Document:

<PAGE>
                                                               EXHIBIT 10.13

                             PURCHASE AND SALE AGREEMENT

                                       BETWEEN

                        WHLW REAL ESTATE LIMITED PARTNERSHIP

                                     AS SELLER,

                                        AND

                            NATROL REAL ESTATE II, INC.

                                    AS PURCHASER

                             DATED: NOVEMBER 22, 1999

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                                       TABLE OF CONTENTS
                                       -----------------

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                                                                         Page
<S>         <C>                                                         <C>
Section 1.  Agreement of Purchase and Sale................................1
Section 2.  The Purchase Price............................................2
Section 3.  Inspection Period; Certain Termination Provisions.............3
Section 4.  Title and Contracts...........................................6
Section 5.  Closing Date.................................................10
Section 6.  "AS IS, WHERE IS AND WITH ALL FAULTS"........................10
Section 7.  Satisfaction of Liens........................................13
Section 8.  Violations...................................................13
Section 9.  Representations, Warranties and Covenants....................13
Section 10. Operation of Property to Closing.............................16
Section 11. Closing Documents............................................16
Section 12. Prorations and Costs.........................................18
Section 13. Brokerage....................................................20
Section 14. Notices......................................................20
Section 15. Damage or Destruction Prior to Closing and Condemnation......21
Section 16. Reporting Requirements.......................................21
Section 17. Miscellaneous................................................22
Section 18. Confidentiality..............................................24
</TABLE>

<TABLE>
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EXHIBITS                                                             Page
--------
<S>         <C>                                                      <C>
EXHIBIT A - Description of Land......................................A-1
EXHIBIT B - Assignment and Assumption of Leases......................B-1
EXHIBIT C - [Intentionally omitted]..................................C-1
EXHIBIT D - Assignment of Warranties, Permits, Contracts
            and General Intangibles..................................D-1
EXHIBIT E - Purchaser's AS-IS Certificate............................E-1
EXHIBIT F - Natural Hazard Disclosure Statement......................F-1
EXHIBIT G - Grant Deed...............................................G-1
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<TABLE>
<CAPTION>

SCHEDULES
<S>             <C>
SCHEDULE 1     - Disclosure Items
SCHEDULE 1.3   - Personal Property
SCHEDULE 1.5   - Schedule of Leases
SCHEDULE 1.7   - Property Contracts
SCHEDULE 9.1.4 - List of Material Contracts
</TABLE>

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                                  PURCHASE AND SALE AGREEMENT
                                  ---------------------------

        PURCHASE AND SALE AGREEMENT ("Agreement") made this 22nd day of
November, 1999 ("Agreement Date") between the Seller identified as such on
the execution page hereof ("Seller") and the Purchaser identified as such on
the execution page hereof ("Purchaser").

                                    W I T N E S S E T H:
                                    -------------------

         WHEREAS, Purchaser desires to acquire and Seller desires to sell all
of Seller's right, title and interest in and to the industrial building more
particularly described on EXHIBIT A attached hereto.

         NOW, THEREFORE, in consideration of Ten and no/100 ($10.00) Dollars
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and the mutual covenants and undertakings of the
parties set forth herein, the Seller and Purchaser agree as follows:

    SECTION 1.  AGREEMENT OF PURCHASE AND SALE

    Seller hereby agrees to sell and convey and Purchaser agrees to purchase
on the terms and conditions herein set forth, all of Seller's right, title
and interest in and to the following:

         1.1  The fee simple estate in and to the land described in EXHIBIT A
attached hereto (the "Land") together with the office building and all other
improvements located thereon ("Improvements"), together with all air rights,
water rights, mineral rights, rights of way, easements, appurtenances and
hereditaments appertaining thereto.  The Land and Improvements are herein
referred to as the "Property";

         1.2  All machinery, apparatus, equipment, fittings and fixtures in
or on the Property or which are attached thereto but excluding any such items
to the extent owned by tenants or other third parties ("Fixtures");

         1.3  All of the personal property located in or on the Property
including, without limitation, the property listed on SCHEDULE 1.3 attached
hereto but specifically excluding the personal property in Seller's
management office on the Property and the personal property owned by tenants
("Personal Property");

         1.4  All rights, if any, to general intangibles relating to the
Property (including, without limitation, any name or trade name used in
connection with the Improvements), but excluding the names or tradenames
Lincoln Property Company, Legacy Partners, Whitehall Street Real Estate
Limited Partnership, Lincoln-Whitehall, Lincoln-Whitehall Pacific, WHLW Real
Estate

                                       1

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Limited Partnership ("WHLW") or any abbreviations or derivations of any of
the foregoing and related names and proprietary computer equipment, software
and systems);

         1.5  The interest of Seller, as landlord, in the occupancy leasehold
estates created by those certain leases, tenancies and rental agreements and
all amendments thereto or assignments thereof that are described in the
Schedule of Leases attached hereto as SCHEDULE 1.5 (hereto collectively
referred to as the "Leases");

         1.6  All assignable warranties and guaranties, if any, issued in
connection with the Property (collectively, the "Assignable Warranties");

         1.7  Any transferable consents, authorizations, variances or
waivers, licenses, permits and approvals from any governmental or
quasi-governmental agency, department, board, commission, bureau or other
entity or instrumentality relating to the Property (collectively, the
"Permits"); and

         1.8  All written agreements (other than the Leases and the Permitted
Exceptions as hereinbelow defined and the management and leasing agreement
with Legacy Partners Commercial, Inc. (formerly known as Lincoln Property
Company N.C., Inc. and LPC MS, Inc.) which shall be cancelled at Closing at
no cost to Purchaser), to which Seller is a party and which affect the
Property ("Contracts"), a schedule of which is attached hereto as SCHEDULE 1.7.

         Except as herein otherwise specifically provided, it is intended
that Seller shall transfer to Purchaser all of Seller's right, title and
interest of every kind or nature in the Property, the Fixtures, the Leases,
the Personal Property, the Assignable Warranties, the Permits, Contracts and
all other interests of Seller in and to the Property (collectively, the
"Project").

    SECTION 2.  THE PURCHASE PRICE

    The purchase price (the "Purchase Price") for the Project is Seven
Million One Hundred Seventy-two Thousand Two Hundred Ninety-four Dollars
($7,172,294) to be paid as follows:

         2.1  One Hundred Thousand Dollars ($100,000) (the "Deposit") shall
be paid by Purchaser on the same day as the execution hereof, which amount
shall, subject to collection, be held in escrow by Fidelity National Title
Insurance Company (hereinafter referred to as "Escrow Agent" or "Title
Insurer").  The Deposit shall be held in an interest bearing account
reasonably acceptable to the parties and all interest on the Deposit shall
become part of the Deposit.  The Deposit and interest earned thereon shall be
fully refundable to Purchaser until 5:00 p.m. (Pacific Time) on November 30,
1999 (the "Conditions Period").  For purposes hereof, the last day of the
Conditions Period shall mean and be referred to herein as the "Approval
Date".  If Purchaser fails to deliver the Deposit with the Escrow Agent
strictly as and when contemplated herein, Seller shall have the right to
terminate this Agreement by delivering written notice thereof to Purchaser at
any time and thereafter neither party shall have any further rights or
obligations hereunder except for the indemnities contained

                                       2

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in Sections 3.2 and 18 below, Purchaser's covenants made herein which are
expressly intended to survive any such termination and Purchaser's
obligations under Section 3.2(x) below to deliver to Seller the Due Diligence
Materials (defined below) (collectively, "Purchaser's Surviving
Obligations").  If the purchase and sale of the Project is consummated in
accordance with the terms and provisions of this Agreement, then the Deposit
shall be paid to Seller at Closing and credited against the Purchase Price.
In all other events, the Deposit shall be disposed of by the Escrow Agent as
provided herein.

         2.2  The balance of the Purchase Price shall be paid on Closing,
plus or minus prorations and adjustments to be made pursuant to this
Agreement, in good immediately available United States funds.  The balance of
the Purchase Price shall be wire transferred into escrow and Escrow Agent
shall receive confirmation of receipt thereof no later than 9:00 a.m.
(Pacific Time) on the date of Closing.

    SECTION 3.  INSPECTION PERIOD; CERTAIN TERMINATION PROVISIONS

         3.1  Purchaser's obligations under this Agreement shall be subject
to the satisfaction of or waiver by Purchaser of the following described
matters (collectively, the "Pre-Closing Conditions") on or before the earlier
of (i) the time periods specified in each subsection below, or (ii) 5:00
p.m. (Pacific Time) on the Approval Date:

              3.1.1  PHYSICAL INSPECTIONS.  Within five (5) business days
after the Agreement Date, but only to the extent the same is actually in
Seller's possession and has not already been delivered to Purchaser by Seller
prior to the Agreement Date, without any warranty or representation as to the
accuracy or thoroughness thereof or to the ability of Purchaser to rely
thereon, Seller shall deliver to Purchaser a true and complete copy of the
most recent environmental site assessment report(s) with respect to an
evaluation of Hazardous Materials (defined below) in, on or under the
Property.  After Purchaser has provided to Seller a certificate of
insurance(s) evidencing Purchaser's or Purchaser's agents', consultants'
and/or contractors' (as the case may be) procurement of a commercial general
liability insurance policy as required herein, Seller shall permit Purchaser
and its authorized agents, consultants and contractors to enter upon the
Property during reasonable business hours (provided, Purchaser shall not
interfere with or disturb any tenants' operations therein or Seller's
operation of the Property)to make and perform such environmental evaluations,
and other inspections and investigations of the physical condition of the
Property.  Purchaser shall maintain, and shall ensure that its agents,
consultants and contractors maintain, public liability and property damage
insurance insuring against any liability arising out of any entry, tests or
investigations of the Property pursuant to the provisions hereof.
Notwithstanding the foregoing, Purchaser shall not be permitted to undertake
any intrusive or destructive testing of the Property, including without
limitation a "Phase II" environmental assessment, without in each instance
first obtaining Seller's written consent thereto, which consent Seller may give
or withhold in Seller's sole and absolute discretion.  Prior to entering the
Property (and on each and every occasion), Purchaser shall deliver to Seller
prior written notice thereof [or verbal notice

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wherein Purchaser actually speaks with a representative of Seller (not a
voicemail message) with written notice delivered immediately thereafter, if
requested at such time], and shall afford Seller a reasonable opportunity to
have a representative of Seller present to accompany Purchaser while Purchaser
performs its evaluations, inspections, tests and other investigations of the
physical condition of the Property.  Prior to any entry to perform any
necessary on-site inspections, tests or investigations, Purchaser shall give
Seller written notice thereof [or verbal notice wherein Purchaser actually
speaks with a representative of Seller (not a voicemail message) with written
notice delivered immediately thereafter, if requested at such time],
including the identity of the company or party(s) who will perform such
inspections, tests or investigations and the proposed scope of the inspections,
tests or investigations. Seller shall approve or disapprove any proposed
inspections, tests or investigations and the party(s) performing the same within
two (2) business days after receipt of such notice. Seller's failure to advise
Purchaser of its disapproval of any proposed inspections, tests or
investigations and the party(s) performing the same within such two (2)
business day period shall be deemed Seller's approval thereof, except to the
extent said proposed inspections, tests or investigations relate to "Phase
II" environmental matters, in which event Seller's failure to advise
Purchaser of its approval or disapproval of any proposed environmental
inspections, tests or investigations and the party(s) performing the same
within such two (2) business day period shall be deemed Seller's disapproval
thereof.  Upon request, Purchaser shall promptly deliver to Seller copies of
any reports relating to any inspections, tests or investigations of the
Property performed by or on behalf of Purchaser.  Prior to Purchaser
contacting any of the tenants, Purchaser shall give Seller written notice
thereof, including the identity of the company or persons who will perform
any tenant interview or contacts.  Seller or its representative(s) may be
present at any such interview or meeting with any of the tenants and
Purchaser will reasonably cooperate and coordinate with Seller to effectuate
same.  Purchaser shall have until 5:00 p.m. (Pacific Time) on the Approval
Date to notify Seller in writing of its approval or disapproval of any such
evaluations, inspections and investigations.

              3.1.2  PLANS, PERMITS, REPORTS AND RELATED INFORMATION.  Within
five (5) business days after the Agreement Date, but only to the extent the
same is actually in Seller's possession and has not already been delivered to
Purchaser by Seller prior to the Agreement Date, Seller will deliver to
Purchaser a true and complete copy of (a) property tax bills for the two (2)
most recent tax fiscal years; (b) without any warranty or representation as
to the accuracy thereof or to the ability of Purchaser to rely thereon, soils
reports, ADA reports, as-built plans and specifications, drawings, and
structural or engineering studies or reports; and (c) without any warranty or
representation as to the accuracy thereof or to the ability of Purchaser to
rely thereon, a copy of any existing survey(s) of the Property.  Purchaser
shall have until 5:00 p.m. (Pacific Time) on the Approval Date to notify
Seller in writing of its disapproval of any such matters.  In no event shall
Seller be required to prepare or obtain any information, report, document or
survey not presently in Seller's possession.

              3.1.3  LEASES AND FINANCIAL INFORMATION.  Within five (5)
business days after the Agreement Date, but only to the extent the same is
actually in Seller's or its property manager's possession and has not already
been delivered to Purchaser by Seller prior to the Agreement Date, Seller
will deliver to Purchaser or otherwise make available to Purchaser at Seller's

                                        4

<PAGE>

property management company's offices during normal business hours for
inspection by Purchaser, the following described documents and information:
(i) a copy of the existing Leases, if any, together with any amendments or
modifications thereof affecting any portion of the Property, and any
correspondence with the tenants of the Property of a material nature; (ii) a
current rent roll for the Property, in the format customarily used by Seller,
with the information contained therein made as of the Agreement Date; (iii) a
copy of project operating reports, in the format and for the time periods
customarily prepared by Seller; and (iv) a copy of CAM reconciliations and
year-end financial statements for the Property for the two (2) most recent
full calendar years prior to the Closing and to the extent available, the
current year.  Purchaser shall until 5:00 p.m. (Pacific Time) on the
Approval Date to notify Seller in writing, of its approval or disapproval of
the Leases and the financial information; provided, however, in no event
shall Seller be required to modify, terminate or otherwise supplement any of
the Leases.  Seller shall assign its rights and interests in and to the
Leases and all security deposit(s), if any, then  being held by Seller to
Purchaser at the Closing pursuant to the Assignment and Assumption of Leases
in substantially the form attached hereto as EXHIBIT B, and made a part
hereof.

              3.1.4  ECONOMIC FEASIBILITY.  Purchaser's determination, in its
sole and absolute discretion, of the economic feasibility of the Property for
Purchaser's intended ownership.

              3.1.5  NATURAL HAZARD DISCLOSURE STATEMENT.  By the date which
is two (2) business days prior to the Approval Date, Seller shall have
executed and delivered to Purchaser a Natural Hazard Disclosure Statement, as
and to the extent prescribed by California law, in substantially the form of
EXHIBIT F attached hereto and made a part hereof (the "NHDS").

    3.2  Any due diligence conducted by Purchaser, whether prior to or after
the execution and delivery of this Agreement, shall be at the sole cost and
expense of the Purchaser.  Purchaser shall be fully responsible to Seller for
all of the acts and/or omissions of Purchaser, its employees, agents and
representatives on or affecting the Project in the course of any such
inspections or assessments.  In connection with any such due diligence
activities, whether conducted prior to or after the date of this Agreement,
Purchaser (i) shall indemnify, defend and hold Seller harmless from and
against all costs, expenses, losses, claims, damages and/or liabilities
relating to any physical damage or personal injury or death resulting from
Purchaser's inspection of the Property, provided Purchaser shall not be
liable to Seller solely as a result of the discovery by Purchaser of a
preexisting condition on the Property; (ii) shall promptly repair any damage
resulting from any such inspections; (iii) shall fully comply with all laws,
ordinances, rules and regulations in connection with such inspections; (iv)
shall conduct its activities in a manner to minimize any disturbance to
Seller, its employee and others; (v) shall not contact any governmental
agencies without the prior written consent of Seller (which consent shall not
be unreasonably withheld or delayed) and shall permit a representative of
Seller to accompany Purchaser on any interviews with governmental agencies;
(vi) shall not permit any inspections, investigations or other due diligence
activities to result in any liens, judgments or other encumbrances being
filed against the Property and shall, at its sole cost and expense, promptly
discharge of record any such liens or encumbrances that are so filed or
recorded; (vii) shall not permit any borings, drillings or samplings to be
done on or at the Property without the prior written consent of Seller;
(viii) shall, promptly following the

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termination of this Agreement, provide Seller with copies of inspection
reports and studies prepared by third parties in connection with Purchaser's
inspection and due diligence, provided Purchaser makes no warranty or
representation as to the accuracy or thoroughness of the reports or studies
and Seller shall not be entitled to rely thereon;(ix) shall maintain, with
insurance companies satisfactory to Seller, a policy of comprehensive
general public liability insurance, with a broad form contractual liability
endorsement covering Purchaser's indemnification obligations hereunder, and
with a combined single limit of not less than $1,000,000 per occurrence for
bodily injury and property damage, automobile liability coverage including
owned and hired vehicles with a combined single limit of $1,000,000 per
occurrence for bodily injury and property damage, and an excess umbrella
liability policy for bodily injury and property damage in the amount of
$5,000,000, insuring Seller and its manager (and their successors, assigns
and affiliates) as additional insureds (certificates of which shall be
given to Seller prior to the first entry by Purchaser on the Property), all
of which insurance shall be written on an "occurrence form", shall contain a
cross-liability provision and a provision that the insurance provided by
Purchaser hereunder shall be primary and non-contributing with any other
insurance available to Seller, and (x) shall return to Seller all materials
with respect to the Property provided to Purchaser by Seller if Purchaser
fails to acquire the Property for any reason.  Such insurance shall apply
exclusively to any costs, expenses, losses, claims, damages and/or liabilities
incurred by Seller as a direct or indirect result of any act or omission by
Purchaser or any of Purchaser's agents, consultants and/or contractors on or
about the Property.  The provisions of this paragraph shall survive the
termination of this Agreement.

         3.3  In the event that this Agreement terminates pursuant to any
other Section of this Agreement which refers to this Section 3.3, (a)
Purchaser shall receive a full refund of the Deposit, together with all
interest actually earned thereon and (b) except for obligations that this
Agreement expressly states survive termination, neither party shall have any
further rights or claims or liabilities towards the other.

    SECTION 4.  TITLE AND CONTRACTS

         4.1  Purchaser shall accept title to the Property if Title Insurer
(as hereinafter defined) will insure the Property subject only to the
Permitted Exceptions (as hereinafter defined).

              4.1.1  Seller has ordered a preliminary title report ("Title
Report") to be issued by the Title Insurer and Seller has delivered to
Purchaser the Title Report.  All exceptions to title and other matters
appearing on the Title Report (other than any such exceptions described in
the second sentence of Section 4.1.2 hereof)  shall constitute "Permitted
Exceptions" for purposes of this Agreement.  In the event the Title Insurer
amends or updates the Title Report ("Title Report Update") after the date on
which the Purchaser posts the Deposit, Purchaser shall furnish Seller with a
statement of objections, if any, to the title to the Property to any matter
first raised in the Title Report Update ("Objections") within three (3)
business days after its receipt of the Title Report Update ("Title Update
Review Period").  Should Purchaser fail so to timely notify Seller of any
such Objections to title to the Property which are first disclosed in a
Title Report Update, Purchaser shall

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be deemed to have agreed to accept title subject to all matters of record.
All title matters and exceptions (i) arising out of the Leases including,
without limitation, new Leases or amendments to Leases entered into pursuant
to the terms hereof, or (ii) set forth in the Title Report, in any Title
Report Update which are not Objections that Seller agrees to satisfy pursuant
to Sections 4.1.2 and 4.2 hereof, and all title matters and exceptions which
are waived or deemed to be waived are hereafter referred to as the "Permitted
Exceptions".  In no event shall the provisions of this Section be deemed to
extend the Closing Date (it being understood and agreed that the failure by
the Purchaser to notify Seller of any Objections as set forth above or to
terminate this Agreement as set forth in Section 4.3 below by the Approval
Date shall be deemed to be a waiver of all Objections that the Seller has not
agreed to cure prior to the Approval Date or that the Seller is not obligated
to cure pursuant to the second sentence of Section 4.1.2 and that, in the
event purchaser does not timely notify Seller of Objections or terminate this
Agreement, all such Objections shall be deemed to be "Permitted Exceptions"
for all purposes of this Agreement).

              4.1.2  If Purchaser notifies Seller within the Title Update
Review Period, if applicable, of any Objections first raised in the Title
Report Update, then within five (5) days after Seller's receipt of
Purchaser's notice ("Seller Response Period"), Seller shall notify Purchaser
("Seller's Title Notice") of the Objections which Seller agrees to satisfy on
or prior to the Closing, at Seller's sole cost and expense, and of the
Objections that Seller cannot or will not satisfy.  Notwithstanding the
foregoing sentence, Seller shall, in any event, be obligated to cure those
Objections (i) that are monetary liens or security interests against the
Project other than taxes and assessments not yet delinquent or (ii) that have
been voluntarily placed against the Property by Seller after the date hereof
and that are not otherwise permitted pursuant to the provisions hereof.  If
Seller (a) delivers Seller's Title Notice stating that Seller cannot or will
not satisfy any such Objections first raised in the Title Report update or
(b) fails to send the Seller's Title Notice within the Seller Response
Period, then Purchaser has the option on or prior to the date that is two (2)
days after the delivery by the Seller of the Seller's Title Notice of either
(i) terminating this Agreement by delivering written notice thereof to Seller
in which event it shall be deemed that Purchaser terminated this Agreement
pursuant to Section 3.3 hereof and the rights of the parties shall be as set
forth therein or (ii) it shall be deemed to have waived such Objections, in
which event those Objections shall become "Permitted Exceptions".

              4.1.3  It is a condition to Purchaser's obligations to close
that provided Purchaser shall meet the requirements of the Title Insurer and
comply with its obligations under this Agreement including, without
limitation, to pay the Purchase Price, the Title Insurer shall issue a
standard American Land Title Association Owners Title Policy (on their
current form but deleting the creditors' rights exception) (the "Title
Policy") to Purchaser in the amount of the Purchase Price, insuring that
Purchaser has good and indefeasible fee simple title to the Property, subject
only to the Permitted Exceptions. Purchaser will pay for the Title Policy
which shall include (a) limiting the standard parties in possession exception
to the rights of other parties in possession under the Leases shown on
SCHEDULE 1.5 as same may be revised pursuant to the terms hereof, as tenants
only, and (b) deleting any general mechanic's lien exception.  The Title
Policy shall contain such endorsements as reasonably required by Purchaser,
provided that Seller shall have no obligation to take any action or provide
any indemnity or agreement to Title Insurer to support the issuance of such
endorsements, and Purchaser shall pay the costs for all such endorsements.

                                       7

<PAGE>

              4.1.4  In the event that Seller shall be unable to convey title
to the Property as herein provided, Purchaser shall, at its election, either
(a) accept such title as Seller is able to convey without abatement or
reduction of the Purchase Price or any credit or allowance on account
thereof; or (b) terminate this Agreement.  Upon such termination, the rights
of the parties shall be as set forth in Section 3.3 hereof.  Seller shall
have no obligation or liability to Purchaser for any damages or other
compensation which Purchaser may have sustained by reason of Seller's
inability to convey title in accordance with the terms of this Agreement.
Notwithstanding anything to the contrary herein contained, Seller shall not
be required to bring any action or proceeding or take any other steps to
remove any defects in or objections to title or to expend any monies
therefor, nor shall Purchaser have any right of action against Seller
therefor at law or in equity for damages or specific performance for Seller's
inability to convey title in accordance with the terms of this Agreement,
provided, however, the Seller shall satisfy any mortgage or other lien which
may be satisfied by payment of a sum of money only, except for the liens for
taxes and assessments not yet delinquent, and Seller shall remove at Closing
any exceptions to title the Property created by the intentional acts of
Seller after the date hereof which are in breach of this Agreement.  In the
event the Property is encumbered by any mortgage or other liens which may be
satisfied by a sum of money only, except for the liens for taxes and
assessments not yet delinquent, and which is not a Permitted Exception,
Purchaser shall have the right, at the time of Closing, to apply a portion
of the Purchase Price towards the payment and satisfaction of such mortgage
or other liens and receive a credit against the Purchase Price for the
amount so applied.  Seller shall, however, have the right at its option, to
remedy any title defects or objections and for such purpose shall be entitled
to one or more adjournments of the Closing, but not for more than fifteen
(15) days beyond the date Purchaser gives written notice of such defect or
objection.  Purchaser's obligations shall remain in full force and effect in
the meantime.

    4.2  Within five (5) business days after the Agreement Date, but only to
the extent the same is actually in Seller's possession, Seller will deliver
to Purchaser a copy of all service agreements,  commission agreements,
maintenance agreements, easement agreements, improvement agreements,
license agreements, and other agreements related to or affecting the
Property and not included as part of the title documents delivered pursuant
to Section 4.1.1 hereof (collectively, the "Contracts").  Purchaser shall
have until 5:00 p.m. Pacific Time on November 24, 1999, to either approve of
any such Contracts, or to notify Seller in writing, specifying any Contracts
which Purchaser desires be terminated on or before the Closing, and which, by
their express terms, may be terminated on or before the Closing, (the
"Disapproved Contracts"); provied, however, in no event shall Seller be
required to terminate any Contracts which by their terms are not terminable
prior to the Closing or otherwise not terminable without payment by Seller of
a penalty, charge or premium. Seller shall have until 5:00 p.m. Pacific Time
on November 29, 1999, to notify Purchaser, in writing, of its agreement to
lawfully terminate such Disapproved Contracts prior to the Closing, with such
Disapproved Contracts being terminated effective on or before the Closing.
Those Contracts not expressly disapproved by Purchaser (collectively, the
"Approved Contracts") shall be assigned by Seller to Purchaser at the
Closing. Seller shall assign its rights and interests under the Approved
Contracts to Purchaser at the Closing pursuant to the Assignment and
Assumption of Contracts, Warranties and Permits in substantially the form
attached hereto as EXHIBIT D, and made a part hereof. Failure by Seller to
agree to so terminate some or all of the Disapproved Contracts within

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the specified period shall be deemed to be a failure of this condition,
unless Purchaser withdraws its disapproval or rejection, in writing, prior to
the 5:00 p.m. (Pacific Time) on the Approval Date.

