Document:

EXHIBIT 10.1

                         INTERCONNECTION AGREEMENT-TEXAS

                                     between

                       Southwestern Bell Telephone Company

                                       and

                        Madison River Communications LLC

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                                TABLE OF CONTENTS
                         INTERCONNECTION AGREEMENT-TEXAS
                                     BETWEEN
                       SOUTHWESTERN BELL TELEPHONE COMPANY
                                       AND
                        MADISON RIVER COMMUNICATIONS LLC

1.   Introduction ...........................................................2
2.   Effective Date .........................................................3
3.   This Section Intentionally Left Blank ..................................3
4.   Term of Agreement ......................................................3
5.   Assignment .............................................................5
6.   Confidentiality and Proprietary Information ............................5
7.   Liability and Indemnification ..........................................7
8.   Payment of Rates and Charges ..........................................11
9.   Dispute Resolution ....................................................11
10.  Termination of Service to CLEC ........................................13
11.  Notices ...............................................................14
12.  Taxes .................................................................15
13.  Force Majeure .........................................................16
14.  Publicity .............................................................17
15.  Network Maintenance and Management ....................................17
16.  Law Enforcement and Civil Process .....................................18
17.  Changes in Subscriber Carrier Selection ...............................18
18.  Amendments or Waivers .................................................19
19.  Authority .............................................................21
20.  Binding Effect ........................................................21
21.  Consent ...............................................................21
22.  Expenses ..............................................................21
23.  Headings ..............................................................21
24.  Relationship of Parties ...............................................22
25.  Conflict of Interest ..................................................22
26.  Multiple Counterparts .................................................22
27.  Third Party Beneficiaries .............................................22
28.  Regulatory Approval ...................................................22
29.  Trademarks and Trade Names ............................................22
30.  Regulatory Authority ..................................................23
31.  Commission Interpretation of Same or substantively Similar
     Language ..............................................................24
32.  Verification Reviews ..................................................24
33.  Complete Terms ........................................................25
34.  Cooperation on Preventing End User Fraud ..............................25
35.  Notice of Network Changes .............................................26
36.  Good Faith Performance ................................................26
37.  Responsibility of Each Party ..........................................26
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38.  Transmission of Traffic to Third Parties ..............................26
39.  Governmental Compliance ...............................................27
40.  Responsibility for Environmental Contamination ........................27
41.  Subcontracting ........................................................29
42.  Referenced Documents ..................................................29
43.  Severability ..........................................................29
44.  Survival of Obligations ...............................................30
45.  Governing Law .........................................................30
46.  Performance Criteria ..................................................30
47.  Other Obligations of CLEC .............................................30
48.  Dialing Parity; Interim Number Portability ............................30
49.  Branding ..............................................................31
50.  Customer Inquiries ....................................................31
51.  Disclaimer of Warranties ..............................................31
52.  No Waiver .............................................................31
53.  Definitions ...........................................................32
54.  Resale ................................................................32
55.  Unbundled Network Elements ............................................32
56.  Ordering and Provisioning, Maintenance, Connectivity Billing
     and Reordering, and Provision of Customer Usage Data ..................32
57.  Network Interconnection Architecture ..................................33
58.  Compensation for Delivery of Traffic ..................................33
59.  Ancillary Functions ...................................................33
60.  Separate Affiliate Commitments ........................................33
61.  Other Requirements and Attachments ....................................34

     ATTACHMENTS
     -----------
     RESALE
     ------
     Attachment 1:  Resale
         Appendix Services/Pricing
             Exhibit A:  SWBT's Telecommunications Services Available for Resale
             Exhibit B:  SWBT's Other Services Available for Resale
         Appendix Customized Routing-Resale
         Appendix DA-Resale
         Appendix OS-Resale
         Appendix White Pages (WP)-Resale
     Attachment 2:  Ordering and Provisioning-Resale
     Attachment 3:  Maintenance-Resale
     Attachment 4:  Connectivity Billing-Resale
     Attachment 5:  Provision of Customer Usage Data-Resale
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     UNBUNDLED NETWORK ELEMENTS
     --------------------------
     Attachment 6:  Unbundled Network Elements (UNE)
         Appendix Pricing-UNE
         Appendix Pricing-UNE Schedule of Prices
     Attachment 7:  Ordering and Provisioning-UNE
     Attachment 8:  Maintenance-UNE
     Attachment 9:  Billing-Other
     Attachment 10:  Provision of Customer Usage Data-UNE

     NETWORK INTERCONNECTION ARCHITECTURE AND COMPENSATION
     -----------------------------------------------------
     Attachment 11:  Network Interconnection Architecture
         Appendix Interconnection Trunking Requirement (ITR)
         Appendix Network Interconnection Methods (NIM)
         Appendix SS7 Interconnection
     Attachment 12:  Compensation
         Appendix Cellular
         Appendix FGA

     ANCILLARY FUNCTIONS
     -------------------
     Attachment 13:  Ancillary Functions
         Appendix Collocation
         Appendix Poles, Conduit, ROW

     OTHER REQUIREMENTS
     ------------------
     Attachment 14:  Interim Number Portability
         Appendix Location Routing Number - PNP
     Attachment 15:  E911
     Attachment 16:  Network Security and Law Enforcement
     Attachment 17:  Performance Remedy Plan
         Appendix Measurements Subject to Per Occurrence Damages or Assessment
           with a Cap and Measurements Subject to Per Measure Damages or
           Assessment
         Appendix Performance Measures Subject to Tier-1 and Tier-2 Damages
           Identified as High, Medium and Low
         Appendix 3 Performance Measurement Business Rules (Version 1.6)
     Attachment 18:  Mutual Exchange of Directory Listing Information
     Attachment 19:  White Pages-Other (WP-O)
     Attachment 20:  Clearinghouse
     Attachment 21:  Numbering
     Attachment 22:  DA-Facilities Based
     Attachment 23:  OS-Facilities Based
     Attachment 24:  Recording-Facilities Based
     Attachment 25:  DSL
     Attachment 26:  Legitimately Related Provisions
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                        INTERCONNECTION AGREEMENT - TEXAS
                       ---------------------------------

         This Interconnection Agreement - Texas (Agreement) is between Madison
River Communications LLC ("CLEC"), a Delaware corporation, having an office at
103 South Fifth Street, Mebane, North Carolina 27302, and Southwestern Bell
Telephone Company (SWBT), a Missouri corporation, having an office at 1010 Pine
Street, St. Louis, Missouri 63101, (collectively the Parties).

         WHEREAS, pursuant to the Telecommunications Act of 1996 (the Act), the
Parties wish to establish terms for the resale of SWBT services and for the
provision by SWBT of Interconnection, unbundled Network Elements, and Ancillary
Functions as designated in the Attachments hereto.

         WHEREAS, SWBT participated in a collaborative process with the Public
Utility Commission of Texas ("Texas PUC", "Commission", or "Texas Commission")
and numerous competitive local exchange carriers ("CLECs") as part of the
process for SWBT to obtain in-region interLATA authority in Texas.

         WHEREAS, SWBT made the following representations as part of the public
interest phase of that collaborative process:

         (1)      SWBT represented that it has already made several, and
                  represented that it would continue, process improvements
                  designed to foster better relationships with and provide
                  better service to its CLEC customers (such improvements
                  include, but are not limited to: the restructuring of its
                  organizations and the creation of new departments to provide
                  faster and better responses to CLECs; the improvement of
                  communications with CLECs through a greatly expanded Internet
                  website, internal broadcast e-mails and user group meetings;
                  the distribution of customer satisfaction surveys; and the
                  creation of an Internal Escalation Process Intervals Policy);

         (2)      SWBT represented that it would follow certain Commission's
                  arbitration awards and other decisions, as set forth elsewhere
                  in this Agreement (SWBT, however, made such commitment without
                  waiving its right to appeal awards or decisions specifically
                  set forth in this Section 18.1, 18.2, and 18.3 of General
                  Terms and Conditions);

         (3)      SWBT represented that it would continue to work with its CLEC
                  customers, and invite their feedback, to provide them a
                  meaningful opportunity to compete in Texas;
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         (4)      SWBT represented that it will comply with the FCC's rules and
                  subsequent Section 271 decisions relating to the structural
                  and nonstructural requirements for a Section 272 affiliate;

         WHEREAS SWBT offered as part of said collaborative process to make
certain modifications to the Interconnection Agreement-Texas between
Southwestern Bell Telephone Company and AT&T Communications of the Southwest,
Inc. ("the AT&T Interconnection Agreement") available to other CLECs.

         WHEREAS, CLEC wishes to enter an agreement containing those terms and
conditions.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants of this Agreement CLEC and SWBT hereby agree as follows:

1.0      Introduction

1.1      This Agreement sets forth the terms, conditions and prices under which
         SWBT agrees to provide (a) services for resale (hereinafter referred to
         as Resale services), (b) unbundled Network Elements, or combinations of
         such Network Elements (Combinations), (c) Ancillary Functions and (d)
         Interconnection to CLEC. This Agreement also sets forth the terms and
         conditions for the interconnection of CLEC's network to SWBT's network
         and reciprocal compensation for the transport and termination of
         telecommunications.

1.2      The Network Elements, Combinations or Resale services provided pursuant
         to this Agreement may be connected to other Network Elements,
         Combinations or Resale services provided by SWBT or to any network
         components provided by CLEC itself or by any other vendor. Subject to
         the requirements of this Agreement, CLEC may at any time add, delete,
         relocate or modify the Resale services, Network Elements or
         Combinations purchased hereunder.

1.3      Except as provided in this Agreement, during the term of this
         Agreement, SWBT will not discontinue, as to CLEC, any Network Element,
         Combination, or Ancillary Functions offered to CLEC hereunder. During
         the term of this Agreement, SWBT will not discontinue any Resale
         services or features offered to CLEC hereunder except as provided in
         this Agreement. This Section is not intended to impair SWBT's ability
         to make changes in its Network, so long as such changes are consistent
         with the Act and do not result in the discontinuance of the offerings
         of Network Elements, Combinations, or Ancillary Functions made by SWBT
         to CLEC as set forth in an during the terms of this Agreement.

1.4      SWBT may fulfill the requirements imposed upon it by this Agreement by
         itself or may cause its Affiliates to take such actions to fulfill the
         responsibilities.
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1.5      This Agreement includes and incorporates herein the Attachments listed
         in Section 61 of this Agreement, and all accompanying Appendices,
         Addenda and Exhibits.

1.6      Unless otherwise provided in the Agreement, SWBT will perform all of
         its obligations concerning its offering of Resale services and
         unbundled Network Elements under this Agreement throughout the entire
         service area where SWBT is the incumbent local exchange carrier;
         provided, that SWBT's obligations to provide Ancillary Functions or to
         meet other requirements of the Act covered by this Agreement are not
         necessarily limited to such service areas.

2.0      Effective Date

2.1      Any CLEC that wants to accept this entire Agreement, shall notify SWBT
         in writing. Within 5 business days of such notification, SWBT shall
         present the CLEC with a signed Interconnection Agreement substantively
         identical to this Agreement. Within 5 business days of receipt of the
         SWBT signed Interconnection Agreement, the CLEC shall sign the
         Interconnection Agreement and file it with this Commission. The signed
         Interconnection Agreement between SWBT and the CLEC shall become
         effective by operation of law immediately upon filing with the
         Commission (the "Effective Date").

3.0      This Section Intentionally Left Blank

4.0      Term of Agreement

4.1      This Agreement will become effective as of the Effective Date stated
         above, and will expire October 13, 2000, unless the Federal
         Communications Commission (FCC) approves SWBT's application to provide
         in-region interLATA service in Texas under 47 U.S.C. ss. 271 by April
         20, 2000, in which event the terms of this Agreement will automatically
         be extended until October 13, 2003. In the event the FCC approves
         SWBT's application to provide in-region interLATA service in Texas
         under 47 U.S.C. ss. 271 after April 20, 2000, but prior to October 13,
         2000, SWBT shall have the option of extending the Agreement until
         October 13, 2003. In such event, SWBT will provide notice to the
         Commission and to CLEC, within five business days of FCC approval, of
         its agreement to extend the Agreement until October 13, 2003. If either
         party desires to negotiate a successor agreement to this Agreement,
         such party must provide the other party with a written request to
         negotiate such successor agreement (Request to Negotiate) not later
         than 180 days prior to the expiration of this Agreement. A Request to
         Negotiate does not activate the negotiation timeframe set forth in this
         Agreement, nor does it shorten the life of this Agreement. The noticing
         Party will delineate the items desired to be negotiated. Not later than
         30 days from receipt of said Notice to Negotiate, the receiving Party
         will notify the sending Party of additional items desired to be
         negotiated,
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         if any. The Parties will begin negotiations not later than 135 days
         prior to expiration of this Agreement. If the FCC approves SWBT's
         application to provide in-region interLATA service in Texas after April
         20, 2000 and SWBT provides notice of its agreement under this Section
         to extend the Agreement until October 13, 2003, CLEC may withdraw its
         Request to Negotiate.

4.1.1    This Section Intentionally Left Blank

4.1.2    Should CLEC opt to incorporate any provision of another interconnection
         agreement into this Agreement pursuant to Section 252(i) of the Act,
         such incorporated provision shall expire on the date it would have
         expired under the interconnection agreement from which it was taken.
         Should CLEC opt to incorporate any provision of this Agreement into
         another interconnection agreement pursuant to Section 252(i) of the
         Act, the provision from this Agreement shall expire on the date
         provided in Section 4.1 above and shall not control the expiration date
         of the provisions of the other interconnection agreement.

4.2      If either party has served a Notice to Negotiate pursuant to paragraph
         4.1 above then, notwithstanding the expiration of the Agreement in
         accordance with paragraph 4.1 above, the terms, conditions, and prices
         of this Agreement will remain in effect for a maximum of 135 days after
         expiration of the Agreement for completion of said negotiations and any
         necessary arbitration. The Parties agree to resolve any impasse by
         submission of the disputed matters to the Texas PUC for arbitration.
         Should the PUC decline jurisdiction, the Parties will resort to a
         commercial provider of arbitration services.

4.2.1    Pursuant to Sections 18.2 and 18.3, SWBT and CLEC agree not to
         challenge the lawfulness of any provision of this Agreement. In the
         event that one of the Parties to this Agreement nonetheless challenges
         the lawfulness of any provision of this Agreement in a judicial,
         dispute resolution, or regulatory proceeding, then the other Party, at
         its option, may terminate this Agreement immediately. In such event,
         the Parties shall have a period not to exceed 135 days in which to
         negotiate, and 135 additional days to arbitrate any disputes for, a
         replacement interconnection agreement. However, should a non-party
         successfully challenge the lawfulness of any provision of this
         Agreement, SWBT and CLEC agree that, despite such challenge, the terms
         and conditions of this Agreement will continue to apply and be
         effective between SWBT and CLEC. Nothing in this Section 4.2.1 is
         intended to imply that pursuit of resolution of disputes concerning a
         Party's clarifications or interpretations of the provisions of this
         Agreement, as provided in Sections 18.2 and 18.3, is a challenge to the
         lawfulness of this Agreement.

4.3      Upon termination of this Agreement, CLEC's liability will be limited to
         payment of the amounts due for Network Elements, Combinations,
         Ancillary Functions and Resale Services provided up to and including
         the date of termination and thereafter as reasonably requested by CLEC
         to prevent service interruption, but not to exceed 135 days after the
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         expiration of this agreement to allow for completion of negotiations,
         and any arbitration for, a successor agreement (such 135 day
         negotiation/arbitration period being in addition to the pre-expiration
         negotiation period of a minimum of 135 days, as provided for in Section
         4.1 above). The Network Elements, Combinations, Ancillary Functions and
         Resale services provided hereunder are vital to CLEC and must be
         continued without interruption. When CLEC provides or retains another
         vendor to provide such comparable Network Elements, Combinations,
         Ancillary Functions or Resale services, SWBT and CLEC agree to
         co-operate in an orderly and efficient transition to CLEC or another
         vendor. SWBT and CLEC further agree to coordinate the orderly
         transition to CLEC or another vendor such that the level and quality of
         the Network Elements, Combinations, Ancillary Functions and Resale
         Services is not degraded and each Party will exercise its best efforts
         to effect an orderly and efficient transition.

