Document:

Exhibit 10.7

EXECUTION COPY

 

PARTNERSHIP
INTEREST PURCHASE AGREEMENT

among 

CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS,

VERIZON WIRELESS OF THE EAST LP

and

TACONIC TELEPHONE CORP.

Dated as of January 15, 2007

 

PARTNERSHIP INTEREST PURCHASE
AGREEMENT

This PARTNERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”),
dated as of January 15, 2007 (the “Execution Date”), is entered into by
and among VERIZON WIRELESS OF THE EAST LP, a Delaware limited partnership (“General
Partner”), CELLCO PARTNERSHIP D/B/A VERIZON
WIRELESS, a Delaware general partnership which indirectly controls General
Partner (“Buyer”), and TACONIC TELEPHONE CORP., a New York corporation (“Seller”).

WHEREAS, Seller holds a 7.5% limited partnership interest (the “Interest”)
in the ORANGE COUNTY -
POUGHKEEPSIE LIMITED PARTNERSHIP, a New York limited partnership (the “Partnership”);
and

WHEREAS, General Partner holds an 85% interest in the Partnership; and

WHEREAS, Buyer desires to purchase the Interest from Seller, and Seller
desires to sell the Interest to Buyer, on the terms and subject to the
conditions set forth herein.

NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants, conditions and agreements hereinafter
set forth, the parties agree as follows:

ARTICLE 1

PURCHASE AND SALE OF INTEREST

1.1                                 Purchase
and Sale of Interest.  Subject to the
terms and conditions of this Agreement, Seller shall sell, transfer, convey,
assign, and deliver to Buyer and Buyer shall purchase and accept from Seller,
the Interest, free and clear of all liens, claims, security interests, charging
orders, and encumbrances whatsoever (other than under the Agreement
Establishing Orange County - Poughkeepsie Limited Partnership, dated as of
April 21, 1987, as amended (the “Partnership Agreement”), and the
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively the “Act”)).

ARTICLE
2

PURCHASE PRICE AND ASSUMPTION OF LIABILITIES

2.1                                 Purchase
Price.  In consideration of the sale,
assignment, and delivery of the Interest and subject to the terms and
conditions of this Agreement, Buyer shall pay to Seller FIFTY FIVE MILLION
DOLLARS ($55,000,000), reduced by the amount by which the total distributions
paid to Seller (whether before or after the Closing Date) in respect of the
Interest pursuant to Section 6.3 of the Partnership Agreement with respect to
the period from January 1, 2007 through the Closing Date exceed $1 million (the
final result of such calculation, the “Purchase Price”).  In the event that one or more 

distributions with
respect to all or any part of such period have been paid to Seller as of the
Closing Date, then the Purchase Price shall be reduced at Closing by the amount,
if any, by which the total of such distributions exceeded $1 million (the “Closing
Adjustment Amount”).  In the event
that one or more distributions with respect to all or any part of such period
are paid to Seller after the Closing Date, then, at the time when any such
distribution is paid, Seller shall repay to Buyer (as a reduction to the
Purchase Price) (x) the amount by which the total amount of all distributions
paid to Seller with respect to such period, both before and after the Closing
Date, exceeded $1 million, minus (y) the Closing Adjustment Amount (if any),
minus (z) amounts previously repaid by Seller to Buyer pursuant to this
sentence with respect to other post-Closing distributions; provided, however,
that following the Closing Buyer shall have the right to cause the Partnership
to pay the amount Seller is obligated to repay pursuant to this provision
directly to Buyer out of the distribution otherwise payable to Seller, in lieu
of being repaid by Seller after Seller’s receipt of the distribution.  Seller hereby acknowledges that it has
already received all distributions in respect of the Interest pursuant to the
Partnership Agreement with respect to all periods through December 31, 2006.  The amount payable to Seller at Closing
pursuant to the foregoing provisions of this Section shall be paid by wire
transfer in immediately available funds to an account designated by Seller at
least two business days in advance of the Closing Date.

2.2                                 Assignment
of Interest.  At the Closing (as
defined in Section 9.1 hereof), by executing and delivering an assignment
agreement in the form attached hereto as Exhibit 2.2 (the “Assignment”),
Seller shall sell, assign and deliver the Interest to Buyer.

2.3                                 Assumption of Liabilities by Buyer.  Subject
to the terms and conditions of this Agreement, at the Closing, by executing and
delivering the Assignment, Buyer shall assume and agree to perform and satisfy,
and indemnify and hold Seller harmless from, any and all liabilities and
obligations in respect of the Interest arising after and related to the period
after the Closing (the “Buyer Assumed Liabilities”).

NOTWITHSTANDING
ANYTHING ELSE HEREIN TO THE CONTRARY, BUYER SHALL NOT ASSUME OR BE BOUND BY OR
RESPONSIBLE FOR ANY OBLIGATIONS, LIABILITIES OR UNDERTAKINGS (WHETHER OF SELLER
OR ANY THIRD PARTY) OF ANY TYPE OR NATURE, KNOWN OR UNKNOWN, CONTINGENT OR
OTHERWISE, OTHER THAN THE BUYER ASSUMED LIABILITIES, AND NOTHING CONTAINED IN
THIS SECTION 2.3 SHALL IN ANY WAY LIMIT BUYER’S RIGHTS TO INDEMNIFICATION
CONTAINED IN THIS AGREEMENT.

ARTICLE
3

REPRESENTATIONS AND WARRANTIES OF GENERAL PARTNER

General
Partner hereby represents and warrants to Seller as follows:

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3.1                               Organization
and Authority.  General Partner is a limited partnership
duly organized and validly existing under the laws of the State of
Delaware.  General Partner has the power and authority to execute and
deliver this Agreement.  The execution,
delivery, and performance of this Agreement by General Partner have been duly authorized by all necessary
partnership action on the part of General
Partner.  This Agreement has been
duly executed and delivered by General
Partner.  This Agreement
constitutes the legal, valid and binding obligation of General Partner, enforceable against General Partner in accordance with its terms, except as may be
limited by bankruptcy laws and other similar laws affecting creditors’ rights
generally and general principles of equity.