     4.3     FAILURE OF CONDITIONS. In the event that any or all of the
Pre-Closing Conditions and/or the conditions set forth in this Section 4 are
not satisfied or waived within the applicable time periods specified above,
then Purchaser may terminate this Agreement by delivering written notice
thereof to Seller on or before the expiration of said time periods. If
Purchaser so elects to terminate this Agreement, the Deposit shall be
returned to Purchaser and neither Purchaser nor Seller shall have any further
liability or obligation to each other, except for the indemnities contained
in Sections 3.2 and 18. Notwithstanding anything to the contrary contained
herein, if Purchaser terminates this Agreement for failure of a Pre-Closing
Condition or for any other reason. Purchaser shall deliver to Seller a copy
of all materials, tests, audits, surveys, reports, studies and the results of
any and all investigations and inspections conducted by Purchaser (excluding
any proprietary materials) (collectively, the "Purchaser's Documents") and
Purchaser shall also return to Seller any and all documents, leases,
agreements, reports and other materials given to Purchaser by or on behalf of
Seller (collectively, the "Seller's Documents") (the Purchaser's Documents
and the Seller's Documents are collectively referred to herein as the "Due
Diligence Materials") within ten (10) days after such termination of this
Agreement. The foregoing covenants of Purchaser shall survive any such
termination of this Agreement. If Purchaser fails to terminate this Agreement
by delivering written notice thereof to Seller prior to 5:00 p.m. (Pacific
Time) on the Approval Date the Deposit shall become non-refundable to
Purchaser. If the Pre-Closing Conditions and the conditions set forth in this
Section 4 are satisfied or waived by Purchaser but any or all of the
Purchaser's Closing Conditions are not satisfied or waived by Purchaser on or
before the date established for the Closing, then Purchaser shall notify
Seller in writing of those Purchaser's Closing Conditions which have not been
satisfied or otherwise waived by Purchaser (the "Purchaser's Closing
Conditions Failure Notice"). Seller shall have three (3) business days after
Purchaser has delivered to Seller the Purchaser's Closing Conditions Failure
Notice (and the Closing shall be extended, if necessary to give Seller such
three (3) business day period) to notify Purchaser in writing of Seller's
election either to (a) take such actions as may be necessary to cure such
matters to Purchaser's reasonable satisfaction prior to the date of Closing
(as same may be extended), or (b) advise Purchaser that Seller will not cure
such matters (the "Seller's Conditions Notice"). If Seller elects not to cure
such matters, then within two (2) business days after Purchaser's receipt of
the Seller's Conditions Notice (and the Closing shall be extended, if
necessary to give Purchaser such two (2) business day period), Purchaser, at
its sole option, may elect to do any of the following: (1) Purchaser may
elect to terminate this Agreement by delivering written notice thereof to
Seller, in which event Seller shall promptly cause the return to Purchaser of
the Deposit, and the parties shall have no further obligations hereunder
except for Purchaser's Surviving Obligations; or (2) Purchaser may elect to
waive the Purchaser's Closing Condition(s) in question and proceed with the
purchase of the Property. If Purchaser elects to terminate the Agreement,
neither party shall have any further liability or obligation hereunder except
for Purchaser's Surviving Obligations. If Seller elects to cure such matters
as set forth in the Purchaser's Closing Conditions Failure Notice, Seller
shall promptly take any and all actions as may be necessary to cure same and
the date of the Closing may be extended for a period of time reasonably
acceptable to both Seller and Purchaser to enable Seller to accomplish same.
Failure by Purchaser to notify Seller within the specified time periods set
forth herein, shall be deemed an approval by Purchaser of each such matter,
in which event all such conditions and contingencies shall be conclusively
deemed to be satisfied and approved. If any of the Seller's Closing

                                       9
<PAGE>

Conditions are not satisfied or otherwise waived by Seller prior to the
Closing Date, Seller may elect, in its sole and absolute discretion, to
terminate this Agreement.

     SECTION 5.     CLOSING DATE

     The sale contemplated by this Agreement shall be consummated and closed
at 8:00 a.m. (Pacific Time) on December 15, 1999 ("Closing Date") at the
offices of the Title Insurer (or its agent), or at such earlier time or
other place as the parties shall mutually agree. TIME SHALL BE OF THE ESSENCE
WITH RESPECT TO PURCHASER'S and SELLER'S OBLIGATION TO CLOSE ON THE CLOSING
DATE subject, however, to Seller's rights to adjourn the Closing Date
expressly set forth in this Agreement. The consummation and the closing of
the purchase and sale of Project as contemplated by this Agreement,
including, without limitation, the recordation of the grant deed, is herein
referred to as the "Closing".

     Seller's obligation to sell the Property is conditioned upon the
satisfaction (or Seller's written waiver) on or prior to the Closing Date of
the following conditions:

                    (i)     There shall exist on the Closing Date no pending
                            order or decree from any governmental authority or
                            entity prohibiting, enjoining or restraining
                            Purchaser from consummating the transactions
                            contemplated hereby with respect to the Property;

                    (ii)    Purchaser shall have paid to Seller in cash the
                            balance of the Purchase Price;

                    (iii)   The Purchaser shall have a signed a Natural Hazard
                            Disclosure Statement, substantially in the form of
                            EXHIBIT F, which shall serve to acknowledge
                            Purchaser's receipt from the Seller of such
                            Natural Hazard Disclosure Statement and the
                            Purchaser's understanding thereof; and

                    (iv)    Purchaser shall not otherwise be in material
                            default of its obligations hereunder.

     SECTION 6.     "AS IS, WHERE IS AND WITH ALL FAULTS"

                    6.1     The Purchaser has made, and shall make, such
investigations and inspections of the Project and the books and records
relating thereto to satisfy itself as to all matters relating to its
purchase of the Project and Purchaser shall purchase the Project in "AS IS,
WHERE IS AND WITH ALL FAULTS" condition, at the date hereof, subject to
normal wear and tear until Closing (consistent with Seller's obligations in
Section 10 hereof) and subject to casualty damage as herein provided.

                                      10

<PAGE>

     This Agreement and the Exhibits and Schedules attached hereto contain
all the terms of the agreement entered into between the parties, and
Purchaser acknowledges that neither Seller nor any representatives of Seller
has made any representations or held out any inducements to Purchaser, other
than those herein expressed. Without limiting the generality of the
foregoing Purchaser has not relied on any representations or warranties and
neither Seller nor its representatives has made any representations or
warranties other than as expressly set forth herein, in either case express
or implied, as to (i) the current or future real estate tax liability,
assessment or valuation of the Property; (ii) the potential qualification of
the Property for any and all benefits conferred by federal, state or
municipal laws, whether for subsidies, special real estate tax treatment,
insurance, mortgages, or any other benefits, whether similar or dissimilar to
those enumerated; (iii) the compliance of the Property, in its current or any
future state, with applicable zoning ordinances and the ability to obtain a
change in the zoning or a variance in respect to the Property's
non-compliance, if any, with said zoning ordinances; (iv) the availability of
any financing for the purchase, alteration, rehabilitation or operation of
the Property from any source, including but not limited to, state, city, or
federal government or any institutional lender; (v) the current or future use
of the Property; (vi) except as set forth in, and subject to the limitations
set forth in, the NHDS, whether any Real Property lies within a special flood
hazard area, regulated wetlands, an area of potential flooding, a very high
hazard severity zone, a wildland fire area, an earthquake fault zone or a
seismic hazard zone; or (vii) the physical condition of the Property
including, without limitation, any environmental conditions (including,
without limitation, the presence of asbestos or other hazardous materials)
which may exist.

     Without limiting the above, and subject to the limitation expressly set
forth in the third to last paragraph of this Section 6.1, the Purchaser, on
behalf of itself and its respective agents, present and former officers,
directors, shareholders, partners, employees, parent and subsidiary
affiliates, predecessors, affiliates, related entities, successors,
subrogees, and assigns, and anyone acting in concert with or claiming rights
derivative of any of them (collectively, the "Purchaser Parties"), waives its
right to recover from, and forever releases and discharges, and covenants not
to sue each of Seller and Lincoln-Whitehall Pacific, L.L.C.
("Lincoln-Whitehall"), and its respective direct and indirect owners,
partners, members, property management company (including the general
partners, officers, directors, members, shareholders, employees or agents
thereof), principals, officers, directors, trustees, beneficiaries, agents,
predecessors, servants, employees, successors, assigns, heirs,
administrators, attorneys, subsidiaries, affiliated companies, insurance
carriers, representatives and adjusters, and all other persons, corporations,
or associations related to or acting in conjunction with, Seller or
Lincoln-Whitehall (each a "Seller Party" and collectively, the "Seller
Parties") from any and all Claims (as hereinafter defined) arising from or
relating to the physical condition of the Property, the lease or occupation
by the tenants of the Property or any law or regulation applicable thereto,
including, without limitation, the future assumption of responsibility for the
presence or alleged presence of asbestos or harmful, hazardous or toxic
substances in, on, under or about the Property, including, without limitation,
any claims under or on account of (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as the same may have been
or may be amended from time to time, and similar state statutes, and any rules
and regulations promulgated thereunder, (ii) any other federal, state or
local law, ordinance, rules or regulation, now or hereafter in effect, that
deals with or otherwise in any manner relates to, environmental or health
and safety matters of any kind, or (iii) this Agreement or the common law.

                                      11

<PAGE>

     In furtherance of the releases set forth in this section, Purchaser (for
itself and on behalf of the Purchaser Parties) hereby expressly waives to the
maximum extent legally permissible any and all rights or benefits conferred
by any law that is inconsistent with the waiver and release contained in this
Section 6.1 and expressly consents that each such waiver and release shall be
given full force and effect according to each and all of its express terms
and conditions, including, without limitation, those relating to unknown and
unsuspected Claims (as hereinafter defined), if any, as well as those
relating to any other Claims set forth herein.

     THE PURCHASER ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER CLAIMS OR FACTS
IN ADDITION TO OR DIFFERENT FROM THOSE WHICH IT NOW KNOWS OR BELIEVES TO
EXIST WITH RESPECT TO THE SUBJECT MATTER OF THE RELEASES AND WHICH, IF KNOWN
OR SUSPECTED AT THE TIME OF EXECUTING THIS AGREEMENT, MAY HAVE MATERIALLY
AFFECTED THE RELEASES. NEVERTHELESS, THE PURCHASER (FOR ITSELF AND ON BEHALF
OF THE PURCHASER PARTIES) HEREBY WAIVES ANY RIGHT, CLAIM OR CAUSE OF ACTION
THAT MIGHT ARISE AS A RESULT OF SUCH DIFFERENT OR ADDITIONAL CLAIM OF FACTS.
THE PURCHASER ACKNOWLEDGES THAT IT UNDERSTANDS THE SIGNIFICANCE AND
CONSEQUENCE OF SUCH RELEASES AND THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL
IN CONNECTION WITH SUCH RELEASES AND SPECIFIC WAIVER.

     IN CONNECTION WITH THE RELEASES CONTAINED HEREIN, THE PURCHASER (FOR
ITSELF AND ON BEHALF OF THE PURCHASER PARTIES) EXPRESSLY WAIVES THE BENEFITS
OF SECTION 1542 OF THE CALIFORNIA CIVIL CODE, WHICH PROVIDES AS FOLLOWS: "A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR."

               INITIALS OF SELLER. [ILLEGIBLE] INITIALS OF PURCHASER
---------------                    ----------

     As used in this Agreement, "Claims" mean any claim, demand, lien,
agreement, contract, covenant, action, suit, cause of action (whether based
on statutory or common law theories), obligation, loss, cost, expense
(including, without limitation, reasonable attorneys' fees (whether or not
litigation is commenced), penalty, damages, order or other liability, of any
kind whatsoever, whether at law or in equity, fixed or contingent, known or
unknown, and whether accruing prior to the date hereof, now or in the future.

     The provisions of this Section 6 shall survive the Closing and
conveyance of title to the Property.

                                      12

<PAGE>

     SECTION 7.     SATISFACTION OF LIENS

     If on the Closing there are any monetary liens or encumbrances on the
Property which Seller is obligated to pay and discharge, Seller may use or
instruct the Title Insurer to use any cash portion of the Purchase Price for
the Property to satisfy the same, provided that Seller shall have delivered
to Purchaser or the Title Insurer on or before the Closing, instruments in
recordable form sufficient to satisfy such liens and encumbrances of record,
together with the cost of recording or filing said instruments. The existence
of any such liens or encumbrances shall not be deemed objections to title if
Seller shall comply with the foregoing requirements and shall cause each of
such liens and encumbrances to be discharged at or prior to Closing or cause
the Title Insurer to insure against collection of the same out of the
Property, which insurance against collection shall be subject to Purchaser's
consent not to be unreasonably withheld. Nothing herein shall be deemed to
modify the provisions of Section 4.1 of this Agreement.

     SECTION 8.     VIOLATIONS

     Seller shall have no obligation or liability with respect to any
violations of any laws, ordinances, statutes, codes, rules or regulations
relating to the Property ("Violations").

     SECTION 9.     REPRESENTATIONS, WARRANTIES AND COVENANTS

             9.1    Subject to the information disclosed or contained in the
Disclosure Items (as defined herein), in the Due Diligence Materials, or in
any third party or other reports or similar documents received or prepared by
Purchaser in connection with its investigation of the Properties, Seller
hereby represents and warrants for the exclusive benefit of Purchaser as of
the date hereof as follows:

                    9.1.1  Seller is duly organized, validly existing and in
good standing under the laws of the State of its organization and is entitled
to and has all requisite power and authority to own and operate its assets as
they are presently owned and operated.

                    9.1.2  The execution of this Agreement by Seller, the
consummation of the transactions herein contemplated, and the execution and
delivery of all documents to be executed and delivered by Seller pursuant
hereto, have been duly authorized by all requisite action on the part of
Seller and this Agreement has been, and all documents to be delivered by
Seller pursuant hereto will be, duly executed and delivered by Seller and is
or will be, as the case may be, binding upon and enforceable against it in
accordance with their respective terms.

                    9.1.3  Neither the execution of this Agreement nor the
carrying out of the transactions contemplated herein will result in any
violation of or be in conflict with the instruments pursuant to which Seller
was organized and/or operates or any applicable law, rule or regulation of
any public, governmental or quasi-governmental agency or authority, or of any
instrument or

                                      13
<PAGE>

agreement to which Seller is a party, nor will it result in the creation or
imposition of any lien on the Property nor will it result in the termination
or the right to terminate any agreement to which Seller is a party or which
affects the Property and no consent or approval of any third party is
required for the execution of this Agreement or the carrying out of the
transactions contemplated herein.

                    9.1.4  Attached hereto as SCHEDULE 9.1.4 is a list of all
material agreements, instruments and understandings (excluding the Leases and
Permitted Exceptions) to which Seller is party and which affect the Property.
The property management agreement with Legacy Partners Commercial, Inc.
(formerly known as Lincoln Property Company N.C., Inc. and LPC MS Inc.) shall
be terminated by Seller on the Closing.

                    9.1.5  Seller is not a foreign person (as defined in
Section 1445 of the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder).

             Except for any material changes made in compliance with Section
10 hereof, if any of the foregoing representations and warranties shall
change in any way which would have a material adverse affect on the Property,
the income derived therefrom, the expenses relating thereto, or the operation
thereof, Purchaser shall have the right to terminate this Agreement within
the shorter of five (5) days of Purchaser's obtaining actual knowledge of any
such change or the time then remaining to Closing. If Purchaser timely
exercises its right to terminate this Agreement it shall be deemed that
Purchaser terminated this Agreement pursuant to Section 3.3 hereof and the
rights of the parties shall be as set forth therein. If Purchaser fails to
timely exercise its right to terminate this Agreement as provided above, this
Agreement shall remain in full force and effect. The provisions of this
Paragraph shall not survive the Closing. For purposes hereof, "material
adverse affect" shall mean a change that in the aggregate would have an
adverse effect on the Property, the income derived therefrom and/or the
expenses related thereto in excess of Fifty Thousand Dollars ($50,000).

             Notwithstanding anything to the contrary contained herein,
Seller makes no representations or warranties with respect to the matters
(the "Disclosure Item") set forth in SCHEDULE 1 attached hereto and made a
part hereof. Notwithstanding anything to the contrary contained herein or in
any document delivered in connection herewith, Seller shall have no liability
with respect to the Disclosure Items.

             9.2    Purchaser hereby warrants and represents for the sole and
exclusive benefit of Seller as follows:

             (a)    Purchaser is, and will continue to be at all times until
the Closing, a California corporation, duly organized and validly existing
in the state of its formation and will at Closing be in good standing under
the laws of the State in which the Project is located. Purchaser is and shall
continue to be entitled to and has and shall continue to have all requisite
power and authority to own and operate its assets as they are presently owned
and operated.

             (b)    The execution of this Agreement by the Purchaser has been
duly authorized by all requisite action on the part of the Purchaser and this
Agreement is binding upon and enforceable against the Purchaser in accordance
with its terms. The consummation of the

                                      14

<PAGE>

transactions contemplated herein and the execution and delivery of all
documents to be executed and delivered by the Purchaser pursuant hereto have
or will (if Purchaser elects to proceed with the transaction in accordance
with this Agreement), prior to the Closing Date, be duly authorized by all
requisite action on the part of the Purchaser and all such documents to be
executed and delivered by the Purchaser pursuant hereto will be duly executed
and delivered by it and will be binding upon and enforceable against the
Purchaser in accordance with their respective terms.

             (c)    Neither the execution of this Agreement nor the carrying
out by the Purchaser of the transactions contemplated herein will result in
any violation of or be in conflict with the Articles of Organization or
By-Laws of the Purchaser, or any applicable law, rule or regulation of any
public, governmental or quasi-governmental agency or authority, or of any
instrument or agreement to which the Purchaser is a party and no consent or
approval of any governmental authority or third party is required for the
execution of this Agreement or the carrying out by Purchaser of the
transactions contemplated herein.

             (d)    Purchaser has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing, of any involuntary petition by Purchaser's creditors,
(iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of Purchaser's assets, (iv) suffered the attachment or
other judicial seizure of all, or substantially all, of Purchaser's assets,
(v) admitted in writing its inability to pay its debts as they come due, or
(vi) made an offer of settlement, extension or composition to its creditors
generally. Purchaser has, and as of the Closing Date will have, sufficient
funds to pay the Purchase Price and consummate the transactions contemplated
by this Agreement.

             (e)    Purchaser (i) is a sophisticated investor, (ii) is
represented by competent counsel, (iii) understands the assumptions of risk
and liability set forth in this Agreement and that, prior to Closing,
Purchaser and its agents will have inspected the Property, fully observed the
physical characteristics and condition of the Property, including without
limitation, the suitability of the topography, the availability of water
rights or utilities, the present and future zoning, subdivision and any and
all other land use matters, the condition of the soil, subsoil or groundwater
of the Property and any and all other environmental matters, the purpose(s) to
which the Property is suited, drainage, flooding, access to public roads, and
proposed routes or roads or extensions relative to the Property, and (iv)
understands that it will have no recourse whatsoever against the Seller or
its Affiliates.

             9.3    The representations and warranties set forth in Section
9.1 and Section 9.2 hereof shall not survive the Closing;  PROVIDED that the
representation contained in Section 9.2(e) shall survive the Closing.
Notwithstanding anything to the contrary contained herein, if prior to the
Closing, Purchaser has actual knowledge that any representation or warranty
of Seller set forth in this Agreement (including, without limitation, any of
the representations and warranties in Section 9.1) is not true, and
nevertheless Purchaser proceeds to close the transaction, then Purchaser
shall be deemed to have irrevocably and unconditionally waived its rights to
assert any claim against Seller after the Closing with respect to any
misrepresentation of which it had actual knowledge prior to the Closing.  For
purposes of this Section 9.3, Purchaser shall be deemed to have actual
knowledge of the contents of the Due Diligence Materials, the Disclosure
Items and all information

                                      15
<PAGE>

specifically delivered to Purchaser or made available to Purchaser.  The
provisions of the preceding sentence shall survive the Closing.

     SECTION 10.  OPERATION OF PROPERTY TO CLOSING

             10.1   From the date hereof until the Closing, or the
termination of this Agreement, whichever shall first occur, (a) Seller shall
continue to operate the Property in the manner in which it presently operates
the Project;  (b) Seller will maintain the existing insurance covering the
Property or if any of such policies is expiring such policies shall be
replaced with new policies containing similar coverage provided the same is
available;  (c) Seller shall not place any mortgage or any other encumbrance
on the Property and Seller will not remove any of the Fixtures unless it
replaces the same with Fixtures of similar quality and (d) Seller will
continue to do routine repairs to the Property in the same manner in which
such repairs are presently made.  If required to comply with its obligations
contained in subdivisions (a) and (d) of the preceding sentence, Seller, to
the extent required by the terms of the Leases, spend up to the aggregate sum
of Ten Thousand Dollars ($10,000) for capital repairs and replacements to the
Property. Notwithstanding anything to the contrary contained herein, Seller
shall not be obligated to make any capital repairs and replacements to the
Property exceeding the aggregate sum of Ten Thousand Dollars ($10,000) in
order to comply with its obligations herein. In the event Seller would need
to make such an expenditure in excess of Ten Thousand Dollars ($10,000) to
comply with the foregoing provisions of subdivision 10.1(a) and (d) of the
first sentence of this Section 10.1 and the terms of the Leases and it shall
be unwilling to do so, then Purchaser shall have the right either (a) to
terminate this Agreement as provided in Section 3.3 hereof as its sole and
exclusive remedy or (b) to close on the acquisition of title to Property and
receive a credit towards the Purchase Price in the amount of Ten Thousand
Dollars ($10,000).

             10.2   Between the date hereof and the Closing, the Seller shall
not enter into any new Contract without the prior written approval of the
Purchaser nor shall it amend, modify, extend or terminate any Contract
without the prior written approval of the Purchaser, unless such amendment,
modification, extension or termination is expressly provided for in the
applicable Contract or unless with respect to the extension or replacement of
a Contract it is on terms generally similar to the existing arrangement and
may be terminated by Purchaser on not more than thirty (30) days' notice
without any penalty.

     SECTION 11.  CLOSING DOCUMENTS

             11.1  At the Closing, Seller shall execute where appropriate and
deliver the following documents to the Title Insurer.

                    11.1.1  a grant deed in the proper form for recording and
meeting the requirements of the Title Insurer;

                                      16
<PAGE>

                    11.1.2  an assignment of Seller's interest in the Leases
in the form of EXHIBIT B attached hereto and made a part hereof together with
the original copies or photocopies of the same (to the extent they are in
writing);

                    11.1.3  an assignment of assignable warranties, permits,
contracts, general intangibles (including, without limitation, trade names,
to the extent provided herein) and other items transferring Seller's right,
title and interest in and to Assignable Warranties, Permits, Contracts and
General Intangibles (including, without limitation, trade names, to the extent
provided herein) if any, in the form of EXHIBIT D attached hereto and made a
part hereof duly executed by Seller;

                    11.1.4  a FIRPTA Affidavit of Seller stating that Seller
is not a foreign person (as defined in Section 1445 of the Internal Revenue
Code of 1986, as amended, and the Regulations promulgated thereunder) and a
California 590 Certificate;

                    11.1.5  a Natural Hazard Disclosure Statement,
substantially in the form of EXHIBIT F, in respect of the Property described
on EXHIBIT A, which the Purchaser shall sign to acknowledge Purchaser's
receipt from the Seller of such Natural Hazard Disclosure Statement and the
Purchaser's understanding thereof; and

                    11.1.6  copies of any "As-Built" surveys commissioned by
Seller and in Seller's possession on the Closing Date;

                    11.1.7  such other instruments and documents which shall
be useful and necessary in connection with the transaction herein
contemplated and which do not impose any liability not agreed to in this
Agreement.

             11.2   At the Closing, the Purchaser shall execute and deliver
the following documents in addition to payment of the balance of the Purchase
Price:

                    11.2.1  reasonable evidence of Purchaser's authority to
execute and deliver this Agreement and the documents to be delivered by it
pursuant thereto.

                    11.2.2  an instrument of assumption of all of Seller's
obligations under the Leases in the form of EXHIBIT B.

                    11.2.3  an instrument acknowledging the assignment of the
Assignable Warranties, Permits, Contracts and General Intangibles in the form
of EXHIBIT D.

                    11.2.4  [intentionally omitted].

                    11.2.5  a Purchaser's "AS-IS" Certificate in the form of
EXHIBIT E.

                    11.2.6  a countersigned copy of the Natural Hazard
Disclosure Statement.

                                      17

<PAGE>

                    11.2.7  such other instruments or documents which shall
be useful and necessary in connection with the transaction herein
contemplated.

     SECTION 12. PRORATIONS AND COSTS

             12.1   PRORATIONS.  Purchaser and Seller shall apportion (based
on the actual number of days in a calendar month) as of 12:01 a.m. on the day
of the Closing (except as may otherwise be herein provided), the items
hereinafter set forth.  Any errors or omissions in computing apportionments
at Closing shall be promptly corrected after Closing.  The obligations set
forth in this Section 12 shall survive the Closing.  The items to be adjusted
are:

                    12.1.1  City, state, county, school, real property taxes
and other assessments for the fiscal year of sale (such apportionment shall
be based upon the latest assessment available);  should such proration be
inaccurate based on the actual tax bills, if the same has not been received
by the date of the Closing, either party may demand after the date of
Closing, and shall be entitled to receive upon demand, a payment correcting
any inaccurate apportionment favoring the other party,

                    12.1.2  All rent and other tenant charges to the extent
that any rent or other tenant charges have been collected at Closing.  From
and after the Closing Date, Seller shall have and hereby reserves the right
to pursue any remedy against the tenant of the Property in the event it owes
rent or other charges with respect to the period prior to the Closing.  The
provisions of this Paragraph shall survive the Closing.

                    12.1.3  All other income and ordinary operating expenses
of the Project including, without limitation, maintenance and other service
charges and all other normal operating charges with respect to the Project
shall be prorated at the Closing effective as of the Closing Date, and
appropriate cash adjustments shall be made by Purchaser.

                    12.1.4  At the Closing, Purchaser shall receive a credit
against the Purchase Price equal to the amount of the tenant security
deposit(s), if any, and the Seller shall be entitled to retain such security
deposits. At the Closing, the Purchaser shall assume all bonds and
assessments relating to the Property.

                    12.1.5  If, at the time of the delivery of the deed, the
Property or any part thereof shall have been affected by an assessment or
assessments, which are or may become payable in annual installments, of which
the first installment is then a charge or lien, then for the purposes of this
Agreement, all the unpaid installments of any such assessment due and payable
in calendar years prior to the year in which the Closing occurs shall be paid
by the Seller and all installments becoming due and payable after the
delivery of the deed shall be assumed and paid by the Purchaser, except,
however, that any installments which are due and payable in the calendar year
in which the Closing occurs shall be adjusted pro rata.

                                      18
<PAGE>
             12.1.6  At the Closing, Purchaser shall reimburse Seller for the
amount of any transferable utility or other deposits (other than security
deposits which are covered by Section 12.1.4) assigned to Purchaser.

     12.2    COSTS.  Seller shall pay any City and County transfer taxes
applicable to the sale, one-half (1/2) of the escrow fee and the recording
charges for recording the Deed.  Purchaser shall pay the costs of obtaining
the ALTA title insurance policy, the cost of any endorsements, and one-half
(1/2) of the escrow fee.  Any other costs and expenses of the sale of the
Property and the escrow therefor shall be paid according to local custom.

     12.3    TAX CERTIORARI PROCEEDINGS.  Seller is hereby authorized, but
not obligated, to (a) commence (prior to the Closing Date) or continue (after
the Closing Date) any proceeding for the reduction of the assessed valuation
of the Property for any tax year which, in accordance with the laws and
regulations applicable to the Property, requires that, to preserve the right
to bring a tax certiorari proceeding with respect to such tax year, such
proceeding be commenced prior to the Closing Date and (b) endeavor to settle
any such proceeding in Seller's discretion;  PROVIDED, HOWEVER, that if such
proceeding is (i) for a tax year in which the Closing Date occurs or would
affect such tax year or any subsequent tax year, such settlement shall not be
made without Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed, and (ii) for a tax year which commences
after the Closing Date, the right to continue and settle such proceeding,
including, without limitation, any contracts or agreements with tax
certiorari counsel with respect to any such tax year, shall be deemed
assigned to Purchaser at the Closing.  After the Closing, (i) Seller shall
retain all rights (subject to any rights of any tenant under its Lease) with
respect to any tax year ending prior to the tax year (and all refunds
relating thereto) in which the Closing Date occurs, and shall have the sole
right to participate in and settle any proceeding relating thereto (PROVIDED,
that such settlement does not affect the assessed tax value for any
subsequent tax year), and (ii) Purchaser shall have all rights with respect
to any tax year (and all refunds relating thereto) which ends after the
Closing Date;  PROVIDED, HOWEVER, that if the proceeding is for a tax year in
which the Closing Date occurs, such settlement shall not be made without
Seller's prior consent, which consent shall not be unreasonably withheld or
delayed.  With respect to any such proceeding for a tax year in which the
Closing Date occurs (whether commenced by Seller or Purchaser), any refund or
credit of taxes for such tax year shall be applied first to the unreimbursed
out-of-pocket expenses, including reasonable counsel fees, necessarily
incurred in obtaining such refund or credit, and second, to any tenant
entitled to same, and the balance shall be apportioned between Seller and
Purchaser as of the Closing Date in accordance with the proportion of the
applicable tax year occurring before and after the Closing Date.  In each
case, the party which commenced the proceeding shall deliver to the other
copies of receipted tax bills and any decision or settlement agreement
evidencing the reduction in taxes.  If any refund shall be received by Seller
which is for the account of Purchaser as provided in this Section 12.3, then
Seller shall hold Purchaser's share thereof in trust for Purchaser and,
promptly upon receipt thereof, pay such share to Purchaser or any other party
entitled to same as provided above.  If any refund shall be received by
Purchaser which is for the account of Seller as provided in this Section
12.3, then Purchaser shall hold Seller's share thereof in trust for Seller
and, promptly upon receipt thereof, pay such share to Seller or any other
party entitled to same as provided above.  Each party shall execute any and
all consents or other documents as may be reasonably necessary to be executed
by such party so as to permit the other party to commence or

                                      19
<PAGE>

continue any tax certiorari proceeding which such other party is authorized
to commence or continue pursuant to the terms of this Section 12.3 or to
collect any refund or credit with respect to any such tax proceeding.  The
provisions of this Section 12.3 shall survive the Closing.