5.0      Assignment

5.1      Neither Party hereto may assign or otherwise transfer its rights or
         obligations under this Agreement, except with the prior written consent
         of the other Party hereto, which consent will not be unreasonably
         withheld; provided, that SWBT may assign its rights and delegate its
         benefits and delegate its duties and obligations under this Agreement
         without the consent of CLEC to a 100 per cent owned affiliate of SWBT,
         provided the performance of any such assignee is guaranteed by the
         assignor. Nothing in this Section is intended to impair the right of
         either Party to utilize subcontractors.

5.2      Each Party will notify the other in writing not less than 60 days in
         advance of anticipated assignment.

6.0      Confidentiality and Proprietary Information.

6.1      For the purposes of this Agreement, "Confidential Information" means
         confidential or proprietary technical or business information given by
         the Discloser to the Recipient. All information which is disclosed by
         one party to the other in connection with this Agreement, during
         negotiations and the term of this Agreement, will automatically be
         deemed proprietary to the Discloser and subject to this Agreement,
         unless otherwise confirmed in writing by the Discloser. In addition, by
         way of example and not limitation, all orders for Resale Services,
         Network Elements or Combinations placed by CLEC pursuant to this
         Agreement, and information that would constitute Customer Proprietary
         Network Information of CLEC's customers pursuant to the Act and the
         rules and regulations of the Federal Communications Commission (FCC),
         and Recorded Usage Data as described in Attachments 5 and 10 concerning
         Recorded Usage Data, whether disclosed by CLEC to SWBT or otherwise
         acquired by SWBT in the course of the performance of this Agreement,
         will be deemed Confidential Information of CLEC for all purposes under
         this Agreement.
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6.2      For a period of five (5) years from the receipt of Confidential
         Information from the Discloser, except as otherwise specified in this
         Agreement, the Recipient agrees (a) to use it only for the purpose of
         performing under this Agreement, (b) to hold it in confidence and
         disclose it to no one other than its employees having a need to know
         for the purpose of performing under this Agreement, and (c) to
         safeguard it from unauthorized use or disclosure using at least the
         same degree of care with which the Recipient safeguards its own
         Confidential Information. If the Recipient wishes to disclose the
         Discloser's Confidential Information to a third-party agent or
         consultant, such disclosure must be agreed to in writing by the
         Discloser, and the agent or consultant must have executed a written
         agreement of nondisclosure and nonuse comparable in scope to the terms
         of this Section.

6.3      The Recipient may make copies of Confidential Information only as
         reasonably necessary to perform its obligations under this Agreement.
         All such copies will be subject to the same restrictions and
         protections as the original and will bear the same copyright and
         proprietary rights notices as are contained on the original.

6.4      The Recipient agrees to return all Confidential Information in tangible
         form received from the Discloser, including any copies made by the
         Recipient within thirty (30) days after a written request is delivered
         to the Recipient, or to destroy all such Confidential Information if
         directed to do so by Discloser except for Confidential Information that
         the Recipient reasonably requires to perform its obligations under this
         Agreement. If either Party loses or makes an unauthorized disclosure of
         the other Party's Confidential Information, it will notify such other
         party immediately and use reasonable efforts to retrieve the lost or
         wrongfully disclosed information.

6.5      The Recipient will have no obligation to safeguard Confidential
         Information: (a) which was in the possession of the Recipient free of
         restriction prior to its receipt from the Discloser, (b) after it
         becomes publicly known or available through no breach of this Agreement
         by the Recipient; (c) after it is rightfully acquired by the Recipient
         free of restrictions on its disclosure; or (d) after it is
         independently developed by personnel of the Recipient to whom the
         Discloser's Confidential Information had not been previously disclosed.
         In addition, either Party will have the right to disclose Confidential
         Information to any mediator, arbitrator, state, or federal regulatory
         body, or a court in the conduct of any mediation, arbitration or
         approval of this Agreement, so long as, in the absence of an applicable
         protective order, the Discloser has been promptly notified by the
         Recipient and so long as the Recipient undertakes all lawful measures
         to avoid disclosing such information until Discloser has had reasonable
         time to negotiate a protective order with any such mediator,
         arbitrator, state or regulatory body or a court, and complies with any
         protective order that covers the Confidential Information.
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6.6      The Parties acknowledge that an individual end user may simultaneously
         seek to become or be a customer of both Parties. Nothing in this
         Agreement is intended to limit the ability of either Party to use
         customer specific information lawfully obtained from end users or
         sources other than the Disclosing Party.

6.7      Each Party's obligations to safeguard Confidential Information
         disclosed prior to expiration or termination of this Agreement will
         survive such expiration or termination.

6.8      Except as otherwise expressly provided elsewhere in this Agreement, no
         license is hereby granted under any patent, trademark, or copyright,
         nor is any such license implied solely by virtue of the disclosure of
         any Confidential Information.

6.9      Each Party agrees that the Discloser may be irreparably injured by a
         disclosure in breach of this Agreement by the Recipient or its
         representatives and the Discloser will be entitled to seek equitable
         relief, including injunctive relief and specific performance, in the
         event of any breach or threatened breach of the confidentiality
         provisions of this Agreement. Such remedies will not be deemed to be
         the exclusive remedies for a breach of this Agreement, but will be in
         addition to all other remedies available at law or in equity.

7.0      Liability and Indemnification

7.1      Limitation of Liabilities

7.1.1    Except as specifically provided in Attachment 25 DSL-TX, the Parties'
         liability to each other during any Contract Year resulting from any and
         all causes, other than as specified below in Sections 7.3.1 and 7.3.3,
         following, and for willful or intentional misconduct (including gross
         negligence), will not exceed the total of any amounts due and owing to
         CLEC pursuant to Section 46 (Performance Criteria) and the Attachment
         referenced in that Section, plus the amounts charged to CLEC by SWBT
         under this Agreement during the Contract Year in which such cause
         accrues or arises. For purposes of this Section, the first Contract
         Year commences on the first day this Agreement becomes effective and
         each subsequent Contract Year commences on the day following that
         anniversary date.

7.1.2    Except for losses alleged or made by an end user of either Party, or
         except as otherwise provided in specific appendices, in the case of any
         loss alleged or made by a third party arising under the negligence or
         willful misconduct of both Parties, each Party shall bear, and its
         obligation under this section shall be limited to, that portion (as
         mutually agreed to by the Parties) of the resulting expense caused by
         its own negligence or willful misconduct or that of its agents,
         servants, contractors, or others acting in aid or concert with it.

7.2      No Consequential Damages
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7.2.1    EXCEPT AS OTHERWISE PROVIDED IN ATTACHMENT 17, NEITHER CLEC NOR SWBT
         WILL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL
         CONSEQUENTIAL, RELIANCE, OR SPECIAL DAMAGES SUFFERED BY SUCH OTHER
         PARTY (INCLUDING WITHOUT LIMITATION DAMAGES FOR HARM TO BUSINESS, LOST
         REVENUES, LOST SAVINGS, OR LOST PROFITS SUFFERED BY SUCH OTHER
         PARTIES), REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT,
         WARRANTY, STRICT LIABILITY, OR TORT, INCLUDING WITHOUT LIMITATION,
         NEGLIGENCE OF ANY KIND WHETHER ACTIVE OR PASSIVE, AND REGARDLESS OF
         WHETHER THE PARTIES KNEW OF THE POSSIBILITY THAT SUCH DAMAGES COULD
         RESULT. EACH PARTY HEREBY RELEASES THE OTHER PARTY (AND SUCH OTHER
         PARTY'S SUBSIDIARIES AND AFFILIATES, AND THEIR RESPECTIVE OFFICERS,
         DIRECTORS, EMPLOYEES, AND AGENTS) FROM ANY SUCH CLAIM. NOTHING
         CONTAINED IN THIS SECTION WILL LIMIT SWBT'S OR CLEC'S LIABILITY TO THE
         OTHER FOR (i) WILLFUL OR INTENTIONAL MISCONDUCT (INCLUDING GROSS
         NEGLIGENCE); (ii) BODILY INJURY, DEATH, OR DAMAGE TO TANGIBLE REAL OR
         TANGIBLE PERSONAL PROPERTY PROXIMATELY CAUSED BY SWBT OR CLEC'S
         NEGLIGENT ACT OR OMISSION OR THAT OF THEIR RESPECTIVE AGENTS,
         SUBCONTRACTORS OR EMPLOYEES, NOR WILL ANYTHING CONTAINED IN THIS
         SECTION LIMIT THE PARTIES INDEMNIFICATION OBLIGATIONS, AS SPECIFIED
         BELOW.

7.3      Obligation to Indemnify

7.3.1    Each Party will and hereby agrees to defend at the other's request,
         indemnify, and hold harmless the other Party and each of its officers,
         directors, employees, and agents (each, an Indemnitee) against and in
         respect of any loss, debt, liability, damage, obligation, claim,
         demand, judgment, or settlement of any nature or kind, known or
         unknown, liquidated or unliquidated, including without limitation all
         reasonable costs and expenses incurred (legal, account or otherwise)
         (collectively, Damages) arising out of, resulting from, or based upon
         any pending or threatened claim, action, proceeding or suit by any
         third party (a Claim) (i) alleging any omissions, breach of any
         representation, warranty, or covenant made by such indemnifying Party
         (the Indemnifying Party) in this Agreement, (ii) based upon injuries or
         damages to any person or property or the environment arising out of or
         in connection with this Agreement that are the result of the
         Indemnifying Party's actions, breach of Applicable Law, or the actions,
         omissions or status of its employees, agents, and subcontractors.

7.3.1.1       In the case of any loss alleged or made by an end user of either
              Party, the Party whose end user alleged or made such loss
              (Indemnifying Party) shall defend and indemnify the other party
              (Indemnified Party) against any and all such claims or loss by its
              end
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              users regardless of whether the underlying service was provided or
              unbundled element was provisioned by the Indemnified Party, unless
              the loss was caused by the gross negligence or intentional or
              willful misconduct or breach of applicable law of the other
              (Indemnified) Party.

7.3.2    CLEC is responsible for obtaining any license or right to use agreement
         associated with a Network Element purchased from SWBT, and further will
         provide SWBT, prior to using any such Network Element, with either: (1)
         a copy of the applicable license or right to use agreement (or letter
         from the licenser attesting as such); or (2) an affidavit signed by
         CLEC attesting to the acquisition of any known and necessary licenses
         or right to use agreements. SWBT will provide a list of all known and
         necessary licenses or right to use agreements applicable to the subject
         Network Element(s) within seven days of a request for such a list by
         CLEC. SWBT agrees to use its best efforts to facilitate the obtaining
         of any necessary license or right to use agreement. In the event such
         an agreement is not forthcoming for a Network Element ordered by CLEC,
         the Parties commit to negotiate in good faith for the provision of
         alternative Elements or services which shall be equivalent to or
         superior to the Element for which CLEC is unable to obtain such license
         or agreement.

7.3.3    Each Party will and hereby agrees to defend at the other's request,
         indemnify, and hold harmless the other Party and each of its officers,
         directors, employees, and agents (each, an "Indemnitee") against and in
         respect of any loss, debt, liability, damage, obligation, claim demand,
         judgment, or settlement of any nature or kind, known or unknown,
         liquidated or unliquidated, including without limitation all reasonable
         costs and expenses incurred (legal, account or otherwise) arising out
         of, resulting from, or based upon any pending or threatened claim,
         action, proceeding or suit by any third party for actual infringement
         of any patent, copyright, trademark, service mark, trade name, trade
         dress, trade secret or any other intellectual property right now known
         or later developed to the extent that such claim or action arises from
         the actions of the respective Parties, or failure to act, as required
         pursuant to this Agreement.

7.3.4    SWBT makes no warranties, express or implied, concerning CLEC's (or any
         third party's) rights with respect to intellectual property (including
         without limitation, patent, copyright and trade secret rights) or
         contract rights associated with CLEC's rights to interconnect with
         SWBT's network and to Unbundled Network Elements and/or combine SWBT's
         network elements (including combining with CLEC's Network Elements)
         such interconnection or unbundling and/or combining of Elements
         (including combining with components of CLEC's network) in SWBT's
         network. Section 7 applies solely to this Agreement. Nothing in this
         Section will be deemed to supersede or replace any other agreements, if
         any, between the Parties with respect to CLEC's intellectual property
         or contract rights.
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7.3.5    The Parties recognize that the Federal Communications Commission, in
         the proceeding styled "Petition of MCI for Declaratory Ruling that New
         Entrants Need Not Obtain Separate License or Right-to-Use Agreements
         Before Purchasing Unbundled Network Elements," CCBPol 97-4, CC Docket
         96-98 ("the Proceeding"), is currently considering the issues of
         intellectual property rights and rights to use Unbundled Network
         Elements. The Parties agree that the provisions of the FCC Order shall
         control over the terms of Sections 7.3.2 through 7.3.4 above, upon the
         effective date of the FCC Order, unless subsequently stayed. Any
         disputes between SWBT and CLEC regarding the implementation of the FCC
         Order will be subject to expedited dispute resolution procedures before
         the Texas Commission.

7.4      Obligation to Defend; Notice; Cooperation

7.4.1    Whenever a Claim will arise for indemnification under this Section, the
         relevant Indemnitee, as appropriate, will promptly notify the
         Indemnifying party and request the Indemnifying Party to defend the
         same. Failure to so notify the Indemnifying Party will not relieve the
         Indemnifying Party of any liability that the Indemnifying Party might
         have, except to the extent that such failure prejudices the
         Indemnifying Party's ability to defend such Claim. The Indemnifying
         Party will have the right to defend against such liability or assertion
         in which event the Indemnifying Party will give written notice to the
         Indemnitee of acceptance of the defense of such Claim and the identity
         of counsel selected by the Indemnifying Party. Except as set forth
         below, such notice to the relevant Indemnitee will give the
         Indemnifying Party full authority to defend, adjust, compromise, or
         settle such Claim with respect to which such notice will have been
         given, except to the extent that any compromise or settlement might
         prejudice the Intellectual Property Rights of the relevant Indemnities.
         The Indemnifying Party will consult with the relevant Indemnitee prior
         to any compromise or settlement that would affect the Intellectual
         Property Rights or other rights of any Indemnitee, and the relevant
         Indemnitee will have the right to refuse such compromise or settlement
         and, at the refusing Party's or refusing Party's cost, to take over
         such defense, provided that in such event the Indemnifying Party will
         not be responsible for, nor will it be obligated to indemnify the
         relevant Indemnitee against any cost or liability in excess of such
         refused compromise or settlement. With respect to any defense accepted
         by the Indemnifying Party, the relevant Indemnitee will be entitled to
         participate with the Indemnifying Party in such defense if the Claim
         requests equitable relief or other relief that could affect the rights
         of the Indemnitee and also will be entitled to employ separate counsel
         for such defense at such Indemnitee's expense. In the event the
         Indemnifying Party does not accept the defense of any indemnified Claim
         as provided above, the relevant Indemnitee will have the right to
         employ counsel for such defense at the expense of the Indemnifying
         Party. Each Party agrees to cooperate and to cause its employees and
         agents to cooperate with the other Party in the defense of any such
         Claim.
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7.5      OSHA Statement

7.5.1    CLEC, in recognition of SWBT's status as an employer, agrees to abide
         by and to undertake the duty of compliance on behalf of SWBT with all
         federal, state and local laws, safety and health regulations relating
         to CLEC's activities concerning Collocated Space, and to indemnify and
         hold SWBT harmless for any judgments, citations, fines, or other
         penalties which are assessed against SWBT as the result solely of
         CLEC's failure to comply with any of the foregoing. SWBT, in its status
         as an employer, will comply with all federal, state and local laws,
         safety and health standards and regulations with respect to all other
         portions of the Premises, and agrees to indemnify and hold CLEC
         harmless for any judgments, citations, fines or other penalties which
         are assessed against CLEC as a result solely of SWBT's failure to
         comply with any of the foregoing.

8.0      Payment of Rates and Charges

8.1      Except as otherwise specifically provided elsewhere in this Agreement,
         the Parties will pay all rates and charges due and owing under this
         Agreement within thirty (30) days of receipt of an invoice. Except as
         otherwise specifically provided in this Agreement interest on overdue
         invoices will apply at the six (6) month Commercial Paper Rate
         applicable on the first business day of each calendar year.

