Agreement and Plan of Merger - RCN Corp. and 21st Century Telecom Group Inc.


  
                        AGREEMENT AND PLAN OF MERGER
  
  
                                   AMONG
  
  
                              RCN CORPORATION,
  
  
                             21ST HOLDING CORP.
  
                                    AND
  
                      21ST CENTURY TELECOM GROUP, INC.
  
  
  
  
                       DATED AS OF DECEMBER 12, 1999
  
  =============================================================================
  
  

                             TABLE OF CONTENTS
  
                                                                         Page

                                  ARTICLE I

                                 THE MERGER

      Section 1.1    The Merger  . . . . . . . . . . . . . . . . . . . . . 1
      Section 1.2    Closing; Effective Time of the Merger . . . . . . . . 1
      Section 1.3    Effects of Merger . . . . . . . . . . . . . . . . . . 2
      Section 1.4    Directors and Officers  . . . . . . . . . . . . . . . 2

                                 ARTICLE II

                          CONVERSION OF SECURITIES

      Section 2.1    Conversion of Capital Stock . . . . . . . . . . . . . 2
      Section 2.2    Exchange of Certificates  . . . . . . . . . . . . . . 6
      Section 2.3    Options . . . . . . . . . . . . . . . . . . . . . . . 9
      Section 2.4    Contingent Deferred Payment . . . . . . . . . . . .  10
      Section 2.5    Payment of Contingent Deferred Payment  . . . . . .  12
      Section 2.6    Franchise Amount  . . . . . . . . . . . . . . . . .  13
      Section 2.7    Shares of Dissenting Shareholders . . . . . . . . .  15

                                ARTICLE III

               REPRESENTATIONS AND WARRANTIES OF THE COMPANY

      Section 3.1    Organization  . . . . . . . . . . . . . . . . . . .  16
      Section 3.2    Company Subsidiaries  . . . . . . . . . . . . . . .  16
      Section 3.3    Company Capital Structure . . . . . . . . . . . . .  17
      Section 3.4    Authority; No Conflict; Required Filings and 
                       Consents  . . . . . . . . . . . . . . . . . . . .  19
      Section 3.5    SEC Filings . . . . . . . . . . . . . . . . . . . .  22
      Section 3.6    Financial Statements  . . . . . . . . . . . . . . .  22
      Section 3.7    Absence of Undisclosed Liabilities  . . . . . . . .  22
      Section 3.8    Absence of Certain Changes or Events  . . . . . . .  23
      Section 3.9    Taxes . . . . . . . . . . . . . . . . . . . . . . .  24
      Section 3.10   Real Properties; Title to and Condition of Assets .  26
      Section 3.11   Intellectual Property . . . . . . . . . . . . . . .  28
      Section 3.12   Agreements, Contracts and Commitments . . . . . . .  28
      Section 3.13   Litigation  . . . . . . . . . . . . . . . . . . . .  30
      Section 3.14   Environmental Matters . . . . . . . . . . . . . . .  30
      Section 3.15   Transactions with Affiliates  . . . . . . . . . . .  31
      Section 3.16   Employee Benefit Plans  . . . . . . . . . . . . . .  31
      Section 3.17   Labor Matters . . . . . . . . . . . . . . . . . . .  34
      Section 3.18   Compliance with Laws; Regulatory Approvals  . . . .  34
      Section 3.19   Systems Information . . . . . . . . . . . . . . . .  38
      Section 3.20   Outside Plant/Network; CLEC; Internet Related 
                       Systems . . . . . . . . . . . . . . . . . . . . .  41
      Section 3.21   No Other Operators  . . . . . . . . . . . . . . . .  43
      Section 3.22   Franchises; Licenses  . . . . . . . . . . . . . . .  43
      Section 3.23   Bonds . . . . . . . . . . . . . . . . . . . . . . .  44
      Section 3.24   Commitments . . . . . . . . . . . . . . . . . . . .  45
      Section 3.25   Brokers . . . . . . . . . . . . . . . . . . . . . .  45
      Section 3.26   Insurance . . . . . . . . . . . . . . . . . . . . .  45
      Section 3.27   Fairness Opinion  . . . . . . . . . . . . . . . . .  46
      Section 3.28   Year 2000 Compliance  . . . . . . . . . . . . . . .  46
      Section 3.29   Full Disclosure . . . . . . . . . . . . . . . . . .  47
      Section 3.30   Registered Securities . . . . . . . . . . . . . . .  47

                                 ARTICLE IV

              REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

      Section 4.1    Organization  . . . . . . . . . . . . . . . . . . .  47
      Section 4.2    Authority; No Conflict; Required Filings and 
                       Consents  . . . . . . . . . . . . . . . . . . . .  48
      Section 4.3    SEC Documents . . . . . . . . . . . . . . . . . . .  49
      Section 4.4    Parent Common Stock Issued in the Merger  . . . . .  49
      Section 4.5    Litigation  . . . . . . . . . . . . . . . . . . . .  49
      Section 4.6    Interim Operations of Sub . . . . . . . . . . . . .  49
      Section 4.7    Brokers . . . . . . . . . . . . . . . . . . . . . .  50
      Section 4.8    Tax Matters . . . . . . . . . . . . . . . . . . . .  50
      Section 4.9    Financial Statements  . . . . . . . . . . . . . . .  50
      Section 4.10   Absence of Undisclosed Liabilities  . . . . . . . .  51
      Section 4.11   Absence of Certain Changes or Events  . . . . . . .  51

                                  ARTICLE V

                             CONDUCT OF BUSINESS

      Section 5.1    Covenants of the Company  . . . . . . . . . . . . .  51
      Section 5.2    Cooperation . . . . . . . . . . . . . . . . . . . .  53

                                 ARTICLE VI

                            ADDITIONAL AGREEMENTS

      Section 6.1    No Solicitation . . . . . . . . . . . . . . . . . .  53
      Section 6.2    Access to Information . . . . . . . . . . . . . . .  54
      Section 6.3    Consents  . . . . . . . . . . . . . . . . . . . . .  55
      Section 6.4    Public Disclosure . . . . . . . . . . . . . . . . .  55
      Section 6.5    Tax-Free Reorganization . . . . . . . . . . . . . .  55
      Section 6.6    Affiliate Agreements  . . . . . . . . . . . . . . .  55
      Section 6.7    Commercially Reasonable Efforts . . . . . . . . . .  56
      Section 6.8    Certain Filings . . . . . . . . . . . . . . . . . .  56
      Section 6.9    Further Assurances  . . . . . . . . . . . . . . . .  56
      Section 6.10   Notification of Certain Matters . . . . . . . . . .  56
      Section 6.11   Affiliate Transactions  . . . . . . . . . . . . . .  57
      Section 6.12   Shareholders Meeting  . . . . . . . . . . . . . . .  57
      Section 6.13   Proxy Statement; Registration Statement; Board 
                       Recommendation  . . . . . . . . . . . . . . . . .  57 
      Section 6.14   Nasdaq Listing  . . . . . . . . . . . . . . . . . .  58
      Section 6.15   Letter of Independent Auditors  . . . . . . . . . .  58
      Section 6.16   Treatment of Company Debt and Exchangeable 
                       Preferred   . . . . . . . . . . . . . . . . . . .  59
      Section 6.17   Employee Matters  . . . . . . . . . . . . . . . . .  61
      Section 6.18   280G Approval . . . . . . . . . . . . . . . . . . .  61
      Section 6.19   Director and Officer Liability  . . . . . . . . . .  61
      Section 6.20   Employee Benefits after the Effective Time  . . . .  62
      Section 6.21   ISP Plan  . . . . . . . . . . . . . . . . . . . . .  63

                                 ARTICLE VII

                            CONDITIONS TO MERGER

      Section 7.1    Conditions to Each Party's Obligation to Effect 
                       the Merger  . . . . . . . . . . . . . . . . . . .  63
      Section 7.2    Additional Conditions to Obligations of Parent and 
                       Sub . . . . . . . . . . . . . . . . . . . . . . .  64
      Section 7.3    Additional Conditions to Obligations of the Company  66

                                ARTICLE VIII

                          TERMINATION AND AMENDMENT

      Section 8.1    Termination . . . . . . . . . . . . . . . . . . . .  67
      Section 8.2    Procedure and Effect of Termination . . . . . . . .  68
      Section 8.3    Amendment . . . . . . . . . . . . . . . . . . . . .  68
      Section 8.4    Extension; Waiver . . . . . . . . . . . . . . . . .  69
      Section 8.5    Fees and Expenses . . . . . . . . . . . . . . . . .  69

                                 ARTICLE IX

                               INDEMNIFICATION

      Section 9.1    Survival  . . . . . . . . . . . . . . . . . . . . .  69
      Section 9.2    Obligations of the Shareholders . . . . . . . . . .  69
      Section 9.3    Indemnification Procedures  . . . . . . . . . . . .  70
      Section 9.4    Shareholder Representative  . . . . . . . . . . . .  72
      Section 9.5    Certain Definitions . . . . . . . . . . . . . . . .  73

                                  ARTICLE X

                                 TAX MATTERS

      Section 10.1   Indemnification by the Company Shareholders . . . .  73
      Section 10.2   Allocation of Taxes . . . . . . . . . . . . . . . .  74
      Section 10.3   Mutual Cooperation; Contests  . . . . . . . . . . .  74
      Section 10.4   Other Tax Agreements  . . . . . . . . . . . . . . .  75

                                 ARTICLE XI

                                MISCELLANEOUS

      Section 11.1   Notices . . . . . . . . . . . . . . . . . . . . . .  76
      Section 11.2   Interpretation; Certain Definitions . . . . . . . .  77
      Section 11.3   Counterparts  . . . . . . . . . . . . . . . . . . .  77
      Section 11.4   Entire Agreement; No Third Party Beneficiaries  . .  78
      Section 11.5   Governing Law . . . . . . . . . . . . . . . . . . .  78
      Section 11.6   Jurisdiction  . . . . . . . . . . . . . . . . . . .  78
      Section 11.7   WAIVER OF JURY TRIAL  . . . . . . . . . . . . . . .  78
      Section 11.8   Assignment  . . . . . . . . . . . . . . . . . . . .  78
      Section 11.9   Severability  . . . . . . . . . . . . . . . . . . .  79




                        AGREEMENT AND PLAN OF MERGER 
  
      AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of  December
 12, 1999 by and among RCN Corporation, a Delaware corporation ("Parent"),
 21st Holding Corp., an Illinois corporation and a wholly owned subsidiary
 of Parent ("Sub"), and 21st Century Telecom Group, Inc., an Illinois
 corporation (the "Company"). 
  
      WHEREAS, the Boards of Directors of Parent, Sub and the Company have
 approved this Agreement and deem it advisable and in the best interests of
 each corporation and its respective stockholders and shareholders to enter
 into this Agreement and the other agreements contemplated herein and
 consummate the transactions contemplated hereby and thereby; and 
  
      WHEREAS, for federal income tax purposes, it is intended that the
 Merger shall qualify as a reorganization within the meaning of Section
 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); 
  
      NOW, THEREFORE, in consideration of the foregoing and the respective
 representations, warranties, covenants and agreements set forth below, the
 parties agree as follows: 
  
                                  ARTICLE I

                                 THE MERGER
  
           Section 1.1    The Merger.  Upon the terms and subject to the
 conditions of this Agreement and in accordance with the Business
 Corporation Act of the State of Illinois (the "Illinois Statute"), Sub
 shall be merged with and into the Company (the "Merger").  As a result of
 the Merger, the outstanding shares of capital stock of Sub and the Company
 shall be converted or canceled in the manner provided in Article II of this
 Agreement, the separate corporate existence of Sub shall cease and the
 Company shall be the surviving corporation in the Merger. 
  
           Section 1.2    Closing; Effective Time of the Merger.  Unless
 this Agreement shall have been terminated pursuant to Section 8.1, the
 closing of the Merger (the "Closing") will take place at 10:00 a.m., New
 York time, on a date to be specified in writing by Parent and the Company
 (the "Closing Date"), which shall be no later than the third business day
 after satisfaction (or waiver in accordance with Section 8.4) of all
 conditions set forth in Article VII, at the offices of Skadden, Arps,
 Slate, Meagher & Flom LLP, Four Times Square, New York, New York  10036,
 unless another date or place is agreed to in writing by Parent and the
 Company.  Subject to the provisions of this Agreement, a certificate of
 merger (the "Certificate of Merger") shall be duly prepared and executed in
 accordance with the Illinois Statute and simultaneously with or as soon as
 practicable following the Closing delivered to the Secretary of State of
 the State of Illinois for filing.  The Merger shall become effective upon
 the later of: (a) the date and time of the filing of the Certificate of
 Merger with the Secretary of State of the State of Illinois, or (b) such
 other date and time as is provided in this Agreement (the "Effective
 Time").
  
           Section 1.3    Effects of Merger.
  
           (a)  At the Effective Time: (i) the separate existence of Sub
 shall cease and Sub shall be merged with and into the Company (Sub and the
 Company are sometimes referred to collectively herein as the "Constituent
 Corporations" and the Company is sometimes referred to herein as the
 "Surviving Corporation"); and (ii) the articles of incorporation and bylaws
 of the Company in effect immediately prior to the Effective Time shall be
 the articles of incorporation and bylaws of the Surviving Corporation until
 amended in accordance with the terms thereof and in accordance with
 applicable law.
  