     SECTION 13.    BROKERAGE

     Seller and Purchaser represent and warrant to each other that no broker
or finder, other than CB Richard Ellis and Cushman & Wakefield, was
instrumental in arranging or bringing about this transaction and that there
are no claims or rights for brokerage commissions or finder's fees in
connection with the transactions contemplated hereby by any person or entity
other than CB Richard Ellis and Cushman & Wakefield, whose fee shall be the
sole responsibility of Seller pursuant to separate agreements between Seller
and CB Richard Ellis and between Seller and Cushman & Wakefield.  If any
person brings a claim for a commission or finders' fee based upon any
contact, dealings or communication with Purchaser or Seller, then the party
through whom such person makes its claim shall defend the other party (the
"INDEMNIFIED PARTY") from such claim, and shall indemnify the Indemnified
Party and hold the Indemnified Party harmless from any and all costs,
damages, claims, liabilities or expenses (including without limitation,
reasonable attorneys' fees and disbursements) incurred by the Indemnified
Party in defending against the claim.  In addition, Purchaser hereby agrees
to indemnify and hold harmless each Seller Party from any and all Claims
resulting from any claim made by any Person for a brokerage commission,
finders' fee or similar fee arising out of or relating to any action taken
(or any communication made) by Purchaser, or any of its agents, employees or
contractors, in connection with the proposed resale by Purchaser of any
Property or the marketing of such Property by Purchaser or by any Person on
behalf of Purchaser.  The provisions of this Section 13 shall survive the
Closing or, if the Closing does not occur, any termination of this Agreement.

     SECTION 14.  NOTICES

     All notices or other communications hereunder to either party shall be
(i) in writing and shall be deemed to be given on the third business day after
deposit of both the original to the party and copy(ies) to the party's counsel
and other addresses as provided after the signatures below in a regularly
maintained receptacle for the United States mail, by registered or certified
mail, return receipt requested, postage prepaid, addressed as provided
hereinafter, and (ii) addressed as set forth on the signature page of this
Agreement.

     Notices may also be given by facsimile to the facsimile numbers set forth
on the signature page hereto, with the original notice being mailed or by
overnight courier service or United States Express Mail, in which event, the
notice shall be deemed delivered on the date of facsimile (provided there is
confirmation of delivery) or on the next business day in the event overnight
courier service or United States Express Mail (in each case with next business
day delivery specified) is used.

                                       20
<PAGE>

     SECTION 15.  DAMAGE OR DESTRUCTION PRIOR TO CLOSING AND CONDEMNATION

           15.1   If prior to the Closing, the Project is damaged or destroyed
by fire or other casualty but the Project is not "materially damaged or
destroyed" by such fire or other casualty, the Purchaser shall be required to
perform this Agreement and shall be entitled to the insurance proceeds
received by Seller or payable pursuant to the policies of insurance maintained
by Seller plus a credit against the Purchase Price in the amount of the
applicable insurance deductible and, if applicable, any uninsured amount
(i.e., the reasonably estimated cost of repair of the damage and destruction,
which cost is not reimbursable by insurance coverage) or self-insured
retention, LESS any sums reasonably expended by Seller prior to the Closing
for the restoration or repair of the Property and/or in collecting such
insurance proceeds or condemnation awards.  If the Project is materially
damaged or destroyed by fire or other casualty, the Purchaser may terminate
this Agreement on written notice to the Seller given within ten (10) days
after Purchaser receives written notice of the occurrence of such fire or
casualty.  If Purchaser shall exercise such option, it shall be deemed that
Purchaser terminated this Agreement pursuant to Section 3.3 hereof and the
rights of the parties shall be as set forth therein.  If Purchaser does not
exercise such option to terminate, the Agreement shall remain in full force
and effect in accordance with its terms and Purchaser shall be entitled to the
proceeds of insurance as provided in the first sentence of this Section 15.1
and a credit against the Purchase Price in the amount of the applicable
insurance deductible.  In no event shall the Purchaser be entitled to any
abatement or reduction of the Purchase Price by reason of such damage.  In the
event of any damage by fire or other casualty the determination as to whether
such damage or destruction is material shall be made by an engineer or
contractor designated by Seller and approved by Purchaser, provided, however,
Purchaser shall not unreasonably withhold or delay such approval and if, it
shall disapprove, Purchaser shall give the reasons for such disapproval.  For
purposes hereof, the Project shall be deemed "materially damaged or destroyed"
if the cost of repair and restoration of such damage or destruction is greater
than One Million Dollars ($1,000,000).

           15.2   In the event proceedings to condemn the Property or any
material portion thereof (including, without limitation, the parking structure
or any access to the Property) are commenced before the Closing, the Purchaser
shall have the right to terminate this Agreement in which event it shall be
deemed that Purchaser terminated this Agreement pursuant to Section 3.3 hereof
and the rights of the parties shall be as set forth herein.  In the event
Purchaser does not elect to terminate this Agreement, Seller shall assign to
Purchaser, at the Closing, all of Seller's right, title and interest in and to
any condemnation proceeds payable with respect to the Property.

     SECTION 16.   REPORTING REQUIREMENTS

     Purchaser and Seller shall each deposit such other instruments as are
reasonably required by the Title Insurer or otherwise required to close the
escrow and consummate the purchase and sale of the Property in accordance with
the terms hereof, including, without limitation, an agreement designating
Title Insurer as the "Reporting Person" for the transaction pursuant to
Section 6045(e) of the Internal Revenue Code and the regulations promulgated
thereunder, and executed by Seller,

                                       21
<PAGE>

Purchaser and Title Insurer.  Such agreement shall comply with the
requirements of Section 6045(e) of the Internal Revenue Code and the
regulations promulgated thereunder.

     SECTION 17.   MISCELLANEOUS

           17.1   This Agreement constitutes the entire Agreement between the
parties.  This Agreement cannot be changed, modified, waived or terminated
orally but only by an agreement in writing signed by the parties hereto.  This
Agreement shall be binding upon the parties hereto and their respective heirs,
executors, personal representatives and permitted successors and assigns.

           17.2  (a)  IF THE SALE IS NOT CONSUMMATED DUE TO ANY DEFAULT BY
PURCHASER HEREUNDER OR THE FAILURE BY PURCHASER TO SATISFY THE CONDITIONS TO
SELLER'S OBLIGATION REQUIRED TO BE SATISFIED BY PURCHASER PRIOR TO THE CLOSING
DATE, THEN SELLER SHALL RETAIN THE DEPOSIT, AND ANY INTEREST ACCRUED THEREON,
AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES,
IN THE EVENT OF A FAILURE TO CONSUMMATE THIS SALE DUE TO PURCHASER'S DEFAULT,
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.  AFTER
NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES
EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A
REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT.
SELLER'S RETENTION OF THE DEPOSIT AS LIQUIDATED DAMAGES IS NOT INTENDED TO BE
A FORFEITURE OR PENALTY BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO
SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.  BY
PLACING THEIR INITIALS BELOW EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF
THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY
COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES
OF THIS LIQUIDATED DAMAGES PROVISION.  THE FOREGOING IS NOT INTENDED TO LIMIT
ANY INDEMNIFICATIONS GIVEN BY PURCHASER IN THIS AGREEMENT OR PURCHASER'S
OBLIGATIONS TO PAY COSTS SET FORTH IN SECTION 12.2.

      INITIALS:  SELLER                        PURCHASER: /s/ [ILLEGIBLE]
                       --------------------              ---------------------

                 (b)  In the event Purchaser shall be ready, willing and able
to close and shall have performed or tendered performance of all of its
obligations in a timely manner and Seller shall default in its obligations
under this Agreement, the parties hereto agree that Purchaser's remedy shall
be limited to the termination of this Agreement as set forth in Section 3.3
hereof or to specific performance of this Agreement. Expect for any liability
or obligation of Seller expressly provided for in Section 9.1 (subject to
the limitations thereon set forth in Section 9.3 and elsewhere in this
Agreement) or in Section 13 of this Agreement, Purchaser hereby
unconditionally and irrevocably waives, to the greatest extent permitted by
law, any claim for damages against Seller arising out of

                                   22

<PAGE>

this Agreement including, without limitation, any claim arising out of any
default or misrepresentation by Seller hereunder.

                 (c)  In the event of a default by either party hereto which
becomes the subject of litigation, the losing party agrees to pay the
reasonable legal fees to the prevailing party. The provision of this Section
shall survive the Closing or the termination of this Agreement.

           17.3  Time shall be of the essence of the obligations of the
parties under this Agreement; provided, however, if the final date of any
period set forth herein (including, but not limited to, the Closing Date)
falls on a Saturday, Sunday or legal holiday under the laws of the State in
which the Project is located, or the United States of America, the final date
of such period shall be extended to the next day that is not a Saturday,
Sunday or legal holiday. The term "days" as used herein shall mean calendar
days, with the exception of "business days", which term shall mean each day
except for any Saturday, Sunday or legal holiday under the laws of the State
in which the Project is located or the United States of America.

           17.4  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
original, and the execution of separate counterparts by Purchaser and Seller
shall bind Purchaser and Seller as if they had each executed the same
counterpart.

           17.5  This Agreement shall be governed, construed and enforced in
accordance with the laws of the State of California.

           17.6  No agreements or covenants to perform any obligation or
representations and warranties contained in this Agreement shall survive the
delivery of the deed except as expressly provided herein. Acceptance of the
deed is an acceptance of all of the obligations of the Seller hereunder
except such as may expressly be stated to survive the Closing.

           17.7  The headings used in this Agreement are for convenience only
and do not constitute substantive matters to be considered in construing same.

           17.8  The parties agree that neither this Agreement nor any
memorandum or notice thereof shall be recorded.

           17.9  This Agreement may not be assigned by the Purchaser, without
the consent of the Seller, provided, that the Purchaser may assign its rights
or obligations under this Agreement to a wholly-owned subsidiary of Purchaser
that is reasonably satisfactory to Seller (which wholly-owned subsidiary
shall not be permitted to assign its rights or obligations under this
Agreement) that executes and delivers to Seller an assignment and assumption
instrument acceptable to Seller pursuant to which the Purchaser assigns all of
its rights, title and interest in and to this Agreement to the assignee
(including all rights to the Deposit and all interest earned thereon) and the
assignee assumes and agrees to be bound by all of the obligations of the
Purchaser under this Agreement and the Confidentiality Agreement. In
connection with any assignment pursuant to the terms hereof, the assignee
shall reconfirm in a written instrument reasonably acceptable to Seller and
delivered to

                                 23

<PAGE>

Seller concurrently with or prior to the assignment, said representations and
warranties as applied to the assignee. No other assignment of this Agreement
shall be permitted except upon the prior written consent of Seller. No
assignment of this Agreement shall release the Purchaser herein; provided
that the assignor shall be released with respect to its obligation to
consummate the transactions contemplated herein. No assignment shall excuse
timely payment by Purchaser or its assignee hereunder.

           17.10   Submission of this form of Agreement for examination shall
not bind Seller in any manner nor be construed as an offer to sell and no
contract or obligations of Seller shall arise until this instrument is
executed by both Seller and Purchaser and delivery is made to each and the
Deposit has been received by the Escrow Agent.

           17.11   The obligations of Seller are intended to be binding only
on the Seller and shall not be personally binding upon, nor shall any resort
be had to, the private properties of any of its trustees, officers,
beneficiaries, directors, members, or shareholders, or of its investment
manager, the general partners, officers, directors, members, or shareholders
thereof, or any employees or agents of Seller or its investment manager.

    SECTION 18. CONFIDENTIALITY

    The Purchaser will maintain strict confidentiality of all aspects of this
Agreement including, without limitation, any information obtained through the
due diligence process (including, without limitation, any papers, documents,
data, plans or other information or materials provided by Seller or its
affiliates or agents concerning the Project and any memoranda, reports,
summaries, or together documents, writings or recordings relating to the
Project or to such information (the "Evaluation Material")). The Purchaser
agrees that such information and Evaluation Material will be used for no
purpose other than evaluating a possible transaction involving the Purchaser,
as a principal, exclusively for its own account, and not as a broker, finder
or similar agent for any other person, and that, except as may be agreed in
writing by the Seller, the Purchaser will not copy or duplicate any
Evaluation Material. In addition, the Purchaser agrees that the Purchaser and
the Related Parties (as defined below) of the Purchaser will not, without the
prior written consent of Seller, disclose to any person (other than a person
authorized hereunder), the fact that the Evaluation Material has been made
available to the Purchaser, that discussions or negotiations between the
Purchaser and the Seller are now taking place or will take place, or any of
the terms, conditions or other facts with respect to the possible acquisition
of the Project.

         In furtherance of the foregoing, except as may be required by law or
as may be necessary to evaluate the Property for Purchaser's acquisition and
financing therefor, Purchaser will not divulge any such information or the
Evaluation Material to other persons or entities including, without
limitation, appraisers, real estate brokers, or competitors of Seller.
Notwithstanding the foregoing, Purchaser shall have the right to disclose
information with respect to the Property to officers, directors, employees,
attorneys, accountants, environmental auditors, engineers, permitted assignees
under this Agreement and other consultants (collectively, "Related Parties")
to the extent

                                 24
<PAGE>

necessary for Purchaser to evaluate its acquisition of the Property provided
that all Related Parties are told that such information is confidential and
agree (in writing for any third party engineers, environmental auditors or
other consultants) to keep such information confidential.

         The Purchaser agrees that the Seller will have no adequate remedy at
law if the Purchaser were to violate any of the terms of this Section 18.
Accordingly, in the event of such a breach by the Purchaser, the Seller and
its affiliates have the right, in addition to any other right the Seller and
its affiliates may have, to seek injunctive relief to restrain any breach or
threatened breach by us or specific enforcement of such terms. The Purchaser
further agrees that it shall be responsible to the Seller and the Seller
Parties for any breach by the Purchaser or any of the Purchaser Related
Parties of the terms of this Section 18.

         Although the Seller has endeavored to include in the Evaluation
Material information known to it which it believe to be relevant for the
purpose of the Purchaser's investigation, the Purchaser understands and
acknowledges that neither the Seller nor any of the Seller Parties makes any
representation or warranty to us as to the accuracy or completeness of the
Evaluation Material. The Purchaser further agrees that none of the Seller or
any of the Seller Parties shall have liability to the Purchaser or any of the
Purchaser's representatives or agents resulting from the use of or reliance
on the Evaluation Material by the Purchaser or the Purchaser's
representatives and agents. The Purchaser acknowledges that the Seller is not
responsible to the Purchaser to determine whether toxic or hazardous wastes
or substances or other undesirable materials are present at the Project and
that it is solely the responsibility of the Purchaser to conduct
investigations to determine the presence of such materials.

         Notwithstanding the foregoing, the Seller or the Purchaser may make
a public announcement concerning the transactions contemplated by this
Agreement to the extent required to comply with applicable law or regulation
or the rules of a stock exchange on which the stock of the Purchaser is
listed or quoted; PROVIDED, that the Purchaser shall provide the Seller with
a copy of any such proposed announcement not less than two (2) business days
prior to the scheduled release of such announcement and provide the Seller
with the opportunity to approve such proposed release (such approval not to
be unreasonably withheld).

         The provisions of this Section 18 shall survive the Closing or any
termination of this Agreement. In the event that this Agreement is
terminated, the Purchaser agrees to return all Evaluation Materials to the
Seller immediately upon the request of the Seller and not to retain any
copies, extracts or other reproductions, in whole or in part, of such
Evaluation Materials.

                                       25
<PAGE>

         IN WITNESS WHEREOF, this Agreement has been entered into as of the
day and year first above written.

                 SELLER:            WHLW Real Estate Limited Partnership

                                    By:  WHLW Gen-Par, Inc.
                                         General Partner

                                        By:
                                             ----------------------------------

                                        Its:
                                             ----------------------------------

                 PURCHASER:         Natrol Real Estate II, Inc.,
                                    a California corporation

                                    By: /s/ Dennis R. Jolicoeur
                                       ----------------------------------
                                        Dennis R. Jolicoeur

                                    Its: CFO
                                        ----------------------------------

                                    By:
                                       ----------------------------------

                                    Its:
                                        ----------------------------------

                                    26
<PAGE>

                          ADDRESS FOR NOTICES TO SELLER:

                          Legacy Partners Commercial, Inc.
                          4000 East Third Avenue, Sixth Floor
                          Foster City, CA 94404-1167
                          Attention: Robert Phipps and Darleen Barnes
                          Fax No.: (650) 235-2589 and (650) 572-9527

with a copy to:           Real Estate Law Group
                          2330 Marinship Way, Suite 211
                          Sausalito, CA 94965
                          Attention: Ann Gaffney Shores
                          Fax No.: (415) 331-7272

with a copy to:           Whitehall Street Real Estate Limited Partnership
                          85 Broad Street
                          New York, New York 10004
                          Attention: Mr. Adam Brooks
                          Facsimile number: 212-357-5505

and a copy to:            Whitehall Street Real Estate Limited Partnership
                          100 Crescent Court, Suite 1000
                          Dallas, Texas 75201
                          Attention: Mr. Paul Milosevich
                          Phone number: 214-855-6364
                          Facsimile number: 214-855-6305

or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be effective only upon delivery
or refusal of delivery.

                          ADDRESS FOR NOTICE TO PURCHASER:

                          Natrol Real Estate II, Inc.
                          21411 Prairie Street
                          Chatsworth, CA 91311
                          Attention: Elliott Balbert
                          Fax No.: (818) 739-6001
                          Phone No.: (818) 739-6000

                                        27

<PAGE>

with a copy to:           Arter & Hadden, LLP
                          5959 Topanga Canyon Blvd.
                          Suite 244
                          Woodland Hills, California 91367
                          Attention: Deborah Feldman
                          Fax No.: 818-346-6502
                          Phone No.: 818-712-0036

                                        28

<PAGE>

                                   EXHIBIT "A"

                               DESCRIPTION OF LAND

9453 Owensmouth Avenue, Chatsworth, California

LOTS 7,8,9 AND 10 OF TRACT NO. 33150, IN THE CITY OF LOS ANGELES, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 910 PAGES 63 TO
65 INCLUSIVE OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

Assessor's Parcel No: 2746-014-018

                                      A-1

<PAGE>

                                   EXHIBIT B

                       ASSIGNMENT AND ASSUMPTION OF LEASES

     ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment") made as of the
day of December __, 1999 by and between WHLW Real Estate Limited Partnership
("Assignor") and Natrol Real Estate II, Inc., ("Assignee").

                              W I T N E S S E T H:

     WHEREAS, Assignor and Assignee are parties to that certain Purchase and
Sale Agreement, dated November __, 1999 (the "Purchase Agreement") covering
the Premises set forth on Exhibit A hereto; and

     WHEREAS, Assignor has simultaneously herewith conveyed to the Assignee
all of Assignor's right, title and interest in and to the Premises located at
9453 Owensmouth Avenue, Chatsworth, California, and in connection therewith,
Assignor has agreed to assign to Assignee all of Assignor's right, title and
interest in and to the leases described on the Schedule of Leases attached as
Exhibit "B" hereto and the guaranties, security deposits and other documents
related thereto, if any (collectively, the "Leases").

     NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1.    Assignor hereby assigns unto Assignee, all of the right, title and
interest of Assignor in and to the Leases.

     TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
from and after the date hereof, subject to the terms, covenants and
conditions of the Leases.

     2.    This Assignment is made without representation or warranty by
Assignor except as provided in that certain Certificate delivered by Assignor
to Assignee on the date hereof.

     3.    Assignee assumes the performance of all of the obligations of
Assignor under the Leases to be first performed from and after the date
hereof and does not assume any obligations or liabilities under the Lease
accruing prior to the date hereof.

     4.    Effective as of the date hereof, Assignee hereby agrees to
indemnify, defend (with counsel reasonably acceptable to Assignor), and to
hold Assignor and each other Seller Party (as defined in the Purchase
Agreement) harmless from any and all Claims (as defined in the Purchase

                                      B-1
<PAGE>

Agreement), arising on or subsequent to the date hereof, under, relating to
or arising out of the Leases.

     5.    Any rental and other payments under the Leases shall be prorated
between the parties as provided in the Purchase Agreement.

     6.    In the event of any dispute between Assignor and Assignee arising
out of the obligations of Assignor under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses of such dispute,
including, without limitation, reasonable attorneys' fees and costs. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately
from and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other
provisions of this Assignment and to survive and not be merged into any such
judgment.

     7.    This Assignment shall be governed by and construed in accordance
with the laws of the State of California.

     8.    This Assignment is made without recourse and without any express
or implied representation or warranty of any kind. Assignee on behalf of
itself and its agents, employees, representatives, successors and assigns
hereby agrees that in no event or circumstance shall Assignor or any Seller
Party have any personal liability under this Assignment, or to any of
Assignee's creditors, or to any other party in connection with the Property.
This Assignment may be executed in counterparts, each of which shall be
deemed an original, and all of which shall taken together be deemed one
document.

     9.     This Assignment is delivered pursuant to the Purchase Agreement
and Assignee expressly acknowledges and affirms the provisions thereof.

     10.    This Assignment shall be binding on and inure to the benefit of
the parties hereto, their heirs, executors, administrators, successors in
interest and assigns.

     11.    This Assignment may be executed in separate counterparts, which,
together, shall constitute one and the same fully executed Assignment.

     12.    The obligations of Assignor are intended to be binding only on
Assignor and shall not be personally binding upon, nor shall any resort be
had to, the private properties of any Seller Party.

     Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Purchase Agreement.

                                      B-2
<PAGE>

         IN WITNESS WHEREOF, this Assignment has been duly executed as of the
date first above written.

                                   ASSIGNOR:

                                   WHLW Real Estate Limited Partnership

                                   By:   WHLW Gen-Par, Inc.
                                              General Partner

                                         Name:
                                              -------------------------------

                                         Title:
                                               ------------------------------

                                   ASSIGNEE:

                                   Natrol Real Estate II, Inc.,
                                   a California corporation

                                         Name: /s/ DENNIS R. JOLICOEUR
                                              -------------------------------

                                         Title: CFO
                                               ------------------------------

                                         Name:
                                              -------------------------------

                                         Title:
                                               ------------------------------

                                      B-3
<PAGE>

                                   EXHIBIT C

                            [Intentionally Omitted]

                                      C-1

<PAGE>

                                   EXHIBIT D

               ASSIGNMENT OF WARRANTIES, PERMITS, CONTRACTS
                        AND GENERAL INTANGIBLES

     ASSIGNMENT OF WARRANTIES, PERMITS, CONTRACTS AND GENERAL INTANGIBLES
(this "Assignment") made as of the ____ day of December, 1999 by and between
WHLW Real Estate Limited Partnership ("Assignor") and Natrol Real Estate II,
Inc. ("Assignee").

                               WITNESSETH:

     WHEREAS, Assignor has simultaneously herewith conveyed to the Assignee
all of Assignor's right, title and interest in and to the premises located on
Exhibit "A" attached hereto (the "Premises"), and in connection therewith,
Assignor has agreed to assign to Assignee all of Assignor's right, title and
interest in and to (i) the warranties and/or guaranties, if any, relating to
the Premises to the extent assignable (collectively, "Warranties"), (ii) any
governmental approvals or permits relating to the Premises to the extent
assignable (collectively, "Permits"), (iii) the agreements, contracts,
instruments and understandings listed on Annex ___ attached hereto
(collectively, the "Contracts") and (iv) general intangibles relating to the
Property including, without limitation, the trade name, to the extent
provided in the Purchase Agreement, if any, used to identify the Premises or
any variation thereof, provided Assignor makes absolutely no representation
or warranty that it has any ownership of or right to use any trade name
(collectively, "General Intangibles").

     NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

     1.  To the extent assignable, Assignor hereby assigns unto Assignee, all
of the right, title and interest, if any, of Assignor in and to the
Warranties, Permits, Contracts and General Intangibles;

     TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
from and after the date hereof.

     2.  Effective as of the date hereof, Assignee hereby assumes and
unconditionally agrees to observe and perform all of the Assignor's
obligations under, relating to or arising out of the Contracts, originating
on or subsequent to the date hereof. Assignee hereby agrees to indemnify
Assignor and its affiliates, against and hold Assignor and its affiliates
harmless from any and all Claims (as defined in the Purchase Agreement),
originating on or subsequent to the date hereof, under, relating to or
arising out of the Contracts.

                                       D-1
<PAGE>

     3.  In the event of any dispute between Assignor and Assignee arising
out of the obligations of Assignor under this Agreement or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses of such dispute,
including, without limitation, reasonable attorneys' fees and costs. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately
from and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other
provisions of this Assignment and to survive and not be merged into any such
judgment.

     4.  This Assignment shall not be construed as a representation or
warranty by Assignor as to the transferability or enforceability of the
Warranties, the Permits, the Contracts or the Intangible Property
(collectively, the "INTERESTS"), and Assignor shall have no liability to
Assignee in the event that any or all of the Interests (a) are not
transferable to Assignee or (b) are canceled or terminated by reason of this
assignment or any acts of Assignee. Furthermore, Assignee on behalf of itself
and the Purchaser Parties hereby agrees that in no event or circumstance
shall Assignor or any Seller Party have any personal liability under this
Assignment, or to any of Assignee's creditors, or to any other party in
connection with the Interests.

     5.  This Assignment shall be governed by and construed and in accordance
with the laws of the State of California.

     6.  This Assignment is made without recourse and without any express or
implied representation or warranty of any kind or nature, except as expressly
set forth in the Purchase Agreement.

     7.  This Assignment is delivered pursuant to the Purchase Agreement
attached hereto and to which this Assignment is an Exhibit thereof, and
Assignee expressly acknowledges and affirms the provisions thereof. This
Assignment may be executed in counterparts, each of which shall be deemed an
original, and all of which shall taken together be deemed one document.

     8.  This Assignment shall be binding on Assignor and its successors,
assigns and legal representatives and shall inure to the benefit of the
Assignee and its successors, assigns and legal representatives.

     9.  This Assignment may be executed in separate counterparts, which,
together, shall constitute one and the same fully executed Assignment.

     10. The obligations of Assignor are intended to be binding only on the
property of Assignor and shall not be personally binding upon, nor shall any
resort be had to, the private properties of any Seller Party.

     Capitalized terms used herein and not defined herein shall have the
meanings given to them in the Purchase Agreement.

                                       D-2
<PAGE>

     IN WITNESS WHEREOF, this Assignment has been duly executed as of the
date first above written.

                                      ASSIGNOR:

                                      WHLW Real Estate Limited Partnership

                                      By: WHLW Gen-Par, Inc.
                                          General Partner

                                         Name:
                                               ----------------------------
                                         Title:
                                                ---------------------------

                                      ASSIGNEE:

                                      Natrol Real Estate II, Inc.,
                                      a California corporation

                                      Name: /s/ Dennis R. Jolicoeur
                                            ----------------------------
                                      Title:  Dennis R. Jolicoeur, CFO
                                             ---------------------------

                                      Name:
                                            ----------------------------
                                      Title:
                                             ---------------------------

                                       D-3
<PAGE>

                                   EXHIBIT E

                        PURCHASER'S AS-IS CERTIFICATE

     THIS CERTIFICATE AND AGREEMENT ("Certificate"), is made as of the ____
day of December, 1999, by Natrol Real Estate II, Inc. ("Purchaser"), to and
for the benefit and WHLW Real Estate Limited Partnership ("Seller").