9.0      Dispute Resolution

9.1      Finality of Disputes

9.1.1    Except as otherwise specifically provided in this Agreement, no claims
         will be brought for disputes arising from this Agreement more than 24
         months from the date the occurrence which gives rise to the dispute is
         discovered or reasonably should have been discovered with the exercise
         of due care and attention.

9.2      Alternative to Litigation

9.2.1    The Parties desire to resolve disputes arising out of this Agreement
         without litigation. Accordingly, except for action seeking a temporary
         restraining order or an injunction related to the purposes of this
         Agreement, or suit to compel compliance with this Dispute Resolution
         process, the Parties agree to use the following Dispute Resolution
         procedure with respect to any controversy or claim arising out of or
         relating to this Agreement or its breach.

9.3      Informal Resolution of Disputes
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9.3.1    In the case of any dispute and at the written request of a Party, each
         Party will appoint a knowledgeable, responsible representative to meet
         and negotiate in good faith to resolve any dispute arising under this
         Agreement. The location, form, frequency, duration, and conclusion of
         these discussions will be left to the discretion of the
         representatives. Upon agreement, the representatives may utilize other
         alternative informal dispute resolution procedures such as mediation to
         assist in the negotiations. Discussions and the correspondence among
         the representatives for purposes of settlement are exempt from
         discovery and production and will not be admissible in the arbitration
         described below or in any lawsuit without the concurrence of both
         parties. Documents identified in or provided with such communications,
         which are not prepared for purposes of the negotiations, are not so
         exempted and, if otherwise admissible, may be admitted in evidence in
         the arbitration or lawsuit.

9.4      Billing Disputes

9.4.1    The Parties agree that with respect to matters that are purely
         unresolved billing disputes, all bills, including bills disputed in
         whole or in part, are to be paid when due, that interest applies to all
         overdue invoices as set forth in Section 8.1 to this Agreement, and
         that no other late payment fee or charge applies to overdue invoices.
         The Parties further agree that if any billing dispute is resolved in
         favor of the disputing Party the disputing Party will receive, by
         crediting or otherwise, interest applied to the disputed amount as set
         forth in Section 8.1.

9.4.2    To the extent that any other portions of this Agreement provide for a
         bill closure process between the parties, or if such a process is
         mutually agreed to by the Parties, the procedures involved in such
         processes will not be deemed to place a particular billing item in
         dispute for purposes of this Section.

9.4.3    Each Party agrees to notify the other Party of a billing dispute and
         may invoke the informal dispute resolution process described in Section
         9.2. The parties will endeavor to resolve the dispute within thirty
         (30) calendar days of the Bill Date on which such disputed charges
         appear, or, if the charges have been subject to the bill closure
         process described in Section 9.4.2, above, within thirty (30) calendar
         days of the closure of the billing period covered by such bill closure
         process.

9.5      Formal Resolution of Disputes

9.5.1    Except as otherwise specifically set forth in this Agreement, for all
         disputes arising out of or pertaining to this Agreement, including but
         not limited to matters not specifically addressed elsewhere in this
         Agreement which require clarification, renegotiation, modifications or
         additions to this Agreement, either party may invoke dispute resolution
         procedures available pursuant to the dispute resolution rules, as
         amended from time to
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         time, of the Public Utility Commission of Texas. Also, upon mutual
         agreement, the parties may seek commercial binding arbitration as
         specified in Section 9.6.

9.5.2    The Parties agree that the Dispute Resolution procedures set forth in
         this Agreement are not intended to conflict with applicable
         requirements of the Act or the state commission with regard to
         procedures for the resolution of disputes arising out of this
         Agreement.

9.6      Arbitration

9.6.1    When both parties agree to binding arbitration, disputes will be
         submitted to a single arbitrator pursuant to the Commercial Arbitration
         Rules of the American Arbitration Association or pursuant to such other
         provider of arbitration services or rules as the Parties may agree. The
         place where each separate arbitration will be held will alternate
         between Dallas, Texas, and St. Louis, Missouri, unless the Parties
         agree otherwise. The arbitration hearing will be requested to commence
         within 60 days of the demand for arbitration. The arbitrator will
         control the scheduling so as to process the matter expeditiously. The
         Parties may submit written briefs upon a schedule determined by the
         arbitrator. The Parties will request that the arbitrator rule on the
         dispute by issuing a written opinion within 30 days after the close of
         hearings. The arbitrator has no authority to order punitive or
         consequential damages. The times specified in this Section may be
         extended or shortened upon mutual agreement of the Parties or by the
         arbitrator upon a showing of good cause. Each Party will bear its own
         costs of these procedures. The Parties will equally split the fees of
         the arbitration and the arbitrator. Judgment upon the award rendered by
         the arbitrator may be entered in any court having jurisdiction.

10.0     Termination of Service to CLEC

10.1     Failure of CLEC to pay charges may be grounds for termination of this
         Agreement. If CLEC fails to pay when due, any and all charges billed to
         them under this Agreement, (Unpaid Charges), and any portion of such
         charges remain unpaid more than fifteen (15) calendar days after the
         due date of such Unpaid Charges, SWBT will notify CLEC in writing that
         in order to avoid having service disconnected, CLEC must remit all
         Unpaid Charges, whether disputed or undisputed, to SWBT within fifteen
         (15) calendar days after receipt of said notice. Disputes hereunder
         will be resolved in accordance with the Dispute Resolution Procedures
         set out in Section 9 of this Agreement.

10.2     If any CLEC charges remain unpaid at the conclusion of the time period
         as set forth in Section 10.1 above (30 calendar days from the due date
         of such unpaid charges), SWBT will notify CLEC, the appropriate
         commission(s) and the end user's IXC(s) of Record in writing, that
         unless all charges are paid within fifteen (15) calendar days, CLEC's
         service will be disconnected and CLEC's end users may be switched to
         SWBT local service. SWBT will also suspend order acceptance at this
         time.
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10.3     If any CLEC charges remain unpaid or undisputed thirty (30) calendar
         days past the due date of the unpaid charges as described in Section
         10.2 above, CLEC will, at its sole expense, notify its end users, the
         Commission and the end user's of Record that their service may be
         disconnected for CLEC failure to pay unpaid charges, and that its end
         users must select a new local service provider within fifteen (15)
         calendar days. The notice will also advise the end user that SWBT will
         assume the end user's account at the end of the fifteen (15) calendar
         day period should the end user fail to select a new local service
         provider.

10.4     If any CLEC charges remain unpaid or undisputed forty-five (45)
         calendar days past the due date, SWBT will disconnect CLEC and transfer
         all CLEC's end users who have not selected another local service
         provider directly to SWBT's service. These end users will receive the
         same services provided through CLEC at the time of service. These end
         users will receive the same services provided through CLEC at the time
         of transfer. SWBT will inform the Commission and the end user's IXC(s)
         of Record of the names of all end users transferred through this
         process. Applicable service establishment charges for switching end
         users from CLEC to SWBT will be assessed to CLEC.

10.5     Within five (5) calendar days of the transfer (50 calendar days past
         CLEC's due date), SWBT will notify all affected end users that because
         of a CLEC's failure to pay, their service is now being provided by
         SWBT. SWBT will also notify the end user that they have thirty (30)
         calendar days to select a local service provider. If the end user does
         not select an LSP within 30 calendar days the customer will remain a
         SWBT local customer.

10.6     SWBT may discontinue service to CLEC upon failure to pay undisputed
         charges as provided in this section, and will have no liability to CLEC
         in the event of such disconnection.

10.7     After disconnect procedures have begun, SWBT will not accept service
         orders from CLEC until all unpaid charges are paid. SWBT will have the
         right to require a deposit equal to one month's charges (based on the
         highest previous month of service from SWBT) prior to resuming service
         to CLEC after disconnect for nonpayment.

10.8     Beyond the specifically set out limitations in this section, nothing
         herein will be interpreted to obligate SWBT to continue to provide
         service to any such end users or to limit any and all disconnection
         rights SWBT may have with regard to such end users.

11.0     Notices

11.1     In the event any notices are required to be sent under the terms of
         this Agreement, they may be sent by mail and are deemed to have been
         given on the date received. Notice may
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         also be effected by personal delivery or by overnight courier, and will
         be effective upon receipt. Notice may also be provided by facsimile,
         which will be effective on the next business day following the date of
         transmission; provided, however, notices to a Party's 24-hour
         maintenance contact number will be by telephone and/or facsimile and
         will be deemed to have been received on the date transmitted. The
         Parties will provide the appropriate telephone and facsimile numbers to
         each other. Unless otherwise specifically provided in this Agreement,
         notice will be directed as follows:

11.2     If to CLEC:

                  Bruce J. Becker, EVP/CTO/CIO
                  Madison River Communications LLC
                  103 South Fifth Street
                  Mebane, NC  27302

11.3     If to SWBT:

                  Contract Management
                  ATTN:  Notices Manager
                  Four Bell Plaza, 9th Flr.
                  311 S. Akard St.
                  Dallas, TX 75202-5398

         Either Party may unilaterally change its designated representative
and/or address, telephone contact number or facsimile number for the receipt of
notices by giving seven (7) days' prior written notice to the other Party in
compliance with this Section. Any notice or other communication will be deemed
given when received.

12.0     Taxes

12.1     With respect to any purchase of service under this Agreement, if any
         Federal, state or local government tax, fee, surcharge, or other
         tax-like charge (a "Tax") is required or permitted by applicable law,
         ordinance or tariff to be collected from a purchasing Party by the
         providing Party, then (i) the providing Party will bill, as a
         separately stated item, the purchasing Party for such Tax, (ii) the
         purchasing Party will timely remit such Tax to the providing Party, and
         (iii) the providing Party will remit such collected Tax to the
         applicable taxing authority.

12.2     If the providing Party does not collect a Tax because the purchasing
         Party asserts that it is not responsible for the tax, or is otherwise
         excepted from the obligation which is later determined by formal action
         to be wrong then, as between the providing Party and the
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         purchasing Party, the purchasing Party will be liable for such
         uncollected Tax and any interest due and/or penalty assessed on the
         uncollected Tax by the applicable taxing authority or governmental
         entity.

12.3     If either Party is audited by a taxing authority or other governmental
         entity the other Party agrees to reasonably cooperate with the Party
         being audited in order to respond to any audit inquiries in a proper
         and timely manner so that the audit and/or any resulting controversy
         may be resolved expeditiously.

12.4     If applicable law excludes or exempts a purchase of services under this
         Agreement from a Tax, and if such applicable law also provides an
         exemption procedure, such as an exemption certificate requirement,
         then, if the purchasing Party complies with such procedure, the
         providing Party, subject to Section 12.2, will not collect such Tax
         during the effective period of the exemption. Such exemption will be
         effective upon receipt of the exemption certificate or affidavit in
         accordance with Section 12.7.

12.5     If applicable law excludes or exempts a purchase of services under this
         Agreement from a Tax, but does not also provide an exemption procedure,
         then the providing Party will not collect such Tax if the purchasing
         Party (i) furnishes the providing Party with a letter signed by an
         officer of the purchasing Party claiming an exemption and identifying
         the applicable law which allows such exemption, and (ii) supplies the
         providing Party with an indemnification agreement, reasonably
         acceptable to the providing Party, which holds the providing Party
         harmless on an after-tax basis with respect to forbearing to collect
         such Tax.

12.6     With respect to any Tax or Tax controversy covered by this Section 12,
         the purchasing Party will be entitled to contest, pursuant to
         applicable law, and at its own expense, any Tax that it is ultimately
         obligated to pay. The purchasing Party will be entitled to the benefit
         of any refund or recovery resulting from such a contest. The providing
         Party will cooperate in any such contest.

12.7     All notices, affidavits, exemption certificates or other communications
         required or permitted to be given by either Party to the other under
         this Section 12, will be made in writing and will be delivered by
         certified mail, and sent to the addresses stated in Section 11 and to
         the following:

         To SWBT:

                  Director-Taxes
                  1010 N. St. Mary's, Room 11-X-1
                  San Antonio, TX  78215
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         To CLEC:

                  Paul Sunu, CFO
                  Madison River Communications LLC
                  103 South Fifth Street
                  Mebane, NC  27302

         Either Party may from time-to-time designate another address or
         addressee by giving notice in accordance with the terms of this Section
         12.7.

         Any notice or other communication will be deemed to be given when
         received.

13.0     Force Majeure

         Except as otherwise specifically provided in this Agreement, neither
         Party will be liable for any delay or failure in performance of any
         part of this Agreement caused by a Force Majeure condition, including
         acts of the United States of America or any state, territory, or
         political subdivision thereof, acts of God or a public enemy, fires,
         floods, labor disputes such as strikes and lockouts, freight embargoes,
         earthquakes, volcanic actions, wars, civil disturbances, cable cuts, or
         other causes beyond the reasonable control of the Party claiming
         excusable delay or other failure to perform. Provided, Force Majeure
         will not include acts of any Governmental Authority relating to
         environmental, health, or safety conditions at work locations. If any
         Force Majeure condition occurs the Party whose performance fails or is
         delayed because of such Force Majeure conditions will give prompt
         notice to the other Party, and upon cessation of such Force Majeure
         condition, will give like notice and commence performance hereunder as
         promptly as reasonably practicable.

14.0     Publicity

14.1     The Parties agree not to use in any advertising or sales promotion,
         press releases or other publicity matters, any endorsements, direct or
         indirect quotes or pictures implying endorsement by the other Party or
         any of its employees without such Party's prior written approval. The
         Parties will submit to each other for written approval, prior to
         publication, all such publicity endorsement matters that mention or
         display the other's name and/or marks or contain language from which a
         connection to said name and/or marks may be inferred or implied.

14.2     Neither Party will offer any services using the trademarks, service
         marks, trade names, brand names, logos, insignia, symbols or decorative
         designs of the other Party or its affiliates without the other Party's
         written authorization.
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15.0     Network Maintenance and Management

15.1     The Parties will work cooperatively to implement this Agreement. The
         Parties will exchange appropriate information (e.g., maintenance
         contact numbers, network information, information required to comply
         with law enforcement and other security agencies of the Government,
         etc.) to achieve this desired reliability.

15.2     Each Party will provide a 24-hour contact number for Network Traffic
         Management issues to the other's surveillance management center. A
         facsimile (FAX) number must also be provided to facilitate event
         notifications for planned mass calling events. Additionally, both
         Parties agree that they will work cooperatively to ensure that all such
         events will attempt to be conducted in such a manner as to avoid
         disruption or loss of service to other end users. Each party will
         maintain the capability of respectively implementing basic protective
         controls such as "Cancel To" or "Call Gap."

15.3     Neither Party will use any service provided under this Agreement in a
         manner that impairs the quality of service to other carriers or to
         either Party's subscribers. Either Party will provide the other Party
         notice of said impairment at the earliest practicable time.

16.0     Law Enforcement and Civil Process

16.1     Intercept Devices

16.1.1   Local and federal law enforcement agencies periodically request
         information or assistance from local telephone service providers. When
         either Party receives a request associated with a customer of the other
         Party, the receiving Party will refer such request to the appropriate
         Party, unless the request directs the receiving Party to attach a pen
         register, trap-and-trace or form of intercept on the Party's own
         facilities, in which case that Party will comply with any valid
         request, to the extent the receiving party is able to do so; if such
         compliance requires the assistance of the other Party such assistance
         will be provided.

16.2     Subpoenas

16.2.1   If a Party receives a subpoena for information concerning an end user
         the Party knows to be an end user of the other Party, the receiving
         Party will refer the subpoena to the requesting entity with an
         indication that the other Party is the responsible company. Provided,
         however, if the subpoena requests records for a period of time during
         which the receiving Party was the end user's service provider, the
         receiving Party will respond to
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         any valid request to the extent the receiving party is able to do so;
         if response requires the assistance of the other party such assistance
         will be provided.

16.3     Law Enforcement Emergencies

16.3.1   If a Party receives a request from a law enforcement agency to
         implement at its switch a temporary number change, temporary
         disconnect, or one-way denial of outbound calls for an end user of the
         other Party, the receiving Party will comply so long as it is a valid
         emergency request. Neither Party will be held liable for any claims or
         damages arising from compliance with such requests, and the Party
         serving the end user agrees to indemnify and hold the other Party
         harmless against any and all such claims.