3.2                                 Compliance.  The execution, delivery, and performance of
this Agreement by General Partner
will not, with or without the giving of notice or the passage of time, or both,
conflict with, result in a breach, default or loss of rights under, accelerate
the maturity of, or result in the creation of any lien, claim, security
interest, charging order, or encumbrance under (i) the organizational documents
of General Partner, or (ii) any
note, mortgage, contract, agreement (other than the Partnership Agreement),
instrument, lease, obligation, license, governmental authorization, statute,
ordinance, rule, order or regulation to which General
Partner is a party or by which General
Partner’s assets, properties, or rights are bound.

3.3                                 Litigation.  There is no outstanding order, injunction,
judgment, or decree of any court or government agency against General Partner
that (a) restrains, enjoins or otherwise prohibits or makes illegal the
consummation of the transactions contemplated by this Agreement, or (b)
otherwise adversely affects the ability of General Partner to consummate the
transactions contemplated hereby.  There
is no pending, or to General Partner’s knowledge, threatened, lawsuit or
governmental investigation or proceeding against, relating to or affecting
General Partner or any of its assets or properties that could reasonably be
expected to (a) result in the issuance of an order, injunction, judgment, or
decree of any court or government agency that could restrain, enjoin or
otherwise prohibit or make illegal the consummation of the transactions
contemplated by this Agreement, or (b) otherwise adversely affect the ability
of General Partner to consummate the transactions contemplated hereby.

3.4                                 Taxes.  All required tax returns of the Partnership
have been, or will be, timely filed with respect to all periods ending on or
prior to the Closing Date, and are, or will be, to the General Partner’s
knowledge, true, correct and complete in all material respects.  To the General Partner’s knowledge, all items
of income, gain, loss, deduction and credit of the Partnership for federal
income tax purposes have been, or will be, properly reported and, with respect
to the Interest, correctly apportioned or allocated to Seller with respect to
all periods ending on or prior to the Closing Date.

3.5                                 Section 754 Election.  The
Partnership has made a valid and effective election under Section 754 of the
Internal Revenue Service Code of 1986, as amended (the “Section 754 Election”).

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3.6                                 Partnership
Budget.  The 2007 operating budget of
the Partnership for its business (the “Budget”), a copy of which has
previously been provided to Seller, is true, correct and complete in all
material respects and, to General Partner’s knowledge, no event has occurred or
condition exists that could reasonably be expected to have a material and
adverse impact on the ability of the Partnership to meet the budgetary goals
contained therein.

3.7                                 No
Broker.  Neither General Partner nor
any of its directors, officers, employees, fiduciaries, or agents has retained,
employed or used any broker or finder in connection with the transactions
provided for herein or in connection with the negotiation hereof.

3.8                                 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES.  EXCEPT
AS PROVIDED IN SECTIONS 3.1 THROUGH 3.7 HEREOF, GENERAL PARTNER MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING
BUT NOT LIMITED TO WARRANTIES REGARDING THE BUSINESS OPERATIONS OF THE
PARTNERSHIP AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, AND SELLER AGREES AND ACKNOWLEDGES THAT ALL SUCH
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.

ARTICLE
4

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer
hereby represents and warrants to Seller as follows:

4.1                               Organization
and Authority.  Buyer is a general
partnership duly organized and validly existing under the laws of the State of
Delaware.  Buyer has the power and
authority to execute and deliver this Agreement and the Assignment, and, upon
receipt of the approvals referred to in Section 4.4, will have the legal right
to consummate the transactions contemplated hereby and thereby.  The execution, delivery, and performance of
this Agreement by Buyer have been duly authorized by all necessary partnership
action on the part of Buyer.  This
Agreement has been duly executed and delivered by Buyer.  This Agreement constitutes, and upon
execution and delivery, the Assignment will constitute, the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with their
terms, except as may be limited by bankruptcy laws and other similar laws affecting
creditors’ rights generally and general principles of equity.

4.2                                 Compliance.  The execution, delivery, and performance of
this Agreement by Buyer will not,
with or without the giving of notice or the passage of time, or both, conflict
with, result in a breach, default or loss of rights under, accelerate the
maturity of, or result in the creation of any lien, claim, security interest,
charging order, or encumbrance under (i) the organizational documents of Buyer, or (ii) any note, mortgage,
contract, agreement (other than the Partnership Agreement), instrument, lease,
obligation, 

 4
 

license,
governmental authorization, statute, ordinance, rule, order or regulation to
which Buyer is a party or by which Buyer’s assets, properties, or rights are
bound.

4.3                                 Litigation.  There is no outstanding order, injunction,
judgment, or decree of any court or government agency against Buyer that (a)
restrains, enjoins or otherwise prohibits or makes illegal the consummation of
the transactions contemplated by this Agreement, or (b) otherwise adversely
affects the ability of Buyer to consummate the transactions contemplated
hereby.  There is no pending, or to Buyer’s
knowledge, threatened, lawsuit or governmental investigation or proceeding
against, relating to or affecting Buyer or any of its assets or properties that
could reasonably be expected to (a) result in the issuance of an order,
injunction, judgment, or decree of any court or government agency that could
restrain, enjoin or otherwise prohibit or make illegal the consummation of the
transactions contemplated by this Agreement, or (b) otherwise adversely affect
the ability of Buyer to consummate the transactions contemplated hereby.

4.4                                 Consents
and Approvals.  Except for any
approval that may be required by the Partnership Agreement, there are no
persons (including but not limited to the Federal Communications Commission
(the “FCC”), any other governmental authorities and agencies, creditors
of Buyer, the Partnership, and parties to any other instrument or agreement to
which Buyer or, to Buyer’s knowledge, the Partnership is a party or by which
Buyer or, to Buyer’s knowledge, the Partnership is bound) whose approval or
consent to the execution, delivery, or performance of this Agreement by Buyer
is legally or contractually required or is necessary duly and validly to sell,
assign and deliver the Interest in accordance with this Agreement.

4.5                                 Governmental
Authorizations.  Buyer is fit,
eligible and possesses all of the necessary character qualifications with
respect to the FCC to be a partner in the Partnership and to hold an interest
in the licenses, permits, and authorizations filed with, granted or issued by,
or entered by the FCC, any state public utility commission, or any state public
service commission that are currently held by the Partnership and that permit
the construction, ownership, or operation of a cellular system, in each case,
without restriction or condition (other than restrictions or conditions
generally applicable to licenses of that type) in any of the approvals by the
FCC.