           (b)  The Merger shall have the effects set forth in this
 Agreement and the Illinois Statute.
  
           Section 1.4    Directors and Officers.  The directors of Sub and
 the officers of the Company immediately prior to the Effective Time shall
 be the initial directors and officers of the Surviving Corporation, and
 shall hold office in accordance with the articles of incorporation and
 bylaws of the Surviving Corporation, in each case until their respective
 successors are duly elected or appointed.
  
  
                                 ARTICLE II

                          CONVERSION OF SECURITIES
  
           Section 2.1    Conversion of Capital Stock.  As of the Effective
 Time, by virtue of the Merger and without any action on the part of the
 Constituent Corporations or the holder of any shares of capital stock of
 the Constituent Corporations (other than Dissenting Shares (as defined in
 Section 2.7)):
  
           (a)  Capital Stock of Sub.  Each issued and outstanding share of
 the capital stock of Sub shall be converted into and become one fully paid
 and nonassessable share of common stock, no par value, of the Surviving
 Corporation.
  
           (b)  Cancellation of Treasury Stock and Parent-Owned Stock.  All
 shares of Company Stock (as defined below) that are owned by the Company as
 treasury stock and any shares of Company Stock owned by Parent, Sub or any
 other wholly owned Subsidiary (as defined in Section 3.1 below) of Parent
 shall be canceled and retired and shall cease to exist and no stock of
 Parent or other consideration shall be delivered in exchange therefor.
  
           (c)  Company Common Stock.  Each issued and outstanding share of
 Company Common Stock (as defined in Section 3.3) shall be converted into
 the right to receive the sum of:
  
                     (i)  that number of shares of Common Stock, par
      value $1.00 per share, of Parent ("Parent Common Stock") equal to
      (A) the Exchange Ratio (as defined below) multiplied by (B) one
      minus the Indemnification Percentage (as defined below);
  
                     (ii) subject to offset in accordance with the
      provisions of Section 2.1(l) and Articles IX and X hereof and the
      Escrow Agreement (as defined below), that number of shares of
      Parent Common Stock equal to (A) the Exchange Ratio multiplied by
      (B) the Indemnification Percentage (the "Escrowed Common
      Consideration");
  
                     (iii) its applicable share of the Contingent
      Deferred Payment (as defined below), if any; and
  
                     (iv) its applicable share of the Franchise Amount
      (as defined below), if any.
  
           (d)  Class A Preferred Stock.  Each issued and outstanding share
 of Class A Preferred Stock (as defined in Section 3.3) shall be converted
 into the right to receive the sum of:
  
                     (i)  that number of shares of Parent Common Stock
      equal to (A) the Exchange Ratio multiplied by (B) one minus the
      Indemnification Percentage multiplied by (C) the Preferred
      Conversion Number (as defined below);
  
                     (ii) subject to offset in accordance with the
      provisions of Section 2.1(l) and Articles IX and X hereof and the
      Escrow Agreement, that number of shares of Parent Common equal to
      (A) the Exchange Ratio multiplied by (B) the Indemnification
      Percentage multiplied by (C) the Preferred Conversion Number 
      (the "Escrowed Preferred Consideration");
  
                     (iii)     its applicable share of the Contingent
      Deferred Payment (as defined below), if any; and
  
                     (iv) its applicable share of the Franchise Amount,
      if any.
  
           (e)  Warrants.  Each Warrant (as defined in Section 3.3(a)) to
 acquire shares of Company that is outstanding immediately prior to the
 Effective Time, whether or not then exercisable, shall, effective as of the
 Effective Time, be cancelled and in exchange therefor, shall be converted
 into the right to receive the sum of:
  
                     (i)  that number of shares of Parent Common Stock
      equal to (1) the Exchange Ratio multiplied by (2) one minus the
      Indemnification Percentage multiplied by (3) the difference
      between (A) the total number of shares of Company Common Stock
      subject to such Warrant less (B) the quotient obtained by
      dividing (i) the product of (x) the total number of shares of
      Company Common Stock subject to such Warrant multiplied by (y)
      the exercise price of such Warrant, by (ii) the Net Equity Value;
  
                     (ii) subject to offset in accordance with the
      provisions of Section 2.1(l) and Articles IX and X hereof and the
      Escrow Agreement, that number of shares of Parent Common equal to
      (1) the Exchange Ratio multiplied by (2) the Indemnification
      Percentage multiplied by (3) the difference between (A) the total
      number of shares of Company Common Stock subject to such Warrant
      less (B) the quotient obtained by dividing (i) the product of (x)
      the total number of shares of Company Common Stock subject to
      such Warrant multiplied by (y) the exercise price of such
      Warrant, by (ii) the Net Equity Value (the "Escrowed Warrant
      Consideration");
  
                     (iii) its applicable share of the Contingent
      Deferred Payment (as defined below), if any; and
  
                     (iv) its applicable share of the Franchise Amount,
      if any.
  
           (f)  As used herein, the term "Company Stock" shall mean the
 Company Common Stock, the Class A Preferred Stock and, as applicable, the
 Warrants and the shares of Company Common Stock subject to the Warrants.
  
           (g)  As used herein, the term "Exchange Ratio" means a fraction,
 the numerator of which is the Net Equity Value (as defined below) and the
 denominator of which is $45.441667 (the "Parent Stock Price").  The
 aggregate shares of Parent Common Stock into which all shares of Company
 Stock will be converted into the right to receive is referred to herein as
 the "Merger Consideration."  The aggregate Escrowed Common Consideration,
 Escrowed Preferred Consideration, Escrowed Warrant Consideration, Escrowed
 CDP (as defined in Section 2.5(a)) and Escrowed Franchise Amount (as
 defined in Section 2.6(c)) are collectively referred to as the "Escrowed
 Consideration."
  
           (h)  As used herein, the term "Net Equity Value" means a
 fraction, the numerator of which is (A) the excess of (i) $212,377,112.50
 less (ii) in the event that the Company shall not have delivered the
 Franchise Certificate (as defined in Section 2.6(b)) to Parent prior to the
 Closing, the Initial Franchise Amount (as defined in Exhibit A-1 hereto),
 and (B) the denominator of which is the number of shares of Company Common
 Stock outstanding immediately prior to the Effective Time assuming, in each
 case, immediately prior to the Effective Time and at the then applicable
 exercise or conversion prices, whether or not then vested, exercisable or
 convertible: (i) conversion of all shares of Class A Preferred into Company
 Common Stock; (ii) the exercise of all outstanding options to acquire
 shares of Company Common Stock; (iii) the exercise of all warrants to
 acquire shares of Company Common Stock; and (iv) the exercise or
 conversion, as applicable, of all other securities convertible into or
 exchangeable for shares of Company Common Stock.
  
           (i)  As used herein, (i) the term "Indemnification Percentage"
 means ten percent (10%) and (ii) the term "Preferred Conversion Number"
 means 1,000.
  
           (j)  Effect on Company Stock.  All such shares of Company Stock,
 when so converted, shall no longer be outstanding and shall automatically
 be canceled and retired and shall cease to exist, and each holder of a
 certificate representing any such shares shall cease to have any rights
 with respect thereto, except the right to receive the shares of Parent
 Common Stock and any cash in lieu of fractional shares of Parent Common
 Stock to be issued or paid in consideration therefor upon the surrender of
 such certificate in accordance with Section 2.2, without interest.
  
           (k)  Adjustment of Exchange Ratio for Dilution and Other Matters. 
 If between the date of this Agreement and the Effective Time, the
 outstanding shares of Parent Common Stock shall have been changed into a
 different number of shares or a different class by reason of any
 reclassification, recapitalization, split-up, stock dividend, stock
 combination, exchange of shares, readjustment or otherwise, then the
 Exchange Ratio shall be correspondingly adjusted.
  
           (l)  Escrow of Shares.  At the Effective Time, any Franchise
 Amount Payment Date and any CDP Payment Date, as applicable, Parent shall
 deposit the number of shares of Parent Common Stock comprising the Escrowed
 Consideration (the "Escrow Shares") with an escrow agent reasonably
 satisfactory to the Company and Parent to be held and disbursed by that
 escrow agent in accordance with the form of escrow agreement attached as
 Exhibit B (the "Escrow Agreement").  Those shares will be withheld from the
 shares of Parent Common Stock allocable to each former holder of the
 Company Stock in accordance with the provisions of Sections 2.1(c)(ii), 2.1
 (d)(ii), 2.1(e)(ii), 2.5(a) and 2.6(c).  To the extent Parent is entitled
 to indemnification out of the Escrow Shares pursuant to Articles IX or X of
 this Agreement and subject to the conditions and limitations therein,
 Parent shall set off and apply against Indemnified Losses (as defined in
 Section 9.2) the Escrow Shares in accordance with the terms hereof and of
 the Escrow Agreement.  Pursuant to the terms of the Escrow Agreement, the
 Escrow Shares shall be valued for purposes of set off against any
 Indemnified Losses at the Parent Stock Price.
  
           Section 2.2    Exchange of Certificates.
  
           (a)  Exchange Agent.  As of the Effective Time, Parent shall
 deposit with an exchange agent designated by Parent and reasonably
 acceptable to the Company (the "Exchange Agent"), for the benefit of the
 holders of shares of Company Stock, for exchange in accordance with this
 Article II, through the Exchange Agent, (A) certificates representing the
 shares of Parent Common Stock (such shares of Parent Common Stock, together
 with any dividends or distributions with respect thereto, being hereinafter
 referred to as the "Exchange Fund") issuable pursuant to this Article II in
 exchange for the shares of Company Stock and (B) cash in an amount
 sufficient for payment in lieu of fractional shares as contemplated by this
 Article II. 
  
           (b)  Exchange Procedures.  As soon as reasonably practicable
 after the Effective Time, the Exchange Agent shall mail to each holder of
 record of a certificate or certificates which immediately prior to the
 Effective Time represented outstanding shares of Company Stock (each a
 "Certificate" and collectively, the "Certificates") whose shares were
 converted pursuant to this Article II into the right to receive shares of
 Parent Common Stock  (i) a letter of transmittal (which shall specify that
 delivery shall be effected, and risk of loss and title to the Certificates
 shall pass, only upon delivery of (1) the Certificates or (2) an affidavit
 in accordance with Section 2.2(h) to the Exchange Agent and shall be in
 such form and have such other provisions as Parent and the Company may
 reasonably specify) and (ii) instructions for use in effecting the
 surrender of the Certificates or affidavits in exchange for certificates
 representing shares of Parent Common Stock.  Upon surrender of a
 Certificate for cancellation to the Exchange Agent or to such other agent
 or agents reasonably acceptable to the Company as may be appointed by
 Parent, together with such letter of transmittal, duly executed, and such
 other documents as may be reasonably required by the Exchange Agent, the
 holder of such Certificate shall be entitled to receive in exchange
 therefor (x) a certificate representing that number of whole shares of
 Parent Common Stock which such holder has the right to receive, pursuant to
 the provisions of this Article II, and (y) cash in lieu of any fractional
 shares of Parent Common Stock in accordance with Section 2.2(e), and the
 Certificate so surrendered shall immediately be canceled.  In the event of
 a transfer of ownership of Company Stock which is not registered in the
 transfer records of the Company, a certificate representing the proper
 number of shares of Parent Common Stock may be issued to a transferee if
 the Certificate representing such Company Stock is presented to the
 Exchange Agent, accompanied by all documents required to evidence and
 effect such transfer and by evidence that any applicable stock transfer
 taxes have been paid.  Until surrendered as contemplated by this Article
 II, each Certificate shall be deemed at any time after the Effective Time
 to represent only the right to receive upon such surrender the certificate
 representing shares of Parent Common Stock and cash in lieu of any
 fractional shares of Parent Common Stock as contemplated by this Article
 II.
  
           (c)  Distributions with Respect to Unexchanged Shares.  No
 dividends or other distributions declared or made after the Effective Time
 with respect to Parent Common Stock with a record date after the Effective
 Time shall be paid to the holder of any unsurrendered Certificate or
 affidavit pursuant to Section 2.2(h) with respect to the shares of Parent
 Common Stock represented thereby and no cash payment in lieu of fractional
 shares shall be paid to any such holder pursuant to paragraph (e) below
 until the holder of record of such Certificate shall surrender such
 Certificate or affidavit.  Subject to the effect of applicable laws,
 following surrender of any such Certificate or affidavit, there shall be
 paid to the record holder of the certificates representing whole shares of
 Parent Common Stock issued in exchange therefor, without interest, (i) at
 the time of such surrender, the amount of any cash payable in lieu of a
 fractional share of Parent Common Stock to which such holder is entitled
 pursuant to paragraph (e) below and the amount of dividends or other
 distributions with a record date after the Effective Time previously paid
 with respect to such whole shares of Parent Common Stock, and (ii) at the
 appropriate payment date, the amount of dividends or other distributions
 with a record date after the Effective Time but prior to surrender and a
 payment date subsequent to surrender payable with respect to such whole
 shares of Parent Common Stock.
  