17.0     Changes in Subscriber Carrier Selection

17.1     With respect to Resale services and unbundled Network Elements provided
         to end users, each Party must obtain end user authorization prior to
         requesting a change in the end users' provider of local exchange
         service (including ordering end user specific Network Elements) and
         must retain such authorizations for twelve (12) months. The
         authorization must conform with federal rules regarding changes of
         presubscribed interexchange carriers until such time as there are
         federal or state rules applicable to changes of local exchange service
         providers. Thereafter, the authorization must comply with each such
         rule. The Party submitting the change request assumes responsibility
         for applicable charges as specified in Section 258(b) of the
         Telecommunications Act of 1996.

17.2     Only an end user can initiate a challenge to a change in its local
         exchange service provider. In connection with such challenges each
         Party will follow procedures which conform with federal rules regarding
         challenges to changes of presubscribed interexchange carriers until
         such time as there are federal or state rules applicable to challenges
         to changes of Local Exchange Service Providers. Thereafter, the
         procedures each Party will follow concerning challenges to changes of
         local exchange service providers will comply with such rule. If an end
         user notified SWBT or CLEC that the end user requests local exchange
         service, the Party receiving such request shall be free to immediately
         provide service to such end user. SWBT shall be free to connect the end
         user to any local service provider based upon the local service
         provider's request and assurance that proper end user authorization has
         been obtained. CLEC shall make authorization available to SWBT upon
         request and at no charge.

17.3     When an end user changes or withdraws authorization, each Party will
         release customer specific facilities in accordance with the end user
         customer's directions, or the directions of the end user's agent.
         Further, when an end user abandons the premise, SWBT is free to reclaim
         the facilities for use by another customer and is free to issue service
         orders required to reclaim such facilities.
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17.4     Neither Party shall be obligated by this Agreement to investigate any
         allegations of unauthorized changes in local exchange service
         ("slamming") on behalf of the other Party or a third party. If SWBT, on
         behalf of CLEC, agrees to investigate an alleged incidence of slamming,
         SWBT shall charge CLEC a cost-based or mutually agreed investigation
         fee.

18.0     Amendments or Waivers

18.1     Except as otherwise provided in this Agreement, no amendment or waiver
         of any provision of this Agreement and no consent to any default under
         this Agreement will be effective unless the same is in writing and
         signed by an officer of the Party against whom such amendment, waiver
         or consent is claimed. In addition, no course of dealing or failure of
         a Party strictly to enforce any term, right or condition of this
         Agreement will be construed as a waiver of such term, right, or
         condition.

18.2     SWBT agrees to dismiss with prejudice its appeals of SWBT v. AT&T and
         the Public Utility Commission of Texas, Cause Nos. 98-51005, 99-50060,
         and 99-50073 in the United States Court of Appeals for the Fifth
         Circuit. Pursuant to Attachment 6, Section 14.8, and for the time
         periods specified in Attachment 6, Section 14, SWBT expressly waives
         its right to assert that it need not provide pursuant to the "necessary
         and impair" standard of FTA Section 251(d)(2) a network element set
         forth in Attachment 6, Unbundled Network Elements, Sections 3-11 of
         this Agreement, and/or its rights with regard to the combination of any
         such network elements that are not already assembled pursuant to the
         provisions in Attachment 6, Section 14. By entering into this Agreement
         to obtain the benefits set forth herein in whole or in part, SWBT
         expressly waives its right to challenge the terms of this Agreement in
         any judicial, dispute resolution or regulatory proceeding, except that
         SWBT expressly reserves the right to seek clarification or
         interpretation of the terms of this Agreement through the dispute
         resolution process established by the Commission or challenge in any
         judicial, dispute resolution or regulatory proceeding the
         interpretation of this agreement or any agreement containing the same
         or substantively similar language to this Agreement (for example, the
         Commission's Order in the Waller Creek proceedings, PUC Docket Nos.
         17922 and 20268); such right to seek clarification or interpretation or
         challenge the interpretation also includes the right to appeal the
         final judicial, dispute resolution or regulatory decision and to
         continue to pursue pending appeals other than the SWBT v. AT&T appeal
         referenced above. SWBT also expressly reserves the right to contest any
         order or decision requiring the payment of reciprocal compensation for
         ISP traffic, including the right to seek refunds or to implement an
         alternate approach to such reciprocal compensation pursuant to
         regulatory or judicial approval. In addition, to the extent that the
         results of the arbitration proceedings pending before the Commission in
         Docket No. 20226, Petition of Accelerated Connections, Inc., d/b/a ACI
         Corp. for Arbitration to
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         Establish an Interconnection Agreement with Southwestern Bell Telephone
         Company, and Docket No. 20272, Petition of DIECA Communications, Inc.,
         d/b/a Covad Communications Co. for Arbitration of Interconnection
         Rates, Terms and Conditions and Related Arrangements with SWBT, are
         incorporated into this Agreement, SWBT reserves the right to appeal
         those dockets. When any final decision is rendered by the appellate
         court, the affected contract provision shall be revised to reflect the
         result of such appeal. Any dispute between the Parties regarding the
         manner in which this Agreement should be modified to reflect the affect
         of the appellate court decision shall be resolved by the Commission.
         Except as provided in this section, SWBT reserves the right to pursue
         pending appeals other than the SWBT v. AT&T appeal referenced above and
         to appeal any other state or federal regulatory decision, but, absent a
         stay or reversal, will comply with any such final decision. Nothing in
         this Agreement limits SWBT's right or ability to participate in any
         proceedings regarding the proper interpretation and/or application of
         the FTA.

18.3     By entering into this Agreement to obtain the benefits set forth herein
         in whole or in part, CLEC expressly waives its right to challenge the
         terms of this Agreement in any judicial, dispute resolution or
         regulatory proceeding, except that CLEC expressly reserves the right to
         seek clarification or interpretation of the terms of this Agreement
         through the dispute resolution process established by the Commission or
         challenge in any judicial, dispute resolution or regulatory proceeding
         the interpretation of this agreement or any agreement containing the
         same or substantially similar language to this agreement; such right to
         seek clarification or interpretation or challenge the interpretation
         also includes the right to appeal the final judicial, dispute
         resolution or regulatory decision and to continue to pursue pending
         appeals. When a final decision is rendered by the appellate court, the
         affected contract provision shall be revised to reflect the result of
         such appeal. Any dispute between the Parties regarding the manner in
         which this Agreement should be modified to reflect the effect of the
         appellate court decision shall be resolved by the Commission. CLEC
         expressly reserves the right to contest any order or decision requiring
         the payment of reciprocal compensation for ISP traffic, including the
         right to seek refunds or to implement an alternate approach to such
         reciprocal compensation pursuant to regulatory or judicial approval.
         Except as provided in this section, CLEC reserves the right to pursue
         pending appeals and to appeal any other state or federal regulatory
         decision, but, absent a stay or reversal, will comply with any such
         final decision. Nothing in this Agreement limits CLEC's right or
         ability to participate in any proceedings regarding the proper
         interpretation and/or application of the FTA.

19.0     Authority

19.1     Each person whose signature appears below represents and warrants that
         he or she has authority to bind the Party on whose behalf he or she has
         executed this Agreement.
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20.0     Binding Effect

20.1     This Agreement will be binding on and inure to the benefit of the
         respective successors and permitted assigns of the Parties.

21.0     Consent

21.1     Where consent, approval, or mutual agreement is required of a Party, it
         will not be unreasonably withheld or delayed.

22.0     Expenses

22.1     Except as specifically set out in this Agreement, each party will be
         solely responsible for its own expenses involved in all activities
         related to the subject of this Agreement.

23.0     Headings

23.1     The headings in this Agreement are inserted for convenience and
         identification only and will not be considered in the interpretation of
         this Agreement.

24.0     Relationship of Parties

24.1     This Agreement will not establish, be interpreted as establishing, or
         be used by either party to establish or to represent their relationship
         as any form of agency, partnership or joint venture. Neither Party will
         have any authority to bind the other or to act as an agent for the
         other unless written authority, separate from this Agreement, is
         provided. Nothing in the Agreement will be construed as providing for
         the sharing of profits or losses arising out of the efforts of either
         or both of the Parties. Nothing herein will be construed as making
         either Party responsible or liable for the obligations and undertakings
         of the other Party.

25.0     Conflict of Interest

25.1     The Parties represent that no employee or agent of either Party has
         been or will be employed, retained, paid a fee, or otherwise received
         or will receive any personal compensation or consideration from the
         other Party, or any of the other Party's employees or agents in
         connection with the arranging or negotiation of this Agreement or
         associated documents.
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26.0     Multiple Counterparts

26.1     This Agreement may be executed in multiple counterparts, each of which
         will be deemed an original but all of which will together constitute
         but one, and the same document.

27.0     Third Party Beneficiaries

27.1     Except as may be specifically set forth in this Agreement, this
         Agreement does not provide and will not be construed to provide third
         parties with any remedy, claim, liability, reimbursement, cause of
         action, or other privilege.

28.0     Regulatory Approval

28.1     Each Party agrees to cooperate with the other and with any regulatory
         agency to obtain regulatory approval. During the term of this
         Agreement, each Party agrees to continue to cooperate with each other
         and any regulatory agency so that the benefits of this Agreement may be
         achieved.

29.0     Trademarks and Trade Names

29.1     Except as specifically set out in this Agreement, nothing in this
         Agreement will grant, suggest, or imply any authority for one Party to
         use the name, trademarks, service marks, or trade names of the other
         for any purpose whatsoever, absent written consent of the other Party.

30.0     Regulatory Authority

30.1     SWBT will be responsible for obtaining and keeping in effect all
         Federal Communications Commission, state regulatory commission,
         franchise authority and other regulatory approvals that may be required
         in connection with the performance of its obligations under this
         Agreement. CLEC will be responsible for obtaining and keeping in effect
         all Federal Communications Commission, state regulatory commission,
         franchise authority and other regulatory approvals that may be required
         in connection with its offering of services to CLEC Customers
         contemplated by this Agreement. CLEC will reasonably cooperate with
         SWBT in obtaining and maintaining any required approvals for which SWBT
         is responsible, and SWBT will reasonably cooperate with CLEC in
         obtaining and maintaining any required approvals for which CLEC is
         responsible.

30.2     SWBT will not, of its own volition, file a tariff or make another
         similar filing which supersedes this Agreement in whole or in part.
         SWBT will make no filings which are
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         inconsistent with this commitment. This Section is not intended to
         apply to any SWBT tariffs or filings which do not affect CLEC's rights
         or SWBT's obligations to CLEC under this Agreement. This Section does
         not impair SWBT's right to file tariffs nor does it impair SWBT's right
         to file tariffs proposing new products and services and changes in the
         prices, terms and conditions of existing products and services,
         including discontinuance or grandfathering of existing features or
         services, of any telecommunications services that SWBT provides or
         hereafter provides to CLEC under this Agreement pursuant to the
         provision of Attachment 1: Resale, nor does it impair CLEC's right to
         contest such tariffs before the appropriate Commission.

30.3     SWBT will provide CLEC notice of any tariff or filing which concerns
         the subject matter of this Agreement at the time a Preliminary Rate
         Authority (PRA) is transmitted to the state commission, or, in
         situations where a PRA would not be issued, within ninety (90) days
         (forty five (45) days for price changes) of the expected effective date
         of the tariff or filing.

30.4     In the event that SWBT is required by any governmental authority to
         file a tariff or make another similar filing in connection with the
         performance of any action that would otherwise be governed by this
         Agreement, SWBT will provide CLEC notice of the same as set forth in
         Section 30.3 above.

30.5     If any tariff referred to in Section 30.4 becomes ineffective by
         operation of law, through deregulation or otherwise, the terms and
         conditions of such tariffs, as of the date on which the tariffs became
         ineffective, will be deemed incorporated if not inconsistent with this
         Agreement.

31.0     Commission Interpretation of Same or Substantively Similar Language

31.1     Any ruling by the Commission interpreting the same or substantively
         similar language in another Interconnection Agreement is applicable to
         the same or substantively similar language in this Agreement.

32.0     Verification Reviews

32.1     Subject to each Party's reasonable security requirements and except as
         may be otherwise specifically provided in this Agreement, either Party
         may audit the other Party's books, records and other documents once in
         each Contract Year for the purpose of evaluating the accuracy of the
         other Party's billing and invoicing. The Parties may employ other
         persons or firms for this purpose. Such audit will take place at a time
         and place agreed on by the Parties no later than thirty (30) days after
         notice thereof.
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32.2     Each Party will promptly correct any billing error that is revealed in
         an audit, including making refund of any overpayment by the other Party
         in the form of a credit on the invoice for the first full billing cycle
         after the Parties have agreed upon the accuracy of the audit results.
         Any disputes concerning audit results will be resolved pursuant to the
         Dispute Resolution procedures described in Section 9 of this Agreement.

32.3     Each Party will cooperate fully in any such audit, providing reasonable
         access to any and all appropriate employees and books, records and
         other documents reasonably necessary to assess the accuracy of the
         Party's bills.

32.4     Either Party may audit the other Party's books, records and documents
         more than once during any Contract Year if the previous audit found
         previously uncorrected net variances or errors in invoices in the other
         Party's favor with an aggregate value of at least two percent (2%) of
         the amounts payable by CLEC for Resale services, Network Elements or
         Combinations provided during the period covered by the audit.

32.5     Audits will be at the auditing Party's expense.

32.6     Upon (i) the discovery by either Party of overcharges not previously
         reimbursed to the other Party or (ii) the resolution of disputed
         audits, the affected Party will promptly reimburse the other Party the
         amount of any overpayment times the commercial paper rate applicable on
         the last day of the month preceding the month of discovery or
         resolution as above. In no event, however, will interest be assessed on
         any previously assessed or accrued late payment charges.

32.7     CLEC may require that, at the end of the first year of implementation
         of this Agreement, SWBT submit to an audit or examination of services
         performed under the interconnection agreement. Subsequent to the first
         year of implementation, CLEC may require that audits or examinations be
         performed if: (1) CLEC can show cause that it has a commercially
         reasonable basis to seek an audit or examination; and (2) the request
         for audit or examination specifically defines the particular services
         that it seeks to audit or examine. All audits requested by CLEC under
         this section shall be conducted at its expense. The dispute resolution
         provisions of this Agreement shall be used to resolve disputes arising
         concerning requests for audits or examinations, or the results of the
         audits or examinations.

32.8     For a period of fourteen (14) months from the Effective Date of this
         Agreement, SWBT may audit CLEC's operations, books, records, and other
         documents related to the development of the percent local usage (PLU)
         to be used to measure and settle untransmitted calling party numbers
         (CPN) in connection with Attachment 12: Compensation. SWBT will bear
         the reasonable expenses associated with this inspection.
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32.9     Information obtained or received by CLEC in conducting the inspections
         described in Section 32.7 and information obtained or received by
         either Party in connection with Sections 32.1 through 32.6 and 32.8
         will be subject to the confidentiality provisions of Section 6 of this
         Agreement.

33.0     Complete Terms

33.1     This Agreement constitutes the entire agreement between the parties
         concerning the subject matter hereof and supersedes any prior
         agreements, representations, statements, negotiations, understandings,
         proposals or undertakings, oral or written, with respect to the subject
         matter expressly set forth herein.

33.2     Neither Party will be bound by an amendment, modification or additional
         term unless it is reduced to writing signed by an authorized
         representative of the Party sought to be bound.

34.0     Cooperation on Preventing End User Fraud

34.1     The Parties agree to cooperate with one another to investigate,
         minimize, and take corrective action in cases of fraud. The Parties'
         fraud minimization procedures are to be cost-effective and implemented
         so as not to unduly burden or harm one Party as compared to the other.

34.2     In cases of suspected fraudulent activity by an end user, at a minimum,
         the cooperation referenced in the above paragraph will include
         providing to the other Party, upon request, information concerning end
         users who terminate services to that Party without paying all
         outstanding charges. The Party seeking such information is responsible
         for securing the end user's permission to obtain such information.