4.6                                 Investment
Information.  Buyer has the capacity
to evaluate the merits and risks of an investment in the Interest and is able
to bear the economic risk of an investment therein.  Buyer acknowledges that Buyer has been
provided access to all information requested by Buyer in order to evaluate the
merits and risks of an investment in the Interest.  Buyer understands that the Interest will not
be registered under the Securities Act of 1933, as amended, or any other
applicable securities laws.  Buyer has
relied solely upon the advice of Buyer’s own counsel, accountant and other
advisors, with regard to the legal, investment, tax and other considerations
regarding this investment.

4.7                                 No
Broker.  Neither Buyer nor any of its
directors, officers, employees, fiduciaries, or agents has retained, employed
or used any broker or finder in connection with the transactions provided for
herein or in connection with the negotiation hereof.

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4.8                                 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES.  EXCEPT
AS PROVIDED IN SECTIONS 4.1 THROUGH 4.7 HEREOF, BUYER MAKES NO REPRESENTATION
OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
LIMITED TO WARRANTIES REGARDING THE BUSINESS OPERATIONS OF THE PARTNERSHIP AND
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
AND SELLER AGREES AND ACKNOWLEDGES THAT ALL SUCH REPRESENTATIONS AND WARRANTIES
ARE HEREBY EXCLUDED AND DISCLAIMED.

ARTICLE
5

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller
hereby represents and warrants to Buyer as follows:

5.1                                 Organization
and Authority.  Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the state of its incorporation. 
Seller has the corporate power and authority to execute and deliver this
Agreement and the Assignment, and, upon receipt of the approvals referred to in
Section 5.6, will have the legal right to consummate the transactions
contemplated hereby and thereby.  The
execution, delivery, and performance of this Agreement by Seller has been duly
authorized by all necessary corporate action on the part of Seller.  This Agreement has been duly executed and
delivered by Seller.  This Agreement
constitutes, and upon execution and delivery, the Assignment will constitute,
the legal, valid and binding obligation of Seller, enforceable against Seller
in accordance with their respective terms, except as may be limited by
bankruptcy laws and other similar laws affecting creditors’ rights generally
and general principles of equity.

5.2                                 Partnership
Interest.  The Interest equals a 7.5%
outstanding limited partnership interest of the Partnership, and all associated
assets, properties and rights of every type and description.  There are no agreements or other documents
known to Seller or to which Seller is a party governing the organization,
operation, management, capital structure, or partners’ rights of the
Partnership other than the Partnership Agreement.  There are no contracts, agreements,
understandings or obligations known to Seller or to which Seller is a party
related to the exercise of any voting, consent, or approval rights with respect
to the Interest other than the Partnership Agreement.

5.3                                 Compliance.  Subject to the receipt of a consent or
approval (the “NYPSC Approval”) from the Public Service Commission of
the State of New York (the “NYPSC”) of one of the types contemplated by
Section 8.4 of this Agreement, the execution, delivery, and performance of this
Agreement by Seller will not, with or without the giving of notice or the
passage of time, or both, conflict with, result in a breach, default or loss of
rights under, accelerate the maturity of, or result in the creation of any
lien, claim, security interest, charging order, or encumbrance under (i) the
organizational documents of Seller, or (ii) any note, mortgage, contract,
agreement (other 

 6
 

than the Partnership Agreement), instrument, lease,
obligation, license, governmental authorization, statute, ordinance, rule,
order, or regulation to which Seller is a party or by which any of its assets,
properties or rights are bound.

5.4                                 Valid
Interest.  Seller owns good and valid
title to the Interest free and clear of all liens, claims, security interests,
charging orders, or encumbrances of any nature whatsoever (other than under the
Partnership Agreement and the Act), and Seller is the exclusive owner of the
Interest.  The execution and delivery at
Closing of the Assignment will vest in Buyer good and valid title to the
Interest, subject to the Act.  Except as
contemplated in this Agreement or the Partnership Agreement, there exists no contract, option, warrant, right
to consent, right of first refusal, right of first offer, preemptive right, put
right, or similar right to acquire the Interest, or any portion thereof or
interest therein that would be triggered by the execution of this Agreement or
the consummation of the transactions contemplated hereby.

5.5                                 Litigation.  There is no outstanding order, injunction,
judgment, or decree of any court or government agency against Seller that (a)
restrains, enjoins or otherwise prohibits or makes illegal the consummation of
the transactions contemplated by this Agreement, or (b) otherwise adversely
affects the ability of Seller to consummate the transactions contemplated
hereby.  There is no pending, or to
Seller’s knowledge, threatened, lawsuit or governmental investigation or
proceeding against, relating to or affecting Seller
or any of its assets or properties that could reasonably be expected to (a)
result in the issuance of an order, injunction, judgment, or decree of any
court or government agency that could restrain, enjoin or otherwise prohibit or
make illegal the consummation of the transactions contemplated by this
Agreement, or (b) otherwise adversely affect the ability of Seller to
consummate the transactions contemplated hereby.

5.6                                 Consents
and Approvals. Except for any approval which may be required by the
Partnership Agreement and the NYPSC Approval, there are no persons (including
but not limited to the FCC, any other governmental authorities and agencies,
creditors of Seller, or parties to any other instrument or agreement to which
Seller is a party or by which Seller is bound) whose approval or consent to the
execution, delivery, or performance of this Agreement by Seller is legally or
contractually required or is necessary duly and validly to sell, assign and
deliver the Interest in accordance with this Agreement.

5.7                                 No
Broker.  Neither Seller nor any of
its directors, officers, employees or agents has retained, employed or used any
broker or finder in connection with the transactions provided for herein or in
connection with the negotiation hereof.

5.8                                 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES.  EXCEPT
AS PROVIDED IN SECTIONS 5.1 THROUGH 5.7 HEREOF, SELLER MAKES NO REPRESENTATION
OR WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
LIMITED TO WARRANTIES REGARDING THE BUSINESS OPERATIONS OF THE PARTNERSHIP AND
TO THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR 

 7
 

PURPOSE, AND BUYER AGREES AND ACKNOWLEDGES THAT ALL SUCH
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXCLUDED AND DISCLAIMED.

ARTICLE
6

COVENANTS

6.1                                 Further
Actions; Release.

(a)                                  Buyer
and Seller agree to comply expeditiously with all provisions of the Partnership
Agreement and applicable partnership law necessary or appropriate for the
consummation of the transactions contemplated by this Agreement, including
without limitation, Section 11.1 of the Partnership Agreement.