           (d)  No Further Ownership Rights in Company Stock.  All shares of
 Parent Common Stock issued upon the surrender for exchange of shares of
 Company Stock in accordance with the terms hereof (including any cash paid
 pursuant to paragraph (c) or (e) shall be deemed to have been issued in
 full satisfaction of all rights pertaining to such shares of Company Stock,
 subject, however, to the Surviving Corporation's obligation to pay any
 dividends or make any other distributions with a record date prior to the
 Effective Time which may have been declared or made by the Company on such
 shares of Company Stock in accordance with the terms of this Agreement on
 or prior to the date hereof and which remain unpaid at the Effective Time,
 and there shall be no further registration of transfers on the stock
 transfer books of the Surviving Corporation of the shares of Company Stock
 which were outstanding immediately prior to the Effective Time.  If, after
 the Effective Time, Certificates are presented to the Surviving Corporation
 for any reason, they shall be canceled and exchanged as provided in this
 Article II.
  
           (e)  No Fractional Shares.  No certificates or scrip representing
 fractional shares of Parent Common Stock shall be issued upon the surrender
 for exchange of Certificates, and such fractional share interests will not
 entitle the owner thereof to vote or to any rights of a shareholder of
 Parent.  Notwithstanding any other provision of the Agreement, each holder
 of shares of Company Stock, exchanged pursuant to the Merger who would
 otherwise have been entitled to receive a fraction of a share of Parent
 Common Stock (after taking into account all Certificates delivered by such
 holder) shall receive from Parent, in lieu thereof, cash (without interest)
 in an amount equal to such fractional part of a share of Parent Common
 Stock multiplied by the average of the closing prices of Parent Common
 Stock, as reported on the Nasdaq, on each of the fifteen trading days
 immediately preceding the date of the Effective Time.
  
           (f)  Termination of Exchange Fund.  Any portion of the Exchange
 Fund which remains undistributed to the shareholders of the Company for one
 year after the Effective Time shall be delivered to Parent, upon demand,
 and any former shareholders of the Company who have not previously complied
 with this Article II shall thereafter look only to Parent for payment of
 their claim for Parent Common Stock, any cash in lieu of fractional shares
 of Parent Common Stock, and any dividends or distributions with respect to
 Parent Common Stock.
  
           (g)  No Liability.  Neither the Exchange Agent, Parent, Sub nor
 the Company shall be liable to any holder of shares of Company Stock or
 Parent Common Stock, as the case may be, for such shares (or dividends or
 distributions with respect thereto) delivered to a public official pursuant
 to any applicable abandoned property, escheat or similar law.
  
           (h)  Lost, Stolen or Destroyed Certificates.  In the event any
 Certificates shall have been lost, stolen or destroyed, the Exchange Agent
 shall issue in exchange for such lost, stolen or destroyed Certificates,
 upon the making of an affidavit of that fact by the holder thereof, such
 shares of Parent Common Stock, cash in lieu of fractional shares of Parent
 Common Stock, to which such holder is entitled pursuant to paragraph (e)
 above and any dividends or other distributions with respect to Parent
 Common Stock to which such holder is entitled.
  
           Section 2.3    Options.
  
           (a)  Except as may otherwise be agreed upon between a holder of
 Company Stock Options and Parent, each option granted to a Company employee
 to acquire shares of Company Common Stock ("Company Stock Option") that is
 outstanding immediately prior to the Effective Time, whether or not then
 vested or exercisable, shall, effective as of the Effective Time, become
 and represent an option to acquire the number of shares of Parent Common
 Stock (a "Substitute Option"), rounded up or down to the nearest whole
 share, determined by multiplying (i) the number of shares of Company Common
 Stock subject to such Company Stock Option immediately prior to the
 Effective Time by (ii) the Exchange Ratio, at an exercise price per share
 of Parent Common Stock (increased to the nearest whole cent) equal to the
 exercise price per share of such Company Stock Option divided by the
 Exchange Ratio; provided, however, that in the case of any Company Stock
 Option to which Section 421 of the Code applies by reason of its
 qualification as an incentive stock option under Section 422 of the Code,
 the conversion formula shall be adjusted if necessary to comply with
 Section 424(a) of the Code; and provided, further, that the conversion
 formula shall be further adjusted as provided in Section 2.3(d).  After the
 Effective Time, except as provided in this Section 2.3, each Substitute
 Option shall be exercisable upon the same terms and conditions as were
 applicable to the related Company Stock Option immediately prior to the
 Effective Time.
  
           (b)  Prior to the Effective Time, the Company shall (i) obtain
 any consents from holders of Company Stock Options and (ii) amend the terms
 of its equity incentive plans or arrangements, in each case to the extent,
 if any, necessary to give effect to the provisions of Section 2.3(a).
  
           (c)  As soon as reasonably practicable after the Effective Time,
 Parent shall (i) file with the Securities and Exchange Commission (the
 "SEC") a registration statement on Form S-8 or another appropriate form
 with respect to the shares of Parent Common Stock subject to such options,
 (ii) as soon as reasonably practicable, prepare and file with the Nasdaq
 listing applications covering the shares of Parent Common Stock issuable
 upon the exercise of Substitute Options and use all reasonable efforts to
 obtain approval for the listing of such shares of Parent Common Stock,
 subject only to official notice of issuance and (iii) amend the terms of
 its equity incentive plans or arrangements, in each case to the extent, if
 any, necessary to give effect to the provisions of Section 2.3(a).  Parent
 shall take all corporate action necessary to reserve for issuance a
 sufficient number of shares of Parent Common Stock for delivery upon
 exercise of Substitute Options.
  
           (d)  In the event that any Franchise Amount becomes due in
 accordance with the provisions of Section 2.6, the conversion formula
 applicable to each Substitute Option shall be adjusted by recalculating
 such formula in accordance with clauses (i) and (ii) of Section 2.3(a) as
 if the Exchange Ratio had been determined at the Effective Time to include
 the value of the Franchise Amount that is actually due in accordance with
 Section 2.6.
  
           (e)  On any date on which either (i) a Contingent Deferred
 Payment is paid or (ii) the Escrow Agent releases any portion of the Escrow
 Account (as it may be increased) to Parent in respect of any Indemnified
 Losses, the conversion formula applicable to each Substitute Option shall
 be adjusted by recalculating such formula in accordance with clauses (i)
 and (ii) of Section 2.3(a) hereof as if the Exchange Ratio had been
 determined at the Effective Time to include the value of any Contingent
 Deferred Payment that is actually paid in accordance with Section 2.5 and
 to exclude the value  of any portion of the Escrow Account that is released
 to Parent in respect of any Indemnified Losses.
  
           Section 2.4    Contingent Deferred Payment.
  
           (a)  For purposes of this Agreement, the Contingent Deferred
 Payment shall have the meaning set forth in Exhibit A hereto.  Capitalized
 terms used herein and not otherwise defined in this Agreement shall have
 the meanings set forth in Exhibit A hereto.
  
           (b)  As promptly as practicable, but no later than ninety (90)
 days after the end of the twelve month period ended March 31, 2001, the
 Company shall prepare and deliver to the Shareholder Representative (as
 defined in Section 9.4) the financial statements of the Company for the
 twelve month period ended March 31, 2001, which shall include a statement
 of the Indicators set forth on Exhibit A hereto and the calculation thereof 
 (the "Company March 2001 Financials").  Such financial statements shall be
 prepared in accordance with GAAP based upon the books and records of the
 Company in a manner consistent with the Company's past practice as of the
 date hereof and shall be certified by the Chief Financial Officer of the
 Company.  Concurrently with delivery of the Company March 2001 Financials,
 the Company shall deliver to the Shareholder Representative a statement
 setting forth the calculation of the Contingent Deferred Payment (the "CDP
 Statement").  Following the delivery of the CDP Statement, the Company
 shall give the Shareholder Representative and any independent auditors of
 the Shareholder Representative access at all reasonable times to the
 properties, books, records and personnel of the Company for purposes of
 reviewing the CDP Statement.  The Shareholder Representative shall have
 thirty (30) days following delivery of the CDP Statement during which to
 notify the Company of any dispute regarding the calculation of the
 Contingent Deferred Payment set forth in the CDP Statement or the Company's
 calculation of the Indicators, as the case may be, which notice shall set
 forth in reasonable detail the basis for such dispute.  If the Shareholder
 Representative fails to notify the Company of any such dispute within such
 30-day period, the CDP Statement and the Indicator calculations shall be
 deemed to be final and binding upon the Company, Shareholder Representative
 and the shareholders.  In the event that the Shareholder Representative
 shall so notify the Company of any dispute, the Shareholder Representative
 and the Company shall cooperate in good faith to resolve such dispute as
 promptly as possible.
  
           (c)  If the Shareholder Representative and the Company are unable
 to resolve any such dispute within thirty (30) days of the delivery of
 notice of a dispute, such dispute shall be resolved by an independent
 accounting firm (the "Accounting Firm") reasonably acceptable to the
 Company and the Shareholder Representative, and such determination shall be
 final and binding on the Company, the shareholders and the Shareholder
 Representative.  If the Shareholder Representative and the Company cannot
 mutually agree on the identity of the Accounting Firm, the Shareholder
 Representative and the Company shall each submit to the other party's
 independent auditor the name of a "big five accounting firm" which does not
 at such time and has not in the two years prior to such time provided
 material services to any of the Shareholder Representative, the Company or
 any of their respective affiliates, and the Accounting Firm shall be
 selected by lot from these two firms by the independent auditors of the two
 parties.  Any expenses relating to the engagement of the Accounting Firm
 shall be paid by the party whom the Accounting Firm determines to be the
 non-prevailing party with respect to such dispute.  The shareholders'
 portion, if any, of such expenses shall be deducted from the Contingent
 Deferred Payment, if any, and if sufficient funds are not available
 therein, Parent and the Shareholder Representative shall instruct the
 Escrow Agent to surrender to Parent a sufficient number of Escrowed Shares,
 valued at the Parent Stock Price, as payment for the shareholders' portion
 of such expenses.  The Accounting Firm shall be instructed to use every
 reasonable effort to perform its services within thirty (30) days of
 submission of the CDP Statement to it and, in any case, as promptly as
 practicable after such submission.
  
           (d)  The Company shall make the Contingent Deferred Payment, if
 any, in shares of Parent Common Stock to the Exchange Agent for
 distribution to the shareholders in accordance with the provisions of 
 Section 2.5.  For purposes of this Agreement, a "Final Determination" shall
 mean the earliest of (i) the expiration of the applicable time periods for
 notifying parties of disputes pursuant to Section 2.4(b) (assuming no such
 notification has been made during such time periods), (ii) the parties
 reaching a final agreement on such amount or (iii) the Accounting Firm
 rendering its determination pursuant to paragraph (c) above.
  
           Section 2.5    Payment of Contingent Deferred Payment.
  
           (a)  Exchange Agent; CDP Exchange Fund.  On the later of (i)
 fifteen (15) business days following a Final Determination and (ii) the
 Escrow Termination Date (as defined in the Escrow Agreement) (such date
 being hereinafter referred to as the "CDP Payment Date"), Parent shall
 deposit with the Exchange Agent certificates representing a number of
 shares of Parent Common Stock equal to the quotient of the Contingent
 Deferred Payment divided by the average of the closing prices of Parent
 Common Stock, as reported on the Nasdaq, on each of the fifteen trading
 days immediately preceding the date on which such shares are deposited with
 the Exchange Agent (such shares of Parent Common Stock, together with any
 dividends or distributions with respect thereto, being hereinafter referred
 to as the "CDP Exchange Fund") issuable pursuant to this Section 2.5 in
 respect of the Contingent Deferred Payment, and cash in an amount
 (determined in accordance with Section 2.2(e)) sufficient for payment in
 lieu of fractional shares.  Notwithstanding the foregoing, if, on the CDP
 Payment Date, the aggregate amount of unpaid and unresolved claims for
 Indemnified Losses (as defined in Section 9.2(a)), as determined in
 accordance with Articles IX and X hereof, and subject to the conditions and
 limitations therein, and the Escrow Agreement, exceeds the value of the
 Escrow Account as it then exists, then the portion of the Contingent
 Deferred Payment which would be necessary to satisfy such claims shall be
 excluded from the CDP Exchange Fund and shall be deposited with the Escrow
 Agent (such shares of Parent Common Stock to be deposited in respect
 thereof, together with any dividends or distributions with respect thereto,
 being hereinafter referred to as the "Escrowed CDP") and shall be added to
 the Escrow Account to be released in accordance with the terms of the
 Escrow Agreement.
  
           (b)  Payment Amount.  The Exchange Agent shall pay to each person
 who held shares of Company Stock (other than Dissenting Shares) immediately
 prior to the Effective Time, out of the CDP Exchange Fund, a number of
 shares of Parent Common Stock (together with cash in lieu of fractional
 shares) equal to the product of (A) the number of shares of Parent Common
 Stock comprising the CDP Exchange Fund multiplied by (B) a fraction, (x)
 the numerator of which is the number of shares of Company Stock held by
 each such shareholder immediately prior to the Effective Time and (y) the
 denominator of which is the aggregate number of shares of Company Stock
 outstanding immediately prior to the Effective Time. 
  