35.0     Notice of Network Changes

         SWBT agrees to provide CLEC reasonable notice consistent with
         applicable FCC rules of changes in the information necessary for the
         transmission and routing of services using SWBT's facilities or
         networks, as well as other changes that affect the interoperability of
         those respective facilities and networks. This Agreement is not
         intended to limit SWBT's ability to upgrade its network through the
         incorporation of new equipment, new software or otherwise so long as
         such upgrades are not inconsistent with SWBT's obligations to CLEC
         under the terms of this Agreement.

36.0     Good Faith Performance

36.1     In the performance of their obligations under this Agreement the
         Parties will act in good faith and consistently with the intent of the
         Act. Where notice, approval or similar action
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         by a Party is permitted or required by any provision of this Agreement,
         (including, without limitation, the obligation of the parties to
         further negotiate the resolution of new or open issues under this
         Agreement) such action will not be unreasonably delayed, withheld or
         conditioned.

37.0     Responsibility of Each Party

37.1     Each Party is an independent contractor, and has and hereby retains the
         right to exercise full control of and supervision over its own
         performance of its obligations under this Agreement and retains full
         control over the employment, direction, compensation and discharge of
         its employees assisting in the performance of such obligations. Each
         Party will be solely responsible for all matters relating to payment of
         such employees, including compliance with social security taxes,
         withholding taxes and all other regulations governing such matters.
         Each party will be solely responsible for proper handling, storage,
         transport and disposal at its own expense of all (i) substances or
         materials that it or its contractors or agents bring to, create or
         assume control over at Work Locations or, (ii) Waste resulting
         therefrom or otherwise generated in connection with its or its
         contractors' or agents' activities at the Work Locations. Subject to
         the limitations on liability and except as otherwise provided in this
         Agreement, each Party will be responsible for (i) its own acts and
         performance of all obligations imposed by applicable law in connection
         with its activities, legal status and property, real or personal and,
         (ii) the acts of its own affiliates, employees, agents and contractors
         during the performance of the Party's obligations hereunder.

38.0     Transmission of Traffic to Third Parties

38.1     CLEC will not send to SWBT local traffic that is destined for the
         network of a third party unless CLEC has the authority to exchange
         traffic with that third party.

39.0     Governmental Compliance

39.1     CLEC and SWBT each will comply at its own expense with all applicable
         law related to i) its obligations under or activities in connection
         with this Agreement; of ii) its activities undertaken at, in connection
         with or relating to Work Locations. CLEC and SWBT each agree to
         indemnify, defend, (at the other party's request) and save harmless the
         other, each of its officers, directors and employees from and against
         any losses, damages, claims, demands, suits, liabilities, fines,
         penalties, and expenses (including reasonable attorneys' fees) that
         arise out of or result from i) its failure or the failure of its
         contractors or agents to so comply or ii) any activity, duty or status
         of it or its contractors or agents that triggers any legal obligation
         to investigate or remediate environmental contamination. SWBT, at its
         own expense, will be solely responsible for obtaining from governmental
         authorities, building owners, other carriers, and any other persons or
         entities, all rights and privileges
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         (including, but not limited to, space and power), which are necessary
         for SWBT to provide the Network Elements and Resale services pursuant
         to this Agreement.

40.0     Responsibility for Environmental Contamination

40.1     Disclosure of Potential Hazards: When and if CLEC notifies SWBT that
         CLEC intends to enter or perform work pursuant to this Agreement in,
         on, or within the vicinity of any particular SWBT building, manhole,
         pole, duct, conduit, right-of-way, or other facility (hereinafter "Work
         Location"), SWBT shall timely notify CLEC of any Environmental Hazard
         at that Work Location of which SWBT has actual knowledge, except that
         this duty shall not apply to any Environmental Hazard (i) of which CLEC
         already has actual knowledge or (ii) was caused solely by CLEC or (iii)
         would be obvious and apparent to anyone coming to the Work Location.
         For purposes of this Agreement, "Environmental Hazard" shall mean (i)
         the presence of petroleum vapors or other gases in hazardous
         concentrations in a manhole or other confined space, or conditions
         reasonably likely to give rise to such concentrations; (ii) the
         presence of electrical cable in a conduit system; (iii)
         asbestos-containing materials; (iv) emergency exit routes and warning
         systems, if and to the extent owned or operated by SWBT; and (v) any
         potential hazard that would not be obvious to an individual entering
         the Work Location or detectable using work practices standard in the
         industry.

40.2     Evaluation of Potential Hazards: Without limiting the foregoing, after
         providing prior notice to SWBT, CLEC shall have the right to inspect,
         test, or monitor any Work Location for possible Environmental Hazards
         as necessary or appropriate to comply with law or to protect its
         employees, contractors or others from the possible effects of
         Environmental Hazards. CLEC shall be responsible for conducting such
         inspections, testing or monitoring in a way that does not unreasonably
         interfere with SWBT's business operations after consultation with SWBT,
         and shall return SWBT's property to substantially the same condition as
         it would have been without such inspections, testing or monitoring.

40.3     Managing Disturbed Materials and Media: If and to the extent that
         CLEC's activity at any Work Location involves the excavation,
         extraction, or removal of asbestos or other manmade materials or
         contaminated soil, groundwater, or other environmental media, then CLEC
         rather than SWBT shall be responsible in the first instance for the
         subsequent treatment, disposal, or other management of such materials
         and media.

40.4     Indemnification:

40.4.1   Each party shall indemnify, on request defend, and hold harmless the
         other party and each of its officers, directors and employees from any
         and all suits, claims, demands, losses, damages, liabilities, fines,
         penalties, or expenses, of every kind and character (including
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         reasonable attorneys' fees), on account of or in connection with any
         injury, loss, or damage to any person or property, or to the
         environment, to the extent any of them arise out of or in connection
         with the violation or breach, by any employee of the indemnifying party
         or other person acting on the indemnifying party's behalf, of this
         Section 40.0 or any federal, state, or local environmental statute,
         rule, regulation, ordinance, or other applicable law or provision of
         this agreement dealing with hazardous substances or protection of human
         health or the environment.

40.4.2   CLEC shall indemnify, on request defend, and hold harmless SWBT and
         each of its officers, directors and employees from any and all suits,
         claims, demands, losses, damages, liabilities, fines, penalties, or
         expenses, of every kind and character (including reasonable attorneys'
         fees), on account of or in connection with any injury, loss, or damage
         to any person or property, or to the environment, to the extent any of
         them arise out of or in connection with (i) the release or discharge,
         onto any public or private property, of any hazardous substances,
         regardless of the source of such hazardous substances, by any employee
         of CLEC, or by any person acting on CLEC's behalf, while at a Work
         Location or (ii) the removal or disposal of any hazardous substances by
         any employee of CLEC or by any person acting on CLEC's behalf, or the
         subsequent storage, processing or other handling of such hazardous
         substances by any person or entity, after such substances have thus
         been removed from a Work Location or (iii) any environmental
         contamination or Environmental Hazard or release of a hazardous
         substance caused or created by CLEC or its contractors or agents.

40.4.3   SWBT shall indemnify, on request defend, and hold harmless CLEC and
         each of its officers, directors and employees from any and all suits,
         claims, demands, losses, damages, liabilities, fines, penalties, or
         expenses, of every kind and character (including reasonable attorneys'
         fees), asserted by any government agency or other third party on
         account of or in connection with any injury, loss, or damage to any
         person or property, or to the environment, to the extent any of them
         arise out of or in connection with (i) the release or discharge, onto
         any public or private property, of any hazardous substances, regardless
         of the source of such hazardous substances, by any employee of SWBT or
         by any person acting on SWBT's behalf, at a Work Location or (ii) the
         removal or disposal of any hazardous substances by any employee of SWBT
         or by any person acting on SWBT's behalf, or the subsequent storage,
         processing or other handling of such hazardous substances by any person
         or entity, after such substances have thus been removed from a Work
         Location or (iii) any environmental contamination or Environmental
         Hazard or release of a hazardous substance either (x) existing or
         occurring at any Work Location on or before the date of this agreement
         or (y) caused or created by SWBT or its contractors or agents.
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41.0     Subcontracting

41.1     If any obligation is performed through a subcontractor, each party will
         remain fully responsible for the performance of this Agreement in
         accordance with its terms, including any obligations either party
         performs through subcontractors, and each party will be solely
         responsible for payments due the party's subcontractors. No contract,
         subcontract or other Agreement entered into by either Party with any
         third party in connection with the provision of Resale services or
         Network Elements hereunder will provide for any indemnity, guarantee or
         assumption of liability by, or other obligation of, the other Party to
         this Agreement with respect to such arrangement, except as consented to
         in writing by the other Party. No subcontractor will be deemed a third
         party beneficiary for any purposes under this Agreement. Any
         subcontractor who gains access to CPNI or Confidential Information
         covered by this Agreement will be required by the subcontracting Party
         to protect such CPNI or Confidential Information to the same extent the
         subcontracting Party is required to protect the same under the terms of
         this Agreement.

42.0     Referenced Documents

42.1     Whenever any provision of this Agreement refers to a technical
         reference, technical publication, CLEC Practice, SWBT Practice, any
         publication of telecommunications industry administrative or technical
         standards, or any other document specifically incorporated into this
         Agreement, it will be deemed to be a reference to the most recent
         version or edition (including any amendments, supplements, addenda, or
         successors) of each document that is in effect, and will include the
         most recent version or edition (including any amendments, supplements,
         addenda, or successors) of each document incorporated by reference in
         such a technical reference, technical publication, CLEC Practice, SWBT
         Practice, or publication of industry standards.

43.0     Severability

43.1     Except as otherwise specifically provided in Sections 4.2.1, 18.1, 18.2
         and 18.3 of the General Terms & Conditions, if any term, condition or
         provision of this Agreement is held to be invalid or unenforceable for
         any reason, such invalidity or unenforceability will not invalidate the
         entire Agreement, unless such construction would be unreasonable. The
         Agreement will be construed as if it did not contain the invalid or
         unenforceable provision or provisions, and the rights and obligations
         of each party will be construed and enforced accordingly; provided,
         however, that in the event such invalid or unenforceable provision or
         provisions are essential elements of this Agreement and substantially
         impair the rights or obligations of either Party, the Parties will
         promptly negotiate a replacement provision or provisions. If impasse is
         reached, the Parties will resolve said impasse under the dispute
         resolution procedures set forth in Section 9.5.
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44.0     Survival of Obligations

44.1     Any liabilities or obligations of a Party for acts or omissions prior
         to the cancellation or termination of this Agreement, any obligation of
         a Party under the provisions regarding indemnification, Confidential
         Information, limitations on liability, and any other provisions of this
         Agreement which, by their terms, are contemplated to survive (or to be
         performed after) termination of this Agreement, will survive
         cancellation or termination thereof.

45.0     Governing Law

45.1     The validity of this Agreement, the construction and enforcement of its
         terms, and the interpretation of the rights and duties of the Parties
         will be governed by the laws of the State of Texas other than as to
         conflicts of laws, except insofar as federal law may control any aspect
         of this Agreement, in which case federal law will govern such aspect.
         The Parties submit to personal jurisdiction in Dallas, Texas, and waive
         any and all objections to a Texas venue.

46.0     Performance Criteria

46.1     Specific provisions governing failure to meet Performance Criteria are
         contained in Attachment 17: Performance Remedy Plan.

47.0     Other Obligations of CLEC

47.1     For the purposes of establishing service and providing efficient and
         consolidated billing to CLEC, CLEC is required to provide SWBT its
         authorized and nationally recognized Operating Company Number (OCN).

48.0     Dialing Parity; Interim Number Portability

48.1     SWBT will ensure that all CLEC Customers experience the same dialing
         parity as similarly-situated customers of SWBT services, such that, for
         all call types: (i) an CLEC Customer is not required to dial any
         greater number of digits than a similarly-situated SWBT customer; (ii)
         the post-dial delay (time elapsed between the last digit dialed and the
         first network response), call completion rate and transmission quality
         experienced by an CLEC Customer is at least equal in quality to that
         experienced by a similarly-situated SWBT customer; and (iii) the CLEC
         Customer may retain its local telephone number. SWBT further agrees to
         provide Interim Number Portability in accordance with the requirements
         of the Act. Specific requirements concerning Interim Number Portability
         are set forth in Attachment 14: Interim Number Portability.
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49.0     Branding

49.1     Specific provisions concerning the branding of services provided to
         CLEC by SWBT under this Agreement are contained in the following
         Attachments and Appendices to this Agreement: Attachment 1: Resale;
         Appendix OS-Resale; Appendix DA-Resale; Attachment 2: Ordering &
         Provisioning-Resale; Attachment 3: Maintenance-Resale; Attachment 7:
         Ordering & Provision in-Unbundled Network Elements; Attachment 8:
         Maintenance-Unbundled Network Elements.

50.0     Customer Inquiries

50.1     Each Party will refer all questions regarding the other Party's
         services or products directly to the other Party at a telephone number
         specified by that Party.

50.2     Each Party will ensure that all of their representatives who receive
         inquiries regarding the other Party's services: (i) provide the numbers
         described in Section 50.1 to callers who inquire about the other
         Party's services or products; and (ii) do not in any way disparage or
         discriminate against the other Party or its products or services.

51.0     Disclaimer of Warranties

51.1     TO THE EXTENT CONSISTENT WITH ITS OBLIGATIONS UNDER THE ACT, SWBT MAKES
         NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT
         LIMITED TO ANY WARRANTY AS TO MERCHANTABILITY OR FITNESS FOR INTENDED
         OR PARTICULAR PURPOSE WITH RESPECT TO SERVICES PROVIDED HEREUNDER.

52.0     No Waiver

52.1     CLEC's agreement herein to accept less than fully operational
         electronic interfaces to operations support systems functions on and
         after January 1, 1997, will not be deemed a waiver of Section 251(c)(3)
         of the Act to receive such interfaces on that date.

53.0     Definitions

53.1     For purposes of this Agreement, certain terms have been defined in this
         Agreement to encompass meanings that may differ from, or be in addition
         to, the normal connotation of the defined word. Unless the context
         clearly indicates otherwise, any term defined or used in the singular
         will include the plural. The words "will" and "shall" are used
         interchangeably throughout this Agreement and the use of either
         connotes a mandatory requirement. The use of one or the other will not
         mean a different degree of right or
<PAGE>
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         obligation for either Party. A defined word intended to convey its
         special meaning is capitalized when used. Other terms that are
         capitalized and not defined in this Agreement will have the meaning in
         the Act.

54.0     Resale

54.1     At the request of CLEC, and pursuant to the requirements of the Act,
         any telecommunications service that SWBT currently provides or
         hereafter offers to any customer in the geographic area where SWBT is
         the incumbent LEC will be made available to CLEC by SWBT for Resale in
         accordance with the terms, conditions and prices set forth in this
         Agreement. Specific provisions concerning Resale are addressed in
         Attachment 1: Resale, and other applicable Attachments.

55.0     Unbundled Network Elements

55.1     At the request of CLEC and pursuant to the requirements of the Act,
         SWBT will offer in the geographic area where SWBT is the incumbent LEC
         Network Elements to CLEC on an unbundled basis on rates, terms and
         conditions set forth in this Agreement that are just, reasonable, and
         non-discriminatory. Specific Provisions concerning Unbundled Network
         Elements are addressed in Attachment 6: Unbundled Network Elements, and
         other applicable Attachments.

56.0     Ordering and Provisioning, Maintenance, Connectivity Billing and
         Recording, and Provision of Customer Usage Data

56.1     In connection with its Resale of services to CLEC, SWBT agrees to
         provide to CLEC Ordering and Provisioning Services, Maintenance
         services, Connectivity Billing and Recording services and Provision of
         Customer Usage Data services pursuant to the terms specified in
         Attachments 2, 3, 4 and 5, respectively.

56.2     In connection with its furnishing Unbundled Networks Elements to CLEC,
         SWBT agrees to provide to CLEC Ordering and Provisioning Services,
         Maintenance services, Connectivity Billing and Recording services and
         Provision of Customer Usage Data services pursuant to the terms
         specified in Attachments 7, 8, 9 and 10, respectively.

