and

(ii)  the amount of any interest, fee or other amount payable by the Borrower hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable on demand (and in any event in arrears on the date such amount shall be paid in full), at a rate per annum equal at all times to two percent (2%) per annum above the rate per annum required to be paid on Loans pursuant to Section 2.05(a).

2.06.  Additional Interest on Eurodollar Rate Loans

.  The Borrower shall pay to the Lender additional interest on the unpaid principal amount of each Loan, from the date of such Loan until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the interest rate for such Loan from (ii) the rate obtained by dividing such interest rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of the Lender, payable on each date on which interest is payable on such Loan.  Such additional interest shall be determined by the Lender and notified to the Borrower.

2.07.  Interest Rate Determinations

.  

(a)  The Lender shall give prompt notice to the Borrower of the applicable interest rates determined by it for the purposes of Section 2.05.

(b)   If, with respect to any Loan, the Lender determines that the interest rate for such Loan will not adequately and fairly reflect the cost to the Lender of making, funding or maintaining the Loans, the Lender shall so notify the Borrower, whereupon the Lender and the Borrower shall negotiate in good faith with a view to agreeing upon a substitute interest rate 

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basis for the Loans which shall reflect the cost to the Lender of funding the Loans from alternative sources (a "Substitute Basis"), and such Substitute Basis shall apply in lieu of such interest rate to all Loans made on or after the date upon which the Lender so notified the Borrower, until the circumstances giving rise to such notice have ceased to apply.  If a Substitute Basis is not agreed upon within five days of the delivery of any notice to the Borrower pursuant to this Section 2.07(b), the Borrower may elect to prepay the Loan pursuant to Section 2.08, provided, however, that if the Borrower does not elect so to prepay, the Lender shall determine (and shall certify from time to time in a certificate delivered by the Lender setting forth in reasonable detail the basis of the computation of such amount, which certification shall be presumptively correct and binding on the Borrower in the absence of manifest error) the rate basis reflecting the cost to the Lender of funding the Loans for any period commencing on or after the date upon which notice was delivered to the Borrower, until the circumstances giving rise to such notice have ceased to apply, and such rate basis shall be binding upon the Borrower and shall apply in lieu of the Eurodollar Rate.

2.08.  Prepayments of Loans

.  The Borrower may, on notice (given not later than 11:00 a.m. (New York City time) on the second Business Day prior to the date of the proposed prepayment of Loans), stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amounts of the Loans in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (i) each partial prepayment shall be in an aggregate principal amount not less than $5,000,000 or integral multiples of $1,000,000 in excess thereof and (ii) the Borrower shall reimburse the Lender in respect thereof pursuant to Section 2.13.

2.09.  Payments; Computations; Etc

.  

(a)  The Borrower shall make each payment hereunder and under the Note without set-off or counterclaim not later than 11:00 a.m. (New York City time) on the day when due in U.S. Dollars to the Lender at its office at 388 Greenwich Street, New York, NY 10013 in same day funds.

(b)  All computations of interest and of facility fee shall be made by the Lender on the basis of a year of 360 days, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.  Each determination by the Lender of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c)  Whenever any payment hereunder or under any Note would be due on a day other than a Business Day, such due date shall be extended to the next succeeding Business Day, and any such extension of such due date shall in such case be included in the computation of payment of interest; provided, however, that if such extension would cause payment of interest on or principal of the Loans to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.

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2.10.  Increased Costs

.  

(a)  Increased Costs Generally.  If any Change in Law shall:

(i)  impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage); or

(ii)  impose on the Lender or the London interbank market any other condition, cost or expense affecting this Agreement or the Loans;

and the result of any of the foregoing shall be to increase the cost to the Lender of making or maintaining any Loan (or of maintaining its obligation to make any Loan), or to increase the cost to the Lender, or to reduce the amount of any sum received or receivable by the Lender hereunder (whether of principal, interest or any other amount) then, upon request of the Lender, the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.

(b)  Capital Requirements.  If the Lender determines that any Change in Law affecting the Lender or any lending office of the Lender or the Lender's holding company regarding capital requirements has or would have the effect of reducing the rate of return on the Lender's capital or on the capital of the Lender's holding company as a consequence of this Agreement, the Commitment or the Loans to a level below that which the Lender or the Lender's holding company could have achieved but for such Change in Law (taking into consideration the Lender's policies and the policies of the Lender's holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender or the Lender's holding company for any such reduction suffered.