                                    RECITALS

     Seller and Purchaser are parties to a Purchase and Sale Agreement, dated
as of November __, 1999 the ("Purchase Agreement"), which provides for the
sale of a certain real property (the "Property") legally described on EXHIBIT
A attached to the Purchase Agreement and incorporated herein by this
reference. Any capitalized terms not otherwise defined herein shall have the
meaning ascribed to such term in the Purchase Agreement; and

     The Purchase Agreement requires, INTER ALIA, that, as a condition
precedent to Seller's obligations under the Purchase Agreement, Purchaser
shall execute and deliver this Certificate to Seller at Closing.

     NOW, THEREFORE, in consideration of TEN AND NO/100 DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Purchaser hereby certifies and agrees as follows:

     1.  Purchaser hereby acknowledges that it has examined and investigated
to its full satisfaction all facts, circumstances and matters relating to the
Property, or otherwise relevant to its purchase of the foregoing, including
without limitation:

          (i)  all matters relating to governmental and other legal
     requirements with respect to the Property, such as taxes, assessments,
     zoning, use permit requirements and building codes;

          (ii)  All zoning, land use, building, environmental and other
     statutes, rules, or regulations applicable to the Property;

          (iii)  to the extent in the possession of Seller or Seller's
     property manager, a copy of a survey of the Property (a "SURVEY"):

          (iv)  to the extent in the possession of Seller or Seller's property
     manager, reports, studies, assessments, investigations and other
     materials related to the presence of Hazardous Materials at, on or
     under the Property and the compliance of such Property with all
     environmental laws, including environmental assessment reports;

                                      E-1
<PAGE>

          (v)  the Leases with respect to the Property and all matters in
     connection therewith, including, without limitation, the ability of the
     tenants thereof to pay the rent;

          (vi)  the Contracts and any other documents or agreements of
     significance affecting the Property;

          (vii)  all matters relating to the income and operating or capital
expenses of the Property and all other financial matters; and

          (viii) all matters relating to title to the Property;

          (ix)  the physical condition of the Property, including, without
     limitation, the interior, the exterior, the square footage of the
     improvements or the leasehold improvements and of the tenant space
     therein, the structure, the roof, the paving, the utilities, and all
     other physical and functional aspects of the Property, including the
     presence or absence of Hazardous Materials;

          (x)  any easements and/or access rights affecting the Property;

          (xi)  all matters that would be revealed by an ALTA as-built
     survey, a physical inspection or an environmental site assessment of the
     Property;

          (xii)  reflected on the Natural Hazard Disclosure Statement; and

          (xiii)  all other matters of significance affecting, or otherwise
     deemed relevant by Purchaser with respect to, the Property.

     2.  Purchaser acknowledges and agrees that (i) it has been given the
full opportunity to inspect and investigate all aspects of the Property,
either independently or through agents, representatives or experts of
Purchaser's choosing, as Purchaser considers necessary or appropriate,
including without limitation those set forth in the Purchase Agreement, (ii)
it has completed its independent investigation of the Property and the Due
Diligence Materials, and (iii) it is acquiring the Property based exclusively
on such independent investigation. The funding of the Deposit by Purchaser
and the execution of this certificate conclusively constitute Purchaser's
approval of each and every aspect of the Property. Purchaser (i) is a
sophisticated investor, (ii) is represented by competent counsel, (iii)
understands the assumptions of risk and liability set forth in this
Certificate and that, prior to Closing, Purchaser and its agents have
inspected the Property, fully observed the physical characteristics and
condition of the Property, performed a thorough investigation of the
suitability of Purchaser's intended use of the Property, including without
limitation, the suitability of the topography, the availability of water
rights or utilities, the present and future

                                       E-2
<PAGE>

zoning, subdivision and any and all other land use matters, the condition of
the soil, subsoil or groundwater of the Property and any and all other
environmental matters, the purpose(s) to which the Property is suited,
drainage, flooding, access to public roads, and proposed routes or roads or
extensions relative to the Property, (iv) acknowledges that its posting of
the Deposit was deemed to be an acknowledgment by the Purchaser that, as of
the date hereof, it had received the Date Diligence Materials and (v)
understands that it will have no recourse whatsoever against Seller or any
Seller Party except as expressly set forth in the Purchase Agreement and this
Certificate. Such independent investigation by Purchaser included items set
forth in the Purchase Agreement, the Purchaser agreeing that it has completed
its due diligence investigation of the Property prior to the date hereof and
is satisfied with the results of such investigation and the Due Diligence
Materials.

         3.   PURCHASER SPECIFICALLY REPRESENTS, ACKNOWLEDGES AND AGREES THAT
(i) SELLER SHALL SELL AND PURCHASER SHALL PURCHASE THE PROPERTY "AS IS, WHERE
IS AND WITH ALL FAULTS," (ii) PURCHASER IS NOT RELYING ON ANY REPRESENTATIONS
OR WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER, NOR ANY SELLER PARTY AS TO ANY
MATTER, CONCERNING THE PROPERTY, OR SET FORTH, CONTAINED OR ADDRESSED IN THE
DUE DILIGENCE MATERIALS (INCLUDING WITHOUT LIMITATIONS, THE COMPLETENESS
THEREOF), INCLUDING WITHOUT LIMITATION: (i) the quality, nature, habitability,
merchantability, use, operation, value, marketability, adequacy or physical
condition of the Property or any aspect or portion thereof, including,
without limitation, structural elements, foundation, roof, appurtenances,
access, landscaping, parking facilities, electrical, mechanical, HVAC,
plumbing, sewage, and utility systems, facilities and appliances, soils,
geology and groundwater, or whether the Property lies within a special flood
hazard area, an area of potential flooding, a very high fire hazard severity
zone, a wildland fire area, an earthquake fault zone or a seismic hazard
zone, (ii) the dimensions or lot size of any Property or the square footage
of the Improvements thereon or of any tenant space therein, (iii) the
development or income potential, or rights of or relating to, the Property,
or the Property's use, habitability, merchantability, or fitness, or the
suitability, value or adequacy of the Property for any particular purpose,
(iv) the zoning or other legal status of the Property or any other public or
private restrictions on the use of the Property, (v) the compliance of the
Property or its operation with any applicable codes, laws, regulations,
statutes, ordinances, covenants, conditions and restrictions of any
Governmental Authority or of any other person or entity (including, without
limitation, the Americans with Disabilities Act), (vi) the ability of
Purchaser to obtain any necessary governmental approvals, licenses or permits
for Purchaser's intended use or development of the Property, (vii) the
presence or absence of Hazardous Materials on, in, under, above or about the
Property or any adjoining or neighboring property, (viii) the quality of any
labor and materials used in any Improvements, (ix) the condition of title to
the Property, (x) the Leases, Contracts or any other agreements affecting the
Property or the intentions of any party with respect to the negotiation
and/or execution of any lease or contract with respect to the Property, (xi)
Seller's ownership of the

                                      E-3

<PAGE>

Property or any portion thereof or (xii) the economics of, or the income and
expenses, revenue or expense projections or other financial matters, relating
to, the operation of the Property. Without limiting the generality of the
foregoing, Purchaser expressly acknowledges and agrees that Purchaser is not
relying on any representation or warranty of the Seller, nor any Seller
Party, whether implied, presumed or expressly provided as law or otherwise,
arising by virtue of any statute, common law or other legally binding right or
remedy in favor of Purchaser except as provided in Section 3.3 of the
Purchase Agreement. Purchaser further acknowledges and agrees that Seller is
under no duty to make any inquiry regarding any matter that may or may not be
known to Seller or any partner, officer, employee, attorney, property
manager, agent or broker of such Seller.

         4.   ANY REPORTS, REPAIRS OR WORK REQUIRED BY PURCHASER ARE THE SOLE
RESPONSIBILITY OF PURCHASER, AND PURCHASER AGREES THAT THERE IS NO OBLIGATION
ON THE PART OF SELLER TO MAKE ANY CHANGES, ALTERATIONS OR REPAIRS TO THE
PROPERTY OR TO CURE ANY VIOLATIONS OF LAW OR TO COMPLY WITH THE REQUIREMENTS
OF ANY INSURER. PURCHASER IS SOLELY RESPONSIBLE FOR OBTAINING ANY CERTIFICATE
OF OCCUPANCY OR ANY OTHER APPROVAL OR PERMIT NECESSARY FOR TRANSFER OR
OCCUPANCY OF ANY PROPERTY AND FOR ANY REPAIRS OR ALTERATIONS NECESSARY TO
OBTAIN THE SAME, ALL AT PURCHASER'S SOLE COST AND EXPENSE.

         5.   Purchaser acknowledges and agrees that the provisions of this
Certificate were a material factor in Seller's acceptance of the Purchase
Price and agreement to sell the Property to Purchaser, and Seller is
unwilling to sell the Properties unless Seller and the other Seller Parties
are expressly released to the extent set forth in Section 6 of the Purchase
Agreement.

         IN WITNESS WHEREOF, Purchaser has executed this Certificate as of
the date first set forth herein above.

                                 NATROL REAL ESTATE II, INC.,
                                 a California corporation

                                 By:   /s/ Dennis R. Jolicoeur
                                    -------------------------------------
                                 Name:   Dennis R. Jolicoeur
                                 Title:  CFO

                                      E-4

<PAGE>

                                   EXHIBIT F

                      NATURAL HAZARD DISCLOSURE STATEMENT

This statement applies to the following described real property: 9453
Owensmouth Avenue, Chatsworth, California

The undersigned Seller discloses the following information with the knowledge
that even though this is not a warranty, the undersigned prospective
Purchaser may rely on this information in deciding whether and on what terms
to purchase the subject real property. The following disclosures are made by
the Seller based solely upon the information contained in the report attached
hereto and made a part hereof. This information is merely a disclosure and
shall not be deemed to be part of any contract between the Purchaser and
Seller.

THIS REAL PROPERTY LIES WITHIN THE FOLLOWING HAZARDOUS AREA(S):

A VERY HIGH FIRE HAZARD SEVERITY ZONE pursuant to Section 51178 or 51179 of
the Government Code. The owner of this property is subject to the maintenance
requirements of Section 51182 of the Government Code.

                 /  / Yes            /  / No

A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISKS AND HAZARDS
pursuant to Section 4125 of the Public Resources Code. The owner of this
property is subject to the maintenance requirements of Section 4291 of the
Public Resources Code. Additionally, it is not the state's responsibility to
provide fire protection services to any building or structure located within
the wildlands unless the Department of Forestry and Fire Protection has
entered into a cooperative agreement with a local agency for those purposes
pursuant to Section 4142 of the Public Resources Code.

                 /  / Yes            /  / No

THESE HAZARDS MAY LIMIT YOUR ABILITY TO DEVELOP THE REAL PROPERTY, TO OBTAIN
INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER.

THE ATTACHED REPORT ON WHICH THESE DISCLOSURES ARE BASED ESTIMATE WHERE
NATURAL HAZARDS EXIST. THEY ARE NOT DEFINITIVE INDICATORS OF WHETHER OR NOT A
PROPERTY WILL BE AFFECTED BY A NATURAL DISASTER. PURCHASER IS HEREBY ADVISED
TO OBTAIN INDEPENDENT PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER
HAZARDS THAT MAY AFFECT THE SUBJECT PROPERTY.

This statement may be signed in one or more counterparts.

\\\\\ CONTINUED ON NEXT PAGE

                                      F-1

<PAGE>

Seller hereby states that the information set forth herein is true and
correct to the best of the Seller's knowledge based solely upon the
information contained in the attached report, and such knowledge is limited
to be as of the date specified below. Seller has not independently verified
the information contained in this statement and the attached report, and
Seller is not personally aware of any errors or inaccuracies in the
information contained in this statement.

SELLER:

By:
      -------------------------
Its:
      -------------------------
Date:
      -------------------------

Purchaser hereby represents and warrants that it has read and understands the
information contained in this disclosure statement and in the attached report
and will rely upon the information contained in the report as though the
report were addressed directly to Purchaser.

PURCHASER:

By:    /s/ Dennis R. Jolicoeur
      -------------------------
Its:         CFO
      -------------------------
Date:      11/20/99
      -------------------------

                                      F-2

<PAGE>

                                  EXHIBIT G

                                  GRANT DEED

Recording Requested by and
When Recorded Mail to,
and Mail Tax Statements to:

______________________________
______________________________
______________________________
Attention: _____________________

-----------------------------------------------------------------------------
                   Space Above This Line for Recorder's use

                                GRANT DEED

         The undersigned Grantor declared that Documentary Transfer Tax is
not part of the public records.

         For valuable consideration, receipt of which is acknowledged,
_____________, a _____________ ("Grantor"), hereby grants to _______________,
a ___________________________, (Grantee), that certain real property located
in the City of ____________, County of _________, State of California, as
legally described in EXHIBIT A attached hereto and made a part hereof (the
"Property") together with all of Grantor's right, title and interest in and
to all improvements and structures located thereon, and all easements,
appurtenances, rights and privileges of Grantor appertaining to the Property.

         The Property is conveyed subject to:

         (a)   The lien of supplemental taxes, if any, assessed pursuant to
the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and
Taxation Code of the State of California;

         (b)   The liens for real property taxes for the fiscal year 19__ -
19__ not yet due and payable;

         (c)   All liens, encumbrances, easements, leases, covenants,
conditions and restrictions of record;

         (d)   All matters which would be disclosed by an inspection of the
Property; and

                                      G-1<PAGE>

                                                                    Exhibit 4(c)

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

                            HICKORY TECH CORPORATION

                                   $40,000,000

                      7.11% Senior Notes due April 1, 2012

                                 --------------

                             NOTE PURCHASE AGREEMENT

                                  -------------

                            Dated as of April 1, 1997

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

<PAGE>

                                TABLE OF CONTENTS

                          (Not a part of the Agreement)

<TABLE>
<CAPTION>
SECTION     HEADING                                                      PAGE
<S>         <C>                                                          <C>
Section 1. Authorization of Notes......................................   1

Section 2. Sale and Purchase of Notes..................................   1

Section 3. Closing.....................................................   2

Section 4. Conditions to Closing.......................................   2
         Section 4.1.  Representations and Warranties..................   2
         Section 4.2.  Performance; No Default.........................   2
         Section 4.3.  Compliance Certificates.........................   2
         Section 4.4.  Opinions of Counsel.............................   3
         Section 4.5.  Purchase Permitted By Applicable Law, Etc.......   3
         Section 4.6.  Sale of Other Notes.............................   3
         Section 4.7.  Payment of Special Counsel Fees.................   3
         Section 4.8.  Private Placement Number........................   3
         Section 4.9.  Changes in Corporate Structure..................   3
         Section 4.10. Completion of Acquisition.......................   3
         Section 4.11. Proceedings and Documents.......................   4

Section 5. Representations and Warranties of the Company...............   4
         Section 5.1.  Organization; Power and Authority...............   4
         Section 5.2.  Authorization, Etc..............................   4
         Section 5.3.  Disclosure......................................   4
         Section 5.4.  Organization and Ownership of Shares of
                       Subsidiaries; Affiliates........................   5
         Section 5.5.  Financial Statements............................   5
         Section 5.6.  Compliance with Laws, Other Instruments, Etc....   5
         Section 5.7.  Governmental Authorizations, Etc................   6
         Section 5.8.  Litigation; Observance of Agreements, Statutes
                       and Orders......................................   6
         Section 5.9.  Taxes...........................................   6
         Section 5.10. Title to Property; Leases.......................   7
         Section 5.11. Licenses, Permits, Etc..........................   7
         Section 5.12. Compliance with ERISA...........................   7
         Section 5.13. Private Offering by the Company.................   8
         Section 5.14. Use of Proceeds; Margin Regulations.............   8
         Section 5.15. Existing Debt; Future Liens.....................   8
         Section 5.16. Foreign Assets Control Regulations, Etc.........   9
         Section 5.17. Status under Certain Statutes...................   9
         Section 5.18. Environmental Matters...........................   9
         Section 5.19. Notes to Rank Pari Passu........................  10

</TABLE>

                                       i
<PAGE>
<TABLE>
<S>         <C>                                                          <C>
Section 6. Representations of the Purchaser............................   10
         Section 6.1.  Purchase for Investment.........................   10
         Section 6.2.  Source of Funds.................................   10

Section 7. Information as to Company...................................   12
         Section 7.1.  Financial and Business Information..............   12
         Section 7.2.  Officer's Certificate...........................   14
         Section 7.3.  Inspection......................................   15

Section 8. Prepayment of the Notes.....................................   16
         Section 8.1.  Required Prepayments............................   16
         Section 8.2.  Optional Prepayments with Make-Whole Amount.....   16
         Section 8.3.  Change in Control...............................   16
         Section 8.4.  Allocation of Partial Prepayments...............   18
         Section 8.5.  Maturity; Surrender, Etc........................   19
         Section 8.6.  Purchase of Notes...............................   19
         Section 8.7.  Make-Whole Amount...............................   19

Section 9. Affirmative Covenants.......................................   20
         Section 9.1.  Compliance with Law.............................   20
         Section 9.2.  Insurance.......................................   21
         Section 9.3.  Maintenance of Properties.......................   21
         Section 9.4.  Payment of Taxes and Claims.....................   21
         Section 9.5.  Corporate Existence, Etc........................   21

Section 10. Negative Covenants.........................................   22
         Section 10.1. Transactions with Affiliates....................   22
         Section 10.2. Merger, Consolidation, Etc......................   22
         Section 10.3. Sale of Assets, Etc.............................   23
         Section 10.4. Liens...........................................   23
         Section 10.5. Consolidated Net Worth..........................   25
         Section 10.6. Limitations on Priority Debt....................   25
         Section 10.7. Consolidated Funded Debt to EBITDA Ratio........   25
         Section 10.8. Line of Business................................   25

Section 11. Events of Default..........................................   26

Section 12. Remedies on Default, Etc...................................   28
         Section 12.1. Acceleration....................................   28
         Section 12.2. Other Remedies..................................   29
         Section 12.3. Rescission......................................   29
         Section 12.4. No Waivers or Election of Remedies,
                       Expenses, Etc...................................   29

Section 13. Registration; Exchange; Substitution of Notes..............   29
         Section 13.1. Registration of Notes...........................   29
         Section 13.2. Transfer and Exchange of Notes..................   30

</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>         <C>                                                          <C>
         Section 13.3. Replacement of Notes............................   30

Section 14. Payments on Notes..........................................   31
         Section 14.1. Place of Payment................................   31
         Section 14.2. Home Office Payment.............................   31

Section 15. Expenses, Etc..............................................   31
         Section 15.1. Transaction Expenses............................   31
         Section 15.2. Survival........................................   31

Section 16. Survival of Representations and Warranties; Entire
            Agreement..................................................   32

Section 17. Amendment and Waiver.......................................   32
         Section 17.1. Requirements....................................   32
         Section 17.2. Solicitation of Holders of Notes................   32
         Section 17.3. Binding Effect, Etc.............................   33
         Section 17.4. Notes Held by Company, Etc......................   33

Section 18. Notices....................................................   33

Section 19. Reproduction of Documents..................................   34

Section 20. Confidential Information...................................   34

Section 21. Substitution of Purchaser..................................   35

Section 22. Miscellaneous..............................................   35
         Section 22.1. Successors and Assigns..........................   35
         Section 22.2. Payments Due on Non-Business Days...............   35
         Section 22.3. Severability....................................   36
         Section 22.4. Construction....................................   36
         Section 22.5. Counterparts....................................   36
         Section 22.6. Governing Law...................................   36

</TABLE>

                                       iii
<PAGE>

SCHEDULE A        --     Information Relating To Purchasers

SCHEDULE B        --     Defined Terms

SCHEDULE 5.4      --     Subsidiaries of the Company and Ownership of
                         Subsidiary Stock

SCHEDULE 5.5      --     Financial Statements

SCHEDULE 5.7      --     Governmental Authorizations

SCHEDULE 5.15     --     Existing Indebtedness and Liens

EXHIBIT 1         --     Form of 7.11% Senior Note due April 1, 2012

EXHIBIT 4.4(a)-1  --     Form of Opinion of Special Counsel for the
                         Company

EXHIBIT 4.4(a)-2  --     Form of Opinion of Special Counsel for the
                         Company

EXHIBIT 4.4(b)    --     Form of Opinion of Special Counsel for the
                         Purchasers

                                       iv
<PAGE>

                            HICKORY TECH CORPORATION
                              221 E. Hickory Street
                          Mankato, Minnesota 56002-3248

                      7.11% Senior Notes due April 1, 2012

                                                       Dated as of April 1, 1997

TO EACH OF THE PURCHASERS LISTED IN
 THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         Hickory Tech Corporation, a Minnesota corporation (the "COMPANY"),
agrees with you as follows:

SECTION 1.               AUTHORIZATION OF NOTES.

         The Company will authorize the issue and sale of $40,000,000
aggregate principal amount of its 7.11% Senior Notes due April 1, 2012 (the
"NOTES", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as
hereinafter defined)). The Notes shall be substantially in the form set out
in Exhibit 1, with such changes therefrom, if any, as may be approved by you
and the Company. Certain capitalized terms used in this Agreement are defined
in Schedule B; references to a "SCHEDULE" or an "EXHIBIT" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

SECTION 2.               SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified
opposite your name in Schedule A at the purchase price of 100% of the
principal amount thereof. Contemporaneously with entering into this
Agreement, the Company is entering into separate Note Purchase Agreements
(the "OTHER AGREEMENTS") identical with this Agreement with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for the
sale at such Closing to each of the Other Purchasers of Notes in the
principal amount specified opposite its name in Schedule A. Your obligation
thereunder, and the obligations of the Other Purchasers under the Other
Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.

                                       1

<PAGE>

SECTION 3.               CLOSING.

         The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Chapman and Cutler, 111 W.
Monroe Street, Chicago, Illinois 60603, at 11:00 a.m., Central time, at a
closing (the "CLOSING") on April 8, 1997 or on such other Business Day
thereafter on or prior to April 9, 1997 as may be agreed upon by the Company
and you and the Other Purchasers. At the Closing the Company will deliver to
you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by
wire transfer of immediately available funds for the account of the Company
to account number 144551001148 at First Bank National Association - Mankato,
Minnesota, ABA 091000022. If at the Closing the Company shall fail to tender
such Notes to you as provided above in this Section 3, or any of the
conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such non fulfillment.

SECTION 4.               CONDITIONS TO CLOSING.

         Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction, prior to
or at the Closing, of the following conditions:

             SECTION 4.1. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.

             SECTION 4.2. PERFORMANCE; NO DEFAULT. The Company shall have
performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by it prior to or at the
Closing and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Section 5.14) no
Default or Event of Default shall have occurred and be continuing. Neither
the Company nor any Subsidiary shall have entered into any transaction since
the date of the Memorandum that would have been prohibited by Sections 10.1,
10.4 or 10.6 hereof had such Sections applied since such date.

             SECTION 4.3. COMPLIANCE CERTIFICATES.

           (a) OFFICER'S CERTIFICATE. The Company shall have delivered to you
an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

           (b) SECRETARY'S CERTIFICATE. The Company shall have delivered to
you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery
of the Notes and the Agreements.

                                       2
<PAGE>

             SECTION 4.4. OPINIONS OF COUNSEL. You shall have received
opinions in form and substance satisfactory to you, dated the date of the
Closing (a) from Dorsey & Whitney LLP and Blethen, Gage & Krause, counsel for
the Company, covering the matters set forth in Exhibits 4.4(a)-1 and
4.4(a)-2, respectively, and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably
request (and the Company hereby instructs its counsel to deliver such opinion
to you) and (b) from Chapman and Cutler, your special counsel in connection
with such transactions, substantially in the form set forth in Exhibit 4.4(b)
and covering such other matters incident to such transactions as you may
reasonably request.

             SECTION 4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. On the
date of the Closing your purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without
restriction as to the character of the particular investment, (b) not violate
any applicable law or regulation (including, without limitation, Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and (c)
not subject you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so permitted.

             SECTION 4.6. SALE OF OTHER NOTES. Contemporaneously with the
Closing, the Company shall sell to the Other Purchasers, and the Other
Purchasers shall purchase the Notes to be purchased by them at the Closing as
specified in Schedule A.

             SECTION 4.7. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting
the provisions of Section 15.1, the Company shall have paid on or before the
Closing the fees, charges and disbursements of your special counsel referred
to in Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the Closing.

             SECTION 4.8. PRIVATE PLACEMENT NUMBER. A Private Placement
Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with
the Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.

             SECTION 4.9. CHANGES IN CORPORATE STRUCTURE. The Company shall
not have changed its jurisdiction of incorporation or been a party to any
merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time
following the date of the most recent financial statements referred to in
Schedule 5.5.

            SECTION 4.10. COMPLETION OF ACQUISITION. The Company shall have
consummated the Acquisition and shall have received all governmental and
regulatory approvals and consents with respect thereto and all such approvals
and consents shall be in full force and effect.

                                       3
<PAGE>

            SECTION 4.11. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions
shall be satisfactory to you and your special counsel, and you and your
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.

SECTION 5.               REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to you that:

             SECTION 5.1. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under lease
the properties it purports to own or hold under lease, to transact the
business it transacts and proposes to transact, to execute and deliver this
Agreement and the Other Agreements and the Notes and to perform the
provisions hereof and thereof.

             SECTION 5.2. AUTHORIZATION, ETC. This Agreement and the Other
Agreements and the Notes have been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes, and upon
execution and delivery thereof each Note will constitute, a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

             SECTION 5.3. DISCLOSURE. The Company, through its agent, First
Union Capital Markets Corp. has delivered to you and each Other Purchaser a
copy of a Confidential Private Placement Memorandum, dated February 1997 (the
"MEMORANDUM"), relating to the transactions contemplated hereby. The
Memorandum fairly describes, in all material respects, the general nature of
the business and principal properties of the Company and its Subsidiaries.
This Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in
Schedule 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. Except as disclosed in the Memorandum or in the financial
statements listed in Schedule 5.5, since December 31, 1996, there has been no
change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually
or in the aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact known to the Company that could reasonably
be expected to have a Material Adverse Effect that has not been set

                                       4
<PAGE>

forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to you by or on behalf of the Company specifically
for use in connection with the transactions contemplated hereby.

             SECTION 5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF
SUBSIDIARIES; AFFILIATES. (a) Schedule 5.4 contains complete and correct
lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.

           (b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by
the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien.

           (c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified as
a foreign corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to
own or hold under lease and to transact the business it transacts and
proposes to transact.

           (d) No Subsidiary is a party to, or otherwise subject to, any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or
any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.

             SECTION 5.5. FINANCIAL STATEMENTS. The Company has delivered to
each Purchaser copies of the financial statements of the Company and its
Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in
all material respects the consolidated financial position of the Company and
its Subsidiaries as of the respective dates specified in such financial
statements and the consolidated results of their operations and cash flows
for the respective periods so specified and have been prepared in accordance
with GAAP consistently applied throughout the periods involved except as set
forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

             SECTION 5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) contravene, result in any breach of, or constitute a
default under, or result in the creation of any Lien in respect of any
property of

                                       5
<PAGE>

the Company or any Subsidiary under, any indenture, mortgage, deed of trust,
loan, purchase or credit agreement, lease, corporate charter or by-laws, or
any other agreement or instrument to which the Company or any Subsidiary is
bound or by which the Company or any Subsidiary or any of their respective
properties may be bound or affected, (b) conflict with or result in a breach
of any of the terms, conditions or provisions of any order, judgment, decree,
or ruling of any court, arbitrator or Governmental Authority applicable to
the Company or any Subsidiary or (c) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.

             SECTION 5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or authorization of, or registration, filing or declaration with,
any Governmental Authority is required in connection with the execution,
delivery or performance by the Company of this Agreement or the Notes or the
consummation of the Acquisition other than the consents described on Schedule
5.7, all of which have been obtained and are in full force and effect.

             SECTION 5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND
ORDERS. (a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority
that, individually or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.

           (b) Neither the Company nor any Subsidiary is in default under any
term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

             SECTION 5.9. TAXES. The Company and its Subsidiaries have filed
all tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (a) the amount of which is not individually or in the aggregate
Material or (b) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Company knows of no basis for
any other tax or assessment that could reasonably be expected to have a
Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or other taxes
for all fiscal periods are adequate. The Federal income tax liabilities of
the Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year
ended December 31, 1993.