57.0     Network Interconnection Architecture

57.1     Where the Parties interconnect their networks, for purposes of
         exchanging traffic between their networks, the Parties agree to utilize
         the interconnection methods specified in Attachment 11: Network
         Interconnection Architecture. SWBT expressly recognizes that this
         provision and said Attachment are in no way intended to impair in any
         way CLEC's
<PAGE>
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                                                    General Terms and Conditions
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         right to interconnect with unbundled Network Elements furnished by SWBT
         at any technically feasible point within SWBT's network, as provided in
         the Act.

58.0     Compensation for Delivery of Traffic

58.1     The Parties agree to compensate each other for the transport and
         termination of traffic as provided in Attachment 12: Compensation.

59.0     Ancillary Functions

         Ancillary Functions may include, but are not limited to, Collocation,
         Rights-of-Way, Conduit and Pole Attachments. SWBT agrees to provide
         Ancillary Functions to CLEC as set forth in Attachment 13: Ancillary
         Functions.

60.0     Separate Affiliate Commitments

         SWBT will comply with all FCC rules and orders relating to the
         structural and nonstructural requirements for Section 272 affiliates.
         To satisfy its obligation to publicly disclose all transactions between
         SWBT and any Section 272 affiliate, SWBT will:

         (a)    Post the full text of all agreements between SWBT and
                Southwestern Bell Long Distance (SBLD) within 10 days on its
                Internet website, including rates, terms, and conditions of
                those agreements, frequency of occurrence of transactions under
                the agreements, and information concerning the level, rate of
                pay, and quantity of employees who perform work under the
                agreements, and post summaries of the agreements on the
                Internet;

         (b)    Post, for each agreement, the states where SBLD's operations are
                supported by the agreement;

         (c)    Maintain, for each agreement, information indicating the
                specific FCC pricing methodology used by SWBT to determine the
                rates for the agreement;

         (d)    Maintain on the Internet a posting of the title, address,
                telephone number, and fax number of the person to contact to
         review paper copies of the agreements; and SWBT will also maintain at
         its headquarters in San Antonio detailed information concerning all
         affiliate transactions between SWBT and SBLD. (This information
         includes the information posted on the Internet as well as the Detailed
         Billing Reports, which provide the month-by-month billing detail by
         specific contract, contract schedule, and pricing addendum. SWBT
         represented that it would update the Detailed Billing Reports, which
         are available for inspection upon execution of a Protective Agreement,
         on a semi-annual basis).
<PAGE>
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                                                                          010700

61.0     Other Requirements and Attachments

61.1     This Agreement incorporates a number of listed Attachments which,
         together with their associated Appendices, Exhibits, and Addenda,
         constitute the entire Agreement between the Parties. In order to
         facilitate use and comprehension of the Agreement, the Attachments have
         been grouped under the following broad headings: Resale; Unbundled
         Network Elements; Network Interconnection Architecture; Ancillary
         Functions; and Other Requirements. It is understood that these
         groupings are for convenience of reference only, and are not intended
         to limit the applicability which any particular Attachment may
         otherwise have.

61.2     Appended to this Agreement and incorporated herein are the Attachments
         listed below. To the extent that any definitions, terms or conditions
         in any given Attachment differ from those contained in the main body of
         this Agreement, those definitions, terms or conditions will supersede
         those contained in the main body of this Agreement, but only in regard
         to the services or activities listed in that particular Attachment. In
         particular, if an Attachment contains a term length that differs from
         the term length in the main body of this Agreement, the term length of
         that Attachment will control the length of time that services or
         activities are to occur under the Attachment, but will not affect the
         term length of the remainder of this Agreement, except as may be
         necessary to interpret the Attachment.

         Resale
         ------
         Attachment 1:  Resale
                  Appendix Services/Pricing
                           Exhibit A:  SWBT's Telecommunications Services
                           Available for Resale
                           Exhibit B:  SWBT's Other Services Available for
                           Resale
                  Appendix Customized Routing-Resale
                  Appendix DA-Resale
                  Appendix OS-Resale
                  Appendix White Pages (WP)-Resale
         Attachment 2:  Ordering and Provisioning-Resale
         Attachment 3:  Maintenance-Resale
         Attachment 4:  Connectivity Billing-Resale
         Attachment 5:  Provision of Customer Usage Data-Resale

         Unbundled Network Elements
         --------------------------
         Attachment 6:  Unbundled Network Elements (UNE)
                  Appendix Pricing-UNE
                     Appendix Pricing-UNE Schedule of Prices
         Attachment 7:  Ordering and Provisioning-UNE
<PAGE>
                                               Interconnection Agreement-TX(T2A)
                                                    General Terms and Conditions
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                           Exhibit A-Electronic Ordering and Provisioning-UNE
         Attachment 8:  Maintenance-UNE
         Attachment 9:  Billing-Other
         Attachment 10:  Provision of Customer Usage Data-UNE

         Network Interconnection Architecture and Compensation
         -----------------------------------------------------
         Attachment 11:  Network Interconnection Architecture
                  Appendix Interconnection Trunking Requirement (ITR)
                  Appendix Network Interconnection Methods (NIM)
                  Appendix SS7 Interconnection
         Attachment 12:  Compensation
                  Appendix Cellular
                  Appendix FGA

         Ancillary Functions
         -------------------
         Attachment 13:  Ancillary Functions
                  Appendix Collocation
                  Appendix Poles, Conduit, ROW

         Other Requirements
         ------------------
         Attachment 14:  Interim Number Portability
                  Appendix Location Routing Number - PNP
         Attachment 15:  E911
         Attachment 16:  Network Security and Law Enforcement
         Attachment 17: Performance Remedy Plan
                  Appendix Measurements Subject to Per Occurrence Damages or
                  Assessment with a Cap and Measurements Subject to Per Measure
                  Damages or Assessment Appendix Performance Measures Subject to
                  Tier-1 and Tier-2 Damages Identified as High, Medium and Low
                  Appendix 3 Performance Measurement Business Rules (Version
                  1.6)
         Attachment 18:  Mutual Exchange of Directory Listing Information
         Attachment 19:  White Pages-Other (WP-O)
         Attachment 20:  Clearinghouse
         Attachment 21:  Numbering
         Attachment 22:  DA-Facilities Based
         Attachment 23:  OS-Facilities Based
         Attachment 24:  Recording-Facilities Based

         Other Attachments
         Attachment 25:  DSL
         Attachment 26:  Legitimately Related Provisions
<PAGE>
                                               Interconnection Agreement-TX(T2A)
                                                    General Terms and Conditions
                                                                   Page 37 of 37
                                                                          010700

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.

/s/ Bruce J. Becker      7/27/00         /s/ Willena D. Slocum          7/25/00
-----------------------------------      ---------------------------------------
Sign and Print Name:     Date            Sign and Print Name:            Date
                                         Willena D. Slocum

EVP/CTO                                  For/ President-Industry Markets
-----------------------------------      ---------------------------------------
Position/Title                           Position/Title

Madison River Communications LLC         Southwestern Bell Telephone Company

OCN/AECN#  2977Exhibit 4.4

                          SECOND SUPPLEMENTAL INDENTURE

         This SECOND SUPPLEMENTAL INDENTURE dated as of September 15, 2000 (this
"Supplemental Indenture") is by and among:

               COBB PONTIAC CADILLAC, INC., an Alabama corporation
              FA THOUSAND OAKS BNG, INC., a California corporation
              FA THOUSAND OAKS COLR, INC., a California corporation
               FA THOUSAND OAKS H, INC., a California corporation
               FA THOUSAND OAKS L, INC., a California corporation
              FA THOUSAND OAKS MBJ, INC., a California corporation
              FA THOUSAND OAKS MSS, INC., a California corporation
                  FAA CAPITOL F, INC., a California corporation
                  FAA MARIN LR, INC., a California corporation
                HMC FINANCE ALABAMA, INC., an Alabama corporation
                 RIVERSIDE NISSAN, INC., an Oklahoma corporation
                ROYAL MOTOR COMPANY, INC., an Alabama corporation
          SONIC AUTOMOTIVE F&I, LLC, a Nevada limited liability company
   SONIC AUTOMOTIVE SERVICING COMPANY, LLC, a Nevada limited liability company
         SONIC AUTOMOTIVE WEST, LLC, a Nevada limited liability company
             SONIC - CARROLLTON V, L.P., a Texas limited partnership
             SONIC - FORT WORTH T, L.P., a Texas limited partnership
         SONIC - DALLAS AUTO FACTORY, L.P., a Texas limited partnership
  SONIC - FITZGERALD CHEVROLET, LLC, a North Carolina limited liability company
                  SONIC - GLOVER, INC., an Oklahoma corporation
        SONIC - LAS VEGAS C EAST, LLC, a Nevada limited liability company
           SONIC - LAS VEGAS C WEST, LLC, a limited liability company
              SONIC - MONTGOMERY FLM, INC., an Alabama corporation
                SONIC - RIVERSIDE, INC., an Oklahoma corporation
          SONIC - RIVERSIDE AUTO FACTORY, INC., an Oklahoma corporation
      SOUTH CAROLINA AUTOMOBILE ENTERPRISES, INCORPORATED, a South Carolina
                                  corporation
                SPEEDWAY CHEVROLET, INC., an Oklahoma corporation
           SRE ALABAMA - 1, LLC, an Alabama limited liability company
           SRE ALABAMA - 2, LLC, an Alabama limited liability company
           SRE ALABAMA - 3, LLC, an Alabama limited liability company
       SREALESTATE ARIZONA - 1, LLC, an Arizona limited liability company
       SREALESTATE ARIZONA - 2, LLC, an Arizona limited liability company
       SREALESTATE ARIZONA - 3, LLC, an Arizona limited liability company
       SREALESTATE ARIZONA - 4, LLC, an Arizona limited liability company
            SRE FLORIDA - 1, LLC, a Florida limited liability company
            SRE FLORIDA - 2, LLC, a Florida limited liability company
            SRE FLORIDA - 3, LLC, a Florida limited liability company
              SRE GEORGIA - 1, L.P., a Georgia limited partnership
              SRE GEORGIA - 2, L.P., a Georgia limited partnership

<PAGE>

              SRE GEORGIA - 3, L.P., a Georgia limited partnership
               SREHOLDING, LLC, a North Carolina limited liability company
            SRE NEVADA - 1, LLC, a Nevada limited liability company
            SRE NEVADA - 2, LLC, a Nevada limited liability company
            SRE NEVADA - 3, LLC, a Nevada limited liability company
     SRE SOUTH CAROLINA - 1, LLC, a South Carolina limited liability company
    SRE SOUTH CAROLINA - 2, LLC, a South Carolina limited liability company
          SRE TENNESSEE - 1, LLC, a Tennessee limited liability company
         SRE TENNESSEE - 2, LLC, a Tennessee limited liability company
         SRE TENNESSEE - 3, LLC, a Tennessee limited liability company
                SRE TEXAS - 1, L.P., a Texas limited partnership
                SRE TEXAS - 2, L.P., a Texas limited partnership
                SRE TEXAS - 3, L.P., a Texas limited partnership
           SRE VIRGINIA - 1, LLC, a Virginia limited liability company

(hereinafter referred to collectively as the "Guaranteeing Subsidiaries"), SONIC
AUTOMOTIVE, INC., a Delaware corporation, (the "Company"), the other Guarantors
(as listed on the signature page of the Indenture referred to below) (the
"Guarantors") and U.S. BANK TRUST NATIONAL ASSOCIATION, as trustee under the
Indenture referred to below (the "Trustee").

                                   WITNESSETH

         WHEREAS, the Company and the Guarantors have heretofore executed and
delivered to the Trustee an Indenture dated as of July 1, 1998, as supplemented
by the First Supplemental Indenture dated as of December 31, 1999 among the
parties listed on the signature pages hereto, (as supplemented, the "Indenture")
providing for the issuance in an aggregate principal amount of up to
$125,000,000 of the Company's 11% Senior Subordinated Notes due 2008 (the
"Notes"); and

         WHEREAS, the Indenture provides that under certain circumstances each
of the Guaranteeing Subsidiaries shall execute and deliver to the Trustee a
supplemental indenture pursuant to which each of the Guaranteeing Subsidiaries
shall guarantee all of the Indenture Obligations under the Notes and the
Indenture on the terms and conditions set forth herein (the "Note Guarantee");
and

         WHEREAS, each Guaranteeing Subsidiary is a wholly-owned direct or
indirect subsidiary of the Company; and

         WHEREAS, pursuant to Section 901(e) of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture to add the
Guaranteeing Subsidiaries pursuant to the requirements of Section 1013 of the
Indenture; and

         NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, each of the
Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

                                       2
<PAGE>

         Section 1. Capitalized  Terms.  Capitalized  terms used herein without
definition shall have the meanings assigned to them in the Indenture.

         Section 2. Agreement to Guarantee. Each of the Guaranteeing
Subsidiaries hereby agrees as follows (notwithstanding anything to the contrary
in this Supplemental Indenture, such agreements of the Guaranteeing Subsidiaries
shall be construed as identical to those agreements made by the Guarantors under
the Indenture, and the obligations and rights of the Guaranteeing Subsidiaries
hereunder shall be no more and no less than those of the Guarantors under the
Indenture):

         (a) Guaranteeing Subsidiaries' Guarantee. Along with the Guarantors
named in the Indenture and in accordance with Article Thirteen of the Indenture
and this Section 2, to guarantee absolutely, fully, unconditionally and
irrevocably, jointly and severally with each other and with each other Person
that may become a Guarantor under the Indenture, to the Trustee and the Holders,
as if the Guaranteeing Subsidiaries were the principal debtor, the punctual
payment and performance when due of all Indenture Obligations (which for
purposes of this Guarantee shall also be deemed to include all commissions,
fees, charges, costs and other expenses (including reasonable legal fees and
disbursements of one counsel) arising out of or incurred by the Trustee or the
Holders in connection with the enforcement of this Guarantee).

         (b)  Continuing Guarantee; No Right of Set-Off; Independent
Obligations.

                  (i) This Guarantee by the Guaranteeing Subsidiaries shall be a
continuing guarantee of the payment and performance of all Indenture Obligations
and shall remain in full force and effect until the payment in full of all of
the Indenture Obligations and shall apply to and secure any ultimate balance due
or remaining unpaid to the Trustee or the Holders. This Guarantee by the
Guaranteeing Subsidiaries shall not be considered as wholly or partially
satisfied by the payment or liquidation at any time or from time to time of any
sum of money for the time being due or remaining unpaid to the Trustee or the
Holders. Each Guaranteeing Subsidiary, jointly and severally, covenants and
agrees to comply with all obligations, covenants, agreements and provisions
applicable to it in the Indenture as if named as a Guarantor therein including
those set forth in Article Eight of the Indenture. Without limiting the
generality of the foregoing, each Guaranteeing Subsidiaries' liability shall
extend to all amounts which constitute part of the Indenture Obligations and
would be owed by the Company under the Indenture and the Securities but for the
fact that they are unenforceable, reduced, limited, impaired, suspended or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Company.

                  (ii) Each Guaranteeing Subsidiary, jointly and severally,
hereby guarantees that the Indenture Obligations will be paid to the Trustee
without set-off or counterclaim or other reduction whatsoever (whether for
taxes, withholding or otherwise) in lawful currency of the United States of
America.

                  (iii) Each Guaranteeing Subsidiary, jointly and severally,
guarantees that the Indenture Obligations shall be paid strictly in accordance
with their terms regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
holders of the Securities.

                                       3
<PAGE>

                  (iv) Each Guaranteeing Subsidiary's liability to pay or
perform or cause the performance of the Indenture Obligations under this
Guarantee shall arise forthwith after demand for payment or performance by the
Trustee has been given to the Guarantors in the manner prescribed in Section 106
of the Indenture.

                  (v) Except as provided in the Indenture, the provisions of
Article Thirteen of the Indenture and this Section 2 cover all agreements
between the parties hereto relative to this Guarantee and none of the parties
shall be bound by any representation, warranty or promise made by any Person
relative thereto or hereto, which is not embodied therein or herein; and it is
specifically acknowledged and agreed that this Guarantee has been delivered by
each Guaranteeing Subsidiary free of any conditions whatsoever and that no
representations, warranties or promises have been made to any Guaranteeing
Subsidiary affecting its liabilities hereunder, and that the Trustee shall not
be bound by any representations, warranties or promises now or at any time
hereafter made by the Company to any Guaranteeing Subsidiary.