(c)  Certificates for Reimbursement.  A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

(d)  Delay in Requests.  Failure or delay on the part of the Lender to demand compensation pursuant to this Section shall not constitute a waiver of the Lender's right to demand such compensation, provided that the Borrower shall not be required to compensate the Lender pursuant to this Section for any increased costs incurred or reductions suffered more than 270 days prior to the date that the Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof).

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2.11.  Taxes

.  

(a)  Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower hereunder or under the Note shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions for Indemnified Taxes or Other Taxes (including deductions for Indemnified Taxes or Other Taxes applicable to additional sums payable under this Section ) the Lender receives an amount equal to the sum it would have received had no such deductions for Indemnified Taxes or Other Taxes been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.

(b)  Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes that arise from any payment made by it hereunder or under the Note to the relevant Governmental Authority in accordance with applicable law.  The Lender shall notify the Borrower on or before the Closing Date of any Other Taxes that to its knowledge are imposed with respect to any Loan Document by the jurisdiction in which the Lender is organized or in which its applicable lending office is located.

(c)  Indemnification by the Borrower.  The Borrower shall indemnify the Lender, within 30 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) attributable to the Borrower under any Loan Document and paid by the Lender and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by the Lender shall be conclusive absent manifest error, provided that if the Borrower has satisfied its indemnity obligation and delivers to the Lender an opinion of nationally recognized counsel to the effect that it is more likely than not that such assertion by the Governmental Authority is incorrect as a matter of law, the Lender shall reasonably assist the Borrower in contesting such Taxes (at the sole expense of the Borrower) and seeking refund thereof and, provided further that such assistance shall not be construed to impose on the Lender an obligation to disclose information it reasonably considers confidential or proprietary or arrange its tax affairs other than as the Lender sees fit.

(d)  Evidence of Payments.  As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

(e)  Treatment of Certain Refunds.  If the Lender determines, in good faith and its reasonable discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section (including, in lieu of an actual refund, a credit 

10

against taxes provided by the taxing authority that imposed such Indemnified Taxes or Other Taxes), it shall pay to the Borrower an amount equal to such refund or the value of the credit in lieu thereof (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit in lieu thereof), provided that the Borrower, upon the request of the Lender, agrees to repay the amount paid over to the Borrower to the Lender in the event the Lender is required to repay or return such refund (or credit in lieu thereof) to such Governmental Authority.  This subsection shall not be construed to require the Lender to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

2.12.  Mitigation Obligations

.  If the Lender requests compensation under Section 2.10, or requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.11, then the Lender shall use reasonable efforts to designate a different lending office for funding or booking the Loans or to assign its rights and obligations to another of its offices, branches or affiliates, if, in the judgment of the Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.10 or 2.11, as the case may be, in the future and (ii) would not subject the Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to the Lender.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

2.13.  Break Funding Payments

.  The Borrower agrees to indemnify the Lender and to hold the Lender harmless from any loss, cost or expense incurred by the Lender which is in the nature of funding breakage costs or costs of liquidation or redeployment of deposits or other funds and any other related expense (but excluding loss of margin or other loss of anticipated profit), upon reasonable notice thereof, which the Lender may sustain or incur as a consequence of (a) default by the Borrower in making any Borrowing after the Borrower has given a Notice of Borrowing requesting the same in accordance with the provisions of this Agreement (including as a result of any failure to fulfill, on or before the date specified in such Notice of Borrowing, the applicable conditions set forth in Section 3), (b) default by the Borrower in making any prepayment of Loans when due after the Borrower has given notice thereof in accordance with this Agreement, (c) the making by the Borrower of a prepayment of any Loan or (d) default by the Borrower in payment when due of the principal of or interest on any Loan.  A certificate of the Lender setting forth any amount or amounts that the Lender is entitled to receive pursuant to this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay the Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

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SECTION 3.  CONDITIONS OF LENDING

.  

3.01.  Closing

.  This Agreement shall become effective on the date (the "Closing Date") (which shall be on or prior to March 31, 2006) on which the Lender shall confirm to the Borrower that the Lender has received the following, each (unless otherwise specified below) dated the Closing Date, and each in form and substance satisfactory to the Lender:

(a)  The Guarantee Agreement, duly executed and delivered by the Guarantor.

(b)  Certified copies of (i) the articles of incorporation and by-laws of the Borrower and the Guarantor, (ii) the resolutions of the Boards of Directors of each of the Borrower and the Guarantor, authorizing and approving the execution, delivery and performance by it of the Loan Documents to which it is a party and the transactions contemplated thereby, and (iii) all documents evidencing other necessary corporate action and governmental, regulatory or third-party consents and approvals, if any, with respect to the Loan Documents.