           (c)  Payment Procedure.  The Exchange Agent shall make such
 payment of shares of Parent Common Stock (together with cash in lieu of
 fractional shares) to each such shareholder in the manner and at the
 location specified in the letter of transmittal previously delivered by
 each such shareholder to the Exchange Agent pursuant to Section 2.2 (unless
 the Exchange Agent has otherwise been notified in writing by the
 Shareholder Representative) and otherwise in accordance with the applicable
 provisions of Section 2.2. 
  
           Section 2.6    Franchise Amount.
  
           (a)  Computation.  For purposes of this Agreement, the "Franchise
 Amount" and "Partial Franchise Amount" shall have the respective meanings
 set forth in Exhibit A-1 hereto.  Capitalized terms used herein and not
 otherwise defined in this Agreement shall have the meanings set forth in
 Exhibit A-1 hereto.
  
           (b)  Franchise Certificate.  In the event that the Company
 obtains franchises for any or all of Chicago Areas 2, 3 and 4, in each
 case, on terms generally no less favorable than the terms of the Company's
 franchise with respect to Chicago Area 1 or otherwise approved by Parent,
 the Company shall prepare and deliver to Parent a certificate (each a
 "Franchise Certificate") executed by the Chief Executive Officer and the
 Chief Financial Officer of the Company and in form and substance reasonably
 satisfactory to Parent, certifying as to (i) the receipt of such franchise
 or franchises on such terms, (ii) the date on which such franchises shall
 have been obtained (each a "Franchise Receipt Date") and that such
 franchise or franchises are in full force and effect and (iii)
 documentation evidencing such franchise or franchises.
  
           (c)  Exchange Agent; Franchise Exchange Fund.  Within ten (10)
 business days following Parent's receipt of a Franchise Certificate in form
 and substance reasonably satisfactory to Parent (each such date being
 hereinafter referred to as a "Franchise Amount Payment Date"), Parent shall
 deposit with the Exchange Agent certificates representing a number of
 shares of Parent Common Stock equal to the quotient of (A) the product of
 (i) the Franchise Amount or a Partial Franchise Amount, as the case may be,
 multiplied by (ii) one minus the Indemnification Percentage divided by (B)
 the Parent Stock Price (such shares of Parent Common Stock, together with
 any dividends or distributions with respect thereto, being hereinafter
 referred to as the "Franchise Exchange Fund") issuable pursuant to this
 Section 2.6 in respect of the Franchise Amount or a Partial Franchise
 Amount, and cash in an amount (determined in accordance with Section
 2.2(e)) sufficient for payment in lieu of fractional shares. 
 Simultaneously therewith, Parent shall deposit with the Escrow Agent
 pursuant to Section 2.1(l) certificates representing a number of shares of
 Parent Common Stock equal to the quotient of (A) the product of (i) the
 Franchise Amount or a Partial Franchise Amount, as the case may be,
 multiplied by (ii) the Indemnification Percentage divided by (B) the Parent
 Stock Price (such shares of Parent Common Stock, together with any
 dividends or distributions with respect thereto, being hereinafter referred
 to as the "Escrowed Franchise Amount") to be included in the Escrowed
 Consideration and to be held and disbursed by the Escrow Agent in
 accordance with the Escrow Agreement.  Notwithstanding the foregoing, in
 the event that the Franchise Amount, or any Partial Franchise Amount, as
 the case may be, is payable after the first anniversary of the Closing,
 then, if on such date or dates the aggregate amount of unpaid and
 unresolved claims for Indemnified Losses (as defined in Section 9.2), as
 determined in accordance with Articles IX and X hereof, and subject to the
 conditions and limitations therein, and the Escrow Agreement, exceeds the
 value of the Escrow Account as it then exists, the portion the Escrowed
 Franchise Amount which would be necessary to satisfy such claims shall be
 deposited with the Escrow Agent and the remainder of the Escrowed Franchise
 Amount, if any, shall be included in the Franchise Exchange Fund.
  
           (d)  Payment Amount.  The Exchange Agent shall pay to each person
 who held shares of Company Stock (other than Dissenting Shares) immediately
 prior to the Effective Time, out of the Franchise Exchange Fund, a number
 of shares of Parent Common Stock (together with cash in lieu of fractional
 shares) equal to the product of (A) the number of shares of Parent Common
 Stock comprising the Franchise Exchange Fund multiplied by (B) a fraction,
 (x) the numerator of which is the number of shares of Company Stock held by
 each such shareholder immediately prior to the Effective Time and (y) the
 denominator of which is the aggregate number of shares of Company Stock
 outstanding immediately prior to the Effective Time. 
  
           (e)  Payment Procedure.  The Exchange Agent shall make such
 payment of shares of Parent Common Stock (together with cash in lieu of
 fractional shares) to each such shareholder in the manner and at the
 location specified in the letter of transmittal previously delivered by
 each such shareholder to the Exchange Agent pursuant to Section 2.2 (unless
 the Exchange Agent has otherwise been notified in writing by the
 Shareholder Representative) and otherwise in accordance with the applicable
 provisions of Section 2.2.
  
           Section 2.7    Shares of Dissenting Shareholders. 
 Notwithstanding anything in this Agreement to the contrary, any shares of
 Company Stock that are issued and outstanding as of the Effective Time and
 that are held by a shareholder that has exercised its right (to the extent
 such right is available by law) to demand and to receive the fair value of
 such shares (the "Dissenting Shares") under Section 5/11.70 of the Illinois
 Statute shall not be converted into the right to receive the Merger
 Consideration unless and until the holder shall have failed to perfect, or
 shall have effectively withdrawn or lost, his right to dissent from the
 Merger under the Illinois Statute and to receive such consideration as may
 be determined to be due with respect to such Dissenting Shares pursuant to
 and subject to the requirements of the Illinois Statute. If any such holder
 shall have so failed to perfect or have effectively withdrawn or lost such
 right, each share of such holder's Company Stock shall thereupon be deemed
 to have been converted into and to have become, as of the Effective Time,
 without any interest thereon, the right to receive the Merger
 Consideration. The Company shall give Parent (i) prompt notice of any
 notice or demands for appraisal or payment for shares of Company Stock
 received by the Company and (ii) the opportunity to participate in and
 direct all negotiations and proceedings with respect to any such demands or
 notices. The Company shall not, without the prior written consent of
 Parent, make any payment with respect to, or settle, offer to settle or
 otherwise negotiate, any such demands.  Except as provided in Section 6.5
 hereof, provided that the Company has sufficient assets to, and actually
 does pay all holders of Dissenting Shares in accordance with the Illinois
 Statute and this Agreement, no assets of Parent will be used in the payment
 for Dissenting Shares.
  
  
                                 ARTICLE III

                REPRESENTATIONS AND WARRANTIES OF THE COMPANY
  
      Except as set forth in the Company Disclosure Schedules (as defined in
 Section 3.2), the Company represents and warrants to Parent and Sub as
 follows:  
  
           Section 3.1    Organization.  Each of the Company and each of its
 Subsidiaries is a corporation duly organized, validly existing and in good
 standing under the laws of the jurisdiction of its incorporation, has all
 requisite corporate power to own, lease and operate its property and to
 carry on its business as now being conducted or as its present business
 (excluding expansions or additions to that business) is contemplated to be
 conducted ("Conducted"), and is duly qualified to do business and is in
 good standing as a foreign corporation in each jurisdiction in which the
 failure to be so qualified would have a Material Adverse Effect (as defined
 below).  When used in connection with the Company or any of its
 Subsidiaries, the term "Material Adverse Effect" means any change, event or
 effect that is materially adverse to the business, assets (including
 intangible assets), liabilities, condition (financial or otherwise),
 operations or results of operations of the Company and its Subsidiaries
 taken as a whole except for such changes, events or effects which are
 directly the result of (i) the entering into or the public announcement of
 this Agreement or the transactions contemplated hereby, (ii) changes in the
 telecommunications industry generally or (iii) changes in general economic
 (excluding changes in the capital markets), regulatory or political
 conditions in the United States; except, in the case of each of (ii) and
 (iii), if the impact on the Company is more than insignificantly
 disproportionate to the more general impact of the change, event or effect. 
 The Company has provided complete and correct copies of the articles of
 incorporation, by-laws or other organizational documents of the Company and
 each of its Subsidiaries as currently in effect.  As used herein,
 "Subsidiary" means, with respect to any person, any entity of which such
 person owns, directly or indirectly, at least a majority of the voting
 securities or economic interests or which is directly or indirectly owned
 or controlled by such person.
  
           Section 3.2    Company Subsidiaries.  All of the issued and
 outstanding shares of capital stock or other equity interest of each of the
 Company's Subsidiaries are owned by the Company or by a Subsidiary of the
 Company free and clear of all Liens (as defined in Section 3.3(a)) and are
 validly issued, fully paid and nonassessable, and there are no outstanding
 subscriptions, options, calls, contracts, voting trusts, proxies or other
 commitments, understandings, restrictions, arrangements, rights or warrants
 with respect to any such Subsidiary's capital stock or other equity
 interest, including any right obligating any such Subsidiary to issue,
 deliver or sell additional shares of its capital stock.  A list of the
 Subsidiaries of the Company (including the authorized capital stock and
 beneficial and record owner thereof) is set forth in Section 3.2 of the
 disclosure schedules delivered by the Company to Parent in connection with
 this Agreement (the "Company Disclosure Schedules").  Neither the Company
 nor any of its Subsidiaries, directly or indirectly, owns any equity or
 similar interest, or any interest convertible into or exchangeable for any
 such equity or similar interest, in any entity other than a Subsidiary.
  
           Section 3.3    Company Capital Structure.
  
           (a)  The authorized capital stock of the Company consists of: 
 (i) 50,000,000 shares of Voting Common Stock, no par value, of the Company
 (the "Company Voting Common Stock") and 1,000,000 shares of Non Voting
 Common Stock, no par value, of the Company (the "Company Non Voting Common
 Stock" and, together with the Company Voting Common Stock, the "Company
 Common Stock"); (ii) 500,000 shares of Class A Convertible 8% Cumulative
 Preferred Stock, no par value, of the Company (the "Class A Preferred
 Stock"); (iii) 500,000 shares of Class B Convertible 8% Cumulative
 Preferred Stock, no par value, of the Company, ("Class B Preferred Stock");
 and (iv) 100,000 shares of 133/4 Senior Cumulative Exchangeable Preferred
 Stock, $0.01 par value, of the Company ("Exchangeable Preferred").  As of
 the date hereof, (x) 3,728,666.2150 shares of Company Voting Common Stock;
 552,271.8965 shares of Company Non Voting Common Stock; 1554.8710 shares of
 Class A Preferred Stock and 65,668.2 shares of Exchangeable Preferred were
 issued and outstanding, all of which were validly issued, fully paid and
 nonassessable, and no shares of Class B Preferred Stock were issued and
 outstanding; (y) no shares of Company Common Stock were held in the
 treasury of the Company or by Subsidiaries of the Company; and (z)
 6,518,486.6 shares of Company Voting Common Stock were reserved for
 issuance pursuant to the following:  (A) 145,235.8330 shares pursuant to
 the 1998 Employee Stock Option Plan; (B) 140,375 shares pursuant to the
 1998 Key Management Stock Option Plan; (C) 331,200 shares pursuant to the
 1998 Stock Option Agreement entered into between the Company and each of
 Robert J. Currey and Ronald D. Webster; (D) 575,758.5360 shares pursuant to
 the 1997 Stock Option Plan; (E) 53,640 shares pursuant to the Company 1999
 Stock Incentive Plan; (F) subjection to the provisions of Section 6.21
 hereof, 599,916 shares pursuant to the Company 1999 ISP Stock Plan; (G)
 97,830.00 shares pursuant to the Company ISP Employee Stock Option Plan;
 (H) 322,000.00 shares pursuant to an option agreement entered into with
 Robert J. Currey dated December 10 , 1999; (I) 1,554,871 shares pursuant to
 the conversion of the Class A Preferred Stock; (J) 3,016,060.35 shares
 pursuant to Warrants (as defined below), of which 1,308,195.65 are
 attributable to Warrants issued in connection with the Class A Preferred
 Stock, 438,870 are attributable to Warrants issued in connection with the
 Exchangeable Preferred, 18,994.7 are attributable to Warrants issued to
 Carr, Nickey & Company and 1,250,000 are attributable to the LaSalle
 Options (as defined below).  As used herein, the term "Warrants" means (i)
 warrants to purchase Company Common Stock and (ii) options (the "LaSalle
 Options") issued pursuant to a Contribution and Indemnity Agreement, dated
 June 24, 1996, and any amendments thereto.  All shares of Company Voting
 Common Stock subject to issuance as specified above, upon issuance on the
 terms and conditions specified in the instruments pursuant to which they
 are issuable, shall be duly authorized, validly issued, fully paid and
 nonassessable.  There are no obligations, contingent or otherwise, of the
 Company or any of its Subsidiaries to repurchase, redeem or otherwise
 acquire any such shares of capital stock or the capital stock of any of the
 Company's Subsidiaries or make any investment (in the form of a loan,
 capital contribution or otherwise) in any such Subsidiary or any other
 entity.  All of the outstanding shares of capital stock of each Subsidiary
 of the Company are duly authorized, validly issued, fully paid and
 nonassessable, and all such shares are owned by the Company or another
 Subsidiary of the Company free and clear of all security interests, liens,
 claims, pledges, agreements, limitations on voting rights, limitations on
 transfer, charges or other encumbrances of any nature (collectively
 "Liens").
  