                  (vi) This Guarantee is a guarantee of payment, performance and
compliance and not of collectibility and is in no way conditioned or contingent
upon any attempt to collect from or enforce performance or compliance by the
Company or upon any event or condition whatsoever.

                  (vii) The obligations of the Guaranteeing Subsidiaries set
forth herein constitute the full recourse obligations of the Guaranteeing
Subsidiaries enforceable against them to the full extent of all their assets and
properties.

         (c) Guarantee Absolute. The obligations of the Guaranteeing
Subsidiaries hereunder are independent of the obligations of the Company under
the Securities and the Indenture and a separate action or actions may be brought
and prosecuted against any Guaranteeing Subsidiary whether or not an action or
proceeding is brought against the Company and whether or not the Company is
joined in any such action or proceeding. The liability of the Guaranteeing
Subsidiaries hereunder is irrevocable, absolute and unconditional and (to the
extent permitted by law) the liability and obligations of the Guaranteeing
Subsidiaries hereunder shall not be released, discharged, mitigated, waived,
impaired or affected in whole or in part by:

                  (i)      any defect or lack of validity or enforceability in
                           respect of any Indebtedness or other obligation of
                           the Company or any other Person under the Indenture
                           or the Securities, or any agreement or instrument
                           relating to any of the foregoing;

                  (ii)     any grants of time, renewals, extensions,
                           indulgences, releases, discharges or modifications
                           which the Trustee or the Holders may extend to, or
                           make with, the Company, any Guarantor, any
                           Guaranteeing Subsidiary or any other Person, or any
                           change in the time, manner or place of payment of, or
                           in any other term of, all or any of the Indenture
                           Obligations, or any other amendment or waiver of, or
                           any consent to or departure from, the Indenture or
                           the Securities, including any increase or decrease in
                           the Indenture Obligations;

                                       4
<PAGE>

                  (iii)    the taking of security from the Company, any
                           Guarantor, any Guaranteeing Subsidiary or any other
                           Person, and the release, discharge or alteration of,
                           or other dealing with, such security;

                  (iv)     the occurrence of any change in the laws, rules,
                           regulations or ordinances of any jurisdiction by any
                           present or future action of any governmental
                           authority or court amending, varying, reducing or
                           otherwise affecting, or purporting to amend, vary,
                           reduce or otherwise affect, any of the Indenture
                           Obligations and the obligations of any Guaranteeing
                           Subsidiary hereunder;

                  (v)      the abstention from taking security from the Company,
                           any Guarantor, any Guaranteeing Subsidiary or any
                           other Person or from perfecting, continuing to keep
                           perfected or taking advantage of any security;

                  (vi)     any loss, diminution of value or lack of
                           enforceability of any security received from the
                           Company, any Guarantor, any Guaranteeing Subsidiary
                           or any other Person, and including any other
                           guarantees received by the Trustee;

                  (vii)    any other dealings with the Company, any Guarantor,
                           any Guaranteeing Subsidiary or any other Person, or
                           with any security;

                  (viii)   the Trustee's or the Holders' acceptance of
                           compositions from the Company, any Guarantor or any
                           Guaranteeing Subsidiary;

                  (ix)     the application by the Holders or the Trustee of all
                           monies at any time and from time to time received
                           from the Company, any Guarantor, any Guaranteeing
                           Subsidiary or any other Person on account of any
                           indebtedness and liabilities owing by the Company,
                           any Guarantor or any Guaranteeing Subsidiary to the
                           Trustee or the Holders, in such manner as the Trustee
                           or the Holders deems best and the changing of such
                           application in whole or in part and at any time or
                           from time to time, or any manner of application of
                           collateral, or proceeds thereof, to all or any of the
                           Indenture Obligations, or the manner of sale of any
                           collateral;

                  (x)      the release or discharge of the Company, any
                           Guarantor or any Guaranteeing Subsidiary of the
                           Securities or of any Person liable directly as surety
                           or otherwise by operation of law or otherwise for the
                           Securities, other than an express release in writing
                           given by the Trustee, on behalf of the Holders, of
                           the liability and obligations of any Guaranteeing
                           Subsidiary hereunder;

                  (xi)     any change in the name, business, capital structure
                           or governing instrument of the Company, any Guarantor
                           or any Guaranteeing Subsidiary or any refinancing or
                           restructuring of any of the Indenture Obligations;

                                       5
<PAGE>

                  (xii)    the sale of the Company's, any Guarantor's or any
                           Guaranteeing Subsidiary's business or any part
                           thereof,

                  (xiii)   subject to Section 1314 of the Indenture, any merger
                           or consolidation, arrangement or reorganization of
                           the Company, any Guarantor or any Guaranteeing
                           Subsidiary, any Person resulting from the merger or
                           consolidation of the Company, any Guarantor or any
                           Guaranteeing Subsidiary with any other Person or any
                           other successor to such Person or merged or
                           consolidated Person or any other change in the
                           corporate existence, structure or ownership of the
                           Company, any Guarantor or any Guaranteeing Subsidiary
                           or any change in the corporate relationship among the
                           Company, any Guarantor and any Guaranteeing
                           Subsidiary, or any termination of such relationship;

                  (xiv)    the insolvency, bankruptcy, liquidation, winding-up,
                           dissolution, receivership, arrangement, readjustment,
                           assignment for the benefit of creditors or
                           distribution of the assets of the Company or its
                           assets or any resulting discharge of any obligations
                           of the Company (whether voluntary or involuntary) or
                           of any Guarantor (whether voluntary or involuntary)
                           or any Guaranteeing Subsidiary (whether voluntary or
                           involuntary) or the loss of corporate existence;

                  (xv)     subject to Section 1314 of the Indenture, any
                           arrangement or plan of reorganization affecting the
                           Company, any Guarantor or any Guaranteeing
                           Subsidiary;

                  (xvi)    any failure, omission or delay on the part of the
                           Company to conform or comply with any term of the
                           Indenture;

                  (xvii)   any limitation on the liability or obligations of the
                           Company or any other Person under the Indenture, or
                           any discharge, termination, cancellation,
                           distribution, irregularity, invalidity or
                           unenforceability in whole or in part of the
                           Indenture;

                  (xviii)  any other circumstance (including any statute of
                           limitations) that might otherwise constitute a
                           defense available to, or discharge of, the Company,
                           any Guarantor or any Guaranteeing Subsidiary; or

                  (xix)    any modification, compromise, settlement or release
                           by the Trustee, or by operation of law or otherwise,
                           of the Indenture Obligations or the liability of the
                           Company or any other obligor under the Securities, in
                           whole or in part, and any refusal of payment by the
                           Trustee, in whole or in part, from any other obligor
                           or other guarantor in connection with any of the
                           Indenture Obligations, whether or not with notice to,
                           or further assent by, or any reservation of rights
                           against, each of the Guarantors and the Guaranteeing
                           Subsidiaries.

                                       6
<PAGE>

         (d) Right to Demand Full Performance. In the event of any demand for
payment or performance by the Trustee from any Guaranteeing Subsidiary
hereunder, the Trustee or the Holders shall have the right to demand its full
claim and to receive all dividends or other payments in respect thereof until
the Indenture Obligations have been paid in full, and the Guaranteeing
Subsidiaries shall continue to be jointly and severally liable hereunder for any
balance which may be owing to the Trustee or the Holders by the Company under
the Indenture and the Securities. The retention by the Trustee or the Holders of
any security, prior to the realization by the Trustee or the Holders of its
rights to such security upon foreclosure thereon, shall not, as between the
Trustee and any Guaranteeing Subsidiary, be considered as a purchase of such
security, or as payment, satisfaction or reduction of the Indenture Obligations
due to the Trustee or the Holders by the Company or any part thereof. Each
Guaranteeing Subsidiary, promptly after demand, will reimburse the Trustee and
the Holders for all costs and expenses of collecting such amount under, or
enforcing this Guarantee, including, without limitation, the reasonable fees and
expenses of counsel.

         (e)      Waivers.

                  (i) Each Guaranteeing Subsidiary hereby expressly waives (to
the extent permitted by law) notice of the acceptance of this Guarantee and
notice of the existence, renewal, extension or the nonperformance, non-payment,
or non-observance on the part of the Company of any of the terms, covenants,
conditions and provisions of the Indenture or the Securities or any other notice
whatsoever to or upon the Company, any Guarantor or such Guaranteeing Subsidiary
with respect to the Indenture Obligations, whether by statute, rule of law or
otherwise. Each Guaranteeing Subsidiary hereby acknowledges communication to it
of the terms of this Supplemental Indenture, the Indenture and the Securities
and all of the provisions herein and therein contained and consents to and
approves the same. Each Guaranteeing Subsidiary hereby expressly waives (to the
extent permitted by law) diligence, presentment, protest and demand for payment
with respect to (a) any notice of sale, transfer or other disposition of any
right, title to or interest in the Securities by the Holders or in the
Indenture, (b) any release of any Guaranteeing Subsidiary from its obligations
hereunder resulting from any loss by it of its rights of subrogation hereunder
and (c) any other circumstances whatsoever that might otherwise constitute a
legal or equitable discharge, release or defense of a guarantor or surety or
that might otherwise limit recourse against such Guaranteeing Subsidiary.

                  (ii) Without prejudice to any of the rights or recourses which
the Trustee or the Holders may have against the Company, each Guaranteeing
Subsidiary hereby expressly waives (to the extent permitted by law) any right to
require the Trustee or the Holders to:

                           (a)      enforce, assert, exercise, initiate or
                                    exhaust any rights, remedies or recourse
                                    against the Company, any Guarantor, any
                                    Guaranteeing Subsidiary or any other Person
                                    under the Indenture or otherwise;

                           (b)      value, realize upon, or dispose of any
                                    security of the Company or any other Person
                                    held by the Trustee or the Holders;

                           (c)      initiate or exhaust any other remedy which
                                    the Trustee or the Holders may have in law
                                    or equity; or

                                       7
<PAGE>

                           (d)      mitigate the damages resulting from any
                                    default under the Indenture;

before requiring or becoming entitled to demand payment from such Guaranteeing
Subsidiary under this Guarantee.

         (f) The Guaranteeing Subsidiaries Remain Obligated in Event the Company
Is No Longer Obligated to Discharge Indenture Obligations. It is the express
intention of the Trustee and the Guaranteeing Subsidiaries that if for any
reason the Company has no legal existence, is or becomes under no legal
obligation to discharge the Indenture Obligations owing to the Trustee or the
Holders by the Company or if any of the Indenture Obligations owing by the
Company to the Trustee or the Holders becomes irrecoverable from the Company by
operation of law or for any reason whatsoever, this Guarantee and the covenants,
agreements and obligations of the Guaranteeing Subsidiaries contained in this
Section Two shall nevertheless be binding upon the Guaranteeing Subsidiaries, as
principal debtor, until such time as all such Indenture Obligations have been
paid in full to the Trustee and all Indenture Obligations owing to the Trustee
or the Holders by the Company have been discharged, or such earlier time as
Section 402 of the Indenture shall apply to the Securities and the Guarantors
and the Guaranteeing Subsidiaries shall be responsible for the payment thereof
to the Trustee or the Holders upon demand.

         (g)  Fraudulent Conveyance, Contribution, Subrogation.

                  (i) Each Guaranteeing Subsidiary, and by its acceptance of the
Indenture each Holder, hereby confirms that it is the intention of all such
parties that the Guarantee by such Guaranteeing Subsidiary pursuant to its
Guarantee not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law. To effectuate the foregoing
intention, the Holders and such Guaranteeing Subsidiary hereby irrevocably agree
that the obligations of such Guaranteeing Subsidiary under its Guarantee shall
be limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Guaranteeing Subsidiary, and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor or Guaranteeing Subsidiary in respect of the obligations of such
other Guarantor or Guaranteeing Subsidiary under its Guarantee or pursuant to
its contribution obligations hereunder and under the Indenture, will result in
the obligations of such Guaranteeing Subsidiary under its Guarantee not
constituting such fraudulent transfer or conveyance.

                  (ii) Each Guaranteeing Subsidiary that makes a payment or
distribution under its Guarantee shall be entitled to a contribution from each
other Guaranteeing Subsidiary, if any, in a pro rata amount based on the net
assets of each Guarantor and Guaranteeing Subsidiary, determined in accordance
with GAAP.

                  (iii) Each Guaranteeing Subsidiary hereby waives all rights of
subrogation or contribution, whether arising by contract or operation of law
(including, without limitation, any such right arising under federal bankruptcy
law) or otherwise by reason of any payment by it pursuant to the provisions of
this Section Two until payment in full of all Indenture Obligations.

         (h) Guarantee Is in Addition to Other Security. This Guarantee shall be
in addition to and not in substitution for any other guarantees or other
security which the Trustee may now or

                                       8
<PAGE>

hereafter hold in respect of the Indenture Obligations owing to the Trustee or
the Holders by the Company and (except as may be required by law) the Trustee
shall be under no obligation to marshal in favor of each of the Guaranteeing
Subsidiaries any other guarantees or other security or any moneys or other
assets which the Trustee may be entitled to receive or upon which the Trustee or
the Holders may have a claim.

         (i) Release of Security Interests. Without limiting the generality of
the foregoing and except as otherwise provided herein and in the Indenture, each
Guaranteeing Subsidiary hereby consents and agrees, to the fullest extent
permitted by applicable law, that the rights of the Trustee hereunder, and the
liability of the Guaranteeing Subsidiaries hereunder, shall not be affected by
any and all releases for any purpose of any collateral, if any, from the Liens
and security interests created by any collateral document and that this
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Indenture Obligations is rescinded or
must otherwise be returned by the Trustee upon the insolvency, bankruptcy or
reorganization of the Company or otherwise, all as though such payment had not
been made.

         (j) No Bar to Further Actions. Except as provided by law, no action or
proceeding brought or instituted under this Section 2, Article Thirteen of the
Indenture and this Guarantee and no recovery or judgment in pursuance thereof
shall be a bar or defense to any further action or proceeding which may be
brought under Section Two, Article Thirteen of the Indenture and this Guarantee
by reason of any further default or defaults under Section Two, Article Thirteen
of the Indenture and this Guarantee or in the payment of any of the Indenture
Obligations owing by the Company.

         (k)  Failure to Exercise Rights Shall Not Operate as a Waiver, No
Suspension of Remedies.

                  (i) No failure to exercise and no delay in exercising, on the
part of the Trustee or the Holders, any right, power, privilege or remedy under
this Section 2, Article Thirteen of the Indenture and this Guarantee shall
operate as a waiver thereof, nor shall any single or partial exercise of any
rights, power, privilege or remedy preclude any other or further exercise
thereof, or the exercise of any other rights, powers, privileges or remedies.
The rights and remedies herein provided for are cumulative and not exclusive of
any rights or remedies provided in law or equity.

                  (ii) Nothing contained in this Section 2 shall limit the right
of the Trustee or the Holders to take any action to accelerate the maturity of
the Securities pursuant to Article Five of the Indenture or to pursue any rights
or remedies hereunder or under applicable law.

         (l)  Trustee's Duties; Notice to Trustee.

                  (i) Any provision in this Section 2 or elsewhere in the
Indenture allowing the Trustee to request any information or to take any action
authorized by, or on behalf of any Guaranteeing Subsidiary, shall be permissive
and shall not be obligatory on the Trustee except as the Holders may direct in
accordance with the provisions of the Indenture or where the failure of the
Trustee to request any such information or to take any such action arises from
the Trustee's negligence, bad faith or willful misconduct.

                                       9
<PAGE>

                  (ii) The Trustee shall not be required to inquire into the
existence, powers or capacities of the Company, any Guarantor, any Guaranteeing
Subsidiary or the officers, directors or agents acting or purporting to act on
their respective behalf.

         (m) Successors and Assigns. All terms, agreements and conditions of
this Section 2 shall extend to and be binding upon each Guaranteeing Subsidiary
and its successors and permitted assigns and shall enure to the benefit of and
may be enforced by the Trustee and its successors and assigns, provided,
however, that the Guaranteeing Subsidiaries may not assign any of their rights
or obligations hereunder other than in accordance with Article Eight of the
Indenture.

         (n)  Release of Guarantee.