(b)                                 Effective
upon the Closing, without further action on the part of any party, Seller (on
its own behalf and on behalf of its Affiliates, successors and assigns and its
and their respective officers, directors, employees, representatives and
agents) hereby remises, releases and forever discharges Buyer, its Affiliates,
General Partner and its Affiliates, and their respective officers, directors,
employees, representatives and agents (collectively, the “General Partner
Released Parties”), from any and all claims and causes of action, in law or
in equity, that the releasing party now has, ever had, or hereafter may have or
claim to have against any of the General Partner Released Parties, and from any
and all debts, obligations and liabilities that any of the General Partner
Released Parties now has, ever had, or hereafter may have or may be alleged to
have to the releasing party, for, upon or by reason of any matter, cause or
thing arising from or related to the Partnership, the Partnership’s business,
the Partnership Agreement or Seller’s status as a partner of the Partnership,
whether known or unknown, from the beginning of the world through and including
the date of this Agreement, other than those arising under this Agreement and
those arising from relationships pursuant to which Seller or any of its Affiliates
provides goods or services to the Partnership. 
Seller expressly waives and relinquishes the benefit of any provision of
applicable law that provides that a general release does not extend to claims
of which the releasing party does not know or suspect to exist at the time of
executing the release.

For purposes of
this Agreement, “Affiliate” means, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person.  The
term “Person” means an individual, firm, corporation, partnership,
limited liability company, trust, governmental authority or body, association,
unincorporated organization or any other entity.  The term “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”),
as applied to any Person, means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of such
Person, through the ownership of more than fifty percent (50%) of the voting
securities or other ownership interest of such Person.  Notwithstanding the foregoing, (i) Verizon
Communications Inc. and Persons that it controls shall not be considered “Affiliates”
of General Partner for purposes of this Agreement, except for Buyer and Persons
controlled by Buyer or General Partner and (ii) FairPoint Communications Inc.
and Persons that it 

 8
 

controls
shall not be considered “Affiliates” of Seller for purposes of this Agreement,
except for MJD Ventures, Inc. (“Parent”)
and Persons controlled by Parent or Seller.

(c)                                  Effective
upon the Closing, without further action on the part of any party, General
Partner (on its own behalf and on behalf of its Affiliates, including, without
limitation, the Partnership and Buyer, successors and assigns and its and their
respective officers, directors, employees, representatives and agents) hereby
remises, releases and forever discharges Seller and its Affiliates (including
Parent), and their respective officers, directors, employees, representatives
and agents (collectively, the “Seller Released Parties”), from any and
all claims and causes of action, in law or in equity, that the releasing party
now has, ever had, or hereafter may have or claim to have against any of the
Seller Released Parties, and from any and all debts, obligations and
liabilities that any of the Seller Released Parties now has, ever had, or
hereafter may have or may be alleged to have to the releasing party, for, upon
or by reason of any matter, cause or thing arising from or related to the
Partnership, the Partnership’s business, the Partnership Agreement or General
Partner’s status as a partner of the Partnership, whether known or unknown,
from the beginning of the world through and including the date of this
Agreement, other than those arising under this Agreement and those arising from
relationships pursuant to which Seller or any of its Affiliates provides goods
or services to the Partnership.  General
Partner expressly waives and relinquishes the benefit of any provision of
applicable law that provides that a general release does not extend to claims
of which the releasing party does not know or suspect to exist at the time of
executing the release.

6.2                                 Compliance
with Conditions; Performance.  Each
party will use its reasonable best efforts, with respect to its obligations, to
cause the conditions set forth in Sections 7 and 8 to be satisfied on or prior
to the Closing Date and otherwise will perform its obligations under this
Agreement in an expeditious manner.

6.3                                 Conduct
of Business.  From the Execution Date
until the earlier of the Closing Date or the date of termination (as described
in Section 11.1 hereof), except for the transactions specifically contemplated
by this Agreement, General Partner covenants and agrees that it will not take,
and will not agree to take or cause, any action that would result in the any of
the Partnership’s businesses not being conducted in the ordinary course and in
accordance with this Agreement and will use its reasonable best efforts to
cause the Partnership (i) to preserve intact its business, organization and
goodwill, (ii) to preserve its goodwill and business relationships with
suppliers, customers and others having business relationships with it, (iii) to
refrain from changing in any material respect, any of its business policies
relating to its business, (iv) to maintain and keep its assets and properties
in good repair, working order and condition (except for obsolescence and
depreciation due to ordinary wear and tear and damage due to casualty), (v) to
perform all of its obligations under its contracts, leases, and other
agreements, (vi) to manage and operate the business of the Partnership in a
manner consistent with past practice, and (vii) to continue to make distributions
to the Partners (as defined in the Partnership Agreement) pursuant to Section
6.3 of the Partnership Agreement in a manner consistent with past
practice.  Each party agrees not to cause
or permit any action to be 

 9
 

taken
that would have the effect of denying Buyer the right to acquire the Interest
or that would constitute a breach of such party’s representations and
warranties or covenants contained in this Agreement.

6.4                                 Section 754 Election.  General
Partner agrees not revoke the Section 754 Election, regardless of whether the
sale of the Interest pursuant to the terms and conditions of this Agreement
occurs, for a period of at least five years from the date hereof.

6.5                                 Compliance with Partnership Agreement.  General
Partner and Seller each agrees to perform and satisfy each of its obligations
under the Partnership Agreement relating to the transfer of the Interest by
Seller (including, without limitation, those obligations set forth in Section
11.1 of the Partnership Agreement). 
General Partner and Seller each agrees to comply with Section 11.2 of
the Partnership Agreement for the purposes of substituting Parent as Limited
Partner, if applicable.

6.6                                 Distributions by the Partnership.  Subject
to the provisions of Section 2.1 hereof, General Partner agrees to cause the
Partnership to distribute to Seller, in the ordinary course consistent with
past practice, the distributions payable in respect of the Interest
pursuant to Section 6.3 of the Partnership Agreement with respect to all
periods after December 31, 2006 (the “Quarterly Distributions”).