(c)  A certificate of the Secretary or an Assistant Secretary of each of the Borrower and the Guarantor certifying the names and true signatures of the officers of the Borrower and the Guarantor authorized to sign the Loan Documents to which it is a party and any other documents to be delivered hereunder.

(d)  A certificate for each of the Borrower and the Guarantor, dated a date reasonably close to the date hereof, as to the good standing of and organizational documents filed by it.

(e)  Favorable opinion of Shearman & Sterling LLP, special New York counsel to the Guarantor, as to the enforceability of this Agreement and the Guarantee Agreement.

(f)  A favorable opinion of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Lender, as to matters relating to this Agreement and the Guarantee Agreement as the Lender may require.

(g)  A certificate of a Responsible Officer of (i) the Guarantor, dated the Closing Date, certifying that the representations and warranties contained in Section 4 of the Guarantee Agreement, excluding the Excluded Representations, are true and correct in all material respects on and as of such date as though made on and as of such date and (ii) the Borrower, dated the Closing Date certifying that the representations and warranties contained in Section 4 are true and correct in all material respects on and as of such date as though made on and as of such date and that no event has occurred and is continuing on and as of such date which constitutes a Default or an Event of Default.

(h)  Evidence of the payment of all fees and invoiced expenses required to be paid on or prior to the Closing Date in connection with this Agreement.

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(i)  A true copy of the Syndicated Revolving Credit Agreement as in effect on the date hereof, duly executed by the parties thereto.

(j)  Such other approvals, opinions and documents relating to this Agreement and the transactions contemplated hereby as the Lender may reasonably request.

3.02.  Conditions Precedent to Each Borrowing

.  The obligation of the Lender to make a Loan on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the conditions precedent that on the date of such Borrowing, the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true):

(a)  the representations and warranties contained in Section 4 and in Section 4 of the Guarantee Agreement (excluding in the case of the Guarantee Agreement the Excluded Representations) are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

(b)  no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, which constitutes a Default or an Event of Default.

SECTION 4.  REPRESENTATIONS AND WARRANTIES

.  The Borrower hereby represents and warrants to the Lender as follows:

(a)  Organization; Powers.  It is duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b)  Authorization.  The execution, delivery and performance by it of this Agreement and the Note, and the borrowing of Loans by it and the use of proceeds therefrom, are within its corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action. 

(c)  Approvals; No Conflicts; Etc.  The execution, delivery and performance by it of this Agreement and the Note, and the borrowing of Loans by it and the use of proceeds therefrom (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation or its charter, by-laws or other organizational documents or any order of any Governmental Authority, and (c) will not violate or result in a default under any credit agreement, loan agreement, note, indenture or other financing agreement, or any other material agreement or instrument, binding upon it or its assets, or give rise to a right thereunder to require any payment to be made by it.

(d)  Enforceability.  This Agreement has been duly executed and delivered by it and constitutes, and the Note when duly executed and delivered by it for value will constitute, its 

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legal, valid and binding obligation, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(e)  Margin Regulations.  It is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Loans will be used for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock.  No proceeds of any Loan will be used for any purpose that violates Regulation T or Regulation X of the Board of Governors of the Federal Reserve System as in effect on the date or dates of such Loan and such use of proceeds.

(f)  Investment and Holding Company Status.  Neither the Borrower nor any of its Subsidiaries is (i) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 (except that for purposes of this representation, the term "Subsidiary" shall not include any investment company a majority of which is owned by the Borrower or one of its Affiliates as a result of the initial seed capital contributed by the Borrower or such Affiliate to such investment company in exchange for its shares) or (ii) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935.

SECTION 5.  COVENANTS

.  So long as any principal of or interest on any Loan or any other amount payable under the Loan Documents shall remain unpaid or the Lender shall have any Commitment hereunder, the Borrower covenants and agrees that, unless the Lender shall otherwise consent in writing:

(a)  Existence; Conduct of Business.  It will do or cause to be done all things necessary to preserve, renew and keep in full force and effect its corporate and legal existence.

(b)  Compliance with Laws.  It will comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including ERISA and all applicable Environmental Laws), except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(c)  Books and Records; Visitation and Inspection Rights.  It will keep proper books of record and account, in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities.  It will permit any representatives designated by the Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested, but in each case subject to and in accordance with all applicable laws of any Governmental Authority and such confidentiality measures relating thereto as the Borrower may reasonably require.