                  (i) Concurrently with the payment in full of all of the
Indenture Obligations, the Guarantors shall be released from and relieved of
their obligations under this Section 2. Upon the delivery by the Company to the
Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of this
Guarantee was made by the Company in accordance with the provisions of the
Indenture and the Securities, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Guaranteeing Subsidiaries from
their obligations under this Guarantee. If any of the Indenture Obligations are
revived and reinstated after the termination of this Guarantee, then all of the
obligations of the Guaranteeing Subsidiaries under this Guarantee shall be
revived and reinstated as if this Guarantee had not been terminated until such
time as the Indenture Obligations are paid in full, and each Guaranteeing
Subsidiary shall enter into an amendment to this Guarantee, reasonably
satisfactory to the Trustee, evidencing such revival and reinstatement.

                  (ii) This Guarantee shall terminate with respect to each
Guaranteeing Subsidiary and shall be automatically and unconditionally released
and discharged as provided in Section 1013(c) of the Indenture.

         (o) Execution and Delivery of Guarantee. Each of the Guaranteeing
Subsidiaries agrees that their Guarantee hereunder shall remain in full force
and effect notwithstanding any failure to endorse on each Note a notation of
their Guarantee. Pursuant to Section 1315(b) of the Indenture, each Guaranteeing
Subsidiary agrees to be subject to the provisions (including the representations
and warranties) of the Indenture as of the date of this Supplemental Indenture
as if named as a Guarantor therein.

         Section 3. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT
THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.

         Section 4. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

                                       10
<PAGE>

         Section 5. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.

         Section 6. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiaries and the
Company.

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the 15th day of September,
2000.

                                    THE COMPANY:

                                    SONIC AUTOMOTIVE, INC.

                                    By: /s/ B. Scott Smith
                                        ----------------------------------------
                                    Name:   B. Scott Smith
                                    Title:  President

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    GUARANTEEING SUBSIDIARIES:

                                    COBB PONTIAC CADILLAC, INC.
                                    FA THOUSAND OAKS BNG, INC.
                                    FA THOUSAND OAKS COLR, INC.
                                    FA THOUSAND OAKS H, INC.
                                    FA THOUSAND OAKS L, INC.
                                    FA THOUSAND OAKS MBJ, INC.

                                    [Signatures continued on next page]

                                       11
<PAGE>

                                    FA THOUSAND OAKS MSS, INC.
                                    FAA CAPITOL F, INC.
                                    FAA MARIN LR, INC.
                                    HMC FINANCE ALABAMA, INC.
                                    RIVERSIDE NISSAN, INC.
                                    ROYAL MOTOR COMPANY, INC.
                                    SONIC - GLOVER, INC.
                                    SONIC - MONTGOMERY FLM, INC.
                                    SONIC - RIVERSIDE, INC.
                                    SONIC - RIVERSIDE AUTO FACTORY, INC.
                                    SOUTH CAROLINA AUTOMOBILE ENTERPRISES,
                                      INCORPORATED
                                    SPEEDWAY CHEVROLET, INC.

                                    By: /s/ B. Scott Smith
                                        ----------------------------------------
                                    Name: B. Scott Smith
                                    Title: Vice President

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    SONIC AUTOMOTIVE F&I, LLC
                                    SONIC AUTOMOTIVE SERVICING COMPANY, LLC
                                    SONIC AUTOMOTIVE WEST, LLC
                                    SONIC - FITZGERALD CHEVROLET, LLC
                                    SONIC - LAS VEGAS C EAST, LLC
                                    SONIC - LAS VEGAS C WEST, LLC
                                    SRE ALABAMA - 1, LLC
                                    SRE ALABAMA - 2, LLC
                                    SRE ALABAMA -3, LLC
                                    SREALESTATE ARIZONA -1, LLC
                                    SREALESTATE ARIZONA - 2, LLC
                                    SREALESTATE ARIZONA - 3, LLC
                                    SREALESTATE ARIZONA - 4, LLC
                                    SRE FLORIDA - 1, LLC
                                    SRE FLORIDA - 2, LLC
                                    SRE FLORIDA - 3, LLC
                                    SRE HOLDING, LLC
                                    SRE NEVADA - 1, LLC

                                    [Signatures continued on next page]

                                       12
<PAGE>

                                    SRE NEVADA - 2, LLC
                                    SRE NEVADA - 3, LLC
                                    SRE SOUTH CAROLINA - 1, LLC
                                    SRE SOUTH CAROLINA - 2, LLC
                                    SRE VIRGINIA - 1, LLC

                                    By: /s/ Theodore M. Wright
                                        ----------------------------------------
                                    Name: Theodore M. Wright
                                    Title: Vice President and Manager

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    SRE TENNESSEE - 1, LLC
                                    SRE TENNESSEE - 2, LLC
                                    SRE TENNESSEE - 3, LLC

                                    By: /s/ B. Scott Smith
                                        ----------------------------------------
                                    Name: B. Scott Smith
                                    Title: Vice President and Governor

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    SRE GEORGIA - 1, L.P.
                                    SRE GEORGIA - 2, L.P.
                                    SRE GEORGIA - 3, L.P.

                                    Sonic Automotive of Georgia, Inc., their
                                    general partner

                                    By: /s/ B. Scott Smith
                                        ----------------------------------------
                                    Name: B. Scott Smith
                                    Title: Vice President

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    [Signatures continued on next page]

                                       13
<PAGE>

                                    SONIC - CARROLLTON V, L.P.
                                    SONIC - FORT WORTH T, L.P.
                                    SONIC - DALLAS AUTO FACTORY, L.P.
                                    SRE TEXAS - 1, L.P.
                                    SRE TEXAS - 2, L.P.
                                    SRE TEXAS - 3, L.P.

                                    Sonic of Texas, Inc., their general partner

                                    By: /s/ B. Scott Smith
                                        ----------------------------------------
                                    Name: B. Scott Smith
                                    Title: Vice President

                                    Attest: /s/ Stephen K. Coss
                                            ------------------------------------
                                    Name: Stephen K. Coss
                                    Title: Secretary

                                    GUARANTORS:

                                    AUTOBAHN, INC.
                                    CAPITOL CHEVROLET AND IMPORTS, INC.
                                    DON LUCAS INTERNATIONAL, INC.
                                    FA SERVICE CORPORATION
                                    FAA AUTO FACTORY, INC.
                                    FAA BEVERLY HILLS, INC.
                                    FAA CAPITOL N, INC.
                                    FAA CONCORD H, INC.
                                    FAA CONCORD N, INC.
                                    FAA CONCORD T, INC.
                                    FAA DUBLIN N, INC.
                                    FAA DUBLIN VWD, INC.
                                    FAA HOLDING CORP.
                                    FAA MARIN D, INC.
                                    FAA MARIN F, INC.
                                    FAA MONTEREY F, INC.
                                    FAA POWAY D, INC.
                                    FAA POWAY G, INC.
                                    FAA POWAY H, INC.
                                    FAA POWAY T, INC.
                                    FAA SAN BRUNO, INC.

                                    [Signatures continued on next page]

                                       14
<PAGE>

                       FAA SANTA MONICA V, INC.
                       FAA SERRAMONTE H, INC.
                       FAA SERRAMONTE L, INC.
                       FAA SERRAMONTE, INC.
                       FAA STEVENS CREEK, INC.
                       FAA TORRANCE CPJ, INC.
                       FAA WOODLAND HILLS VW, INC.
                       FORT MILL CHRYSLER-PLYMOUTH-DODGE INC.
                       FORT MILL FORD, INC.
                       FRANCISCAN MOTORS, INC.
                       FRONTIER OLDSMOBILE-CADILLAC, INC.
                       KRAMER MOTORS INCORPORATED
                       L DEALERSHIP GROUP, INC. (f/k/a Lucas
                         Dealership Group, Inc.)
                       MARCUS DAVID CORPORATION
                       SANTA CLARA IMPORTED CARS, INC.
                       SMART NISSAN, INC.
                       SONIC AUTOMOTIVE OF GEORGIA, INC.
                       SONIC AUTOMOTIVE - 1400 AUTOMALL DRIVE, COLUMBUS, INC.
                       SONIC AUTOMOTIVE - 1455 AUTOMALL DRIVE, COLUMBUS, INC.
                       SONIC AUTOMOTIVE - 1495 AUTOMALL DRIVE, COLUMBUS, INC.
                       SONIC AUTOMOTIVE - 1500 AUTOMALL DRIVE, COLUMBUS, INC.
                       SONIC AUTOMOTIVE 2424 LAURENS RD., GREENVILLE,
                               INC.
                       SONIC AUTOMOTIVE 2752 LAURENS RD., GREENVILLE,
                               INC.
                       SONIC AUTOMOTIVE - 3700 WEST BROAD STREET, COLUMBUS, INC.
                       SONIC AUTOMOTIVE - 4000 WEST BROAD STREET, COLUMBUS, INC.
                       SONIC - CLASSIC DODGE, INC.
                       SONIC - MANHATTAN FAIRFAX, INC.
                       SONIC - MANHATTAN WALDORF, INC.
                       SONIC - NEWSOME CHEVROLET WORLD, INC.
                       SONIC - NEWSOME OF FLORENCE, INC.
                       SONIC - NORTH CHARLESTON, INC.
                       SONIC - NORTH CHARLESTON DODGE, INC.
                       SONIC - ROCKVILLE IMPORTS, INC.
                       SONIC - ROCKVILLE MOTORS, INC.

                       [Signatures continued on next page]

                                       15
<PAGE>

                      SONIC OF TEXAS, INC.
                      SONIC - WILLIAMS BUICK, INC.
                      SONIC - WILLIAMS CADILLAC, INC.
                      SONIC - WILLIAMS IMPORTS, INC.
                      STEVENS CREEK CADILLAC, INC.
                      TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP OF ROCK HILL, INC.
                      TOWN AND COUNTRY FORD, INCORPORATED
                      TRANSCAR LEASING, INC.
                      VILLAGE IMPORTED CARS, INC.
                      WINDWARD, INC.

                      By: /s/ B. Scott Smith
                          ------------------------------------------------------
                      Name: B. Scott Smith
                      Title: Vice President

                      Attest: /s/ Stephen K. Coss
                              --------------------------------------------------
                      Name: Stephen K. Coss
                      Title: Secretary

                      FAA LAS VEGAS H, INC.
                      FIRSTAMERICA AUTOMOTIVE, INC.
                      FREEDOM FORD, INC.
                      SONIC AUTOMOTIVE - BONDESEN, INC.
                      SONIC AUTOMOTIVE - CLEARWATER, INC.
                      SONIC AUTOMOTIVE COLLISION CENTER OF CLEARWATER, INC.
                      SONIC AUTOMOTIVE OF NEVADA, INC.
                      SONIC AUTOMOTIVE OF TENNESSEE, INC.
                      SONIC AUTOMOTIVE - 1307 N. DIXIE HWY., NSB, INC.
                      SONIC AUTOMOTIVE - 1720 MASON AVE., DB, INC.
                      SONIC AUTOMOTIVE - 1919 N. DIXIE HWY., NSB, INC.
                      SONIC AUTOMOTIVE  - 21699 U.S. HWY 19 N., INC.
                      SONIC AUTOMOTIVE - 241 RIDGEWOOD AVE., HH, INC.
                      SONIC AUTOMOTIVE - 3741 S. NOVA RD., PO, INC.
                      SONIC AUTOMOTIVE - 6008 N. DALE MABRY, FL, INC.
                      SONIC - FM , INC.
                      SONIC - FM NISSAN, INC.
                      SONIC - FM VW, INC.
                      SONIC - FREELAND, INC.

                      [Signatures continued on next page]

                                       16
<PAGE>

                         SONIC - LLOYD NISSAN, INC.
                         SONIC - LLOYD PONTIAC-CADILLAC, INC.
                         SONIC - SHOTTENKIRK, INC.

                         By: /s/ B. Scott Smith
                             ----------------------------------------
                         Name: B. Scott Smith
                         Title: President

                         Attest: /s/ Stephen K. Coss
                                 ------------------------------------
                         Name: Stephen K. Coss
                         Title: Secretary

                         SONIC AUTOMOTIVE OF CHATTANOOGA, LLC
                         SONIC AUTOMOTIVE OF NASHVILLE, LLC
                         SONIC AUTOMOTIVE - 2490 SOUTH LEE HIGHWAY, LLC
                         SONIC AUTOMOTIVE - 5260 PEACHTREE INDUSTRIAL BLVD., LLC
                         SONIC AUTOMOTIVE - 5585 PEACHTREE INDUSTRIAL BLVD., LLC
                         SONIC AUTOMOTIVE - 6025 INTERNATIONAL DRIVE, LLC
                         SONIC - 2185 CHAPMAN RD., CHATTANOOGA, LLC
                         SONIC - SUPERIOR OLDSMOBILE, LLC
                         TOWN AND COUNTRY CHRYSLER-PLYMOUTH-JEEP, LLC
                         TOWN AND COUNTRY DODGE OF CHATTANOOGA, LLC
                         TOWN AND COUNTRY FORD OF CLEVELAND, LLC
                         TOWN AND COUNTRY JAGUAR, LLC

                         By: /s/ B. Scott Smith
                             ---------------------------------------------------
                         Name: B. Scott Smith
                         Title: Vice President and Governor

                         Attest: /s/ Stephen K. Coss
                                 -----------------------------------------------
                         Name: Stephen K. Coss
                         Title: Secretary

                         SONIC AUTOMOTIVE - 1720 MASON AVE., DB, LLC
                         SONIC - FM AUTOMOTIVE, LLC

                         By: /s/ B. Scott Smith
                             ---------------------------------------------------
                         Name: B. Scott Smith
                         Title: President and Manager

                         [Signatures continued on next page]

                                       17
<PAGE>

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name: Stephen K. Coss
                       Title: Secretary

                       SONIC AUTOMOTIVE - 9103 E. INDEPENDENCE , NC. LLC
                       SONIC CHRYSLER-PLYMOUTH-JEEP, LLC
                       SONIC DODGE, LLC
                       SONIC - WILLIAMS MOTORS, LLC

                       By: /s/ B. Scott Smith
                           -----------------------------------------------------
                       Name: B. Scott Smith
                       Title: Vice President and Manager

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name: Stephen K. Coss
                       Title: Secretary

                       SONIC - INTEGRITY DODGE LV, LLC
                       SONIC - VOLVO LV, LLC

                       By: /s/ Theodore M. Wright
                           -----------------------------------------------------
                       Name: Theodore M. Wright
                       Title: Vice President and Manager

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name: Stephen K. Coss
                       Title: Secretary

                       SONIC - GLOBAL IMPORTS, L.P.
                       SONIC PEACHTREE INDUSTRIAL BLVD., L.P.

                       Sonic Automotive of Georgia, Inc.,their general partner

                       By: /s/ B. Scott Smith
                           -----------------------------------------------------
                       Name: B. Scott Smith
                       Title: Vice President

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name: Stephen K. Coss
                       Title: Secretary

                           [Signatures continued on next page]

                                       18
<PAGE>

                       SONIC AUTOMOTIVE OF TEXAS, L.P.
                       SONIC AUTOMOTIVE - 3401 N. MAIN, TX, L.P.
                       SONIC AUTOMOTIVE - 4701 I-10 EAST, TX, L.P.
                       SONIC AUTOMOTIVE - 5221 I-10 EAST, TX, L.P.
                       SONIC - CAMP FORD, L.P.
                       SONIC - LUTE RILEY, L.P.
                       SONIC - READING, L.P.
                       SONIC - SAM WHITE NISSAN, L.P.
                       SONIC - SAM WHITE OLDSMOBILE, L.P.

                       Sonic of Texas, Inc., their general partner

                       By: /s/ B. Scott Smith
                           -----------------------------------------------------
                       Name: B. Scott Smith
                       Title: Vice President

                       Attest: /s/ Stephen K. Coss
                               -------------------------------------------------
                       Name: Stephen K. Coss
                       Title: Secretary

                       [Signatures continued on next page]

                                       19
<PAGE>

                                    TRUSTEE:

                                    U.S. BANK TRUST NATIONAL ASSOCIATION,
                                            as Trustee.

                                    By: /s/ Lori-Anne Rosenberg
                                           ---------------------
                                            Authorized Signatory

                                       20

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