6.7                                 NYPSC Approval.  The parties acknowledge that
Seller has previously submitted an application to the NYPSC requesting an NYPSC
Approval of the type contemplated by Section 8.4(a) or 8.4(b)(i) hereof.  As soon as practicable and in any event no
later than 10 business days after the date hereof, Seller shall amend such
application or submit an additional application to the NYPSC requesting an
NYPSC Approval of the type contemplated by Section 8.4(b)(ii) hereof.  Seller shall diligently pursue both
such applications and shall use its reasonable best efforts to obtain the NYPSC
Approval as soon as reasonably practicable after the date hereof.  If Seller
reasonably determines that it will not receive a satisfactory approval and
determination of the NYPSC in respect of the foregoing applications and if appropriate
under the circumstances based on its discussions with the NYPSC, Seller
will submit one or more additional applications requesting an NYPSC Approval of
one of the other types contemplated by Section 8.4 hereof and shall diligently
pursue those applications.  From and
after the date hereof, Seller will give
Buyer a reasonable opportunity to review and comment on all applications before
they are filed, will promptly furnish to Buyer copies of all written
communications to or from the NYPSC regarding the NYPSC Approval and will keep
Buyer reasonably apprised of all developments relating to the NYPSC Approval;
provided, however, that Buyer shall be obligated to treat all information
regarding the NYPSC Approval as confidential to the same extent as it would if
(a) such information were “Confidential Information” under the Nondisclosure
Agreement, dated December 2005, by and between Verizon Communications Inc. and
FairPoint Communications, Inc., and (b) the “Transaction” for purposes of such
Nondisclosure Agreement were the transactions contemplated hereby.

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ARTICLE
7

BUYER’S CONDITIONS TO CLOSING

The obligations of Buyer under this Agreement are
subject to the satisfaction, on or before the Closing Date, of the following
conditions, unless waived in writing by Buyer:

7.1                                 Representations
and Warranties True on Closing Date. 
The representations and warranties made by Seller in this Agreement
shall be true in all material respects on and as of the Closing Date as though
those representations and warranties were made on and as of the date thereof.

7.2                                 Compliance
with Agreement.  Seller shall have
performed and complied in all material respects with all of its obligations
under this Agreement that are to be performed or complied with by it on or
before the Closing Date, and Seller shall not otherwise be in material breach
or default in any respect under any of the provisions of this Agreement.

7.3                                 Rights of First Refusal.  All
rights of first refusal under the Partnership Agreement shall have been
satisfied, waived or terminated.

7.4                                 Closing Certificate.  Seller
shall have delivered to Buyer a certificate dated as of the Closing Date and
signed on its behalf by its President or other authorized officer as to
compliance with the conditions set forth in Sections 7.1 and 7.2.

7.5                                 NYPSC Approval.  Seller shall have received an
NYPSC Approval of one of the types contemplated by Section 8.4 hereof in the
form of one or more final orders (as defined below).

ARTICLE
8

SELLER’S CONDITIONS TO CLOSING

The
obligations of Seller under this Agreement are subject to the satisfaction, on
or before the Closing Date, of the following conditions, unless waived in
writing by Seller:

8.1                                 Representations and Warranties True on Closing
Date.  The representations and warranties made by
each of General Partner and Buyer in this Agreement shall be true in all
material respects on and as of the Closing Date as though those representations
and warranties were made on and as of the date thereof.

8.2                                 Compliance
with Agreement.  Each of General
Partner and Buyer shall have performed and complied in all material respects
with all of its obligations under this Agreement that are to be performed or
complied with by it on or before the Closing Date, and neither General Partner
nor Buyer shall otherwise be in material breach or default in any respect under
any of the provisions of this Agreement.

 11
 

8.3                                 Rights of First Refusal.  All
rights of first refusal under the Partnership Agreement shall have been
satisfied, waived or terminated and General Partner shall have provided
evidence reasonably satisfactory to Seller that all such rights have been so
satisfied, waived or terminated.

8.4                                 NYPSC Approval.  Seller shall have received the
NYPSC Approval, consisting of any one of the following:  (a) a determination by the NYPSC to the
effect that the NYPSC does not have jurisdiction over any transfers of the
Interest, (b) approvals by the NYPSC to transfer the Interest (i) from Seller
to Seller’s sole stockholder, Parent, and (ii) from Parent to Buyer, (c) (i) an
approval by the NYPSC to transfer the Interest from Seller to Parent and (ii) a
determination by the NYPSC that its approval is not required for any transfer
of the Interest by Parent, or (d) any other one or more determinations or
approvals by the NYPSC that are sufficient to permit the Interest to be
transferred to Buyer (including, if the
determinations and approvals identified in clauses (a), (b) and (c) above cannot
be obtained, an approval of the NYPSC to transfer the Interest from Seller
directly to Buyer), in each case, in form and substance (including any terms
and conditions thereof) reasonably satisfactory to Seller (or Parent, if
applicable).  The NYPSC Approval shall be
in the form of one or more final orders. 
As used in this Agreement, “final order” means an action by the NYPSC as
to which:  (a) no request for stay of the
action is pending, no stay is in effect, and all relevant time periods for
requesting such a stay have passed; (b) no petition for rehearing or
reconsideration, or application for review, is pending before the NYPSC and the
time for filing such a petition or application has passed; (c) the NYPSC does
not have an action under reconsideration on its own motion, and the time in
which to move for reconsideration is passed; and (d) no appeal to any court, or
request for stay to a court, of the NYPSC’s action is pending or in effect, and
the time for filing any such appeal or request has passed.

8.5                                 Minimum
Distributions.  The total amount of
distributions received by Seller in respect of the Interest pursuant to Section
6.3 of the Partnership Agreement with respect to the period from January 1,
2007 through the Closing Date shall be at least $1 million; provided,
however, that nothing herein shall require the Partnership to make any
distributions outside of the ordinary course consistent with past practice.

8.6                                 Closing
Certificate.  General Partner and
Buyer shall have delivered to Seller a certificate dated as of the Closing Date
and signed on their behalves by the President or other authorized officer of
each of them as to compliance by the General Partner and Buyer with the
conditions set forth in Sections 8.1 and 8.2.

ARTICLE
9

CLOSING; CLOSING DOCUMENTS

9.1                                 Closing.  The closing of the purchase and sale of the
Interest (the “Closing”) shall take place at (a) the offices of Buyer at
10:00 a.m. local time on the date that is five business days following the date
on which all conditions under Articles 7 and 8 have been satisfied or waived
(except those conditions that by their nature will be 

 12
 

satisfied
at Closing), or (b) such other time or place as may be mutually agreed upon in
writing by the parties (the “Closing Date”).