                                       6
<PAGE>

            SECTION 5.10. TITLE TO PROPERTY; LEASES. The Company and its
Subsidiaries have good and sufficient title to their respective properties,
including all such properties reflected in the most recent audited balance
sheet referred to in Section 5.5 or purported to have been acquired by the
Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear
of Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.

            SECTION 5.11. LICENSES, PERMITS, ETC. (a) the Company and its
Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade
names, or rights thereto, that individually or in the aggregate are Material,
without known conflict with the rights of others;

           (b) to the best knowledge of the Company, no product of the
Company infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and

           (c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark, trademark,
trade name or other right owned or used by the Company or any of its
Subsidiaries.

            SECTION 5.12. COMPLIANCE WITH ERISA. (a) The Company and each
ERISA Affiliate have operated and administered each Plan in compliance with
all applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that could reasonably be expected to result in the incurrence of any
such liability by the Company or any ERISA Affiliate, or in the imposition of
any Lien on any of the rights, properties or assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code,
other than such liabilities or Liens as would not be individually or in the
aggregate Material.

           (b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end
of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate current value of the
assets of such Plan allocable to such benefit liabilities. The term "benefit
liabilities" has the meaning specified in section 4001 of ERISA and the terms
"current value" and "present value" have the meaning specified in Section 3
of ERISA.

           (c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.

                                       7
<PAGE>

           (d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated
by section 4980B of the Code) of the Company and its Subsidiaries is not
Material.

           (e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that is
subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the first sentence of this Section
5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by you.

            SECTION 5.13. PRIVATE OFFERING BY THE COMPANY. Neither the
Company nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from,
or otherwise approached or negotiated in respect thereof with, any Person
other than you, the Other Purchasers and not more than 80 other Institutional
Investors, each of which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken, or
will take, any action that would subject the issuance or sale of the Notes to
the registration requirements of Section 5 of the Securities Act.

            SECTION 5.14. USE OF PROCEEDS; MARGIN REGULATIONS. The Company
will apply the proceeds of the sale of the Notes to acquire eleven new
exchanges from US WEST representing 12,400 access lines in northern Iowa and
will use any excess proceeds for general corporate purposes. No part of the
proceeds from the sale of the Notes hereunder will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve
System (12 CFR 207), or for the purpose of buying or carrying or trading in
any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker
or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 1% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not have any
present intention that margin stock will constitute more than 1% of the value
of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in
said Regulation G.

            SECTION 5.15. EXISTING DEBT; FUTURE LIENS. (a) Schedule 5.15 sets
forth a complete and correct list of all outstanding Debt of the Company and
its Subsidiaries as of December 31, 1996, since which date there has been no
Material change in the amounts, interest rates, sinking funds, installment
payments or maturities of the Debt of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of default
is currently in effect, in the payment of any principal or interest on any
Debt of the Company or such Subsidiary and no event or condition exists with
respect to any Debt of the Company or any Subsidiary that would permit (or
that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.

                                       8
<PAGE>

           (b) Neither the Company nor any Subsidiary has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to
be subject to a Lien not permitted by Section 10.4.

            SECTION 5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither
the sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

            SECTION 5.17. STATUS UNDER CERTAIN STATUTES. Neither the Company
nor any Subsidiary is an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, or is
subject to regulation under the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended, or the Federal Power
Act, as amended.

            SECTION 5.18. ENVIRONMENTAL MATTERS. Neither the Company nor any
Subsidiary has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real properties
now or formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any Environmental
Laws, except, in each case, such as could not reasonably be expected to
result in a Material Adverse Effect. Except as otherwise disclosed to you in
writing:

                   (a) neither the Company nor any Subsidiary has knowledge of
         any facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets or
         their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;

                   (b) neither the Company nor any of its Subsidiaries has
         stored any Hazardous Materials on real properties now or formerly
         owned, leased or operated by any of them and has not disposed of any
         Hazardous Materials in a manner contrary to any Environmental Laws in
         each case in any manner that could reasonably be expected to result in
         a Material Adverse Effect; and

                   (c) all buildings on all real properties now owned, leased or
         operated by the Company or any of its Subsidiaries are in compliance
         with applicable Environmental Laws, except where failure to comply
         could not reasonably be expected to result in a Material Adverse
         Effect.

            SECTION 5.19. NOTES TO RANK PARI PASSU. The obligations of the
Company with respect to the Notes and all other obligations under this
Agreement of the Company are direct and unsecured obligations of the Company
ranking PARI PASSU as against the assets of the Company and PARI PASSU with

                                       9
<PAGE>

all other present and future Debt of the Company which is not expressed to be
subordinate or junior in rank to any other Debt of the Company (except to the
extent that the foregoing is not true by virtue of, Liens expressly permitted
by this Agreement securing other Debt insofar as such Debt represents a prior
claim in respect of the property or assets secured by such permitted Lien).

SECTION 6.               REPRESENTATIONS OF THE PURCHASER.

             SECTION 6.1. PURCHASE FOR INVESTMENT. You represent that you are
purchasing the Notes for your own account or for one or more separate
accounts maintained by you or for the account of one or more pension or trust
funds and not with a view to the distribution thereof, PROVIDED that the
disposition of your or their property shall at all times be within your or
their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor
such an exemption is required by law, and that the Company is not required to
register the Notes.

             SECTION 6.2. SOURCE OF FUNDS. You represent that at least one of
the following statements is an accurate representation as to each source of
funds (a "SOURCE") to be used by you to pay the purchase price of the Notes
to be purchased by you hereunder:

                   (1) if you are an insurance company, the Source is your
         "insurance company general account" as defined in Department of Labor
         Prohibited Transaction Exemption PTE 95-60 (60 FR 35925), July 12, 1995
         (hereinafter "PTE 95-60"), and in respect thereof you represent that
         there is no "employee benefit plan" (as defined in section 3(3) of
         ERISA and section 4975(e)(1) of the Code) established or maintained by
         the Company (and affiliates thereof as defined in section V(a)(1) of
         the PTE 95-60) with respect to which the amount of general account
         reserves and liabilities of all contracts held by or on behalf of such
         plan exceed ten percent (10%) of the total reserves and liabilities of
         such general account (exclusive of separate account liabilities) plus
         surplus, as set forth in the National Association of Insurance
         Commissioners' Annual Statement filed with your state of domicile; or

                   (2) the Source is either (i) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (ii) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
         to the Company in writing pursuant to this subparagraph (2), no
         employee benefit plan or group or plans maintained by the same employer
         or employee organization beneficially owns more than 10% of all assets
         allocated to such pooled separate account or collective investment
         fund; or

                   (3) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the

                                       10
<PAGE>

         meaning of Section V(c)(1) of the QPAM Exemption) of such employer
         or by the same employee organization and managed by such QPAM, exceed
         20% of the total client assets managed by such QPAM, the conditions of
         Part I(c) and (g) of the QPAM Exemption are satisfied, neither the
         QPAM nor a person controlling or controlled by the QPAM (applying the
         definition of "control" in Section V(e) of the QPAM Exemption) owns a
         5% or more interest in the Company and (i) the identity of such QPAM
         and (ii) the names of all employee benefit plans whose assets are
         included in such investment fund have been disclosed to the Company
         in writing pursuant to this subparagraph (3); or

                   (4) the Source is a governmental plan; or

                   (5) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Company in
         writing pursuant to this subparagraph (5); or

                   (6) the Source does not include assets of any employee
         benefit plan, other than a plan exempt from the coverage of ERISA.

         If you indicate that you are relying on any representation contained
in subparagraph (2), (3) or (5) above, the Company shall deliver on the
Closing Date a certificate, which shall either state that (i) it is neither a
party in interest nor a "disqualified person" (as defined in Section
4975(e)(2) of the Code), with respect to any plan identified pursuant to
paragraphs (2) or (5) above, or (ii) with respect to any plan identified
pursuant to subparagraph (3) above, neither it nor any "affiliate" (as
defined in Section V(c) of the QPAM Exemption) has at such time, and during
the immediately preceding one year, exercised the authority to appoint or
terminate said QPAM as manager of any plan identified in writing pursuant to
subparagraph (3) above or to negotiate the terms of said QPAM's management
agreement on behalf of any such identified plan.

         As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have
the respective meanings assigned to such terms in Section 3 of ERISA.

SECTION 7.               INFORMATION AS TO COMPANY.

             SECTION 7.1. FINANCIAL AND BUSINESS INFORMATION. The Company
shall deliver to each holder of Notes that is an Institutional Investor:

                   (a) QUARTERLY STATEMENTS -- promptly, and in any event,
         within 45 days after the end of each quarterly fiscal period in each
         fiscal year of the Company (other than the last quarterly fiscal period
         of each such fiscal year), duplicate copies of:

                                       11
<PAGE>

                            (i) a consolidated balance sheet of the Company and
                  its Subsidiaries as at the end of such quarter, and

                           (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Subsidiaries for such quarter and (in the case of the second
                  and third quarters) for the portion of the fiscal year ending
                  with such quarter,setting forth in each case in comparative
                  form the figures for the corresponding periods in the previous
                  fiscal year, all in reasonable detail, prepared in accordance
                  with GAAP applicable to quarterly financial statements
                  generally, and certified by a Senior Financial Officer as
                  fairly presenting, in all material respects, the financial
                  position of the companies being reported on and their results
                  of operations and cash flows, subject to changes resulting
                  from year-end adjustments, PROVIDED that delivery within the
                  time period specified above of copies of the Company's
                  Quarterly Report on Form 10-Q prepared in compliance with the
                  requirements therefor and filed with the Securities and
                  Exchange Commission shall be deemed to satisfy the
                  requirements of this Section 7.1 (a);

                   (b) ANNUAL STATEMENTS -- promptly, and in any event, within
         120 days after the end of each fiscal year of the Company, duplicate
         copies of,

                            (i) a consolidated balance sheet of the Company and
                  its Subsidiaries, as at the end of such year, and

                           (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Subsidiaries, for such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by

                                     (A) an opinion thereon of Olsen, Thielen &
                           Co., Ltd. or any other independent certified public
                           accountants of recognized national standing, which
                           opinion shall state that such financial statements
                           present fairly, in all material respects, the
                           financial position of the companies being reported
                           upon and their results of operations and cash flows
                           and have been prepared in conformity with GAAP, and
                           that the examination of such accountants in
                           connection with such financial statements has been
                           made in accordance with generally accepted auditing
                           standards, and that such audit provides a reasonable
                           basis for such opinion in the circumstances, and

                                     (B) a certificate of such accountants
                           stating that they have reviewed this Agreement and
                           stating further whether, in making their audit, they
                           have become aware of any condition or event that then
                           constitutes a Default or an Event of Default, and, if
                           they are aware that any such condition or event then

                                       12
<PAGE>

                           exists, specifying the nature and period of the
                           existence thereof (it being understood that such
                           accountants shall not be liable, directly or
                           indirectly, for any failure to obtain knowledge of
                           any Default or Event of Default unless such
                           accountants should have obtained knowledge thereof in
                           making an audit in accordance with generally accepted
                           auditing standards or did not make such an audit),

         PROVIDED that the delivery within the time period specified above of
         the Company's Annual Report on Form 10-K for such fiscal year (together
         with the Company's annual report to shareholders, if any, prepared
         pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
         with the requirements therefor and filed with the Securities and
         Exchange Commission, together with the accountant's certificate
         described in clause (B) above, shall be deemed to satisfy the
         requirements of this Section 7.1(b);

                   (c) SEC AND OTHER REPORTS -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or periodic report,
         each registration statement (without exhibits except as expressly
         requested by such holder), and each prospectus and all amendments
         thereto filed by the Company or any Subsidiary with the Securities and
         Exchange Commission and of all press releases and other statements made
         available generally by the Company or any Subsidiary to the public
         concerning developments that are Material;

                   (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT OR ACCELERATION OF
         NOTES -- promptly, and in any event within five days after a
         Responsible Officer becoming aware of (i) the existence of any Default
         or Event of Default or that any Person has given any notice or taken
         any action with respect to a claimed default hereunder or that any
         Person has given any notice or taken any action with respect to a
         claimed default of the type referred to in Section 11(f), a written
         notice specifying the nature and period of existence thereof and what
         action the Company is taking or proposes to take with respect thereto
         or (ii) the acceleration of any Note pursuant to Section 12.1 hereof, a
         written notice setting forth the principal amount of each Note so
         accelerated, the name of the holder thereof and the circumstances
         surrounding such acceleration;

                   (e) ERISA MATTERS -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                            (i) with respect to any Plan, any reportable event,
                  as defined in section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                                       13
<PAGE>

                           (ii) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by the Company or any ERISA Affiliate of a notice from
                  a Multiemployer Plan that such action has been taken by the
                  PBGC with respect to such Multiemployer Plan; or

                          (iii) any event, transaction or condition that could
                  result in the incurrence of any liability by the Company or
                  any ERISA Affiliate pursuant to Title I or IV of ERISA or the
                  penalty or excise tax provisions of the Code relating to
                  employee benefit plans, or in the imposition of any Lien on
                  any of the rights, properties or assets of the Company or any
                  ERISA Affiliate pursuant to Title I or IV of ERISA or such
                  penalty or excise tax provisions, if such liability or Lien,
                  taken together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect;

                   (f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Company or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect;

                   (g) AUDIT REPORTS -- Promptly upon receipt thereof, one copy
         of each interim or special audit made by independent accountants of the
         books of the Company or any Subsidiary and any management letter
         received from such accountants; and

                   (h) REQUESTED INFORMATION -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Company to
         perform its obligations hereunder and under the Notes (including,
         without limitation, any data or information furnished to any other
         holder of Debt of the Company or any Subsidiary) as from time to time
         may be reasonably requested by any such holder of Notes.

             SECTION 7.2. OFFICER'S CERTIFICATE. Each set of financial
statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:

                   (a) COVENANT COMPLIANCE -- the information (including
         detailed calculations) required in order to establish whether the
         Company was in compliance with the requirements of Section 10.2 through
         Section 10.7 hereof, inclusive, during the quarterly or annual period
         covered by the statements then being furnished (including with respect
         to each such Section, where applicable, the calculations of the maximum
         or minimum amount, ratio or percentage, as the case may be, permissible
         under the terms of such Sections, and the calculation of the amount,
         ratio or percentage then in existence); and

                                       14
<PAGE>

                   (b) EVENT OF DEFAULT -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Company and its Subsidiaries from the beginning of
         the quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists (including, without limitation,
         any such event or condition resulting from the failure of the Company
         or any Subsidiary to comply with any Environmental Law), specifying the
         nature and period of existence thereof and what action the Company
         shall have taken or proposes to take with respect thereto.

             SECTION 7.3. INSPECTION. The Company shall permit the
representatives of each holder of Notes that is an Institutional Investor:

                   (a) NO DEFAULT -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior written
         notice to the Company, to visit the principal executive office of the
         Company, to discuss the affairs, finances and accounts of the Company
         and its Subsidiaries with the Company's officers, and (with the consent
         of the Company, which consent will not be unreasonably withheld) its
         independent public accountants, and (with the consent of the Company,
         which consent will not be unreasonably withheld) to visit the other
         offices and properties of the Company and each Subsidiary, all at such
         reasonable times and as often as may be reasonably requested in
         writing; and

                   (b) DEFAULT -- if a Default or Event of Default then exists,
         at the expense of the Company, to visit and inspect any of the offices
         or properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

SECTION 8.               PREPAYMENT OF THE NOTES.

             SECTION 8.1. REQUIRED PREPAYMENTS. On April 1, 2002 and on each
April 1 thereafter to and including April 1, 2011, the Company will prepay
$3,636,364.00 principal amount (or such lesser principal amount as shall then
be outstanding) of the Notes at par and without payment of the Make-Whole
Amount or any premium, PROVIDED that any partial prepayment of the Notes
pursuant to Section 8.2 shall be deemed to be applied first, to the amount of
principal scheduled to remain unpaid on April 1, 2012, and then to the
remaining scheduled principal payments under this Section 8.1 in inverse
chronological order.

             SECTION 8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT. The
Company may, at its option, upon notice as provided below, prepay at any time
all, or from time to time any part of, the Notes,

                                       15
<PAGE>

in an amount not less than 10% of the aggregate principal amount of the Notes
then outstanding in the case of a partial prepayment, at 100% of the
principal amount so prepaid, together with interest accrued thereon to the
date of such prepayment, plus the Make-Whole Amount determined for the
prepayment date with respect to such principal amount. The Company will give
each holder of Notes written notice of each optional prepayment under this
Section 8.2 not less than 30 days and not more than 60 days prior to the date
fixed for such prepayment. Each such notice shall specify such date, the
aggregate principal amount of the Notes to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to
such prepayment, the Company shall deliver to each holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.

             SECTION 8.3.    CHANGE IN CONTROL.

           (a) NOTICE OF CHANGE IN CONTROL OR CONTROL EVENT. The Company
will, within two Business Days after any Responsible Officer has knowledge of
the occurrence of any Change in Control or Control Event, give written notice
of such Change in Control or Control Event to each holder of Notes UNLESS
notice in respect of such Change in Control (or the Change in Control
contemplated by such Control Event) shall have been given pursuant to
subparagraph (b) of this Section 8.3. If a Change in Control has occurred,
such notice shall contain and constitute an offer to prepay Notes as
described in subparagraph (c) of this Section 8.3 and shall be accompanied by
the certificate described in subparagraph (g) of this Section 8.3.

           (b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless (i) at least
30 Business Days prior to such action it shall have given to each holder of
Notes written notice containing and constituting an offer to prepay Notes as
described in subparagraph (c) of this Section 8.3, accompanied by the
certificate described in subparagraph (g) of this Section 8.3, and (ii)
contemporaneously with such action, it prepays all Notes required to be
prepaid in accordance with this Section 8.3.

           (c) OFFER TO PREPAY NOTES. The offer to prepay Notes contemplated
by subparagraphs (a) and (b) of this Section 8.3 shall be an offer to prepay,
in accordance with and subject to this Section 8.3, all, but not less than
all, the Notes held by each holder (in this case only, "HOLDER" in respect of
any Note registered in the name of a nominee for a disclosed beneficial owner
shall mean such beneficial owner) on a date specified in such offer (the
"PROPOSED PREPAYMENT DATE"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of this Section
8.3, such date shall be not less than 30 days and not more than 60 days after
the date of such offer (if the Proposed Prepayment Date shall not be
specified in such offer, the Proposed Prepayment Date shall be the 45th day
after the date of such offer).

                                       16
<PAGE>

           (d) ACCEPTANCE. A holder of Notes may accept or reject the offer
to prepay made pursuant to this Section 8.3 by causing a notice of such
acceptance or rejection to be delivered to the Company at least 10 Business
Days prior to the Proposed Prepayment Date. A failure by a holder of Notes to
respond to an offer to prepay made pursuant to this Section 8.3 shall be
deemed to constitute a rejection of such offer by such holder.

           (e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant to
this Section 8.3 shall be at 100% of the principal amount of such Notes,
together with interest on such Notes accrued to the date of prepayment. The
prepayment shall be made on the Proposed Prepayment Date except as provided
in subparagraph (f) of this Section 8.3

           (f) DEFERRAL PENDING CHANGE IN CONTROL. The obligation of the
Company to prepay Notes pursuant to the offers required by subparagraph (b)
and accepted in accordance with subparagraph (d) of this Section 8.3 is
subject to the occurrence of the Change in Control in respect of which such
offers and acceptances shall have been made. In the event that such Change in
Control does not occur on or prior to the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until and shall be made on the date
on which such Change in Control occurs. The Company shall keep each holder of
Notes reasonably and timely informed of (i) any such deferral of the date of
prepayment, (ii) the date on which such Change in Control and the prepayment
are expected to occur, and (iii) any determination by the Company that
efforts to effect such Change in Control have ceased or been abandoned (in
which case the offers and acceptances made pursuant to this Section 8.3 in
respect of such Change in Control shall be deemed rescinded).

           (g) OFFICER'S CERTIFICATE. Each offer to prepay the Notes pursuant
to this Section 8.3 shall be accompanied by a certificate, executed by a
Senior Financial Officer of the Company and dated the date of such offer,
specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made
pursuant to this Section 8.3; (iii) the principal amount of each Note offered
to be prepaid; (iv) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of
this Section 8.3 have been fulfilled; and (vi) in reasonable detail, the
nature and date or proposed date of the Change in Control.

           (h) EFFECT ON REQUIRED PAYMENTS. The amount of each payment of the
principal of the Notes made pursuant to this Section 8.3 shall be applied
against and reduce each of the then remaining principal payments due pursuant
to Section 8.1 by a percentage equal to the aggregate principal amount of the
Notes so paid divided by the aggregate principal amount of the Notes
outstanding immediately prior to such payment.

           (i) "CHANGE IN CONTROL" means any of the following events or
circumstances:

         if any person (as such term is used in section 13(d) and section
         14(d)(2) of the Exchange Act as in effect on the date of the Closing)
         or related persons constituting a Group, other than the Current
         Management Group, become the "beneficial owners" (as such term is used
         in Rule 13d-3

                                       17
<PAGE>

         under the Exchange Act as in effect on the date of the Closing),
         directly or indirectly, of more than 50% of the total voting power
         of all classes then outstanding of the Company's voting stock.

                  "CURRENT MANAGEMENT GROUP" shall mean and include any Group
         which includes, and is under the general direction and authority of, at
         least two of Robert Alton, David Christensen, Tom Borchert and Jon
         Anderson so long as such individuals continue to be employed in a
         managerial capacity by the Company.

                  "GROUP" shall mean any group of related persons constituting a
         "Group" for the purposes of Section 13(d) of the Exchange Act, or any
         successor provision.

           (j) CONTROL EVENT" means:

                   (i) the execution by the Company or any of its Subsidiaries
         or Affiliates of any agreement or letter of intent with respect to any
         proposed transaction or event or series of transactions or events
         which, individually or in the aggregate, may reasonably be expected to
         result in a Change in Control,

                  (ii) the execution of any written agreement which, when fully
         performed by the parties thereto, would result in a Change in Control,
         or

                 (iii) the making of any written offer by any person (as such
         term is used in section 13(d) and section 14(d)(2) of the Exchange Act
         as in effect on the date of the Closing) or related persons
         constituting a group (as such term is used in Rule 13d-5 under the
         Exchange Act as in effect on the date of the Closing) to the holders of
         the common stock of the Company, which offer, if accepted by the
         requisite number of holders, would result in a Change in Control.

             SECTION 8.4. ALLOCATION OF PARTIAL PREPAYMENTS. In the case of
each partial prepayment of the Notes pursuant to Section 8.1 or Section 8.2,
the principal amount of the Notes to be prepaid shall be allocated among all
of the Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof.

             SECTION 8.5. MATURITY; SURRENDER, ETC. In the case of each
prepayment of Notes pursuant to this Section 8, the principal amount of each
Note to be prepaid shall mature and become due and payable on the date fixed
for such prepayment, together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and after
such date, unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.

             SECTION 8.6. PURCHASE OF NOTES. The Company will not and will
not permit any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except

                                       18
<PAGE>

upon the payment or prepayment of the Notes in accordance with the terms of
Sections 8.1, 8.2 and 8.3, and the Notes. The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment
or purchase of Notes pursuant to any provision of this Agreement and no Notes
may be issued in substitution or exchange for any such Notes.

             SECTION 8.7. MAKE-WHOLE AMOUNT. The term "MAKE-WHOLE AMOUNT"
means, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the
Called Principal of such Note over the amount of such Called Principal,
PROVIDED that the Make-Whole Amount may in no event be less than zero. For
the purposes of determining the Make-Whole Amount, the following terms have
the following meanings:

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, 0.50% over the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "USD" of the Bloomberg
         Financial Markets Services Screen (or such other display as may replace
         page "USD" of the Bloomberg Financial Markets Services Screen) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H.15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (b) interpolating linearly between (1) the
         actively traded U.S. Treasury security with the duration closest to and
         greater than the Remaining Average Life and (2) the actively traded
         U.S. Treasury security with the duration closest to and less than the
         Remaining Average Life.

                  "REMAINING AVERAGE LIFE" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal

                                       19
<PAGE>

         into (ii) the sum of the products obtained by multiplying (a) the
         principal component of each Remaining Scheduled Payment with respect
         to such Called Principal by (b) the number of years (calculated to
         the nearest one-twelfth year) that will elapse between the Settlement
         Date with respect to such Called Principal and the scheduled due date
         of such Remaining Scheduled Payment.

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date, PROVIDED that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to Section 8.2 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

SECTION 9.               AFFIRMATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are
outstanding:

             SECTION 9.1. COMPLIANCE WITH LAW. The Company will, and will
cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject,
including, without limitation, ERISA and all Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such
laws, ordinances or governmental rules or regulations or failures to obtain
or maintain in effect such licenses, certificates, permits, franchises and
other governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

             SECTION 9.2. INSURANCE. The Company will, and will cause each of
its Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

             SECTION 9.3. MAINTENANCE OF PROPERTIES. The Company will, and
will cause each of its Subsidiaries to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working
order and condition (other than ordinary wear and tear), so that the business
carried on in

                                       20
<PAGE>

connection therewith may be properly conducted at all times, PROVIDED that
this Section shall not prevent the Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties if
such discontinuance is desirable in the conduct of its business and the
Company has concluded that such discontinuance could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

             SECTION 9.4. PAYMENT OF TAXES AND CLAIMS. The Company will, and
will cause each of its Subsidiaries to, file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due
and payable on such returns and all other taxes, assessments, governmental
charges, or levies imposed on them or any of their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent and all claims for which sums
have become due and payable that have or might become a Lien on properties or
assets of the Company or any Subsidiary, PROVIDED that neither the Company
nor any Subsidiary need pay any such tax or assessment or claims if (i) the
amount, applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate proceedings,
and the Company or such Subsidiary has established reserves reasonably deemed
by it to be adequate, on the books of the Company or such Subsidiary with
respect thereto or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.

             SECTION 9.5. CORPORATE EXISTENCE, ETC. The Company will at all
times preserve and keep in full force and effect its corporate existence.
Subject to Sections 10.2 and 10.3, the Company will at all times preserve and
keep in full force and effect the corporate existence of each of its
Subsidiaries and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

SECTION 10.              NEGATIVE COVENANTS.

         The Company covenants that so long as any of the Notes are
outstanding:

            SECTION 10.1. TRANSACTIONS WITH AFFILIATES. The Company will not
and will not permit any Subsidiary to enter into directly or indirectly any
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in
a comparable arm's-length transaction with a Person not an Affiliate.

            SECTION 10.2. MERGER, CONSOLIDATION, ETC. The Company shall not,
and shall not permit any Subsidiary to, consolidate with or merge with any
other Person or convey, transfer or lease substantially all of its assets in
a single transaction or series of transactions to any Person (except that a
Subsidiary may (x) consolidate with or merge with, or convey, transfer or
lease substantially all of its assets in a single transaction or series of
transactions to, the Company or another Subsidiary and (y) convey, transfer or

                                       21
<PAGE>

lease all of its assets in compliance with the provisions of Section 10.3),
PROVIDED that the foregoing restriction does not apply to the consolidation
or merger of the Company with, or the conveyance, transfer or lease of
substantially all of the assets of the Company in a single transaction or
series of transactions to, any Person so long as:

                   (a) the successor formed by such consolidation or the
         survivor of such merger or the Person that acquires by conveyance,
         transfer or lease substantially all of the assets of the Company as an
         entirety, as the case may be, shall be a solvent corporation (the
         "SUCCESSOR") organized and existing under the laws of the United States
         or any State thereof (including the District of Columbia) and, if the
         Company is not such Successor, (i) such Successor shall have executed
         and delivered to each holder of any Notes its assumption of the due and
         punctual performance and observance of each covenant and condition of
         this Agreement, the Other Agreements and the Notes and (ii) shall have
         caused to be delivered to each holder of any Notes an opinion of
         nationally recognized independent counsel, or other independent counsel
         reasonably satisfactory to the Required Holders, to the effect that all
         agreements or instruments effecting any such assumptions are
         enforceable in accordance with their terms and comply with the terms
         hereof; and

                   (b) at the time thereof and immediately after giving effect
         to such transaction, no Default or Event of Default shall have occurred
         and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of
the Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed
in this Section 10.2 from its liability under this Agreement or the Notes.