(d)  Use of Proceeds.  It will use the proceeds of the Loans in accordance with Section 2.01; provided that the Lender shall have no responsibility as to the use of any such proceeds.

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SECTION 6.  EVENTS OF DEFAULT

.  If any of the following events ("Events of Default") shall occur and be continuing:

(a)  the Borrower shall fail to pay any principal of any Loan or the Note when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; 

(b)  the Borrower shall fail to pay any interest on any Loan or the Note or any fee or any other amount (other than principal) payable by the Borrower under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days;

(c)  any representation or warranty made or deemed made by or on behalf of the Borrower or the Guarantor in or in connection with any Loan Document or any amendment or modification hereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification hereof or waiver thereunder, shall prove to have been incorrect when made or deemed made in any material respect;

(d)  the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5 and, in the case of clauses (b) and (c) thereof, such failure shall continue for 30 days;

(e)  the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a), (b) or (d) of this Section, and such failure shall continue unremedied for a period of 30 days after notice thereof from the Lender to the Borrower (which notice will be given at the request of any Lender);

(f)  any Event of Default as defined in the Syndicated Revolving Credit Agreement, as in effect on the date hereof and without regard to whether said agreement is modified or amended or remains in effect among the parties thereto, shall occur (and for this purpose the Borrower shall be deemed to be a “Significant Subsidiary” of the Guarantor); or

(g)  the Guarantor shall cease to own, directly or indirectly, beneficially and of record, at least 65% of the outstanding Voting Shares of the Borrower;

then, and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of Section 6.01 of the Syndicated Revolving Credit Agreement as in effect on the date hereof), and at any time thereafter during the continuance of such event, the Lender may, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitment, and thereupon the Commitment shall terminate immediately, and (ii) declare the Loans then out­standing to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and 

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in case of any event with respect to the Borrower described in clause (h) or (i) of Section 6.01 of the Syndicated Revolving Credit Agreement as in effect on the date hereof, the Commitment shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall automatically become due and payable, without present­ment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

SECTION 7.  MISCELLANEOUS

.  

7.01.  Amendments, Etc.

  No amendment or waiver of any provision of this Agreement or the Note, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by all parties thereto, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.  This Agreement, the Guarantee Agreement and the Note constitute the entire agreement of the parties with respect to the subject matter hereof and thereof.

7.02.  Notices, Etc.

(a)  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsections (b) and (c) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows:

(i)  if to the Borrower:

c/o Legg Mason, Inc.

100 Light Street

30th Floor

Baltimore, Maryland  21202

Attention:  Cheryl Ruth

Telephone No.:  410-454-2924

Telecopier No.:  410-454-2986; and

(ii)  if to the Lender:

Citicorp North America, Inc.

2 Penns Way, Suite 200

New Castle, Delaware  19720

Attention:  John Davidson

Telephone No.:  302-894-6171

Telecopier No.:  212-944-1410;

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provided that any party hereto may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient), except that notices and communications to the Lender pursuant to Sections 2 or 7 shall not be effective until received by the Lender.  

7.03.  No Waiver; Remedies; Setoff.

  

(a)  No Waiver; Remedies.  No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

(b)  Setoff.  If an Event of Default shall have occurred and be continuing, the Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of such now or hereafter existing under this Agreement or the Note to the Lender irrespective of whether or not the Lender shall have made any demand under this Agreement or the Note and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of the Lender different from the branch or office holding such deposit or obligated on such indebtedness.  The rights of the Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lender or its Affiliates may have.  The Lender agrees to notify the Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

7.04.  Expenses; Indemnity; Damage Waiver.

(a)  Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lender), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all out-of-pocket expenses incurred by the Lender (including the fees, charges and disbursements of any counsel for the Lender) in connection with the enforcement or, during the continuance of an Event of Default, protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.

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(b)  Indemnification by the Borrower.  The Borrower shall indemnify the Lender and each Related Party of the Lender (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower and regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if the Borrower has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

(c)  Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, each party hereto agrees that it will not assert, and hereby waives, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, any Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof.

(d)  Payments.  All amounts due under this Section shall be payable not later than 10 days after demand therefor.