9.2                                 Closing Documents.  In
connection with the purchase and sale of the Interest, on the Closing Date:

(a)                                  Buyer
and Seller shall execute and deliver to
each other the Assignment;

(b)                                 General
Partner and Buyer shall execute and deliver to Seller a closing certificate as
required by Section 8.6 of this Agreement; and

(c)                                  Seller
shall execute and deliver to Buyer a closing certificate as required by Section
7.4 of this Agreement.

ARTICLE
10

SURVIVAL; INDEMNIFICATION

10.1                           Survival.

(a)                                  All
representations and warranties contained in this Agreement and the rights to
indemnification in respect thereof shall survive any investigation and the
Closing Date until the first anniversary of the Closing Date, except that the
representations and warranties contained in Sections 3.1, 4.1, 5.1 and 5.4
shall survive any investigation and the Closing Date without limitation as to
time, and except that the representations and warranties in Section 3.4 shall
survive until 90 days following the expiration of the applicable statute of
limitations (including any tolling or extensions thereof).  The parties agree that no claims or causes of
action may be brought against any party based upon, directly or indirectly, any
of the representations or warranties contained in this Agreement after the
applicable survival period.  If notice of
a claim is submitted within the applicable survival period, the right of the
claimant to recover from the other party with respect to such claim shall not
be dependent on the claim being resolved or the losses being incurred within
such time period.

(b)                                 In the event any party should have a claim
against the other under this Article 10, the party seeking indemnification (the
“Indemnified Party”) shall, as promptly as reasonably practicable after
discovery of such claim, deliver written notice of such claim to the other
party (the “Indemnifying Party”). 
The failure by the Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability that it may have to
such Indemnified Party under Article 10, except to the extent that the
Indemnifying Party demonstrates that it has been materially prejudiced by such
failure.

10.2                           Buyer Indemnification.  Subject
to the provisions of this Article 10, Buyer agrees to indemnify, defend, and
hold harmless Seller and its officers, directors, employees, and affiliates
(the “Buyer Indemnitees”) against and in respect of any and all loss,
cost, liability and expense (including, without limitation, reasonable
attorneys’ fees and costs) 

 13
 

actually
incurred by any Buyer Indemnitee arising out of (i) any material breach of
representation or warranty on the part of Buyer made in this Agreement or in
any certificate or document delivered by Buyer in accordance with this
Agreement, (ii) any material breach or nonfulfillment of any agreement,
covenant, or obligation on the part of Buyer made in this Agreement or in any
certificate or document delivered by Buyer in accordance with this Agreement,
(iii) any obligations or liabilities of Buyer arising from or related to the
Buyer Assumed Liabilities, or (iv) any brokerage fee, finders’ fee or similar
payment arising under any agreement or other arrangement with Buyer in
connection with the transactions contemplated by this Agreement.

10.3                           General Partner Indemnification.  Subject
to the provisions of this Article 10, General Partner agrees to indemnify,
defend, and hold harmless Seller and its officers, directors, employees, and
affiliates (the “General Partner Indemnitees”) against and in respect of
any and all loss, cost, liability and expense (including, without limitation,
reasonable attorneys’ fees and costs) actually incurred by any General Partner
Indemnitee arising out of (i) any material breach of representation or warranty
on the part of General Partner made in this Agreement or in any certificate or
document delivered by General Partner in accordance with this Agreement, (ii)
any material breach or nonfulfillment of any agreement, covenant, or obligation
on the part of General Partner made in this Agreement or in any certificate or
document delivered by General Partner in accordance with this Agreement, or
(iii) any brokerage fee, finders’ fee or similar payment arising under any
agreement or other arrangement with General Partner in connection with the
transactions contemplated by this Agreement.

10.4                           Seller Indemnification.  Subject
to the provisions of this Article 10, Seller agrees to indemnify, defend, and
hold harmless Buyer and its officers, directors, employees, and affiliates (the
“Seller Indemnitees”) against and in respect of any and all loss, cost,
liability and expense (including, without limitation, reasonable attorneys’
fees and costs) actually incurred by any Seller Indemnitee arising out of (i)
any material breach of representation or warranty on the part of Seller made in
this Agreement or in any certificate or document delivered by Seller in
accordance with this Agreement, (ii) any material breach or nonfulfillment of
any agreement, covenant, or obligation on the part of Seller made in this Agreement
or in any certificate or document delivered by Seller in accordance with this
Agreement,  (iii) any brokerage fee,
finders’ fee or similar payment arising under any agreement or other
arrangement with Seller in connection with the transactions contemplated by
this Agreement, or (iv) any obligations or liabilities of Seller arising from
or related to the Interest, other than the Buyer Assumed Liabilities.

10.5                           Exclusive Remedy.   From and after the Closing,
the sole and exclusive remedy at law, excluding claims involving willful
misrepresentation or fraud, for any claim (whether such claim is framed in
tort, contract or otherwise) arising out of a breach of any representation,
warranty, covenant or other agreement in this Agreement or with respect to the
transactions contemplated hereby shall be a claim for indemnification pursuant
to this Article 10, which claims are independent of and in addition to any
equitable rights or remedies.

 14
 

ARTICLE
11

MISCELLANEOUS PROVISIONS

11.1                           Termination.  This Agreement may be
terminated and the transactions contemplated hereby abandoned at any time on or
before the Closing Date:

(a)                      By the mutual consent of each Buyer and Seller;

(b)                     By Buyer or Seller if the Closing shall not have
occurred by the date that is sixteen (16) months following the date hereof,
except that the right to terminate this Agreement under this Section 11.1(b)
shall not be available to any party whose failure (or the failure of its
affiliates) to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Closing Date to occur on or before such
date;

(c)                      By Buyer if there shall have been a breach
in any material respect of any of the covenants, obligations or agreements on
the part of Seller set forth in this Agreement or a breach of any of the
representations and warranties of Seller that would cause the conditions
precedent set forth in Article 7 of this Agreement not to be satisfied, in each
case, which has not been cured within 30 days after receipt of notice of such
breach;

(d)                     By Seller if there shall have been a
breach in any material respect of any of the covenants, obligations or
agreements on the part of General Partner or Buyer set forth in this Agreement
or a breach of any of the representations and warranties of General Partner or
Buyer that would cause the conditions precedent set forth in Article 8 of this
Agreement not to be satisfied, in each case, which has not been cured within 30
days after receipt of notice of such breach;

(e)                      By
Buyer if any condition to Closing set forth in Article 7 or Section 8.4 of this
Agreement becomes incapable of being satisfied; and

(f)                        By Seller
if any condition to Closing set forth in Article 8 of this Agreement becomes
incapable of being satisfied.