           (b)  Section 3.3 of the Company Disclosure Schedules sets forth a
 complete and accurate list of each of the record and beneficial holders of
 (i) each class or series of the Company's capital stock and the number of
 shares of the Company's capital stock held by each holder as of the date
 hereof and the number of shares or other securities into which such capital
 stock is convertible, (ii) options and warrants and the exercise price,
 date of grant, and number of shares and class of capital stock of the
 Company into which such options and warrants are exercisable by each such
 holder as of the date hereof and the vesting schedules of each such option
 or warrant and (iii) the percentage of each class or series of capital
 stock of the Company held by each holder as of the date hereof, the
 percentage of the total outstanding capital stock of the Company held by
 each holder as of the date hereof, and the percentage of each such class or
 series and the percentage of the total outstanding capital stock as of the
 date hereof, assuming, at the then applicable exercise or conversion
 prices, whether or not then vested, exercisable or convertible: (A)
 conversion of all shares of Class A Preferred; (B) the exercise of all
 outstanding options; (C) the exercise of all warrants; and (D) the exercise
 or conversion, as applicable, of all other securities convertible into or
 exchangeable for shares of capital stock of the Company.  No shares of
 capital stock of the Company and no securities convertible into or
 exercisable for shares of capital stock of the Company are convertible into
 or exercisable for any other class or series of capital stock of the
 Company other than Company Common Stock.  Immediately prior to the
 Effective Time, the Company shall provide Parent with a revised
 capitalization table substantially in the form of Section 3.3 of the
 Company Disclosure Schedules and setting forth any changes made in the
 capitalization of the Company after the date hereof and prior to the
 Effective Time.
  
           (c)  Except as set forth in this Section 3.3, there are no equity
 securities of any class of the Company or any of its Subsidiaries, or any
 security exchangeable into or exercisable for such equity securities,
 issued and outstanding or, reserved for issuance and the Company has not
 authorized the issuance of such security.  Except as set forth in this
 Section 3.3, there are no options, warrants, equity securities, calls,
 rights commitments or agreements of any character to which the Company or
 any of its Subsidiaries is a party or by which it is bound obligating the
 Company or any of its Subsidiaries to issue, deliver or sell, or cause to
 be issued, delivered or sold, additional shares of capital stock of the
 Company or any of its Subsidiaries or obligating the Company or any of its
 Subsidiaries to grant, extend, accelerate the vesting of or enter into any
 such option, warrant, equity, security, call, right, commitment or
 agreement, and to the knowledge of the Company, there are no voting trusts,
 proxies or other agreements or understandings with respect to the shares of
 capital stock of the Company.
  
           (d)  Each share of Class A Preferred Stock is, and immediately
 prior to the Effective Time will be, convertible into 1,000 shares of
 Company Voting Stock.
  
           (e)  On January 9, 1998, the Company effected a 1,000 for 1 share
 split with respect to the Company Common Stock and no other splits or
 similar adjustments with respect to any of the Company's capital stock or
 securities convertible thereinto have otherwise occurred.  The Board of
 Directors of the Company has rescinded, or will prior to the Effective Time
 rescind, the 3 for 1 share split described on the Company's Quarterly
 Report on Form 10-Q for the Quarterly Period ended September 30, 1999 and
 will file a Current Report on Form 8-K reflecting the foregoing and
 revising the disclosure contained in the Company's Quarterly Report on Form
 10-Q for the Quarterly Period ended September 30, 1999.
  
           Section 3.4    Authority; No Conflict; Required Filings and
 Consents.
  
           (a)  The Company has all requisite corporate power and authority
 to enter into and deliver this Agreement and the other agreements
 contemplated herein, and to consummate the transactions contemplated hereby
 and thereby.  The execution and delivery of this Agreement and the other
 agreements contemplated herein and the consummation of the transactions
 contemplated hereby and thereby have been duly authorized by all necessary
 corporate action on the part of the Company and each of its Subsidiaries,
 subject only (in the case of this Agreement) to the approval of the Merger
 by the Company's shareholders under the Illinois Statute.  This Agreement
 and the other agreements contemplated herein have been duly executed and
 delivered by the Company and constitute valid and binding obligations of
 the Company, enforceable in accordance with the terms hereof and thereof,
 except as such enforceability may be limited by (i) bankruptcy laws and
 other similar laws affecting creditors' rights generally and (ii) general
 principles of equity, regardless of whether asserted in a proceeding in
 equity or at law.  
  
           (b)  The only vote of the Company's shareholders required for the
 approval of the Merger and the consummation of the transactions
 contemplated hereby is the affirmative vote of (i) two-thirds of the
 outstanding shares of Company Voting Common Stock and Class A Preferred
 Stock, voting together as a class, and (ii) a majority of the outstanding
 shares of Class A Preferred Stock.  This Agreement and the transactions
 contemplated hereby have been approved by (i) at least a majority of the
 directors comprising the Company's Board of Directors and (ii) at least a
 majority of the directors appointed by the holders of the Class A Preferred
 Stock, which are the only votes of the Company's Board of Directors
 required for approval of this Agreement and the consummation of the
 transactions contemplated hereby.  The Company has taken all appropriate
 action so that the restrictions on business combinations contained in
 Section 5/11.75 of the Illinois Statute and in any other applicable laws
 will not apply to Parent or Sub and their respective associates and
 affiliates with respect to or as a result of this Agreement and the
 transactions contemplated hereby.
  
           (c)  Persons holding, beneficially and of record, (i) (A) two-
 thirds of the outstanding shares of Company Voting Common Stock and Class A
 Preferred Stock, voting together as a class, and (B) two-thirds of the
 shares of Company Voting Common Stock and Class A Preferred Stock, voting
 together as a class, that would be outstanding assuming the exercise or
 conversion, as the case may be, of any and all options, warrants or other
 securities exercisable or convertible into Company Voting Common Stock or
 Class A Preferred Stock, whether or not then convertible or exercisable and
 (ii) (A) a majority of the outstanding shares of Class A Preferred Stock
 and (B) a majority of the shares of Class A Preferred Stock that would be
 outstanding assuming the exercise or conversion, as the case may be, of any
 and all options, warrants or other securities exercisable or convertible
 into Class A Preferred Stock, whether or not then convertible or
 exercisable, have each validly executed and delivered a Voting and Lock-Up
 Agreement substantially in the form attached hereto as Exhibit C and each
 such agreement is enforceable against each such person that is a party
 thereto in accordance with its terms except as such enforceability may be
 limited by (i) bankruptcy laws and other similar laws affecting creditors'
 rights generally and (ii) general principles of equity, regardless of
 whether asserted in a proceeding in equity or at law and the votes
 represented thereby represent the only approval required by the Company's
 shareholders as of the date hereof and at any time prior to the Effective
 Time necessary to approve the Merger and the other transactions
 contemplated hereby and thereby. 
  
           (d)  Except as set forth in Section 3.4 of the Company Disclosure
 Schedules, the execution and delivery of this Agreement and the other
 agreements contemplated herein does not, and the consummation of the
 transactions contemplated hereby and thereby will not, (i) conflict with,
 or result in any violation or breach of any provision of the certificates
 of incorporation or bylaws of the Company or any of its Subsidiaries, (ii)
 result in any violation or breach of, or constitute (with or without notice
 or lapse of time, or both) a default or conflict with (or give rise to a
 right of termination, amendment, cancellation or acceleration of any
 obligation or loss of any benefit) or require any consent or notice to any
 person, under any of the terms, conditions or provisions of any note, bond,
 mortgage, indenture, lease, contract or other agreement, instrument or
 obligation to which the Company or any of its Subsidiaries is a party or by
 which any of them or any of their properties or assets may be bound, (iii)
 conflict with or violate any permit, concession, franchise, license,
 judgment, order, decree, statute, law, ordinance, rule or regulation
 applicable to the Company or any of its Subsidiaries or any of their
 properties or assets or (iv) result in the imposition of any Lien (except
 the claims, agreements, limitations on voting rights or transfer and other
 encumbrances contemplated by this Agreement) against any of the properties
 or assets of the Company or any of its Subsidiaries.
  
           (e)  No consent, approval, order or authorization of, or
 registration, declaration or filing with, any supranational, national,
 state, municipal, county or local government, any instrumentality,
 subdivision, court, administrative agency or commission or other authority
 thereof, or any quasi-governmental or private body exercising any
 regulatory, taxing, importing or other governmental or quasi-governmental
 authority (each such entity shall hereinafter be referred to as a
 "Governmental Entity"), is required by or with respect to the Company or
 any of its Subsidiaries in connection with the execution and delivery of
 this Agreement or the consummation of the transactions contemplated hereby,
 except for (i) the filing of a pre-merger notification report under the
 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
 Act"), (ii) the filing of the Illinois Articles of Merger with, and the
 issuance of the Illinois Certificate of Merger by, the Secretary of State
 of the State of Illinois in accordance with Illinois Statute, (iii) the
 filing of documents to satisfy the applicable requirements, if any, of the
 Securities Exchange Act of 1934, as amended (the "Exchange Act"), and state
 takeover laws, (iv) the filing with the SEC of the Registration Statement
 (as defined in Section 6.13(d)), (v) approval by the Illinois Public
 Utility Commission and applicable state and local franchising authorities
 and (vi) consents, authorizations, filings, approvals and registrations
 pursuant to the foregoing or set forth in Section 3.4 of the Company
 Disclosure Schedules.
  
           Section 3.5    SEC Filings.  The Company has filed all reports
 and registration statements required to be filed by it with the SEC since
 May 14, 1998 (collectively, the "Company SEC Reports").  As of its filing
 date, and giving effect to any amendments thereof, each Company SEC Report
 complied as to form in all material respects with the applicable
 requirements of the Securities Act of 1933, as amended (the "Securities
 Act"), and the Exchange Act, as the case may be.  As of its filing date,
 and giving effect to any amendments thereof, each Company SEC Report filed
 pursuant to the Exchange Act did not contain any untrue statement of a
 material fact or omit to state any material fact necessary in order to make
 the statements made therein, in the light of the circumstances under which
 they were made, not misleading.  Each Company SEC Report that is a
 registration statement, as amended or supplemented, if applicable, filed
 pursuant to the Securities Act, as of the date of such registration
 statement or amendment became effective, did not contain any untrue
 statement of a material fact or omit to state any material fact required to
 be stated therein or necessary to make the statements therein not
 misleading.
  
           Section 3.6    Financial Statements.  Each of the consolidated
 financial statements (including, in each case, any related notes thereto)
 contained in the Company SEC Reports (the "Financial Statements") complied
 as to form in all material respects with applicable accounting requirements
 and with the published rules and regulations of the SEC with respect
 thereto, had been prepared in accordance with generally accepted accounting
 principles ("GAAP") applied on a consistent basis throughout the periods
 involved (except as may be indicated in the notes thereto or, in the case
 of the unaudited financial statements contained therein (the "Interim
 Financial Statements"), as permitted by Form 10-Q or the Exchange Act
 regulations promulgated by the SEC), and each fairly presented the
 consolidated financial position of the Company and its consolidated
 Subsidiaries in all material respects as at the respective dates thereof
 and the consolidated results of its operations and cash flows for the
 periods indicated in accordance with GAAP (subject, in the case of the
 Interim Financial Statements, to normal audit adjustments which were not
 and are not expected, individually or in the aggregate, to be material in
 amount). 
  
           Section 3.7    Absence of Undisclosed Liabilities.  The Company
 and its Subsidiaries do not have any liabilities or obligations of any
 nature, whether accrued or contingent (whether or not required to be
 reflected in financial statements in accordance with GAAP), and whether due
 or to become due, and there is no existing condition or situation which
 could reasonably be expected to result in any such liabilities or
 obligations other than (i) liabilities reflected in the consolidated
 balance sheet of the Company dated as of September 30, 1999 (the "Company
 Balance Sheet"); (ii) normal or recurring immaterial liabilities incurred
 since September 30, 1999 in the ordinary course of business consistent with
 past practices; and (iii) liabilities set forth in Section 3.7 of the
 Company Disclosure Schedules.
  