7.05.  Binding Effect, Successors and Assigns.

  This Agreement shall become effective when it shall have been executed by the Borrower and the Lender and thereafter shall be binding upon and inure to the benefit of the Borrower and the Lender and their respective successors and permitted assigns, except that neither the Borrower nor the Lender shall have the right to assign its rights and obligations hereunder or any interest herein without the prior written consent of the Borrower or the Lender, as the case may be; provided, that the Lender may assign its rights and obligations hereunder to an Affiliate of the Lender without the consent of the Borrower.

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7.06.  Governing Law; Jurisdiction; Etc.

(a)  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the law of the State of New York.

(b)  Submission to Jurisdiction.  Each of the parties hereto irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Note, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in any Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to any Loan Document against the Borrower or its properties in the courts of any jurisdiction.

(c)  Waiver of Venue.  Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or the Note in any court referred to in subsection (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d)  Service of Process.  The Borrower agrees that service of process in any action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to CT Corporation System (the "Process Agent") as agent for the Borrower in New York, New York for service of process at its address at 111 Eighth Avenue, New York, New York  10011, or at such other address of which the Lender shall have been notified in writing by the Borrower; provided that, if the Process Agent ceases to act as the Borrower's agent for service of process, the Borrower will, by an instrument reasonably satisfactory to the Lender, appoint another Person (subject to the approval of the Lender) in the Borough of Manhattan, New York, New York to act as the Borrower's agent for service of process.  Each other party hereto irrevocably consents to service of process in the manner provided for notices in Section 7.02.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

7.07.  Severability.

  Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

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7.08.  Counterparts; Integration; Effectiveness; Execution

.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Except as provided in Section 3.01, this Agreement shall become effective when it shall have been executed by the Lender and when the Lender shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

7.09.  Survival

.  The provisions of Sections 2.06, 2.10, 2.11 and 7.04 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the Commitment or the termination of this Agreement or any provision hereof.  In addition, all covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to any Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitment has not expired or terminated.  

7.10.  Waiver of Jury Trial

.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

7.11.  No Fiduciary Relationship

.  The Borrower acknowledges that the Lender has no fiduciary relationship with, or fiduciary duty to, the Borrower arising out of or in connection with any Loan Document, and the relationship between the Lender and the Borrower in connection herewith or therewith is solely that of debtor and creditor.  This Agreement does not create a joint venture among the parties. 

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7.12.  Headings

.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

7.13.  USA PATRIOT Act

.  The Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the Act. 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

CAM NORTH AMERICA, LLC

By:       /s/ Ray Gaetano

Name:  Ray Gaetano

Title:    Managing Director

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CITICORP NORTH AMERICA, INC.

By:      /s/ Matthew Nicholls

Name: Matthew Nicholls

Title:   Director

EXHIBIT A

[FORM OF NOTE]

PROMISSORY NOTE

$[_________]

[________], 20[__]

New York, New York

FOR VALUE RECEIVED, CAM NORTH AMERICA, LLC, a Delaware limited liability company (the "Borrower"), hereby promises to pay to the order of [NAME OF LENDER] (the "Lender"), at such of the offices of Citicorp North America, Inc. in New York, New York as shall be notified to the Borrower from time to time, the principal sum of [DOLLAR AMOUNT] United States Dollars, in lawful money of the United States and in immediately available funds, on ___________, 200[5], or such lesser amount at any time as shall equal the then aggregate outstanding principal amount of Loans by the Lender under the Credit Agreement referred to below and to pay interest on the unpaid principal amount hereof, at such office, in like money and funds, for the period commencing on the date hereof until the principal hereof shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement referred to below.

This Note evidences a Loan made by the Lender under the Credit Agreement dated as of December 1, 2005 (as modified and supplemented and in effect from time to time, the "Credit Agreement") between the Borrower and the Lender.  Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement.

The date, amount and Eurodollar Rate of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the Schedule attached hereto or any continuation thereof, provided that the failure of the Lender to make any such recordation (or any error in making any such recordation) or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing under the Credit Agreement or hereunder.

The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for prepayments hereof upon the terms and conditions specified therein.

Except as permitted by Section 7.05 of the Credit Agreement, this Note may not be assigned by the Lender to any other Person.

Form of Note

This Note shall be governed by, and construed in accordance with, the law of the State of New York.

CAM NORTH AMERICA, LLC

By_________________________

Name:

Title:

Form of Note

SCHEDULE OF REVOLVING CREDIT LOANS

This Note evidences Loans made under the within-described Credit Agreement to the Borrower, on the dates, in the principal amounts, and bearing interest at the rates set forth below, subject to the payments and prepayments of principal set forth below:

	Principal Amount of Loan

	

Eurodollar Rate

	Amount Paid or Prepaid

	Unpaid Principal Amount

	

Notation Made By

Form of Note

 

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EXHIBIT B

[FORM OF NOTICE OF BORROWING]

NOTICE OF BORROWING

[Date]

Citicorp North America, Inc.