            SECTION 10.3. SALE OF ASSETS, ETC. Except as permitted under
Section 10.2, the Company will not, and will not permit any of its
Subsidiaries to, make any Asset Disposition unless:

                   (a) in the good faith opinion of the Company, the Asset
         Disposition is in exchange for consideration having a Fair Market Value
         at least equal to that of the property exchanged and is in the best
         interest of the Company or such Subsidiary; and

                   (b) immediately after giving effect to the Asset Disposition,
         no Default or Event of Default would exist; and

                   (c) immediately after giving effect to the Asset Disposition,
         the Disposition Value of all property that was the subject of any Asset
         Disposition occurring in the then current fiscal year would not exceed
         15% of Consolidated Telephone Segment Assets or 50% of Consolidated
         Non-Telephone Segment Assets, as of the end of the fiscal quarter of
         the Company immediately preceding such Asset Disposition.

         If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application or a Property Reinvestment Application within one year
after such Transfer, then such Transfer, only for the

                                       22
<PAGE>

purpose of determining compliance with subsection (c) of this Section 10.3 as
of any date, shall be deemed not to be an Asset Disposition.

            SECTION 10.4. LIENS. The Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any Lien
on or with respect to any property or asset (including, without limitation,
any document or instrument in respect of goods or accounts receivable) of the
Company or any such Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom or assign or otherwise convey
any right to receive income or profits (unless it makes, or causes to be
made, effective provision whereby the Notes will be equally and ratably
secured with any and all other obligations thereby secured, such security to
be pursuant to an agreement reasonably satisfactory to the Required Holders
and the Company provides an opinion of independent counsel reasonably
satisfactory to the Required Holders including, but not limited to, the
legal, valid and binding nature of such agreement and the relative priority
of such security interest, and, in any such case, the Notes shall have the
benefit, to the fullest extent that, and with such priority as, the holders
of the Notes may be entitled under applicable law, of an equitable Lien on
such property), except:

                   (a) Liens for taxes, assessments or other governmental
         charges which are not yet due and payable or the payment of which is
         not at the time required by Section 9.4;

                   (b) Liens of or resulting from any litigation or legal
         proceeding which are currently being contested in good faith by
         appropriate proceedings and for which the Company or such Subsidiary
         shall have set aside on its books adequate reserves with respect
         thereto;

                   (c) Liens on property or assets of any Subsidiary securing
         Debt owing to the Company or to any Wholly-Owned Subsidiary;

                   (d) Liens existing on the date of this Agreement and securing
         the Debt of the Company and its Subsidiaries referred to in items 1 and
         2 of Schedule 5.15;

                   (e) any Lien created to secure all or any part of the
         purchase price, or to secure Debt incurred or assumed to pay all or any
         part of the purchase price or cost of construction, of tangible
         property (or any improvement thereon) acquired or constructed by the
         Company or a Subsidiary after the date of the Closing including Liens
         existing on fixed assets at the time of acquisition thereof or at the
         time of acquisition by the Company or a Subsidiary of any business
         entity then owing such fixed assets, whether or not such existing Liens
         were given to secure the payment of the purchase price of the fixed
         assets to which they attach so long as they were not incurred, extended
         or renewed in contemplation of such acquisition, PROVIDED that

                            (i) any such Lien shall extend solely to the item or
                  items of such property (or improvement thereon) so acquired or
                  constructed and, if required by the terms of the instrument
                  originally creating such Lien, other property (or improvement
                  thereon) which is an improvement to or is acquired for
                  specific use in connection with such acquired or

                                       23
<PAGE>

                  constructed property (or improvement thereon) or which is
                  real property being improved by such acquired or constructed
                  property (or improvement thereon),

                           (ii) the principal amount of the Debt secured by any
                  such Lien shall at no time exceed an amount equal to 100% of
                  the Fair Market Value (as determined in good faith by the
                  board of directors of the Company) of such property (or
                  improvement thereon) at the time of such acquisition or
                  construction, and

                          (iii) any such Lien shall be created contemporaneously
                  with, or within 120 days after, the acquisition or
                  construction of such property;

                   (f) Liens incidental to the conduct of business or the
         ownership of properties and assets (including Liens in connection with
         worker's compensation, unemployment insurance and other like laws,
         warehousemen's and attorneys' liens and statutory landlords' liens) and
         Liens to secure the performance of bids, tenders or trade contracts, or
         to secure statutory obligations, indemnity, surety or appeal bonds or
         other Liens of like general nature, in any such case not incurred in
         connection with the incurrence of Debt; PROVIDED that such Liens do
         not, individually or in the aggregate, materially impair the use of
         such property encumbered by any such Lien in the operation of the
         business of the Company and its Subsidiaries, taken as a whole, or the
         value of the property so encumbered for purposes of such business;
         PROVIDED FURTHER in each case, the obligation secured is not overdue
         or, if overdue, is being contested in good faith by appropriate actions
         or proceedings;

                   (g) minor survey exceptions or minor encumbrances, easements
         or reservations, or rights of others for rights-of-way, utilities and
         other similar purposes, or zoning or other restrictions as to the use
         of real properties, which are necessary for the conduct of the
         activities of the Company and its Subsidiaries or which customarily
         exist on properties of Persons engaged in similar activities and
         similarly situated and which do not in any event materially impair
         their use in the operation of the business of the Company and its
         Subsidiaries, taken as a whole;

                   (h) any Lien renewing, extending or refunding any Lien
         permitted by paragraph (d) of this Section 10.4, PROVIDED that (i) the
         principal amount of Debt secured by such Lien immediately prior to such
         extension, renewal or refunding is not increased or the maturity
         thereof reduced, (ii) such Lien is not extended to any other property,
         and (iii) immediately after such extension, renewal or refunding no
         Default or Event of Default would exist; and

                   (i) other Liens not otherwise permitted by paragraphs (a)
         through (h) securing Debt of the Company or any Subsidiary permitted
         under Section 10.6.

For the purposes of this Section 10.4, any Person becoming a Subsidiary after
the date of this Agreement shall be deemed to have incurred all of its then
outstanding Liens at the time it becomes a Subsidiary, and any Person
extending, renewing or refunding any Debt secured by any Lien shall be deemed
to have incurred such Lien at the time of such extension, renewal or
refunding.

                                       24
<PAGE>

            SECTION 10.5. CONSOLIDATED NET WORTH. The Company will not, at
any time, permit Consolidated Net Worth to be less than the sum of (a)
$34,000,000, plus (b) an aggregate amount equal to 40% of its aggregate
Consolidated Net Earnings (but only if a positive number) for the period
beginning on the date of Closing and ending at the end of the Company's most
recently completed fiscal quarter.

            SECTION 10.6. LIMITATIONS ON PRIORITY DEBT. (a) The Company will
not, at any time, permit Priority Debt to exceed 15% of Consolidated Net
Worth.

           (b) Any corporation which becomes a Subsidiary after the date
hereof shall for all purposes of this Section 10.6 be deemed to have created,
assumed or incurred at the time it becomes a Subsidiary all Debt of such
corporation existing immediately after it becomes a Subsidiary.

            SECTION 10.7. CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. The
Company shall not, at any time, permit the ratio of (i) Consolidated Funded
Debt to (ii) EBITDA, to be greater than 3.00 to 1.00 determined, in the case
of EBITDA, as of the end of each fiscal quarter for the period consisting of
the immediately preceding four fiscal quarters, (each such rolling four
fiscal quarter period being treated as a single accounting period).

            SECTION 10.8. LINE OF BUSINESS. The Company will not, and will
not permit any of its Subsidiaries to, engage to any substantial extent in
any business other than the businesses in which the Company and its
Subsidiaries are engaged on the date of this Agreement as described in the
Memorandum and businesses reasonably related thereto or in furtherance
thereof.

         In addition, the Company will not, and will not permit any of its
Subsidiaries to, engage in any business if, as a result, Consolidated
Telephone Segment Assets would be less than 51% of Consolidated Total Assets.

SECTION 11.              EVENTS OF DEFAULT.

         An "EVENT OF DEFAULT" shall exist if any of the following conditions
or events shall occur and be continuing:

                   (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                   (b) the Company defaults in the payment of any interest on
         any Note for more than five Business Days after the same becomes due
         and payable; or

                   (c) the Company defaults in the performance of or compliance
         with any term contained in Sections 10.2 through 10.7; or

                                       25
<PAGE>

                   (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from any holder of a Note (any
         such written notice to be identified as a "NOTICE OF DEFAULT" and to
         refer specifically to this paragraph (d) of Section 11); or

                   (e) any representation or warranty made in writing by or on
         behalf of the Company or by any officer of the Company in this
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any Material respect on the date as of which made; or

                   (f) (i) the Company or any Subsidiary is in default (as
         principal or as guarantor or other surety) in the payment of any
         principal of or premium or make-whole amount or interest on any Debt
         that is outstanding in an aggregate principal amount of at least
         $1,000,000 beyond any period of grace provided with respect thereto, or
         (ii) the Company or any Subsidiary is in default in the performance of
         or compliance with any term of any evidence of any Debt in an aggregate
         outstanding principal amount of at least $1,000,000 or of any mortgage,
         indenture or other agreement relating thereto or any other condition
         exists, and as a consequence of such default or condition such Debt has
         become, or has been declared due and payable before its stated maturity
         or before its regularly scheduled dates of payment, or (iii) as a
         consequence of the occurrence or continuation of any event or condition
         (other than the passage of time or the right of the holder of Debt to
         convert such Debt into equity interests), (x) the Company or any
         Subsidiary has become obligated to purchase or repay Debt before its
         regular maturity or before its regularly scheduled dates of payment in
         an aggregate outstanding principal amount of at least $1,000,000, or
         (y) one or more Persons have required the Company or any Subsidiary so
         to purchase or repay such Debt; or

                   (g) the Company or any Subsidiary (i) is generally not
         paying, or admits in writing its inability to pay, its debts as they
         become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdiction, (iii) makes an
         assignment for the benefit of its creditors, (iv) consents to the
         appointment of a custodian, receiver, trustee or other officer with
         similar powers with respect to it or with respect to any substantial
         part of its property, (v) is adjudicated as insolvent or to be
         liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                   (h) a court or Governmental Authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any of its Subsidiaries, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or approving a petition for relief or reorganization or any other
         petition in bankruptcy or for liquidation or to take advantage of any

                                       26
<PAGE>

         bankruptcy or insolvency law of any jurisdiction, or ordering the
         dissolution, winding-up or liquidation of the Company or any of its
         Subsidiaries, or any such petition shall be filed against the Company
         or any of its Subsidiaries and such petition shall not be dismissed
         within 60 days; or

                   (i) a final judgment or judgments for the payment of money
         aggregating in excess of $1,000,000 are rendered against one or more of
         the Company and its Subsidiaries and which judgments are not, within 45
         days after entry thereof, bonded, discharged or stayed pending appeal,
         or are not discharged within 45 days after the expiration of such stay;
         or

                   (j) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under Section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $1,000,000, (iv) the Company or any ERISA Affiliate shall have
         incurred or is reasonably expected to incur any liability pursuant to
         Title I or IV of ERISA or the penalty or excise tax provisions of the
         Code relating to employee benefit plans, (v) the Company or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
         any Subsidiary establishes or amends any employee welfare benefit plan
         that provides post-employment welfare benefits in a manner that would
         increase the liability of the Company or any Subsidiary thereunder; and
         any such event or events described in clauses (i) through (vi) above,
         either individually or together with any other such event or events,
         could reasonably be expected to have a Material Adverse Effect.

As used in Section 11(v), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

SECTION 12.              REMEDIES ON DEFAULT, ETC.

            SECTION 12.1. ACCELERATION. (a) If an Event of Default with
respect to the Company described in paragraph (g) or (h) of Section 11 (other
than an Event of Default described in clause (i) of paragraph (g) or
described in clause (vi) of paragraph (g) by virtue of the fact that such
clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes
then outstanding shall automatically become immediately due and payable.

           (b) If any other Event of Default has occurred and is continuing,
any holder or holders of more than 25% in principal amount of the Notes at
the time outstanding may at any time at its or their option, by notice or
notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.

                                       27
<PAGE>

           (c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may at any time, at its option,
by notice or notices to the Company, declare all the Notes held by it to be
immediately due and payable.

         Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (i) all accrued and
unpaid interest thereon and (ii) the Make-Whole Amount determined in respect
of such principal amount (to the full extent permitted by applicable law),
shall all be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are hereby
waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free
from repayment by the Company (except as herein specifically provided for),
and that the provision for payment of a Make-Whole Amount by the Company in
the event that the Notes are prepaid or are accelerated as a result of an
Event of Default, is intended to provide compensation for the deprivation of
such right under such circumstances.

            SECTION 12.2. OTHER REMEDIES. If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under Section 12.1,
the holder of any Note at the time outstanding may proceed to protect and
enforce the rights of such holder by an action at law, suit in equity or
other appropriate proceeding, whether for the specific performance of any
agreement contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.

            SECTION 12.3. RESCISSION. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of Section 12.1, the
holders of not less than 76% in principal amount of the Notes then
outstanding, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any
Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of
Default and Defaults, other than non-payment of amounts that have become due
solely by reason of such declaration, have been cured or have been waived
pursuant to Section 17, and (c) no judgment or decree has been entered for
the payment of any monies due pursuant hereto or to the Notes. No rescission
and annulment under this Section 12.3 will extend to or affect any subsequent
Event of Default or Default or impair any right consequent thereon.

            SECTION 12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or by any Note upon any holder thereof
shall be exclusive of any other right, power or remedy referred to herein or
therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15,
the Company

                                       28
<PAGE>

will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

SECTION 13.              REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

            SECTION 13.1. REGISTRATION OF NOTES. The Company shall keep at
its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of
one or more Notes, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in whose name any
Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of
a Note that is an Institutional Investor promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered
holders of Notes.

            SECTION 13.2. TRANSFER AND EXCHANGE OF NOTES. Upon surrender of
any Note at the principal executive office of the Company for registration of
transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of such Note or his attorney duly
authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and
deliver, at the Company's expense (except as provided below), one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which
interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000, PROVIDED
that if necessary to enable the registration of transfer by a holder of its
entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee of a Note, or purchaser of a participation therein,
shall, by its acceptance of such Note be deemed to make the same
representations to the Company regarding the Note or participation as you and
the Other Purchasers have made pursuant to Section 6.2, PROVIDED, that such
entity may (in reliance upon information provided by the Company, which shall
not be unreasonably withheld) make a representation to the effect that the
purchase by such entity of any Note will not constitute a non-exempt
prohibited transaction under section 406(a) of ERISA.

            SECTION 13.3. REPLACEMENT OF NOTES. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any Note (which evidence shall be, in the
case of an Institutional Investor, notice from such Institutional Investor of
such ownership and such loss, theft, destruction or mutilation), and

                                       29
<PAGE>

                   (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (PROVIDED that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note with a minimum net worth of at least $10,000,000, such Person's
         own unsecured agreement of indemnity shall be deemed to be
         satisfactory), or

                   (b) in the case of mutilation, upon surrender and
         cancellation thereof,

the Company at its own expense shall execute and deliver, in lieu thereof, a
new Note, dated and bearing interest from the date to which interest shall
have been paid on such lost, stolen, destroyed or mutilated Note or dated the
date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.

SECTION 14.              PAYMENTS ON NOTES.

            SECTION 14.1. PLACE OF PAYMENT. Subject to Section 14.2, payments
of principal, Make-Whole Amount, if any, and interest becoming due and
payable on the Notes shall be made in Mankato, Minnesota at the principal
office of the Company in such jurisdiction. The Company may at any time, by
notice to each holder of a Note, change the place of payment of the Notes so
long as such place of payment shall be either the principal office of the
Company in such jurisdiction or the principal office of a bank or trust
company in such jurisdiction.

            SECTION 14.2. HOME OFFICE PAYMENT. So long as you or your nominee
shall be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below
your name in Schedule A, or by such other method or at such other address as
you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of
any notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full
of any Note, you shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive
office or at the place of payment most recently designated by the Company
pursuant to Section 14.1.

SECTION 15.              EXPENSES, ETC.

            SECTION 15.1. TRANSACTION EXPENSES. Whether or not the
transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys' fees of a special counsel
and, if reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in respect of
this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce
or defend) any rights under this Agreement or the Notes or in responding to
any subpoena or other legal process or

                                       30
<PAGE>

informal investigative demand issued in connection with this Agreement or the
Notes, or by reason of being a holder of any Note, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in connection
with any work-out or restructuring of the transactions contemplated hereby or
the Notes. The Company will pay, and will save you and each other holder of a
Note harmless from, all claims in respect of any fees, costs or expenses, if
any, of brokers and finders (other than those retained by you).

            SECTION 15.2. SURVIVAL. The obligations of the Company under this
Section 15 will survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the Notes, and the
termination of this Agreement.

SECTION 16.              SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
                       AGREEMENT.

         All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you
or any other holder of a Note. All statements contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant to this
Agreement shall be deemed representations and warranties of the Company under
this Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.

SECTION 17.              AMENDMENT AND WAIVER.

            SECTION 17.1. REQUIREMENTS. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment
or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof,
or any defined term (as it is used therein), will be effective as to you
unless consented to by you in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount
on, the Notes, (ii) change the percentage of the principal amount of the
Notes the holders of which are required to consent to any such amendment or
waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

            SECTION 17.2. SOLICITATION OF HOLDERS OF NOTES.

           (a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required,
to enable such holder to make an informed and considered decision with
respect to

                                       31
<PAGE>

any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.

           (b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and provisions
hereof or of the Notes unless such remuneration is concurrently paid, or
security is concurrently granted, on the same terms, ratably to each holder
of Notes then outstanding whether or not such holder consented to such waiver
or amendment.

            SECTION 17.3. BINDING EFFECT, ETC. Any amendment or waiver
consented to as provided in this Section 17 applies equally to all holders of
Notes and is binding upon them and upon each future holder of any Note and
upon the Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to
or affect any obligation, covenant, agreement, Default or Event of Default
not expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may
from time to time be amended or supplemented.

            SECTION 17.4. NOTES HELD BY COMPANY, ETC. Solely for the purpose
of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to
any amendment, waiver or consent to be given under this Agreement or the
Notes, or have directed the taking of any action provided herein or in the
Notes to be taken upon the direction of the holders of a specified percentage
of the aggregate principal amount of Notes then outstanding, Notes directly
or indirectly owned by the Company or any of its Affiliates shall be deemed
not to be outstanding.

SECTION 18.              NOTICES.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:

                   (i) if to you or your nominee, to you or it at the address
         specified for such communications in Schedule A, or at such other
         address as you or it shall have specified to the Company in writing,

                                       32
<PAGE>

                  (ii) if to any other holder of any Note, to such holder at
         such address as such other holder shall have specified to the Company
         in writing, or

                 (iii) if to the Company, to the Company at its address set
         forth at the beginning hereof to the attention of Chief Financial
         Officer, or at such other address as the Company shall have specified
         to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.              REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) financial statements, certificates and other
information previously or hereafter furnished to you, may be reproduced by
you by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.

SECTION 20.              CONFIDENTIAL INFORMATION.

         For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, PROVIDED
that such term does not include information that (a) was publicly known or
otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting
on your behalf, (c) otherwise becomes known to you other than through
disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise publicly
available. You will maintain the confidentiality of such Confidential
Information in accordance with procedures adopted by you in good faith to
protect confidential information of third parties delivered to you, PROVIDED
that you may deliver or disclose Confidential Information to (i) your
directors, trustees, officers, employees, agents, attorneys and affiliates
(to the extent such disclosure reasonably relates to the administration of
the investment represented by your Notes), (ii) your financial advisors and
other professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section 20,
(iii) any other holder of any Note, (iv) any Institutional Investor to which
you sell or offer to sell such

                                       33
<PAGE>

Note or any part thereof or any participation therein (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (v) any Person from which you
offer to purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about your
investment portfolio or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to
which you are a party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20
as though it were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this
Agreement or its nominee or any other holder that shall have previously
delivered such a confirmation), such holder will confirm in writing that it
is bound by the provisions of this Section 20.

SECTION 21.              SUBSTITUTION OF PURCHASER.

         You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and
such Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted
as a purchaser hereunder and such Affiliate thereafter transfers to you all
of the Notes then held by such Affiliate, upon receipt by the Company of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall no longer be deemed to refer
to such Affiliate, but shall refer to you, and you shall have all the rights
of an original holder of the Notes under this Agreement.

SECTION 22.              MISCELLANEOUS.

            SECTION 22.1. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and
assigns (including, without limitation, any subsequent holder of a Note)
whether so expressed or not.

                                       34
<PAGE>

            SECTION 22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or Make-Whole Amount or interest on any Note that is due on a
date other than a Business Day shall be made on the next succeeding Business
Day without including the additional days elapsed in the computation of the
interest payable on such next succeeding Business Day.

            SECTION 22.3. SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall (to the
full extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction.

            SECTION 22.4. CONSTRUCTION. Each covenant contained herein shall
be construed (absent express provision to the contrary) as being independent
of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.

            SECTION 22.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.

            SECTION 22.6. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be
governed by, the law of the State of Minnesota excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.

                                    * * * * *

                                       35
<PAGE>

         If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.

                                       Very truly yours,

                                       HICKORY TECH CORPORATION

                                       By
                                         ----------------------------
                                       Its
                                          ---------------------------

The foregoing is hereby agreed to as of the date thereof.

[Variation]

By
  -------------------------------
Its
   ------------------------------

                                       36
<PAGE>

                                                              PRINCIPAL AMOUNT
         NAME AND ADDRESS                                      OF NOTES TO BE
           OF PURCHASER                                           PURCHASED

XXXX XXXX                                                         $X,X00,000
  XXXX XXXX
XXXX XXXX

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Hickory Tech Corporation, 7.11% Senior Notes due April 1, 2012, PPN 429060
A* 7, principal, premium or interest") to:

         XXXX Bank
         XXXX, XXXX
         ABA #XXXXXXXXX

         For credit to:  XXXXX XXXXX
                         Account #XXX-XXXXX

Notices

All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-XXXXXXX

                                  SCHEDULE A
                              (to Note Agreement)

<PAGE>

                                  DEFINED TERMS

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

GENERAL PROVISIONS

         Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the express
requirements of this Agreement.

         Where any provision in this Agreement refers to action to be taken
by any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether the action in question is taken directly or
indirectly by such Person.

         "AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person, and (b) any Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or equity
interests of the Company or any Subsidiary or any corporation of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "AFFILIATE" is a reference to an Affiliate of
the Company.

         "ACQUISITION" shall mean the acquisition by the Company of eleven
new exchanges from US WEST representing 12,400 access lines in northern Iowa
pursuant to the Agreement for Purchase and Sale of Exchanges dated as of June
15, 1995 between Hickory Tech Corporation and US West Communications, Inc.

         "ASSET DISPOSITION" means any Transfer except:

                   (a) any Transfer from a Subsidiary to the Company or a
         Subsidiary so long as immediately before and immediately after the
         consummation of any such Transfer and after giving effect thereto, no
         Default or Event of Default exists; and

                   (b) any Transfer made in the ordinary course of business and
         involving only property that is either (i) inventory held for sale or
         (ii) equipment, fixtures, supplies or materials

                                  SCHEDULE B
                         (to Note Purchase Agreement)

<PAGE>

         no longer required in the operation of the business of the Company or
         any of its Subsidiaries or that is obsolete.

         "BUSINESS DAY" means (a) for the purposes of Section 8.7 only, any
day other than a Saturday, a Sunday or a day on which commercial banks in New
York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in Minneapolis, Minnesota or New
York, New York are required or authorized to be closed.

         "CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset
and the incurrence of a liability in accordance with GAAP or, with respect to
which the amount of the asset and liability thereunder as if so capitalized,
should be disclosed in a note to the lessee's balance sheet.

         "CAPITAL LEASE OBLIGATION" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on a balance sheet of such Person.

         "CLOSING" is defined in Section 3.

         "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to
time.

         "COMPANY" means Hickory Tech Corporation, a Minnesota corporation.

         "CONFIDENTIAL INFORMATION" is defined in Section 20.

         "CONSOLIDATED NET WORTH" means, at any time stockholder's equity of
the Company and its Subsidiaries as such amount would be shown on a
consolidated balance sheet of the Company and its Subsidiaries as of such
time prepared in accordance with GAAP.

         "CONSOLIDATED FUNDED DEBT" means, as of any date of determination,
the total of all Funded Debt of the Company and its Subsidiaries outstanding
on such date, after eliminating all offsetting debits and credits between the
Company and its Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Company and its Subsidiaries in accordance with GAAP.

         "CONSOLIDATED NET EARNINGS" for any period shall mean the gross
revenues of the Company and its Subsidiaries for such period LESS all
expenses and other proper charges, determined on a consolidated basis in
accordance with GAAP after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:

                                       2
<PAGE>

                   (a) any extraordinary gains or losses determined in
         accordance with GAAP; and

                   (b) net earnings of any business entity (other than a
         Subsidiary of the Company) in which the Company or any Subsidiary of
         the Company has an ownership interest unless such net earnings shall
         have actually have been received by the Company or a Subsidiary of the
         Company in the form of cash distributions.

         "CONSOLIDATED TOTAL ASSETS" shall mean, as of the date of any
determination thereof, total assets of the Company and its Subsidiaries
determined on a consolidated basis in accordance with GAAP eliminating
intercompany items.

         "CONSOLIDATED NON-TELEPHONE SEGMENT ASSETS" means the remainder of
Consolidated Total Assets MINUS Consolidated Telephone Segment Assets.

         "CONSOLIDATED TELEPHONE SEGMENT ASSETS" means, as of any date of
determination thereof, the sum of all assets of the Company and its
Subsidiaries which are attributable to the telephone operations as determined
on a consolidated basis in accordance with GAAP eliminating intercompany
items, and including, but not limited to, those assets related to local
exchange telephone services, fiber optic transport network, operator
assistance, network tandem switching, switched and dedicated private line
service, directory advertising, wireless communications, resale of
long-distance and other services and internet services.

         "CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of
Consolidated Net Worth and Consolidated Funded Debt.

         "DEBT" means, with respect to any Person, without duplication,

                   (a) its liabilities for borrowed money;

                   (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including, without limitation, all
         liabilities created or arising under any conditional sale or other
         title retention agreement with respect to any such property);

                   (c) its Capital Lease Obligations;

                   (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                   (e) all obligations of such Person in respect of acceptances
         or letters of credit or other credit enhancement instruments issued or
         created for the account of any such Person and

                                       3
<PAGE>

         reimbursement obligations in respect of credit enhancement instruments
         which are, in substance, financial guaranties;

                   (f) all Swaps of such Person; and

                   (g) any Guaranty of such Person with respect to liabilities
         of a type described in any of clauses (a) through (f) hereof.

Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP, HOWEVER, Debt shall not
include unfunded obligations relating to any Plan of such Person.

         "DEBT PREPAYMENT APPLICATION" means, with respect to any Transfer of
property, the application by the Company or its Subsidiaries of cash in an
amount equal to the Net Proceeds Amount with respect to such Transfer to pay
Senior Funded Debt of the Company (other than Senior Funded Debt owing to the
Company, any of its Subsidiaries or any Affiliate and Senior Funded Debt in
respect of any revolving credit or similar credit facility providing the
Company or any of its Subsidiaries with the right to obtain loans or other
extensions of credit from time to time, except to the extent that in
connection with such payment of Senior Funded Debt the availability of credit
under such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Senior Funded Debt
(any such Senior Funded Debt being herein referred to as "REVOLVING FUNDED
DEBT")), PROVIDED THAT in the course of making such application the Company
shall offer to prepay each outstanding Note in accordance with Section 8.2 in
a principal amount which, when added to the Make-Whole Amount applicable
thereto, equals the Ratable Portion for such Note. If any holder of a Note
fails to accept such offer of prepayment, then, for purposes of the preceding
sentence only, the Company nevertheless will be deemed to have paid Senior
Funded Debt in an amount equal to the Ratable Portion for such Note. "RATABLE
PORTION" for any Note means an amount equal to the product of (x) the Net
Proceeds Amount being so applied to the payment of Senior Funded Debt
multiplied by (y) a fraction the numerator of which is the outstanding
principal amount of such Note and the denominator of which is the aggregate
principal amount of Senior Funded Debt of the Company and its Subsidiaries
other than Revolving Funded Debt.