           Section 3.8    Absence of Certain Changes or Events.  Since the
 date of the Company Balance Sheet, the Company and its Subsidiaries have
 conducted their businesses in the ordinary course, in a manner consistent
 with past practice, and there has not been: (i) any event, occurrence or
 development of a state of circumstances or facts which has had or could
 reasonably be expected to have a Material Adverse Effect; (ii) any
 declaration, setting aside or payment of any dividend or other distribution
 with respect to any shares of capital stock of the Company, or any
 repurchase, redemption or other acquisition by the Company or any of its
 Subsidiaries of any outstanding shares of capital stock or other securities
 of, or other ownership interests in, the Company or any of its
 Subsidiaries; (iii) any amendment of any term of any outstanding security
 of the Company or any of its Subsidiaries; (iv) any incurrence, assumption
 or guarantee by the Company (other than guarantees of its Subsidiaries'
 obligations) or any of its Subsidiaries (other than guarantees of their
 Subsidiaries' obligations) of any indebtedness for borrowed money; (v) any
 creation or assumption by the Company or any of its Subsidiaries of any
 Lien (except as contemplated by this Agreement) on any asset; (vi) any
 making of any loan, advance or capital contributions to or investment in
 any person other than loans, advances or capital contributions to or
 investments in wholly owned Subsidiaries made in the ordinary course of
 business consistent with past practices; (vii) any condemnation, seizure,
 damage, destruction or other casualty loss (whether or not covered by
 insurance) affecting the business or assets of the Company or any of its
 Subsidiaries; (viii) any transaction or commitment made, or any contract or
 agreement entered into, amended or terminated by the Company or any of its
 Subsidiaries or any relinquishment by the Company or any Subsidiary of any
 contract or other right, in either case, material to the Company and its
 Subsidiaries taken as a whole; (ix) any change in any method of accounting
 or accounting practice by the Company or any of its Subsidiaries; (x) any
 (A) grant of any severance or termination pay to any director, officer or
 employee of the Company or any of its Subsidiaries, (B) entering into or
 renewal of any employment, deferred compensation, severance, retirement or
 other similar agreement (or any amendment to any such existing agreement)
 with any director, officer or employee of the Company or any of its
 Subsidiaries, (C) increase in benefits payable under any existing severance
 or termination pay policies or employment agreements, or (D) except in the
 ordinary course of business consistent with past practice, increase in
 compensation, bonus or other benefits payable to directors, officers or
 employees of the Company or any of its Subsidiaries; (xi)  any labor
 dispute, other than routine individual grievances, or any activity or
 proceeding by a labor union or representative thereof to organize any
 employees of the Company or any of its Subsidiaries, or any lockouts,
 strikes, slowdowns, work stoppages or threats thereof by or with respect to
 such employees; (xii) any capital expenditure, or commitment for a capital
 expenditure, for additions or improvements to property, plant and equipment
 in excess of $500,000, individually or $1,000,000 in the aggregate other
 than expenditures for planned build out of the Company's network that are
 in accordance with the budget agreed to between Parent and the Company;
 (xiii) except for capital expenditures and commitments referred to in
 subsection (xii) above, any acquisition or disposition of any material
 assets or properties or any Intellectual Property (as defined in Section
 3.11) in one or more transactions, or any commitment in respect thereof;
 (xiv) any express or deemed election for Tax (as defined below) purposes or
 any offer to settle or compromise or any settlement or compromise of any
 liability with respect to Taxes (as defined below); (xv) any offers to
 existing Subscribers (as defined in Section 3.19(i)) for renewal at rates
 below the standard rates charged by the Company and its Subsidiaries; or
 (xvi) any Outage (as defined below).  As used herein, "Outage" means any
 complete loss of any service to any System, including but not limited to
 any complete loss of network access, telephone, video, audio, Internet,
 data, bandwidth access, mail, web or other services.
  
           Section 3.9    Taxes.
  
           (a)  (i) The Company and each of its Subsidiaries have duly and
 timely filed (or there have been duly and timely filed on its behalf), or a
 valid extension of time to file has been obtained, with the appropriate
 governmental authorities all Tax Returns (as hereinafter defined) required
 to be filed by it and all such Tax Returns are true, correct and complete
 in all material respects, and (ii) all Taxes for which the Company or any
 Subsidiary is or may be liable (whether or not shown on any Tax Return) in
 respect of periods (or portions thereof) ending on or before the Closing
 Date have been timely paid, or will be timely paid, or have been provided
 for on the Financial Statements and Interim Financial Statements in
 accordance with GAAP.  With respect to any period (or portion thereof)
 through the Closing Date for which Taxes are not yet due or owing, the
 Company and each of its Subsidiaries have established due and sufficient
 reserves for the payments of such Taxes in accordance with generally
 accepted accounting principles, and such current reserves through the
 Closing Date are duly and fully provided for in the Financial Statements
 and Interim Financial Statements.
  
           (b)  No deficiencies for Taxes have been claimed, proposed or
 assessed by any taxing or other governmental authority against the Company
 or any of its Subsidiaries, and none of the Company shareholders or the
 Company or any Subsidiary has received any notice, or otherwise has any
 knowledge, of any potential claim, proposal or assessment against the
 Company or any of its Subsidiaries for any such deficiency for Taxes. 
 There are no pending, or to the best of the Company's or any Subsidiary's
 knowledge, threatened audits, investigations or claims for or relating to
 any liability in respect of Taxes, and there are no matters under
 discussion between the Company or any Subsidiary on the one hand and any
 governmental authority on the other hand with respect to Taxes that, in the
 reasonable judgment of the Company shareholders, the Company or any of its
 Subsidiaries are likely to result in a material additional liability of the
 Company or any of its Subsidiaries for Taxes.
  
           (c)  There are no liens for Taxes upon any property or assets of
 the Company or any of its Subsidiaries, except for liens for Taxes not yet
 due and payable, and for which adequate reserves have been provided for on
 the Financial Statements and Interim Financial Statements in accordance
 with GAAP.
  
           (d)  Each of the Company and each of its Subsidiaries has duly
 and timely withheld, collected and paid to the proper governmental
 authority all Taxes required to have been withheld, collected or paid.
  
           (e)  No claim has ever been made to the Company or any Subsidiary
 by an authority in a jurisdiction where the Company or any Subsidiary has
 not filed Tax Returns that the Company or any Subsidiary is or may be
 subject to taxation by that jurisdiction.
  
           (f)  Neither the Company nor any of its Subsidiaries has waived
 any statute of limitations in respect of Taxes or agreed to any extension
 of time with respect to a Tax assessment or deficiency.
  
           (g)  There is no contract, plan or arrangement (written or
 otherwise) covering any current or former employee or independent
 contractor of the Company or any of its Subsidiaries that, individually or
 in the aggregate, could give rise to the payment of any amount that will
 not be deductible by the Company or any of its Subsidiaries under Section
 280G of the Code.
  
           (h)  Other than an affiliated group (as defined under Section
 1504 of the Code) of which the common parent was the Company, neither the
 Company nor any of its Subsidiaries has (i) been a member of an affiliated
 group or (ii) any liability for Taxes of any person (other than the Company
 or any of its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or any
 similar provision of state, local or foreign law), as a transferee or
 successor, by contract or otherwise.
  
           (i)  No power of attorney that is currently in force has been
 granted by the Company or any of its Subsidiaries with respect to any
 matters relating to Taxes.
  
           (j)  There are no tax sharing agreements or other similar
 arrangements with respect to or involving the Company or any of its
 Subsidiaries.
  
           (k)  Neither the Company nor any of its Subsidiaries is, and
 during the five-year period ending on the Closing Date has been, a "United
 States Real Property Holding Corporation," as such term is defined in
 Section 897(c) of the Code or the Treasury Regulations promulgated
 thereunder.
  
           (l)  "Tax" or "Taxes" shall mean any and all taxes, charges,
 fees, levies or other assessments, including all net income, gross income,
 gross receipts, excise, stamp, real or personal property, ad valorem,
 sales, withholding, estimated, social security, employment, unemployment,
 occupation, use, service, service use, license, net worth, payroll,
 franchise, environmental, severance, transfer, recording, escheat, or other
 taxes, duties, assessments, or charges, imposed by any governmental
 authority and any interest, penalties, or additions to tax attributable
 thereto.  "Tax Return" shall mean any report, return, document,
 declaration, information, return or filing (including any related or
 supporting information) filed or required to be filed with respect to
 Taxes.
  
           Section 3.10   Real Properties; Title to and Condition of Assets.
  
           (a)  Neither the Company nor any Subsidiary of the Company now
 owns or at any time in the past has owned any fee interest in fee estates.
  
           (b)  Section 3.10(b) of the Company Disclosure Schedules contains
 a complete and correct list of all Real Property leased, subleased,
 licensed, used or occupied by the Company and each of its Subsidiaries
 pursuant to the Leases ("Leased Real Property") setting forth information
 sufficient to identify specifically such Leased Real Property and material
 terms of the Leases with respect thereto.  For purposes of this Agreement,
 "Leases" means the Real Property leases, subleases, licenses and use or
 occupancy agreements pursuant to which the Company or any of its
 Subsidiaries is the lessee, sublessee, licensee, user or occupant of Real
 Property, or interests therein with lease payments in excess of $1,000 per
 month.  Each Lease grants the lessee under the Lease the right to use and
 occupy the premises and rights demised thereunder in accordance with the
 terms thereof, free and clear of any Liens, other than (i) Liens for
 current Taxes, assessments and other governmental charges not yet due and
 payable or that may subsequently be paid without penalty or that are being
 contested in good faith by appropriate proceedings, and (ii) matters set
 forth in Section 3.10(b) of the Company Disclosure Schedules (collectively,
 "Permitted Liens").  The Company and its Subsidiaries have good and valid
 title to the leasehold estate or other interest created under its
 respective Leases free and clear of any Liens other than Permitted Liens
 and except as otherwise provided in the Leases.  In the case of easements,
 rights of access, rights-of-way, licenses and other interests included in
 the Real Property, the Company and its Subsidiaries have such title or
 other interest as is necessary to permit the use and enjoyment of such
 properties substantially in the manner such properties are used and are
 contemplated to be used.
  
           (c)  The Leased Real Property constitutes all the leasehold and
 other interests in Real Property held by the Company and its Subsidiaries,
 and constitutes all of the leasehold and other interests in Real Property
 necessary for the conduct of, or otherwise material to, the business of the
 Company and its Subsidiaries as it is Conducted, except for any leasehold
 or other interest acquired or disposed of in the ordinary course of
 business after the date hereof.
  
           (d)  The Real Property has been maintained in compliance with (i)
 all applicable laws, treaties, statutes, ordinances, codes, rules or
 regulations of Governmental Entities, including, without limitation, local
 zoning and subdivision ordinances ("Laws"), (ii) all applicable judgments,
 decrees, orders, writs, awards, injunctions or determinations of an
 arbitrator or court or other Governmental Entity  ("Orders") and (iii) all
 applicable Licenses (as defined in Section 3.22(a)), except, in each case,
 where the failure to be in compliance would not have, individually or in
 the aggregate, a Material Adverse Effect.  To the knowledge of the Company
 and its Subsidiaries, none of the Real Property is subject to any decree or
 order of any Governmental Entity to be sold or is being condemned,
 expropriated or otherwise taken by any Governmental Entity.
  
           (e)  As used herein, "Real Property" means all the leasehold and
 fee simple interests in all fee estates, and all buildings, fixtures, and
 all other improvements located thereon (including, without limitation,
 towers), leasehold interests in real estate, private easements, private
 rights to access, private rights-of-way, and other real property interests
 including, without limitation, head-end sites which are owned, leased or
 used by the Company and its Subsidiaries in the conduct of their business
 or operation of the Systems.
  
           (f)  The Company and its Subsidiaries have good and marketable
 title to, or valid leasehold or other interests in, and possession or valid
 use of, all of their respective assets and properties, including without
 limitation the Systems (as defined in Section 3.19), free and clear of all
 Liens.  Such assets and properties are in good operating condition and
 repair, ordinary wear and tear excepted, and will permit the Company and
 its Subsidiaries to comply with the material terms of their current
 Franchises (as defined in Section 3.22(a), but excluding franchises applied
 for but not yet awarded).  Such assets and properties constitute all
 property and rights, real and personal, tangible and intangible, necessary
 or required to operate the Systems and Conduct the business of the Company
 and its Subsidiaries.
  
           Section 3.11   Intellectual Property.  The Company and its
 Subsidiaries own or have a valid license to use each trademark, service
 mark, trade name, invention, patent, trade secret, copyright, know-how
 (including any registrations or applications for registration of any of the
 foregoing) or any other similar type of proprietary intellectual property
 right (collectively, the "Intellectual Property") necessary to carry on its
 business substantially as Conducted.  Neither the Company nor any of its
 Subsidiaries has received any notice of infringement of or conflict with,
 and to their knowledge, there are no infringements of or conflicts with,
 the rights of any person with respect to the use of any Intellectual
 Property.
  