Subject to the provisions of this Section 11.1 below, if this Agreement
is terminated in a manner that is expressly permitted by subsection (a), (b),
(e) or (f) of this Section 11.1 and that termination is not attributable to the
breach of or default under this Agreement by a party, this Agreement will
become void and of no further force and effect (except for Section 11.6), and
there will be no liability on the part of any party in respect of a termination
of this Agreement.  If this Agreement is
terminated following the breach or default by a party of its obligations
hereunder, the other party shall, notwithstanding that termination, be entitled
to all rights and remedies (including, but not limited to, damages) available
at law or in equity resulting from that breach or default.

 15
 

Notwithstanding the foregoing, if this Agreement is terminated by
Seller pursuant to subsection (b) of this Section 11.1 following the failure of
the condition set forth in Section 8.4 to be satisfied by the date that is
sixteen (16) months following the date hereof, or this Agreement is terminated
by Seller pursuant to subsection (f) of this Section 11.1 based on such condition
having become incapable of being satisfied, then Seller shall pay to Buyer (as
Buyer’s sole and exclusive remedy for such a termination) an amount equal to
the amount by which the total distributions paid to Seller (whether before or
after the termination date) in respect of the Interest pursuant to Section 6.3
of the Partnership Agreement with respect to the period from January 1, 2007
through the termination date exceed $1 million. 
To the extent Seller has already received more than $1 million in
distributions prior to such termination date, Seller shall repay such excess to
Buyer within 10 days after the termination date.  Any amounts that are not repaid within 10
days shall accrue interest thereafter at the same interest rate that the
General Partner pays the Partnership on amounts due to the Partnership from the
General Partner.  If any amount due
pursuant to the foregoing provisions has not been paid as of the time when any
distribution from the Partnership becomes payable to Seller, Buyer shall have
the right to cause the Partnership to pay such amount directly to Buyer out of
the distribution otherwise payable to Seller. 
In addition, if any distribution with respect to the period from January
1, 2007 through the termination date has not been paid by the Partnership as of
the termination date, then at the time when such distribution becomes payable
to Seller, Buyer shall have the right to cause the Partnership to pay such
distribution directly to Buyer, but only to the extent that such distribution,
combined with distributions previously received by Seller with respect to such
period, exceed $1 million.

11.2                           Specific
Performance.  The parties acknowledge
and agree that cellular properties are unique and that money damages for breach
of this Agreement would not provide an adequate remedy for the non-breaching party.  Therefore, the parties agree that specific
performance may be granted to enforce this Agreement without proof of damage or
the inadequacy of a remedy at law.

11.3                           Press
Releases and SEC Filings.  No party
shall issue or cause the publication of any press release or otherwise make any
public statements related to the transaction contemplated by this Agreement
without the prior written consent of the other party; except that nothing
herein will prohibit any party from issuing or causing publication of any press
release to the extent that such action
is required by applicable law or the rules of any national stock exchange
applicable to such party or its affiliates, in which case the party wishing to
make such disclosure shall, if and to the extent reasonably practicable under
the circumstances, notify the other party of the proposed time of issuance of
such press release and consult with and allow the other party reasonable time
to comment on such press release in advance of its issuance.  The foregoing shall not be construed to
prohibit either party from making any required disclosure in filings under the
federal securities laws.  However, the
party making such filing shall, if and to the extent reasonably practicable
under the circumstances, notify the other party of the proposed time of the
filing and allow the other party reasonable time to comment on such disclosure
in advance of the filing.

 16
 

11.4                           Governing
Law.  This Agreement shall be governed by and construed in accordance with
the laws of the state of New York, without regard to conflict of law principles
thereof.

11.5                           Notices.  Any notice, request, instruction or other
document to be given hereunder by either party hereto to the other party hereto
shall be in writing and delivered personally or by telecopy or facsimile transmission or sent by registered or
certified mail or by any express mail service, postage or fees prepaid:

If to Seller to:

Taconic Telephone
Corp.

c/o FairPoint Communications, Inc.

521 East Morehead Street, Suite 250

Charlotte, North Carolina  28202

Attn:  Shirley J. Linn

Executive Vice
President and General Counsel

Telephone:  (704) 344-8150

Facsimile:  (704) 344-1594

If to Buyer or
General Partner, to:

Cellco Partnership
d/b/a Verizon Wireless

One Verizon Way

Basking Ridge, New Jersey  07920

Attn:  Vice President – Business
Development

Telephone:  908-559-5400

Facsimile:  908-696-2197

or at such other
address or number for a party as shall be specified by like notice.  Any notice which is delivered personally or
by telecopy or facsimile transmission in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.  Any
notice which is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been duly given to the party to which it is
addressed at the close of business, local time of the recipient, on the fourth
business day after the day it is so placed in the mail or, if earlier, the time
of actual receipt.

11.6                           Expenses.  Except as otherwise provided herein, each
party shall bear its own expenses and costs, including the fees of any
attorney, accountant, broker, finder or other advisor or representative
retained by it, incurred at any time in connection with the preparation of this
Agreement and the consummation of the transactions contemplated hereby.

 17
 

11.7                           Transfer
Taxes and Sales Taxes.  Buyer shall
bear and be responsible for any and all sales, use, transfer or similar taxes
imposed by state or local tax authorities with respect to the transfer of the
Interest contemplated by this Agreement, regardless of whether the tax
authority seeks to collect the tax from the acquiring party or the selling
party with respect to the Interest.

11.8                           Counterparts.  This Agreement may be executed in
counterparts, each of which when so executed shall be an original, but all of
which together shall constitute one agreement.

11.9                           Entire
Agreement; Amendments.  This
Agreement (together with any Exhibits and Schedules) and the other agreements
referred to herein represent the entire agreement of the parties with respect
to the transactions contemplated hereby and supersede all previous agreements
relating to the subject matter thereof. 
This Agreement may only be amended by a writing executed by the parties.