2 Penns Ways, Suite 200

New Castle, Delaware  19720

Attention:  [________]

Ladies and Gentlemen:

The undersigned, CAM North America, LLC (the "Borrower"), refers to the Credit Agreement dated as of December 1, 2005 (as from time to time amended, the "Credit Agreement", the terms defined therein being used herein as therein defined), between the undersigned and Citicorp North America, Inc., as Lender, and hereby give you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement, that the undersigned hereby request a Borrowing of Loans thereunder, and in that connection set forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.02(a)(ii) of the Credit Agreement:

(i)  The Business Day of the Proposed Borrowing is ___________ __, _____.

(ii)  The aggregate amount of the Proposed Borrowing is $___________.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

(A)  the representations and warranties contained in Section 4.01 are correct in all material respects, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

(B)  no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, which constitutes an Event of Default or a Default.

Very truly yours,

 CAM NORTH AMERICA, LLC

By_________________________

Name:

    Title:

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EXECUTION COUNTERPART

AMENDMENT NO. 1 dated as of January 12, 2006 by and between CAM North America, LLC, as borrower (the “Borrower”) and Citicorp North America, Inc., as lender (the “Lender”)

The Borrower and the Lender are parties to the Revolving Credit Agreement dated as of December 1, 2005 (as amended, supplemented or modified and in effect on the date hereof, the “Existing Credit Agreement”), and said parties wish to amend the Existing Credit Agreement in certain respects as set forth in this Amendment No. 1.  Accordingly, the parties hereto hereby agree to amend the Existing Credit Agreement as set forth herein (as so amended, the “Credit Agreement”):

Section 1. Definitions. Except as otherwise defined in this Amendment No. 1, terms defined in the Existing Credit Agreement are used herein as defined therein.

Section 2.  Amendments.  Effective as of the Effective Date (as defined in Section 3 hereof), the Existing Credit Agreement shall be amended as follows:

2.1.  Section 2.03 of the Existing Credit Agreement is hereby amended by deleting the phrase “which is 90 days from the date” in the third line thereof.

2.2  Section 2.05 of the Existing Credit Agreement is hereby amended by deleting the phrase “(i) until the date which is 90 days after the date hereof, minus 0.25% and (ii) from and after the date which is 90 days after the date hereof,” therefrom.

2.3.  Section 2.03 of the Existing Credit Agreement entitled “Reductions of the Commitments” is hereby re-numbered as Section 2.04 and each Section in Section 2 following consecutively thereafter is hereby appropriately re-numbered and all references in the Existing Credit Agreement to such Sections are hereby amended to refer to the amended Section references.

2.4.  Each reference in the Existing Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein” and “hereof”) shall be deemed to be references to the Credit Agreement.

Section 3.  Conditions Precedent to Effectiveness.  The amendments set forth in Section 2 hereof shall become effective on the date (the “Effective Date”) on which the Lender has received duly executed counterparts of this Amendment No. 1 from each of the Borrower and the Lender, each in form and substance satisfactory to the Lender.

Section 4.  Miscellaneous.  Except as expressly herein provided, the Existing Credit Agreement and all agreements, instruments and documents referred to therein shall each remain unchanged and in full force and effect.  This Amendment No. 1 may be executed in any number of counterparts, all of which taken together shall constitute one and the same agreement, and any of the parties hereto may execute this Amendment No. 1 by signing any such counterpart.  Delivery of an executed counterpart of a signature page to this Amendment No. 1 by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment No. 1.  This Amendment No. 1 shall be governed by, and construed in accordance with, the law of the State of New York. 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered as of the day and year first above written.

CAM NORTH AMERICA, LLC

By:      /s/ Terrence Murphy

Name: Terrence Murphy

Title:   CFO

LENDER

CITICORP NORTH AMERICA, INC.

By:      /s/ Matthew Nicholls

Name: Matthew Nicholls

Title:   Director  

Acknowledged and agreed to by:

LEGG MASON, INC., as Guarantor

By:       /s/ Charles J. Daley, Jr.

     

Name: Charles J. Daley, Jr.

Title:   Senior Vice President, CFO

 and Treasurer

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