           Section 3.12   Agreements, Contracts and Commitments.  Section
 3.12 of the Company Disclosure Schedules sets forth a true and complete
 list of all the following arrangements, agreements, or understandings,
 whether written or oral, to which the Company or any of its Subsidiaries is
 a party, (i) any agreements relating to indebtedness for borrowed money
 (whether incurred, assumed, guaranteed, secured by any asset or otherwise),
 (ii) any agreements for the lease of personal property to or from any
 person, (iii) any agreement concerning a partnership or joint venture, (iv)
 any agreement concerning confidentiality or non-competition other than
 those entered into in the ordinary course of  business for the benefit of
 the Company's vendors or potential investors, (v) any profit sharing, stock
 option, stock purchase, stock appreciation, deferred compensation,
 severance, or other material plan or arrangement for the benefit of the
 current or former employees of the Company or any of its Subsidiaries, (vi)
 any collective bargaining agreement, (vii) any agreement for the employment
 or retention of any individual on a full-time, part-time, consulting, or
 other basis not terminable on less than 30 days notice without penalty or
 cost, (viii) any agreement under which it has advanced or loaned any amount
 in excess of $1,000 to any of the employees or affiliates of the Company or
 any of its Subsidiaries, (ix) any agreement providing for indemnification
 of or by the Company, (x) any agreement by the Company or any of its
 Subsidiaries providing products or services to any person for consideration
 other than cash or receiving consideration from any person in products or
 services in lieu of cash, (xi) any agreement for the purchase of materials,
 software, supplies, goods, services, equipment or other assets providing
 for either annual or aggregate payments by the Company and its Subsidiaries
 of $100,000 or more; (xii) any sales, distribution or other similar
 agreement providing for the sale by the Company or any Subsidiary of
 materials, supplies, goods, services, equipment or other assets that
 provides for annual or aggregate payments by the Company and its
 Subsidiaries of $100,000 or more, (xiii) any agreement relating to the
 acquisition or disposition of any business (whether by merger, sale of
 stock, sale of assets or otherwise); (xiv) any option, license, franchise
 or similar agreement; (xv) any agency, dealer, sales representative,
 marketing or other similar agreement; (xvi) any agreement to provide
 service to any Subscriber other than the standard dial-up service contracts
 previously disclosed to Parent which individually or in the aggregate would
 be material; (xvii) any formal or informal partnership arrangement with any
 merchant or service or web content provider; (xviii) any agreement with any
 local exchange carrier, competitive local exchange carrier, competitive
 access provider or other telecommunications carrier; (xix) any collocation
 or other similar agreements; (xx) any peering, transit or other agreement
 with any Internet service provider, online company or similar entity; (xxi)
 any pole attachment agreements; (xxii) any programming agreements; (xxiii)
 any right of entry agreements; (xxiv) any bulk agreements and (xxv) any
 other agreement (or group of related agreements) material to the Company or
 any of its Subsidiaries or disclosed, or required to be disclosed, in the
 Company SEC Reports (such contracts and agreements, the "Material
 Agreements").  The Company has delivered to Parent a correct and complete
 copy of each written Material Agreement and a written summary setting forth
 the terms and conditions of each oral Material Agreement.  Except as set
 forth in Section 3.12 of the Company Disclosure Schedules, all Material
 Agreements are valid, binding and enforceable in accordance with their
 terms and will continue to be so on identical terms immediately following
 the consummation of the transactions contemplated by this Agreement, and
 neither the Company or any of its Subsidiaries are in default under any of
 such agreements, nor, to the best knowledge the Company, has any event or
 circumstance occurred that, with notice or lapse of time or both, would
 constitute any event of default by the Company or any of its Subsidiaries. 
 Except as set forth in Section 3.12 of the Company Disclosure Schedules,
 (i) all right of entry agreements have perpetual terms and (ii) none of the
 Material Agreements contain any revenue sharing provisions and to the
 extent any such agreements contain such provisions, the schedule shall
 describe the revenue sharing information with respect to such agreements.
  
           Section 3.13   Litigation.
  
           (a)  Except as set forth in Section 3.13 of the Company
 Disclosure Schedules, there are no claims, actions, suits, proceedings or
 investigations pending or, to the knowledge of the Company, threatened by
 or against the Company or any of its Subsidiaries at law or in equity or
 before or by any court, Governmental Entity or arbitrator, nor is there any
 judgment, decree, injunction, rule or order of any court, Governmental
 Entity or arbitrator outstanding against the Company or any of its
 Subsidiaries.  Neither the Company nor any of its subsidiaries is in
 violation of any term of any judgment, decree, injunction or order
 outstanding against it.
  
           (b)  No demands have been made on the Company or any of its
 Subsidiaries by any Governmental Entity, utility, pole lessor, or other
 party, which seek or could reasonably be expected to result in the
 termination, modification, suspension or limitation to the rights or
 obligations of the Company or any of its Subsidiaries with respect to the
 Franchises, Licenses or Material Agreements.
  
           Section 3.14   Environmental Matters.
  
           (a)  The Company and its Subsidiaries are in compliance with all
 applicable Environmental Laws (as defined below) (which compliance
 includes, but is not limited to, the possession by the Company and its
 Subsidiaries of all permits and other governmental authorizations required
 under applicable Environmental Laws, which are in full force and effect,
 and compliance with the terms and conditions thereof).  As of the date of
 this Agreement, the Company and its Subsidiaries have not received since
 January 1, 1995 any written communication, whether from a governmental
 authority, citizens' group, employee or otherwise, alleging that the
 Company and its Subsidiaries is not in such compliance.
  
           (b)  Except as set forth in Section 3.14 of the Company
 Disclosure Schedule, there is no Environmental Claim (as defined below)
 pending or, to the knowledge of the Company, threatened against the Company
 or any of its Subsidiaries or against any person or entity whose liability
 for any Environmental Claim the Company or any of its Subsidiaries has or
 may have retained or assumed either contractually or by operation of law. 
  
           (c)  There have been (a) no Releases (as defined below) of
 Hazardous Materials (as defined below) at any of the Real Property or (b)
 to the knowledge of the Company, at any other location that could have a
 Material Adverse Effect on the Company and its Subsidiaries, taken as a
 whole.
  
           (d)  Except as set forth in Section 3.14 of the Company
 Disclosure Schedules, there are no past or present actions, activities,
 circumstances, conditions, events or incidents, including, without
 limitation, the Release or presence of any Hazardous Material, which could
 form the basis of any Environmental Claim against the Company or any of its
 Subsidiaries, or to the knowledge of the Company, against any person or
 entity whose liability for any Environmental Claim the Company or any of
 its Subsidiaries has or may have retained or assumed either contractually
 or by operation of law which could have a Material Adverse Effect on the
 Company and its Subsidiaries, taken as a whole.
  
           (e)  As used herein, (i) "Environmental Claim" means any claim,
 action, cause of action, investigation or notice (written or oral) by any
 person or entity alleging any actual or potential liability arising out of,
 based on or resulting from (a) the presence or Release of any Hazardous
 Materials at any location, whether or not owned or operated by the Company,
 or (b) circumstances forming the basis of any violation of any
 Environmental Law, (ii) "Environmental Laws" means all federal, state,
 local and foreign laws and regulations relating to pollution, protection of
 human health or the environment, including, without limitation, those
 relating to Releases or threatened Releases of Hazardous Materials or
 otherwise relating to the manufacture, processing, distribution, use,
 treatment, storage, transport or handling of Hazardous Materials, (iii)
 "Hazardous Materials" means all substances defined as Hazardous Substances,
 Oils, Pollutants or Contaminants in the National Oil and Hazardous
 Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined as
 such by, or regulated as such under, any Environmental Law and (iv)
 "Release" means any release, spill, emission, discharge, leaking, pumping,
 pouring, dumping, injection, deposit, disposal, dispersal, leaching or
 migration of Hazardous Materials into the environment (including, without
 limitation, ambient air, surface water, groundwater and surface or
 subsurface strata).
  
           Section 3.15   Transactions with Affiliates.  Neither the Company
 nor any of its Subsidiaries is involved with any of its officers,
 directors, affiliates, employees or shareholders in any contract, loan,
 commitment, transaction or in any other situation which may generally be
 characterized as a "conflict of interest," including, without limitation,
 any direct or indirect interest in the business of competitors, suppliers
 or customers of the Company or any of its Subsidiaries.
  
           Section 3.16   Employee Benefit Plans.
  
           (a)  Section 3.16 of the Company Disclosure Schedules contains a
 true and complete list of, (i) each deferred compensation and each bonus or
 other incentive compensation, stock purchase, stock option and other equity
 compensation plan, program, agreement or arrangement; (ii) each severance
 or termination pay, medical, surgical, hospitalization, life insurance and
 other "welfare" plan, fund or program (within the meaning of Section 3(1)
 of the Employee Retirement Income Security Act of 1974, as amended
 ("ERISA")); (iii) each profit-sharing, stock bonus or other "pension" plan,
 fund or program (within the meaning of Section 3(2) of ERISA); (iv) each
 employment, termination or severance agreement; and (v) each other employee
 benefit plan, fund, program, agreement or arrangement, other than the Bonus
 Pool as defined in Section 6.17, in each case, that is sponsored,
 maintained or contributed to or required to be contributed to by the
 Company or by any trade or business, whether or not incorporated, that
 together with the Company would be deemed a "single employer" within the
 meaning of Section 4001(b) of ERISA (an "ERISA Affiliate"), or to which the
 Company or an ERISA Affiliate is party, whether written or oral, for the
 benefit of any employee or former employee of the Company or any of its
 Subsidiaries (collectively, the "Plans").  No Plan is subject to Section
 302 or Title IV of ERISA or Section 412 of the Code.  Neither the Company,
 any of its Subsidiaries nor any ERISA Affiliate has any commitment or
 formal plan, whether legally binding or not, to create any additional
 employee benefit plan or modify or change any existing Plan (other than a
 modification or change required by applicable Laws) that would affect any
 employee or former employee of the Company or any of its Subsidiaries.
  
           (b)  With respect to each Plan, the Company has heretofore
 delivered or made available to Parent true and complete copies of each of
 the following documents: (i) a copy of the Plan and any amendments thereto
 (or if the Plan is not a written Plan, a description thereof); (ii) a copy
 of the two most recent annual reports and actuarial reports, if required
 under ERISA, and the most recent report prepared with respect thereto in
 accordance with Statement of Financial Accounting Standards No. 87; (iii) a
 copy of the most recent Summary Plan Description required under ERISA with
 respect thereto; (iv) if the Plan is funded through a trust or any third
 party funding vehicle, a copy of the trust or other funding agreement and
 the latest financial statements thereof; and (v) the most recent
 determination letter received from the IRS with respect to each Plan
 intended to qualify under Section 401 of the Code.
  
           (c)  No liability under Title IV or Section 302 of ERISA has been
 incurred by the Company or any ERISA Affiliate that has not been satisfied
 in full, and no condition exists that presents a material risk to the
 Company or any ERISA Affiliate of incurring any such liability, other than
 liability for premiums due to the Pension Benefit Guaranty Corporation
 (which premiums have been paid when due). 
  
           (d)  All contributions required to be made with respect to any
 Plan on or prior to the Effective Time have been timely made or are
 reflected on the Company's balance sheet. 
  
           (e)  Neither the Company nor any of its Subsidiaries, any Plan,
 any trust created thereunder, nor any trustee or administrator thereof has
 engaged in a transaction in connection with which the Company or any of its
 Subsidiaries, any Plan, any such trust, or any trustee or administrator
 thereof, or any party dealing with any Plan or any such trust could be
 subject to either a civil penalty assessed pursuant to Section 409 or
 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of the
 Code.
  
           (f)  Each Plan has been operated and administered in all material
 respects in accordance with its terms and applicable law, including but not
 limited to ERISA and the Code.  There are no pending or, to the knowledge
 of the Company, threatened or anticipated claims by or on behalf of any
 Plan, by any employee or beneficiary covered under any such Plan, or
 otherwise involving any such Plan (other than routine claims for benefits).
  
           (g)  Each Plan intended to be "qualified" within the meaning of
 Section 401(a) of the Code is so qualified and the trusts maintained
 thereunder are exempt from taxation under Section 501(a) of the Code.  Each
 Plan intended to satisfy the requirements of Section 501(c)(9) of the Code
 has satisfied such requirements.
  
           (h)  No Plan provides medical, surgical, hospitalization, death
 or similar benefits (whether or not insured) for employees or former
 employees of the Company or any of its Subsidiaries for periods extending
 beyond their retirement or other termination of service, other than (i)
 coverage mandated by applicable law, (ii) death benefits under any "pension
 plan," or (iii) benefits the full cost of which is borne by the current or
 former employee (or his beneficiary).  No condition exists that would
 prevent the sponsor of any Plan providing health or medical benefits in
 respect of any active employee of the Company or any of its Subsidiaries
 from amending or terminating such Plan.
  
           (i)  No amounts payable under the Plans will fail to be
 deductible for federal income tax purposes by virtue of Section 162(m) or
 280G of the Code.
  
           (j)  Except as expressly provided in this Agreement or disclosed
 in Section 3.16 of the Company Disclosure Schedule, the consummation of the
 transactions contemplated by this Agreement will not, either alone or in
 combination with another event, (i) entitle any current or former employee
 or officer of the Company or any ERISA Affiliate to severance pay,
 unemployment compensation or any other payment or (ii) accelerate the time
 of payment or vesting, or increase the amount of compensation due any such
 employee or officer.
  
           Section 3.17   Labor Matters.  Except as set forth in Section
 3.17 of the Company Disclosure Schedules, (i) the Company and its
 Subsidiaries are not a party to or bound by any collective bargaining
 agreement or other labor union contract applicable to persons employed by
 the Company, nor does the Company know of any activities or proceedings on
 behalf of or by any labor union to organize any such employees, (ii) there
 are no unfair labor practice charges or complaints, or any current union
 representation questions, involving employees or former employees of the
 Company or any of its Subsidiaries pending against the Company or any of
 its Subsidiaries before the National Labor Relations Board or similar
 foreign entity and (iii) there is no labor strike, lockout, organized
 slowdown or organized work stoppage in effect or, to the knowledge of the
 Company, threatened against the Company or any of its Subsidiaries.
  