         "DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become
an Event of Default.

         "DEFAULT RATE" means that rate of interest that is the greater of
(i) 2.0% per annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes or (ii) 2.00% over the rate of interest publicly
announced by The Chase Manhattan Bank N.A. in New York, New York as its
"base" or "prime" rate.

         "DISPOSITION VALUE" means, at any time, with respect to any property

                                       4
<PAGE>

                   (a) in the case of property that does not constitute
         Subsidiary Stock, the book value thereof, valued at the time of such
         disposition in good faith by the Company, and

                   (b) in the case of property that constitutes Subsidiary
         Stock, an amount equal to that percentage of book value of the assets
         of the Subsidiary that issued such stock as is equal to the percentage
         that the book value of such Subsidiary Stock represents of the book
         value of all of the outstanding capital stock of such Subsidiary
         (assuming, in making such calculations, that all Securities convertible
         into such capital stock are so converted and giving full effect to all
         transactions that would occur or be required in connection with such
         conversion) determined at the time of the disposition thereof, in good
         faith by the Company.

         "EBITDA" means, in respect of any period, the sum of (a)
Consolidated Net Earnings for such period plus, to the extent deducted in the
determination of Consolidated Net Earnings for such period, (b) Interest
Charges, (c) taxes imposed on or measured by income or excess profits and (d)
the amount of all depreciation and amortization allowances, in each case, of
the Company and its Subsidiaries. For purposes of any determination of EBITDA
pursuant to Section 10.7, (i) "EBITDA" (determined in a manner consistent
with the immediately preceding sentence of this definition) which were earned
in the period of determination by any business entity acquired by the Company
or any of its Subsidiaries during such period of determination shall be
included in any determination of "EBITDA", PROVIDED that there shall be a
reasonable basis consistent with GAAP for the computation of such "EBITDA"
and, concurrently with such determination, the Company shall have furnished
to the holders of the Notes audited financial statements or other financial
information reasonably satisfactory to the Required Holders with respect to
such business entity demonstrating to the reasonable satisfaction of the
Required Holders the basis for the including and computations of such
"EBITDA" and (ii) "EBITDA" (determined in a manner consistent with the
immediately preceding sentence of this definition) which were earned in the
period of determination by any business entity divested by the Company or any
of its Subsidiaries during such period shall be excluded from a determination
of "EBITDA."

         "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.

         "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

         "EVENT OF DEFAULT" is defined in Section 11.

                                       5
<PAGE>

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and an
informed and willing seller (neither being under a compulsion to buy or sell).

         "FUNDED DEBT" means, with respect to any Person, (i) all Debt of
such Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, more than
one year from, or is directly or indirectly renewable or extendible at the
option of the obligor in respect thereof to a date more than one year
(including, without limitation, an option of such obligor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of more than one year) from, the date of the creation thereof
(ii) Capitalized Lease Obligations and (iii) any Guaranty of Funded Debt of
others, PROVIDED, HOWEVER, that FUNDED DEBT shall not include, to the extent
otherwise included therein, Debt outstanding under any credit line, revolving
credit or similar agreement which Debt is fully paid (and not refinanced) for
a period of not less than 30 consecutive days in the immediately preceding 12
calendar month period pursuant to the terms of such agreement.

         "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.

         "GOVERNMENTAL AUTHORITY" means

                   (a) the government of

                            (i) the United States of America or any State or
                  other political subdivision thereof, or

                           (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                   (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other
Person in any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent or
otherwise, by such Person:

                                       6
<PAGE>

                   (a) to purchase such indebtedness or obligation or any
         property constituting security therefor;

                   (b) to advance or supply funds (i) for the purchase or
         payment of such indebtedness or obligation, or (ii) to maintain any
         working capital or other balance sheet condition or any income
         statement condition of any other Person or otherwise to advance or make
         available funds for the purchase or payment of such indebtedness or
         obligation;

                   (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such indebtedness or
         obligation of the ability of any other Person to make payment of the
         indebtedness or obligation; or

                   (d) otherwise to assure the owner of such indebtedness or
         obligation against loss in respect thereof.

In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.

         "HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health
or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage,
seepage, or filtration of which is or shall be restricted, prohibited or
penalized by any applicable law (including, without limitation, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls).

         "HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.

         "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company,
savings and loan association or other financial institution, any pension
plan, any investment company, any insurance company, any broker or dealer, or
any other similar financial institution or entity, regardless of legal form.

         "INTEREST CHARGES" means, with respect to any period, all interest
and all amortization of debt discount and expense on any particular Debt of
the Company and its Subsidiaries (including, without limitation,
payment-in-kind, zero coupon and other like securities) for which such
calculations are being made, including imputed interest on Capital Leases and
all fees and commissions for letters of credit and bankers' acceptance
financings and the net interest costs of Swaps.

                                       7
<PAGE>

         "LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or
title of any vendor, lessor, lender or other secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person
(including in the case of stock, stockholder agreements, voting trust
agreements and all similar arrangements).

         "MAKE-WHOLE AMOUNT" is defined in Section 8.7.

         "MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company
and its Subsidiaries taken as a whole.

         "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Subsidiaries taken as a whole, or (b) the ability of the
Company to perform its obligations under this Agreement and the Notes, or (c)
the validity or enforceability of this Agreement or the Notes.

         "MEMORANDUM" is defined in Section 5.3.

         "MINORITY INTERESTS" shall mean any shares of stock of any class of
a Subsidiary of the Company (other than directors' qualifying shares as
required by law) that are not owned by the Company and/or one or more
Subsidiaries of the Company. Minority Interests shall be valued by valuing
Minority Interests constituting Preferred Stock at the voluntary or
involuntary liquidating value of such Preferred Stock, whichever is greater,
and by valuing Minority Interests constituting common stock at the book value
of capital and surplus applicable thereto adjusted, if necessary, to reflect
any changes from the book value of such common stock required by the
foregoing method of valuing Minority Interests in Preferred Stock.

         "MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).

         "NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
Property by any Person, an amount equal to the DIFFERENCE of

                   (a) the aggregate amount of the consideration (valued at the
         Fair Market Value of such consideration at the time of the consummation
         of such Transfer) received by such Person in respect of such Transfer,
         MINUS

                   (b) all ordinary and reasonable out-of-pocket costs and
         expenses actually incurred by such Person in connection with such
         Transfer.

         "NOTES" is defined in Section 1.

                                       8
<PAGE>

         "OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend
to the subject matter of such certificate.

         "OTHER AGREEMENTS" is defined in Section 2.

         "OTHER PURCHASERS" is defined in Section 2.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.

         "PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "PLAN" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may
have any liability.

         "PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation
as to the payment of dividends or the payment of any amount upon liquidation
or dissolution of such corporation.

         "PRIORITY DEBT" shall mean as of the date of any determination
thereof, the sum of (i) Debt of the Company or any Subsidiary secured by a
Lien described in Section 10.4(i) PLUS (but without duplication) (ii) Debt of
Subsidiaries.

         "PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
choate or inchoate.

         "PROPERTY REINVESTMENT APPLICATION" means, with respect to any
Transfer of property, the satisfaction of each of the following conditions:

                   (a) an amount equal to the Net Proceeds Amount with respect
         to such Transfer shall have been applied to the acquisition by the
         Company, or any of its Subsidiaries making such Transfer, of property
         that upon such acquisition is unencumbered by any Lien (other than
         Liens described in subparagraphs (a) through (i), inclusive, of Section
         10.4) and that

                            (i) constitutes property that is (x) property
                  classifiable under GAAP as non-current to the extent that such
                  proceeds are derived from the transfer of property that was
                  properly classifiable as non-current, and otherwise properly
                  classifiable as either current or non-current, and (y) to be
                  used in the ordinary course of business of the Company and the
                  Subsidiaries, or

                                       9
<PAGE>

                           (ii) constitutes equity interests of a Person that
                  shall be, on or prior to the time of such acquisition, a
                  Wholly-Owned Subsidiary of the Company, and that shall invest
                  the proceeds of such acquisition in property of the nature
                  described in the immediately preceding clause (i); and

                   (b) the Company shall have delivered a certificate of a
         Responsible Officer of the Company to each holder of a Note referring
         to Section 10.3 and identifying the property that was the subject of
         such Transfer, the Disposition Value of such property, and the nature,
         terms, amount and application of the proceeds from the Transfer.

         "QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.

         "REQUIRED HOLDERS" means, at any time, the holders of at least
66-2/3% in principal amount of the Notes at the time outstanding (exclusive
of Notes then owned by the Company or any of its Affiliates).

         "RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration of
the relevant portion of this Agreement.

         "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.

         "SECURITY" has the meaning set forth in section 2(1) of the
Securities Act.

         "SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

         "SENIOR FUNDED DEBT" means (a) any Funded Debt of the Company which
is not in any manner subordinated in right of payment or security in any
respect to the Debt evidenced by the Notes and (b) any Funded Debt of any
Subsidiary.

         "SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries (unless such partnership can
and does ordinarily take major business actions without the prior approval of
such Person or one or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.

                                       10
<PAGE>

         "SUBSIDIARY STOCK" means, with respect to any Person, the stock (or
any options or warrants to purchase stock or other Securities exchangeable
for or convertible into stock) of any Subsidiary of such Person.

         "SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.

         "TRANSFER" means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of its
property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case, (a)
the Disposition Value of any property subject to each such separate Transfer
and (b) the amount of Consolidated Total Assets attributable to any property
subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of, and the aggregate Consolidated
Total Assets attributable to, all property subject to all such separate
Transfers to each such separate Transfer on a proportionate basis.

                                       11
<PAGE>

SECTION 5.4(a)(i) - SUBSIDIARIES

<TABLE>
<CAPTION>
                 SUBSIDIARY                 NUMBER OF SHARES     JURISDICTION OF INCORPORATION
<S>                                         <C>                  <C>
Mankato Citizens Telephone Company               429,714                  Minnesota

Mid-Communications, Inc.                          13,791                  Minnesota

Cable Network, Inc.                                3,000                  Minnesota

Amana Colonies Telephone Company                 100,000                  Minnesota

Computoservice, Inc. (a)                             560                  Minnesota

Collins Communications System Co.                 16,053                  Minnesota

Digital Techniques, Inc.                         477,057                    Texas

Crystal Communications, Inc.                       1,000                  Minnesota

Heartland Telecommunications
Company of Iowa                                    1,000                  Minnesota

</TABLE>

All such subsidiaries are 100%-owned by Hickory Tech Corporation.

         (a)      Includes a wholly owned subsidiary, National Independent
                  Billing, Inc., a Minnesota corporation

SECTION 5.4(a)(ii) -- AFFILIATES OTHER THAN SUBSIDIARIEs

                                     -None-

                                  SCHEDULE 5.4
                          (to Note Purchase Agreement)

<PAGE>

SECTION 5.4(a)(iii) -- DIRECTORS AND SENIOR OFFICERS OF COMPANy

                                    DIRECTORS

                              Robert D. Alton, Jr.
                                Lyle T. Bosacker
                                 Robert K. Else
                                James H. Holdrege
                                Lyle G. Jacobson
                              R. Wynn Kearney, Jr.
                                Starr J. Kirklin
                              Brett M. Taylor, Jr.

                                    OFFICERS
                   Robert D. Alton, Jr. - Chairman, President
                           and Chief Executive Officer
                        Jon L. Anderson - Vice President
                       Thomas R. Borchert - Vice President
                  David A. Christensen - Vice President, Chief
                   Financial Officer, Treasurer and Secretary
                         Mary T. Jacobs - Vice President
                       Bruce H. Malmgren - Vice President
                        David H. Rowley - Vice President

                                       2
<PAGE>
The financial statements delivered to each purchaser:

DELIVERED IN CONJUNCTION WITH CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

                  Annual Report for Year ended December 31, 1995

                  SEC Form 10-K for Year ended December 31, 1995

DELIVERED SUBSEQUENT TO PURCHASER'S BID ACCEPTANCE:

                  Annual Report for Year ended December 31, 1996

                                  SCHEDULE 5.5
                          (to Note Purchase Agreement)

<PAGE>

                           GOVERNMENTAL AUTHORIZATIONS

On May 30, 1996, the Iowa Utilities Board approved the Acquisition.

On June 25, 1996, the South Dakota Public Utilities Commission approved the
Acquisition.

On September 9, 1996, the Minnesota Public Utilities Commission approved the
Acquisition.

(Note:  three states were involved because of customer location)

On February 14, 1997, the Federal Communications Commission approved an
application in connection with the Acquisition, and this constituted final
regulatory approval.

On March 4, 1997 the Federal Trade Commission ruled on the Premerger
Notification filing (Hart-Scott-Rodino Antitrust Act) in connection with the
Acquisition and granted authorization without comment.

                                  SCHEDULE 5.7
                          (to Note Purchase Agreement)

<PAGE>

                    HICKORY TECH CORPORATION AND SUBSIDIARIES
                    DEBT DESCRIPTIONS FOLLOWED BY COLLATERAL

                             Amounts as of 12/31/96

                See following excerpt from 12/31/96 Annual Report

NOTE 6 - DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
           (DOLLARS IN THOUSANDS)            1996                1995
                                             ----                ----
<S>                                          <C>                <C>
1.    Notes Payable to Rural Utilities
      Service, 2% Due November 2003           $ 935             $1,119

2.    Notes Payable to Rural Telephone
      Bank, 4% Due April 2007                   154                174
                                              -----             ------

TOTAL                                         1,089              1,293

Less Current Maturities                         212                206
                                              -----             ------
Long-Term Debt                                $ 887             $1,087
                                              =====             ======

</TABLE>

The collateral for the notes payable to the Rural Utilities Service (RUS) and
the Rural Telephone Bank (RTB) is exclusively the property, plant and
equipment of Mid-Communications, Inc.

Annual requirements for principal payments for the four years subsequent to
1997 are as follows: 1998 -- $217,100; 1999 -- $222,900; 2000 -- $229,800 and
2001 -- $237,700.

In July, 1996, the Company secured a $10 million line of credit arrangement
with a local bank. This line of credit will be used for general corporate
purposes including interim financing for acquisitions. The line of credit
provides for borrowing at a variable annual rate of LIBOR plus 1.5%. There
are no material compensating balances or commitment fee requirements under
this arrangement.

                                  SCHEDULE 5.15
                          (to Note Purchase Agreement)

<PAGE>

                                 [FORM OF NOTE]

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND CANNOT BE RESOLD EXCEPT PURSUANT
TO REGISTRATION UNDER SAID ACT AND ANY NECESSARY STATE SECURITIES LAWS OR AN
EXEMPTION THEREFROM.

                            HICKORY TECH CORPORATION

                       7.11% SENIOR NOTE DUE APRIL 1, 2012

No. [_________]                                                           [Date]
$[____________]                                                  PPN 429060 A* 7

         FOR VALUE RECEIVED, the undersigned, Hickory Tech Corporation
(herein called the "COMPANY"), a corporation organized and existing under the
laws of the State of Minnesota, hereby promises to pay to [________________],
or registered assigns, the principal sum of [________________] DOLLARS on
April 1, 2012 with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.11%
per annum from the date hereof, payable semiannually, on the first day of
April and October in each year, commencing with the April or October next
succeeding the date hereof, until the principal hereof shall have become due
and payable, and (b) to the extent permitted by law on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand), at
a rate per annum from time to time equal to the greater of (i) 9.11% or (ii)
2.00% over the rate of interest publicly announced by The Chase Manhattan
Bank N.A. from time to time in New York, New York as its "base" or "prime"
rate.

         Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of the Company in Mankato, Minnesota or at
such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreements referred
to below.

         This Note is one of a series of Senior Notes (herein called the
"NOTES") issued pursuant to separate Note Purchase Agreements, dated as of
April 1, 1997 (as from time to time amended, the "NOTE PURCHASE AGREEMENTS"),
between the Company and the respective Purchasers named therein and is
entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions
set forth in Section 20 of the Note Purchase Agreements and (ii) to have made
the representation set forth in Section 6.2 of the Note Purchase Agreements
PROVIDED that such holder may (in reliance upon information provided by the
Company, which shall not be

                                   EXHIBIT 1
                          (to Note Purchase Agreement)

<PAGE>

unreasonably withheld) make a representation to the effect that the purchase
by such holder of any Note will not constitute a non-exempt prohibited
transaction under section 406(a) of ERISA.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any
notice to the contrary.

         The Company will make required prepayments of principal on the dates
and in the amounts specified in the Note Purchase Agreements. This Note is
also subject to optional prepayment, in whole or from time to time in part,
at the times and on the terms specified in the Note Purchase Agreements, but
not otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note
Purchase Agreements.

         This Note shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of
Minnesota excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.

                                       HICKORY TECH CORPORATION

                                       By
                                         ----------------------------

                                         ----------------------------
                                                    [Title]

                                   EXHIBIT 1-2

<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                 TO THE COMPANY

         The closing opinion of _______________________, counsel for the
Company which is called for by Section 4.4(a) of the Note Purchase
Agreements, shall be dated the date of the Closing and addressed to you and
the Other Purchasers, shall be satisfactory in scope and form to you and the
Other Purchasers and shall be to the effect that:

                                  EXHIBIT 4.4(a)
                          (to Note Purchase Agreement)

<PAGE>

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

         The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by Section 4.4(b) of the Note Purchase Agreements,
shall be dated the date of the Closing and addressed to you and the Other
Purchasers, shall be satisfactory in form and substance to you and the Other
Purchasers and shall be to the effect that:

                    1. The Company is a corporation validly existing and in good
         standing under the laws of the State of Minnesota, and has the
         corporate power and the corporate authority to execute and deliver the
         Note Purchase Agreements and to issue the Notes.

                    2. Each Note Purchase Agreement has been duly authorized by
         all necessary corporate action on the part of the Company, has been
         duly executed and delivered by the Company and constitutes the legal,
         valid and binding obligation of the Company enforceable in accordance
         with its terms, subject to bankruptcy, insolvency, fraudulent
         conveyance and similar laws affecting creditors' rights generally, and
         general principles of equity (regardless of whether the application of
         such principles is considered in a proceeding in equity or at law).

                    3. The Notes have been duly authorized by all necessary
         corporate action on the part of the Company, have been duly executed
         and delivered by the Company and constitute the legal, valid and
         binding obligations of the Company enforceable in accordance with their
         terms, subject to bankruptcy, insolvency, fraudulent conveyance and
         similar laws affecting creditors' rights generally, and general
         principles of equity (regardless of whether the application of such
         principles is considered in a proceeding in equity or at law).

                    4. The issuance, sale and delivery of the Notes under the
         circumstances contemplated by the Note Purchase Agreements do not,
         under existing law, require the registration of the Notes under the
         Securities Act of 1933, as amended, or the qualification of an
         indenture under the Trust Indenture Act of 1939, as amended.

         The opinion of Chapman and Cutler shall also state that the opinion
of Dorsey & Whitney LLP and Blethen, Gage & Krause, counsel for the Company,
is satisfactory in scope and form to Chapman and Cutler and that, in their
opinion, you and the Other Purchasers are justified in relying thereon.

         In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Articles of Incorporation
certified by, and a certificate of good standing of the Company from, the
Secretary of State and the By-laws of the Company.

         With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials
and officers of the Company and upon representations of the Company, the
Other Purchasers and you delivered in connection with the issuance and sale
of the Notes. The opinion of Chapman and Cutler may be limited to the laws of
the State of Illinois, and the Federal laws of the United States.

                                       1
<PAGE>

                                                                   Exhibit 10(d)
                           CHANGE OF CONTROL AGREEMENT

         This Change of Control Agreement (this "Agreement") is entered into
as of the 25th day of June, 1998, by and between Hickory Tech Corporation, a
Minnesota corporation (the "Company"), and Robert D. Alton (the "Executive").

                                   WITNESSETH:

         WHEREAS, the Executive has heretofore devoted substantial skill and
effort to the affairs of the Company, and the Board of Directors of the
Company desires to recognize the significant personal contribution that the
Executive has made to further the best interests of the Company; and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to continue to obtain the benefits of the Executive's
services and attention to the affairs of the Company, and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to provide inducement for the Executive (1) to remain in
the service of the Company in order to facilitate an orderly transition in
the event of a change in control of the Company and (2) to remain in the
service of the Company in the event of any threatened or anticipated change
in control of the Company; and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders that the Executive be in a position to make judgments
and take actions with respect to proposed change in control of the Company
without regard to the possibility that his or her employment may be
terminated without compensation in the event of certain changes in control of
the Company; and

         WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and

         WHEREAS, for the reasons set forth above, the Company and the
Executive desire to enter into this Agreement.

         NOW, THEREFORE, in consideration of the facts recited above and the
mutual covenants and agreements contained herein, the Company and the
Executive agree as follows:

1.   RIGHT TO PAYMENT. If (A) the Executive's employment with the Company or its
     Successor is terminated within three (3) years following an Event (as
     defined in Paragraph 2 below) for any reason other than a reason permitted
     in Paragraph 3 below, or (B) the Executive voluntarily terminates his or
     her employment within a period of thirty (30) days following the first
     anniversary of an Event, then the Executive shall be entitled to receive
     the Benefits set out in Paragraph 4 below. If a subsequent Event occurs,
     and if the Executive did not receive Benefits under this Agreement as a
     result of any prior Event, the three (3) year period shall be renewed upon
     the occurrence of each subsequent Event and the other provisions of this
     Agreement shall be applied accordingly.

2.   CHANGE OF CONTROL EVENTS. An "Event" shall be deemed to have occurred if:

         (a)  A majority of the directors of the Company shall be persons other
              than persons

                   (1) for whose election proxies shall have been solicited by
                       the Board of Directors of the

                                       1
<PAGE>

                       Company; or

                   (2) who are then serving as directors and who were initially
                       appointed or elected by the Board of Directors to fill
                       vacancies on the Board of Directors caused by death or
                       resignation (but not by removal), or to fill newly
                       created directorships created by the Board of Directors;
                       provided, however, that a person shall not be deemed to
                       be a director subject to clause (1) or (2), above, if his
                       or her initial assumption of office occurs as a result of
                       an actual or threatened election contest with respect to
                       the threatened election or removal of directors (or other
                       actual or threatened solicitation of proxies or consents)
                       by or on behalf of any person other than the Board of
                       Directors of the Company.

         (b)  30% or more of the outstanding voting stock of the Company or all
              or substantially all of the assets or stock of the Company is
              acquired or beneficially owned (as defined in Rule 13d-3 under the
              Securities and Exchange Act of 1934, as amended, or any successor
              rule thereto), directly or indirectly, by any Person (other than
              by the Company, a subsidiary of the Company, an employee benefit
              plan (or related trust) sponsored or maintained by the Company or
              one or more of its subsidiaries, or by the Employee or a group of
              persons, including the Employee, acting in concert) or group of
              Persons, acting in concert, whether by acquisition of assets,
              merger, consolidation, statutory share exchange (other than a
              merger, consolidation or statutory share exchange described in
              clause (c)(i) or (ii), below), tender offer, exchange offer, or
              otherwise;

         (c)  The Company is merged into or consolidated with another
              corporation (other than a subsidiary of the Company) on a
              statutory share exchange for the Company's outstanding voting
              stock of any class is consummated unless (i) a majority of the
              voting power of the voting stock of the surviving corporation is,
              immediately following the merger, consolidation or statutory share
              exchange, beneficially owned, directly or indirectly, by the
              Employee (or a group of Persons, including the Employee, acting in
              concert) or (ii) immediately following the merger, consolidation
              or statutory share exchange, more than 70% of the voting power of
              the voting stock of the surviving corporation is beneficially
              owned, directly or indirectly, by the persons who beneficially
              owned voting stock of the Company immediately prior to such
              merger, consolidation or statutory share exchange in substantially
              the same proportion as their ownership of the voting stock of the
              Company immediately prior to such merger, consolidation or
              statutory share exchange; or

         (d)  The shareholders of the Company approve the complete liquidation
              or dissolution of the Company.

3.   TERMINATION NOT ENTITLING EXECUTIVE TO BENEFITS. The Executive shall not be
     entitled to the Benefits set out in Paragraph 4 if his or her employment is
     terminated during the three (3) year period following an Event for any of
     the following reasons:

         (a)  DEATH. The Executive's death.

         (b)  DISABILITY. The Executive's disability. "Disability" shall mean
              the inability of the Executive to perform the duties and
              responsibilities of his or her employment by reasons of illness or
              other physical or mental impairment or condition, if such
              inability continues for an uninterrupted period of one hundred
              eighty (180) calendar days or more. A period of inability shall be
              "uninterrupted" unless and until the Executive returns to
              full-time work for a continuous period of at least thirty (30) out
              of thirty-two (32) business days.

                                       2
<PAGE>

                  (1) The determination of whether the Executive is suffering
                      from a "disability" as defined herein shall be made in the
                      first instance by the Executive's treating physician. At
                      the Company's sole discretion, however, the Company can
                      request that the Executive be examined by a physician of
                      the Company's own choosing. If the physician chosen by the
                      Company disagrees with the determination made by the
                      Executive's treating physician, then the Company and
                      Executive shall jointly pick a third physician whose
                      determination shall be conclusive and binding.

                  (2) The Executive agrees to make himself or herself available
                      for and to submit to examinations by such physicians as
                      may be requested by the Company. The Executive's failure
                      to submit to examinations by such physicians as may be
                      requested by the Company shall disqualify Executive from
                      receiving Benefits under this Agreement.

         (c)  VOLUNTARY TERMINATION. The Executive's voluntary retirement or
              voluntary termination of employment. However, the Executive's
              retirement or termination of employment shall not be considered
              voluntary if, following the Event, one or more of the following
              has occurred (unless the Executive has expressly consented thereto
              in writing):

                   (1) There has been a failure to provide the Executive with
                       substantially equivalent reporting responsibilities,
                       titles, offices or positions, or Executive has been
                       removed from, or has not been re-elected to, any of such
                       positions, which has the effect of materially diminishing
                       the Executive's responsibility or authority;

                   (2) There has been a failure to provide the Executive with
                       substantially equivalent (or greater) salary or other
                       remuneration or fringe benefits;

                   (3) There has been a failure to provide the Executive with
                       substantially equivalent office space, furniture,
                       secretarial or administrative support, or other working
                       conditions, or

                   (4) Executive has been required to perform his or her
                       services in an area other than the Executive's regularly
                       assigned geographical location at the time of the Event,
                       or to do substantially more job related traveling.

         (d)  INVOLUNTARY TERMINATION FOR CAUSE. The Executive's involuntary
              termination "for cause." "For cause" shall mean:

                   (1) A persistent failure by the Executive to perform the
                       duties and responsibilities of his or her job, which
                       failure is willful and deliberate on the Executive's part
                       and is not remedied within a reasonable period of time
                       after the Executive's receipt of written notice from the
                       Company or its Successor specifying the act or omission
                       constituting such failure;

                   (2) An act or acts of dishonesty undertaken by the Executive
                       and intended to result in substantial gain or personal
                       enrichment of the Executive at the expense of the Company
                       or its Successor;

                   (3) Unlawful conduct or gross misconduct that is willful and
                       deliberate on the Executive's part and that, in either
                       event, is materially injurious to the Company or

                                       3
<PAGE>

                       its Successor; or

                   (4) The conviction of the Executive of a felony.

         (e)  SUBSEQUENT OCCURRENCES. If the Executive's employment is
              terminated under circumstances in which Executive would be
              entitled to Benefits as defined in Paragraph 4, and thereafter
              there is an occurrence that would have justified the termination
              of the Executive's employment with no entitlement to Benefits
              (such as the Executive's death, disability, voluntary termination,
              or involuntary termination for cause [all as defined above in this
              Paragraph]), that subsequent occurrence shall not disqualify the
              Executive (or the Executive's legal representative) from receiving
              or continuing to receive the Benefits provided under this
              Agreement.