11.10                     Successors and Assigns.  This Agreement will be binding upon and inure
to the benefit of the parties hereto and their successors and permitted
assigns.  No party may assign or delegate
any of its rights or duties hereunder without the prior written consent of the
other party, except that either party may, upon prior written notice to the
other party, assign or delegate any of its rights or duties hereunder to any
person or entity that is a wholly owned subsidiary of such party without prior
written consent of the other party.  Notwithstanding anything herein to the
contrary, prior to the Closing Date, subject to NYPSC Approval, Seller may
transfer the Interest to Parent and, in connection therewith, shall assign to
Parent all of Seller’s rights under this Agreement (except in respect of the
release set forth in Section 6.1(c)), and Parent shall assume and agree to
perform all of Seller’s obligations hereunder pursuant to an assignment and
assumption agreement in form and substance reasonably satisfactory to Buyer;
provided, however; that notwithstanding any such assignment, the releases set
forth in Sections 6.1(b) and (c) shall remain in full force and affect in
accordance with their terms and the release set forth in Section 6.1(b), in the
event of an assignment as provided herein, shall be binding on both Parent and
Seller.

11.11                     Headings.  The headings of the Articles, Sections and
paragraphs of this Agreement are inserted for convenience only and shall not be
deemed to constitute part of this Agreement or to affect the construction
hereof.

11.12                     Modification and Waiver.  Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party which is entitled
to the benefits thereof.  No waiver of
any of the provisions of this Agreement shall be deemed to or shall constitute
a waiver of any other provisions hereof (whether or not similar).

11.13                     Severability.  Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the 

 18
 

remaining terms and
provisions of this Agreement.  If any
provision of this Agreement is so broad as to be unenforceable, such provision
shall be interpreted to be only so broad as is enforceable.

11.14                     No Third-Party Beneficiaries.
With the exception of the parties to this Agreement and their permitted
successors and assigns and except for the provisions of Article 10, there shall
exist no right of any person to claim a beneficial interest in this Agreement
or any rights occurring by virtue of this Agreement.

11.15                     Further Assurances. From
time to time, as and when requested by one of the parties, the other party will
execute and deliver, or cause to be executed and delivered, all such documents
and instruments as may be reasonably necessary to consummate and make effective
the transactions contemplated by this Agreement.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 19

IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date set forth above.

	
  TACONIC TELEPHONE CORP.

  	
   

  	
  CELLCO PARTNERSHIP 

  
	
   

  	
   

  	
  D/B/A VERIZON WIRELESS 

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Eugene B.
  Johnson

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Lowell
  McAdam

  
	
   

  	
   

  	
        Lowell McAdam

  
	
   

  	
   

  	
        President and
  CEO

  
	
   

  	
   

  	
   

  
	
  VERIZON WIRELESS OF THE EAST LP

  	
   

  	
   

  
	
  D/B/A VERIZON WIRELESS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Verizon Wireless of Georgia LLC, Its 

  	
   

  	
   

  
	
   

  	
  General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Cellco Partnership d/b/a
  Verizon Wireless,

  	
   

  	
   

  
	
   

  	
  Its Sole Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Lowell McAdam

  	
   

  	
   

  
	
   

  	
  President and CEOExhibit 10.1

SECOND AMENDMENT OF PURCHASE AND SALE AGREEMENT

WHEREAS, on November 16, 2006, Smith Production Inc. (“Smith”), a Texas
corporation, as seller, and Edge Petroleum Exploration Company (“Edge”), a
Delaware corporation, as purchaser, entered into that certain Purchase and Sale
Agreement (the “Agreement”)  covering
certain oil and gas properties described therein dated effective as of January
1, 2007. The Agreement is attached hereto.

WHEREAS, Smith and
Edge amended the Agreement
by First Amendment of Purchase and Sale Agreement executed on December 15,
2006.

WHEREAS, Smith and Edge desire to amend (i) the Agreement and (ii) the First Amendment of Purchase and Sale Agreement as set
forth below by executing this Second Amendment of Purchase and Sale Agreement (the
“Second Amendment”).

NOW THEREFORE, for
valuable consideration received, Smith and Edge
hereby amend (i) the Agreement and (ii)
the First Amendment of Purchase and Sale Agreement as follows:

1.
In Section 1.6(a)(ii) of the Agreement, the word “produced” is insert
after the word “Hydrocarbons” and before the word “at”.

2. In Section 1.6(a)(ii) of the Agreement,
the word “produced” is insert after the word “Hydrocarbons”and before the word “prior”.

3.
In Section 3.4(a) of the Agreement, the first sentence is deleted and
replaced with the following sentence: “To assert a claim arising out of a
breach of Seller’s representation and warranty of Defensible Title in Section
3.1(a), Purchaser must deliver claim notices to Seller (each a “Title Defect
Notice”) on or before Monday, January 15, 2007 at 12:00 pm CST (the “Title Claim Date”), except as otherwise
provided in Sections 3.5, 3.6, 3.7, or 3.8.”

4. In the First Amendment of Purchase and Sale
Agreement, the parenthetical phrase that is used as a defined term, (the
“Effective Date”), is deleted from the first sentence.

5. In the First Amendment of Purchase and Sale Agreement, the last
sentence is deleted and replaced with the following: “IN WITNESS
WHEREOF, this Amendment is executed as of the dates shown below to be effective
as of November 16, 2006.”

To the extent that any other provisions in the Agreement require amendment in order to make
the context of such provisions correct as the result of the foregoing
amendments, all such provisions in the Agreement that require amendment are deemed to be amended.

As
amended herein, the Agreement is hereby adopted, ratified and confirmed as
being in full force and effect.

This Amendment shall be binding on each party that executes same,
regardless of whether the Amendment is executed by all of the parties who are
named below. The provisions of this Amendment shall be binding upon and inure
to the benefit of each signatory party and their respective successors and
assigns.

This Amendment may be executed in one or more counterparts, each of
which shall have the same force and effect as an original, and each counterpart
shall be binding upon the parties executing the same.

IN WITNESS
WHEREOF, this Amendment is executed as of the dates shown below to be effective
as of November 16,
2006.

	
  Smith Production Inc.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Glenn R. Smith

  	
   

  
	
  Glenn R. Smith,
  President

  	
   

  
	
   

  	
   

  
	
  Date: January
  15, 2007

  	
   

  
	
   

  	
   

  
	
  Edge Petroleum
  Exploration Company

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John W.
  Elias

  	
   

  
	
  John W. Elias

  	
   

  
	
  Chairman, President
  and CEO

  	
   

  
	
  Date: January 15, 2007

  	
   

  

 

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