4.   BENEFITS.  If the Executive's employment is terminated under circumstances
     entitling the Executive to Benefits, the Executive shall receive the
     following:

         (a)  LUMP SUM PAYMENT. The Executive shall be entitled to a lump sum
              cash payment in the amount of One Month's Salary times 35.88. One
              Month's Salary shall be determined by taking the Executive's
              highest annual compensation for a calendar year (including salary,
              bonuses, and other incentive payments) during the five-year period
              prior to the Executive's termination and dividing that amount by
              twelve (12). This lump sum payment shall be made by the Company or
              its Successor at the time of the Executive's termination of
              employment, and shall be subject to withholding of all taxes and
              other amounts required by law to be withheld or paid to others.

         (b)  In the event it shall be determined that any payment or
              distribution by the Company or other amount with respect to the
              Company to or for the benefit of the Executive, whether paid or
              payable or distributed or distributable pursuant to the terms of
              this Agreement or otherwise, (a "Payment"), is (or will be)
              subject to the excise tax imposed by Section 280G of the Internal
              Revenue Code or any interest or penalties are (or will be)
              incurred by the Executive with respect to the excise tax imposed
              by Section 280G of the Internal Revenue Code with respect to the
              Company (the excise tax, together with any interest and penalties,
              are hereinafter collectively referred to as the "Excise Tax"), the
              Executive shall be entitled to receive an additional cash payment
              (a "Gross-Up Payment") from the Company in an amount equal to the
              sum of the Excise Tax and an amount sufficient to pay the
              cumulative Excise Tax and all cumulative income taxes (including
              any interest and penalties imposed with respect to such taxes)
              relating to the Gross-Up Payment so that the net amount retained
              by the Executive is equal to all payments received pursuant to the
              terms of this Agreement or otherwise (prior to income taxes with
              respect to such payments).

         (c)  All determinations required to be made to determine whether and
              when a Gross-Up Payment is required and the amount of such
              Gross-Up Payment and the assumptions to be utilized in arriving at
              the determination shall be made by a nationally recognized
              certified public accounting firm designated by the Executive (the
              "Accounting Firm") which shall provide detailed supporting
              calculations both to the Company and the Executive within 30 days
              after the receipt of notice from the Executive that there has been
              a Payment, or such earlier time as is requested by the Company. In
              the event that at any time relevant to this Agreement the
              Accounting Firm is serving as accountant or auditor for the
              individual, entity or group or Person effecting the Change in
              Control, the executive shall appoint another nationally recognized
              certified public accounting firm to make the determinations
              required hereunder (which accounting firm shall then be referred
              to as the "Accounting Firm" hereunder). All

                                       4
<PAGE>

              fees and expenses of the Accounting Firm shall be borne solely
              by the Company. Any Gross-Up Payment, as determined in accordance
              with this Section, shall be paid by the Company to the Executive
              within five days after the receipt of the Accounting Firm's
              determination. If the Accounting Firm determines that no Excise
              Tax is payable by the Executive, it shall so indicate to the
              Executive in writing. Any determination by the Accounting Firm
              shall be binding upon the Company and the Executive.

         (d)  CONTINUED INSURANCE COVERAGE. The Executive shall be entitled to
              continuation of his or her Company-provided insurance coverage
              (health, life, dental, accidental death and dismemberment, and any
              other applicable health and welfare benefit programs excluding
              short and long-term disability) for 2.99 years after the
              Executive's employment termination, at the same levels and
              coverages and on the same terms and conditions as if the Executive
              were still an active employee of the Company or its Successor
              throughout such period, including the right (if provided to active
              employees) to elect spousal or family coverage. In the event that
              the participation of the Executive in any such insurance plan or
              program is barred, the Company or its Successor, at its sole cost
              and expense, shall arrange to provide the Executive with benefits
              substantially similar to those which the Executive would otherwise
              be entitled to receive under such plans and programs.
              Notwithstanding the foregoing, however, the Company or its
              Successor shall not be required to provide any continuation
              coverage under this subparagraph 4(b) to the extent that such
              coverage is duplicative of any coverage the Executive is receiving
              under any other policy provided at the expense of the Company or
              another employer.

5.   BENEFITS OFFSET BY OTHER SEVERANCE PAYMENTS. The lump sum payment provided
     in subparagraph 4(a) shall be in addition to any salary or other
     remuneration otherwise payable to the Executive on account of the
     Executive's employment by the Company or its Successor. This payment shall
     be in lieu of any severance payments under any other agreement resulting
     from his or her termination of employment with the Company or its
     Successor, and any payments the Executive receives pursuant to any
     individual income continuation agreements between the Company or its
     Successor and the Executive.

6.   NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the
     amount of any payment or other benefit provided for in Paragraph 4 by
     seeking other employment or otherwise, nor (except as specifically provided
     in subparagraph 4(d) and paragraphs 5 above) shall the amount of any
     payment or other benefit provided for in Paragraph 4 be reduced by any
     compensation earned by the Executive as the result of employment by another
     employer after the Executive's employment termination.

7.   DEFINITION OF CERTAIN TERMS.

         (a)  SUCCESSOR. "Successor" means any Person that succeeds to the
              business of the Company through merger, consolidation, or
              acquisition, including any Person acquiring all or substantially
              all of the assets or stock of the Company.

         (b)  PERSON. "Person" means an individual, partnership, corporation,
              estate, trust, or other entity.

8.       SUCCESSORS AND ASSIGNS.

         (a)  This Agreement shall be binding upon and inure to the benefit of
              the legal representatives, successors, and assigns of the parties
              hereto; provided, however, that the Executive shall not have any
              right to assign, pledge, or otherwise dispose of or transfer any
              interest in this Agreement or any payments hereunder, whether
              directly or indirectly or in whole or in part,

                                       5
<PAGE>

              without the written consent of the Company or its Successor.

         (b)  The Company will require any Successor, by agreement in form and
              substance satisfactory to the Executive, to assume expressly and
              agree to perform this Agreement in the same manner and to the same
              extent that the Company would be required to perform it if no such
              succession had taken place.

9.   ATTORNEYS' FEES, COSTS AND INTEREST. If the Executive (or the Executive's
     legal representative) successfully challenges, in whole or in part, the
     refusal of the Company or its Successor to provide Benefits under this
     Agreement or to abide by any other provision of this Agreement, then the
     Company or its Successor shall pay to the Executive (or the Executive's
     legal representative):

         (a)  All legal fees, costs, disbursements, and expenses incurred as a
              result of the refusal to provide Benefits or to abide by the other
              provisions of the Agreement; and

         (b)  Interest on any funds (or on the fair market value of any
              benefits) that were wrongfully withheld by the Company or its
              Successor, calculated by reference to the prime rate as in effect
              during the applicable period.

10.  GOVERNING LAW.  This Agreement  shall be construed in accordance with the
     laws of the State of Minnesota, without giving effect to principles of
     conflicts of laws.

11.  NOTICES. All notices, requests, and demands given to or made pursuant
     hereto shall be in writing and be either hand-delivered or mailed to any
     such party at its address which:

         (a)  In the case of the Company shall be:

                  Hickory Tech Corporation
                  221 East Hickory Street
                  P.O. Box 3248
                  Mankato, MN  56002-3248

         (b)  In the case of the Executive shall be:

                  Robert D. Alton
                  228 Mayan Way
                  Mankato, MN  56001

         Either party may, by notice hereunder, designate a changed address. Any
         notice, if properly addressed and sent prepaid by registered or
         certified mail, shall be deemed dispatched on the registered date or
         that stamped on the certified mail receipt, and shall be deemed
         received within the second business day thereafter or when it is
         actually received, whichever is sooner. Any notice sent regular mail or
         hand-delivered shall be deemed received when it is actually received by
         the other party.

12.  SEVERABILITY. In the event that any portion of this Agreement may be held
     to be invalid or unenforceable for any reason, such invalidity or
     unenforceability shall not affect the other portions of this Agreement, and
     any court of competent jurisdiction may so modify the objectionable
     provision as to make it valid, reasonable, and enforceable.

                                       6
<PAGE>

13.  INCENTIVE COMPENSATION PLAN AND STOCK OPTIONS. In the case of a payment
     being due as described in Paragraph 1, the Executive's benefits under the
     HTC Executive Incentive Plan, and any outstanding stock options or awards
     issued to the Executive (including restricted stock and performance
     shares), shall immediately become fully vested.

                                       7
<PAGE>

14.  AMENDMENT OR TERMINATION OF THIS AGREEMENT.

         (a)  PRIOR TO THE OCCURRENCE OF AN EVENT. Prior to the occurrence of an
              Event, the Company, by resolution of the Compensation Committee of
              the Board of Directors, has the unilateral power to amend or
              terminate this Agreement at any time and for any reason, and may
              do so without the Executive's consent. Notwithstanding the
              foregoing, however:

                   (1) No such amendment or termination of this Agreement shall
                       be effective with respect to the Executive until two
                       weeks following the date that Executive is provided with
                       written notice of the change.

                   (2) No such amendment or termination of this Agreement shall
                       be effective with respect to the Executive, unless
                       otherwise agreed by the Executive, if an Event occurs
                       during the one-year period following the date of adoption
                       of the resolution amending or terminating this Agreement.

         (b)  AFTER THE OCCURRENCE OF AN EVENT. After the occurrence of an
              Event, the Company, by resolution of the Compensation Committee of
              the Board of Directors, can amend or terminate this Agreement, but
              no such amendment or termination of this Agreement shall be
              effective unless the Executive consents thereto in writing.

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

EXECUTIVE                              HICKORY TECH CORPORATION

                                       By:
------------------------------            ----------------------------
Name                                      Its:
                                              ------------------------

                                       8
<PAGE>

                                                                  Exhibit 10(e)

Exhibit 10(e) note: There were Change in Control Agreements executed
identical to the agreement filed herewith between registrant and the
following six officers Jon L. Anderson, David A. Christensen, John W. Finke,
Mary T. Jacobs, F. Ernest Lombard and Bruce H. Malmgren.

                           CHANGE OF CONTROL AGREEMENT

         This Change of Control Agreement (this "Agreement") is entered into
as of the 25th day of June, 1998, by and between Hickory Tech Corporation, a
Minnesota corporation (the "Company"), and Jon L. Anderson (the "Executive").

                                   WITNESSETH:

         WHEREAS, the Executive has heretofore devoted substantial skill and
effort to the affairs of the Company, and the Board of Directors of the
Company desires to recognize the significant personal contribution that the
Executive has made to further the best interests of the Company; and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to continue to obtain the benefits of the Executive's
services and attention to the affairs of the Company, and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders to provide inducement for the Executive (1) to remain in
the service of the Company in order to facilitate an orderly transition in
the event of a change in control of the Company and (2) to remain in the
service of the Company in the event of any threatened or anticipated change
in control of the Company; and

         WHEREAS, it is desirable and in the best interests of the Company
and its stockholders that the Executive be in a position to make judgments
and take actions with respect to proposed change in control of the Company
without regard to the possibility that his or her employment may be
terminated without compensation in the event of certain changes in control of
the Company; and

         WHEREAS, the Executive desires to be protected in the event of
certain changes in control of the Company; and

         WHEREAS, for the reasons set forth above, the Company and the
Executive desire to enter into this Agreement.

         NOW, THEREFORE, in consideration of the facts recited above and the
mutual covenants and agreements contained herein, the Company and the Executive
agree as follows:

2.   RIGHT TO PAYMENT. If (A) the Executive's employment with the Company or its
     Successor is terminated within three (3) years following an Event (as
     defined in Paragraph 2 below) for any reason other than a reason permitted
     in Paragraph 3 below, or (B) the Executive voluntarily terminates his or
     her employment within a period of thirty (30) days following the first
     anniversary of an Event, then the Executive shall be entitled to receive
     the Benefits set out in Paragraph 4 below. If a subsequent Event occurs,
     and if the Executive did not receive Benefits under this Agreement as a
     result of any prior Event, the three (3) year period shall be renewed upon
     the occurrence of each subsequent Event and the other provisions of this
     Agreement shall be applied accordingly.

3.   CHANGE OF CONTROL EVENTS. An "Event" shall be deemed to have occurred if:

         (b)  A majority of the directors of the Company shall be persons other
              than persons

                   (2) for whose election proxies shall have been solicited by
                       the Board of Directors of the Company; or

                   (3) who are then serving as directors and who were initially
                       appointed or elected by the

                                       1
<PAGE>

                       Board of Directors to fill vacancies on the Board of
                       Directors caused by death or resignation (but not by
                       removal), or to fill newly created directorships
                       created by the Board of Directors; provided, however,
                       that a person shall not be deemed to be a director
                       subject to clause (1) or (2), above, if his or her
                       initial assumption of office occurs as a result of
                       an actual or threatened election contest with respect to
                       the threatened election or removal of directors (or other
                       actual or threatened solicitation of proxies or consents)
                       by or on behalf of any person other than the Board of
                       Directors of the Company.

         (d)  30% or more of the outstanding voting stock of the Company or all
              or substantially all of the assets or stock of the Company is
              acquired or beneficially owned (as defined in Rule 13d-3 under the
              Securities and Exchange Act of 1934, as amended, or any successor
              rule thereto), directly or indirectly, by any Person (other than
              by the Company, a subsidiary of the Company, an employee benefit
              plan (or related trust) sponsored or maintained by the Company or
              one or more of its subsidiaries, or by the Employee or a group of
              persons, including the Employee, acting in concert) or group of
              Persons, acting in concert, whether by acquisition of assets,
              merger, consolidation, statutory share exchange (other than a
              merger, consolidation or statutory share exchange described in
              clause (c)(i) or (ii), below), tender offer, exchange offer, or
              otherwise;

         (e)  The Company is merged into or consolidated with another
              corporation (other than a subsidiary of the Company) on a
              statutory share exchange for the Company's outstanding voting
              stock of any class is consummated unless (i) a majority of the
              voting power of the voting stock of the surviving corporation is,
              immediately following the merger, consolidation or statutory share
              exchange, beneficially owned, directly or indirectly, by the
              Employee (or a group of Persons, including the Employee, acting in
              concert) or (ii) immediately following the merger, consolidation
              or statutory share exchange, more than 70% of the voting power of
              the voting stock of the surviving corporation is beneficially
              owned, directly or indirectly, by the persons who beneficially
              owned voting stock of the Company immediately prior to such
              merger, consolidation or statutory share exchange in substantially
              the same proportion as their ownership of the voting stock of the
              Company immediately prior to such merger, consolidation or
              statutory share exchange; or

         (e)  The shareholders of the Company approve the complete liquidation
              or dissolution of the Company.

4.   TERMINATION NOT ENTITLING EXECUTIVE TO BENEFITS. The Executive shall not be
     entitled to the Benefits set out in Paragraph 4 if his or her employment is
     terminated during the three (3) year period following an Event for any of
     the following reasons:

         (b)  DEATH. The Executive's death.

         (c)  DISABILITY. The Executive's disability. "Disability" shall mean
              the inability of the Executive to perform the duties and
              responsibilities of his or her employment by reasons of illness or
              other physical or mental impairment or condition, if such
              inability continues for an uninterrupted period of one hundred
              eighty (180) calendar days or more. A period of inability shall be
              "uninterrupted" unless and until the Executive returns to
              full-time work for a continuous period of at least thirty (30) out
              of thirty-two (32) business days.

                   (2) The determination of whether the Executive is suffering
                       from a "disability" as defined herein shall be made in
                       the first instance by the Executive's treating

                                       2
<PAGE>

                       physician. At the Company's sole discretion, however,
                       the Company can request that the Executive be examined
                       by a physician of the Company's own choosing. If the
                       physician chosen by the Company disagrees with the
                       determination made by the Executive's treating physician,
                       then the Company and Executive shall jointly pick a
                       third physician whose determination shall be conclusive
                       and binding.

                   (3) The Executive agrees to make himself or herself available
                       for and to submit to examinations by such physicians as
                       may be requested by the Company. The Executive's failure
                       to submit to examinations by such physicians as may be
                       requested by the Company shall disqualify Executive from
                       receiving Benefits under this Agreement.

         (d)  VOLUNTARY TERMINATION. The Executive's voluntary retirement or
              voluntary termination of employment. However, the Executive's
              retirement or termination of employment shall not be considered
              voluntary if, following the Event, one or more of the following
              has occurred (unless the Executive has expressly consented thereto
              in writing):

                   (2) There has been a failure to provide the Executive with
                       substantially equivalent reporting responsibilities,
                       titles, offices or positions, or Executive has been
                       removed from, or has not been re-elected to, any of such
                       positions, which has the effect of materially diminishing
                       the Executive's responsibility or authority;

                   (3) There has been a failure to provide the Executive with
                       substantially equivalent (or greater) salary or other
                       remuneration or fringe benefits;

                   (4) There has been a failure to provide the Executive with
                       substantially equivalent office space, furniture,
                       secretarial or administrative support, or other working
                       conditions, or

                   (5) Executive has been required to perform his or her
                       services in an area other than the Executive's regularly
                       assigned geographical location at the time of the Event,
                       or to do substantially more job related traveling.

         (e)  INVOLUNTARY TERMINATION FOR CAUSE. The Executive's involuntary
              termination "for cause." "For cause" shall mean:

                   (2) A persistent failure by the Executive to perform the
                       duties and responsibilities of his or her job, which
                       failure is willful and deliberate on the Executive's part
                       and is not remedied within a reasonable period of time
                       after the Executive's receipt of written notice from the
                       Company or its Successor specifying the act or omission
                       constituting such failure;

                   (3) An act or acts of dishonesty undertaken by the Executive
                       and intended to result in substantial gain or personal
                       enrichment of the Executive at the expense of the Company
                       or its Successor;

                   (4) Unlawful conduct or gross misconduct that is willful and
                       deliberate on the Executive's part and that, in either
                       event, is materially injurious to the Company or its
                       Successor; or

                   (5) The conviction of the Executive of a felony.

                                       3
<PAGE>

         (f)  SUBSEQUENT OCCURRENCES. If the Executive's employment is
              terminated under circumstances in which Executive would be
              entitled to Benefits as defined in Paragraph 4, and thereafter
              there is an occurrence that would have justified the termination
              of the Executive's employment with no entitlement to Benefits
              (such as the Executive's death, disability, voluntary termination,
              or involuntary termination for cause [all as defined above in this
              Paragraph]), that subsequent occurrence shall not disqualify the
              Executive (or the Executive's legal representative) from receiving
              or continuing to receive the Benefits provided under this
              Agreement.

5.   BENEFITS.  If the Executive's employment is terminated under circumstances
     entitling the Executive to Benefits, the Executive shall receive the
     following:

         (b)  LUMP SUM PAYMENT. The Executive shall be entitled to a lump sum
              cash payment in the amount of One Month's Salary times 24. One
              Month's Salary shall be determined by taking the Executive's
              highest annual compensation for a calendar year (including salary,
              bonuses, and other incentive payments) during the five-year period
              prior to the Executive's termination and dividing that amount by
              twelve (12). This lump sum payment shall be made by the Company or
              its Successor at the time of the Executive's termination of
              employment, and shall be subject to withholding of all taxes and
              other amounts required by law to be withheld or paid to others.

         (e)  In the event it shall be determined that any payment or
              distribution by the Company or other amount with respect to the
              Company to or for the benefit of the Executive, whether paid or
              payable or distributed or distributable pursuant to the terms of
              this Agreement or otherwise, (a "Payment"), is (or will be)
              subject to the excise tax imposed by Section 280G of the Internal
              Revenue Code or any interest or penalties are (or will be)
              incurred by the Executive with respect to the excise tax imposed
              by Section 280G of the Internal Revenue Code with respect to the
              Company (the excise tax, together with any interest and penalties,
              are hereinafter collectively referred to as the "Excise Tax"), the
              Executive shall be entitled to receive an additional cash payment
              (a "Gross-Up Payment") from the Company in an amount equal to the
              sum of the Excise Tax and an amount sufficient to pay the
              cumulative Excise Tax and all cumulative income taxes (including
              any interest and penalties imposed with respect to such taxes)
              relating to the Gross-Up Payment so that the net amount retained
              by the Executive is equal to all payments received pursuant to the
              terms of this Agreement or otherwise (prior to income taxes with
              respect to such payments).

         (f)  All determinations required to be made to determine whether and
              when a Gross-Up Payment is required and the amount of such
              Gross-Up Payment and the assumptions to be utilized in arriving at
              the determination shall be made by a nationally recognized
              certified public accounting firm designated by the Executive (the
              "Accounting Firm") which shall provide detailed supporting
              calculations both to the Company and the Executive within 30 days
              after the receipt of notice from the Executive that there has been
              a Payment, or such earlier time as is requested by the Company. In
              the event that at any time relevant to this Agreement the
              Accounting Firm is serving as accountant or auditor for the
              individual, entity or group or Person effecting the Change in
              Control, the executive shall appoint another nationally recognized
              certified public accounting firm to make the determinations
              required hereunder (which accounting firm shall then be referred
              to as the "Accounting Firm" hereunder). All fees and expenses of
              the Accounting Firm shall be borne solely by the Company. Any
              Gross-Up Payment, as determined in accordance with this Section,
              shall be paid by the Company to the Executive within five days
              after the receipt of the Accounting Firm's determination. If the
              Accounting Firm determines that no Excise Tax is payable by the

                                       4
<PAGE>

              Executive, it shall so indicate to the Executive in writing. Any
              determination by the Accounting Firm shall be binding upon the
              Company and the Executive.

         (g)  CONTINUED INSURANCE COVERAGE. The Executive shall be entitled to
              continuation of his or her Company-provided insurance coverage
              (health, life, dental, accidental death and dismemberment, and any
              other applicable health and welfare benefit programs excluding
              short and long-term disability) for two years after the
              Executive's employment termination, at the same levels and
              coverages and on the same terms and conditions as if the Executive
              were still an active employee of the Company or its Successor
              throughout such period, including the right (if provided to active
              employees) to elect spousal or family coverage. In the event that
              the participation of the Executive in any such insurance plan or
              program is barred, the Company or its Successor, at its sole cost
              and expense, shall arrange to provide the Executive with benefits
              substantially similar to those which the Executive would otherwise
              be entitled to receive under such plans and programs.
              Notwithstanding the foregoing, however, the Company or its
              Successor shall not be required to provide any continuation
              coverage under this subparagraph 4(b) to the extent that such
              coverage is duplicative of any coverage the Executive is receiving
              under any other policy provided at the expense of the Company or
              another employer.

6.   BENEFITS OFFSET BY OTHER SEVERANCE PAYMENTS. The lump sum payment provided
     in subparagraph 4(a) shall be in addition to any salary or other
     remuneration otherwise payable to the Executive on account of the
     Executive's employment by the Company or its Successor. This payment shall
     be in lieu of any severance payments under any other agreement resulting
     from his or her termination of employment with the Company or its
     Successor, and any payments the Executive receives pursuant to any
     individual income continuation agreements between the Company or its
     Successor and the Executive.

7.   NO DUTY TO MITIGATE. The Executive shall not be required to mitigate the
     amount of any payment or other benefit provided for in Paragraph 4 by
     seeking other employment or otherwise, nor (except as specifically provided
     in subparagraph 4(d) and paragraphs 5 above) shall the amount of any
     payment or other benefit provided for in Paragraph 4 be reduced by any
     compensation earned by the Executive as the result of employment by another
     employer after the Executive's employment termination.

8.   DEFINITION OF CERTAIN TERMS.

         (b)  SUCCESSOR. "Successor" means any Person that succeeds to the
              business of the Company through merger, consolidation, or
              acquisition, including any Person acquiring all or substantially
              all of the assets or stock of the Company.

         (c)  PERSON. "Person" means an individual, partnership, corporation,
              estate, trust, or other entity.

9.   SUCCESSORS AND ASSIGNS.

         (b)  This Agreement shall be binding upon and inure to the benefit of
              the legal representatives, successors, and assigns of the parties
              hereto; provided, however, that the Executive shall not have any
              right to assign, pledge, or otherwise dispose of or transfer any
              interest in this Agreement or any payments hereunder, whether
              directly or indirectly or in whole or in part, without the written
              consent of the Company or its Successor.

         (c)  The Company will require any Successor, by agreement in form and
              substance satisfactory to the Executive, to assume expressly and
              agree to perform this Agreement in the same manner

                                       5
<PAGE>

              and to the same extent that the Company would be required to
              perform it if no such succession had taken place.

10.  ATTORNEYS' FEES, COSTS AND INTEREST. If the Executive (or the Executive's
     legal representative) successfully challenges, in whole or in part, the
     refusal of the Company or its Successor to provide Benefits under this
     Agreement or to abide by any other provision of this Agreement, then the
     Company or its Successor shall pay to the Executive (or the Executive's
     legal representative):

         (b)  All legal fees, costs, disbursements, and expenses incurred as a
              result of the refusal to provide Benefits or to abide by the other
              provisions of the Agreement; and

         (c)  Interest on any funds (or on the fair market value of any
              benefits) that were wrongfully withheld by the Company or its
              Successor, calculated by reference to the prime rate as in effect
              during the applicable period.

11.  GOVERNING LAW. This Agreement shall be construed in accordance with the
     laws of the State of Minnesota, without giving effect to principles of
     conflicts of laws.

12.  NOTICES. All notices, requests, and demands given to or made pursuant
     hereto shall be in writing and be either hand-delivered or mailed to any
     such party at its address which:

         (b)  In the case of the Company shall be:
                  Hickory Tech Corporation
                  221 East Hickory Street
                  P.O. Box 3248
                  Mankato, MN  56002-3248

         (c)  In the case of the Executive shall be:
                  Jon L. Anderson
                  20760 Quincy Street
                  Elk River, MN  55330

         Either party may, by notice hereunder, designate a changed address. Any
         notice, if properly addressed and sent prepaid by registered or
         certified mail, shall be deemed dispatched on the registered date or
         that stamped on the certified mail receipt, and shall be deemed
         received within the second business day thereafter or when it is
         actually received, whichever is sooner. Any notice sent regular mail or
         hand-delivered shall be deemed received when it is actually received by
         the other party.

13.  SEVERABILITY. In the event that any portion of this Agreement may be held
     to be invalid or unenforceable for any reason, such invalidity or
     unenforceability shall not affect the other portions of this Agreement, and
     any court of competent jurisdiction may so modify the objectionable
     provision as to make it valid, reasonable, and enforceable.

15.  INCENTIVE COMPENSATION PLAN AND STOCK OPTIONS. In the case of a payment
     being due as described in Paragraph 1, the Executive's benefits under the
     HTC Executive Incentive Plan, and any outstanding stock options or awards
     issued to the Executive (including restricted stock and performance
     shares), shall immediately become fully vested.

                                       6
<PAGE>

16.  AMENDMENT OR TERMINATION OF THIS AGREEMENT.

         (b)  PRIOR TO THE OCCURRENCE OF AN EVENT. Prior to the occurrence of an
              Event, the Company, by resolution of the Compensation Committee of
              the Board of Directors, has the unilateral power to amend or
              terminate this Agreement at any time and for any reason, and may
              do so without the Executive's consent. Notwithstanding the
              foregoing, however:

                   (2) No such amendment or termination of this Agreement shall
                       be effective with respect to the Executive until two
                       weeks following the date that Executive is provided with
                       written notice of the change.

                   (3) No such amendment or termination of this Agreement shall
                       be effective with respect to the Executive, unless
                       otherwise agreed by the Executive, if an Event occurs
                       during the one-year period following the date of adoption
                       of the resolution amending or terminating this Agreement.

         (c)  AFTER THE OCCURRENCE OF AN EVENT. After the occurrence of an
              Event, the Company, by resolution of the Compensation Committee of
              the Board of Directors, can amend or terminate this Agreement, but
              no such amendment or termination of this Agreement shall be
              effective unless the Executive consents thereto in writing.

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

EXECUTIVE                              HICKORY TECH CORPORATION

                                       By:
-----------------------------             ---------------------------
Name                                      Its:
                                              -----------------------

                                       7

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