           Section 3.18   Compliance with Laws; Regulatory Approvals.
  
           (a)  No Violation of Law.  The Company and its Subsidiaries are
 in compliance, and have conducted their respective businesses and operated
 the Systems in accordance, with (and, to the knowledge of the Company, are
 not under investigation with respect to and have not been threatened in
 writing to be charged with or given notice that the continued operation of
 any business or assets does or will violate or conflict with), all
 applicable Laws and Orders and the Company and its Subsidiaries are not in
 default of, or in violation with respect to, any Order.  The Company and
 its Subsidiaries hold all Licenses and Franchises and all certificates,
 consents, permits, qualifications and authorizations from all Governmental
 Entities necessary for the lawful conduct of the business and operations of
 the Systems.  Except as set forth in Section 3.18 of the Company Disclosure
 Schedules, each of the Company and its Subsidiaries has all requisite
 authority from federal, state, local or municipal authorities to hold
 itself out as a provider of, and to provide, telecommunications services
 and to Conduct the business and operations of the Systems, including local
 exchange telephone and interexchange toll services, Internet access, or any
 other telecommunications services offered by the Company, and whether
 offered on facilities within its own or other private rights-of-way or on
 public rights-of-way.  The Company has timely filed all required tariffs,
 reports, or other information required for the conduct of its
 telecommunications business.  The Company's tariffs are in effect and no
 action is pending or, to the knowledge of the Company, threatened
 challenging the lawfulness of the Company's operations or services or any
 element of such operations or services.  Except as set forth in Section
 3.18 of the Company Disclosure Schedules, (i) all television stations
 carried by the cable systems are carried either pursuant to retransmission
 consent agreements or must-carry elections (or must-carry defaults) (which
 Schedule includes a description of the basis for the exception) and (ii)
 the Company has delivered or made available to Parent full and complete
 copies of all retransmission consent agreements.  For each commercial
 television station carried on a System that has elected must-carry status,
 but that is not being carried because of signal quality problems or
 potential copyright liability, Section 3.18 of the Company Disclosure
 Schedules lists the call sign of the station and the reason for non-
 carriage. Except as set forth in Section 3.18 of the Company Disclosure
 Schedules, there are no requests by any television station which asserts
 that it is entitled to must-carry status seeking carriage on any System
 which the Company or any of its Subsidiaries has denied or refused to honor
 or which is the subject of a complaint filed with the FCC.
  
           (b)  Licensing.  The Company and its Subsidiaries are permitted
 under all applicable Franchises, Licenses and rules, regulations and orders
 of the Federal Communications Commission ("FCC"), all applicable state,
 local or municipal laws or regulations to distribute the transmissions
 (whether television, satellite, radio or otherwise) of video programming or
 other information that they make available to Subscribers  (the "Signals")
 and to use all carrier frequencies generated by the operations of the
 Systems.  The Company and its Subsidiaries are licensed to operate all the
 facilities required by law to be licensed, including, without limitation,
 any business radio and any cable television relay service system being
 operated as part of the Systems.  Other than requests for network
 non-duplication and syndicated exclusivity, and sports black-out
 protection, neither the Company nor any of its Subsidiaries has received
 any written requests from the FCC, the United States Copyright Office or
 any other person challenging or questioning the right of operation of the
 Systems and of any FCC-licensed or registered facility used in conjunction
 with the Company and its Subsidiaries' operation of the Systems.  The
 Company and its Subsidiaries have not violated any Laws or any duty or
 obligation with regard to protecting the privacy rights of any past or
 present Subscribers.  Except as set forth in Section 3.18(b)(ii) of the
 Company Disclosure Schedules, neither the Company nor any of its
 Subsidiaries has made or is bound by any commitments to any state,
 municipal, local or other governmental commission, agency or body with
 respect to the operation and construction of their respective systems which
 are not fully reflected in the Franchises or Licenses.
  
           (c)  Pole Attachment Agreements.  Each of the Company and its
 Subsidiaries (i) has complied in all material respects with the terms and
 conditions of all pole attachment agreements to which it is a party
 (including any requirements for notifications, filing, reporting, posting
 and maintaining logs and records) and (ii) has not performed any act or
 failed to perform any act, the doing of which or failure to do so, would
 invalidate or impair in any material respect its rights under the pole
 attachment agreements.  There is no pending claim that operations by the
 Company or any of its Subsidiaries pursuant to any pole attachment
 agreement have been improperly conducted or maintained in any material
 respect. There is no action, suit or proceeding pending, or to the
 knowledge of the Company, threatened, to terminate, suspend or modify in
 any material respect any pole attachment agreement.
  
           (d)  Programming Agreements.  Each of the Company and its
 Subsidiaries (i) has complied in all material respects with the terms and
 conditions of the programming agreements to which it is a party (including
 any requirements for notifications, filing, reporting, posting and
 maintaining logs and records) and (ii) has not performed any act or failed
 to perform any act, the doing of which or the failure to do, would
 invalidate or impair in any material respect its rights under the
 programming agreements.  Except as set forth in Section 3.18(d) of the
 Company Disclosure Schedules, no consents, permits or approvals of, or
 notice to, or declaration, filing or registration with, any Governmental
 Entity or any other person under the Franchises, Licenses, Material
 Agreements or other agreement involving the Company or any of its
 Subsidiaries or under any Law or otherwise is required in connection with
 the execution, delivery or performance of any programming agreement. 
 Except as set forth in Section 3.18(d) of the Company Disclosure Schedules, 
 no material programming agreement expires or requires renewal or other
 material modification within two years of the date of this Agreement. 
 Except as set forth in Section 3.18(d) of the Company Disclosure Schedules,
 there is no pending claim that operations by the Company or any of its
 Subsidiaries pursuant to any programming agreement have been improperly
 conducted or maintained in any material respect. There is no action, suit
 or proceeding pending, or to the knowledge of the Company, threatened, to
 terminate, suspend or modify in any material respect any programming
 agreement.  
  
           (e)  Cable Act.  The Company and its Subsidiaries are operating
 the Systems in material compliance with the Franchises, the Copyright Act,
 the Cable Act, the provisions of the Communications Act of 1934, as
 amended, 47 U.S.C. section151 et seq. and the rules and regulations
 promulgated thereunder ("Communications Act"), as such Laws apply to the
 Systems, including those relating to signal carriage, syndicated
 exclusivity, network non-duplication, sports black-out, must-carry and
 retransmission consent.  No written notice or demands, and to the knowledge
 of the Company and its Subsidiaries, no oral notice or demands, have been
 received from any television station or from any other person claiming to
 have a right, or objecting to or challenging the right of the Systems, to
 carry or deliver any signal, or challenging the channel position on which
 any television station is carried.  The Company and its Subsidiaries have
 used reasonable good faith efforts to establish rates charged to
 Subscribers that are or were allowable under the Cable Act and any
 authoritative interpretation thereof now or then in effect, whether or not
 such rates are or were subject to regulation at that date by any
 Governmental Entity, including any local franchising authority and/or the
 FCC, unless such rates were not subject to regulation pursuant to a
 specific exemption from rate regulation contained in the Cable Act, other
 than the failure of any franchising authority to have been certified to
 regulate rates.  The Company and its Subsidiaries have filed complete and
 correct reports and filings required to be filed pursuant to the Cable Act
 or FCC rules or regulations with respect to the Systems, including but not
 limited to equal opportunity reporting in accordance with Section 634 of
 the Cable Act.  No System is rate-regulated under any Law.  A request for
 renewal has been timely filed under Section 626(a) of the Cable Act with
 the proper Governmental Entity with respect to each Franchise expiring
 within 36 months of the date of this Agreement.  Neither the Company nor
 any of its Subsidiaries have received any written notice or, to the
 knowledge of the Company and its Subsidiaries, any oral notice from any
 Governmental Entity with respect to the intention to enforce customer
 service standards pursuant to the Cable Act, and neither the Company nor
 any of its Subsidiaries have agreed with any Governmental Entity to
 establish customer service standards that exceed the standards in the Cable
 Act.  Except as set forth in Section 3.18(e) of the Company Disclosure
 Schedules, there are no requests by any television station that asserts
 must-carry status seeking carriage on any System that the Company or any of
 its Subsidiaries has denied or refused to honor or that is the subject of a
 complaint filed with the FCC.  For the purposes of this Agreement, "Cable
 Act" means Title VI of the Communications Act of 1934, as amended, 47
 U.S.C.  section151 et seq., and all other provisions of the Cable
 Communications Policy Act of 1984, Pub.  L.  No.  98-549, the Cable
 Television Consumer Protection and Competition Act of 1992, Pub.  L.  No. 
 102-385, and the provisions of the Telecommunications Act of 1996 amending
 Title VI of the Communications Act, as such statutes may be amended from
 time to time, and the rules and regulations promulgated thereunder.
  
           (f)  CLI.  The Company and its Subsidiaries have conducted all
 system and microwave performance tests required by any applicable Law,
 including all Cumulative Leakage Index ("CLI") related tests applicable to
 the Systems.  The Company and its Subsidiaries have (i) maintained
 appropriate log books and other record keeping which accurately and
 completely reflect in all material respects all results required to be
 shown thereon, (ii) to the extent required by the rules and regulations of
 the FCC, corrected any radiation leakage of the Systems required to be
 corrected in connection with monitoring obligations of the Company and its
 Subsidiaries under the rules and regulations of the FCC and (iii) otherwise
 complied in all material respects with all applicable CLI rules and
 regulations in connection with the operation of the Systems.  Parent may,
 with reasonable notice, review all tests and filings at offices of the
 Company.  Neither the Company nor any of its Subsidiaries is using any
 frequency whose use is prohibited by the FAA (as defined below), Department
 of Defense or any other Governmental Entity.
  
           (g)  FAA Rules and Regulations.  The Systems are being operated
 in all material respects in compliance with the rules and regulations of
 the Federal Aviation  Administration ("FAA").  Section 3.18(g) of the
 Company Disclosure Schedules lists the existing towers, if any, utilized in
 conjunction with the Systems.  Without limiting the generality of the
 foregoing, the existing towers, if any, of the Systems are obstruction-
 marked and lighted in all material respects in accordance with the rules
 and regulations of the FAA and FCC if so required.  All required
 authorizations, including, without limitation, hazard to air navigation
 determinations, for any such towers have been issued by and pursuant to the
 rules and regulations of the FAA.  Except as set forth in Section 3.18(g)
 of the Company Disclosure Schedules, neither the Company nor any of its
 Subsidiaries leases space on any such towers to any third party.
  
           (h)  Copyright.  The Company has deposited with the United States
 Copyright Office all statements of account and other documents and
 instruments, and paid all royalties, supplemental royalties, fees and other
 sums to the United States Copyright Office required under the Copyright Act
 with respect to the business and operations of the Systems as are required
 to obtain, hold and maintain the compulsory copyright license for cable
 television systems prescribed in Section 111 of the Copyright Act and has
 made all payments to ASCAP and BMI required under the Copyright Act. 
 Neither the Company nor any of its Subsidiaries has any knowledge of any
 deficiency in the amount of compulsory copyright or other fee payments made
 and has not received any statement, notice or claim respecting an
 underpayment or nonpayment of any compulsory copyright or other fee payment
 for the Systems.  Except as set forth in Section 3.18(h) of the Company
 Disclosure Schedules,  the Company and its Subsidiaries are in compliance
 in all material respects with the Copyright Act and the rules and
 regulations of the Copyright Office with respect to the operation of the
 Systems.  The Company and its Subsidiaries are entitled to hold and do hold
 the compulsory copyright license described in Section 111 of the Copyright
 Act, which compulsory copyright license is in full force and effect and has
 not been revoked, canceled, encumbered or adversely affected in any manner.
  
           Section 3.19   Systems Information.  Section 3.19 of the Company
 Disclosure Schedules sets forth a complete and correct description of the
 following applicable information with respect to each System operated by
 the Company and its Subsidiaries as of the date hereof (unless a different
 date is specified below or indicated in Section 3.19 of the Company
 Disclosure Schedules) with paragraph references corresponding to those set
 forth below.  As used herein, "Systems" means the infrastructure used to
 provide telephone, video, audio, Internet, data, bandwidth access and
 related services, including network components, communications facilities,
 computing platforms and services (including for mail, news, DNS, web,
 authentication, and other services), power plants, data processing
 platforms, MIS systems, DRS Network components, office automation systems
 and internal LAN, network management systems:
  
           (a)  for the period ended September 30, 1999 (or such other
 period or date indicated in Section 3.19 of the Company Disclosure
 Schedules) a description of the services offered by each System; the rates
 charged by the Company and its Subsidiaries for each; a description of any
 memoranda of understanding or other agreements regarding rates; and any
 other charges by the Company and its Subsidiaries for services to
 Subscribers (as defined below);
  
           (b)  the channel and bandwidth capacity of the Systems;
  
           (c)  the number of off-air signals available in the community in
 which each System operates;
  
           (d)  the date and amount of the last rate increase for System
 service and a description of marketing programs, policies and practices; 
  
           (e)  a description of any proposed rate increases and channel
 changes; 
  
           (f)  the approximate total number of miles of fully completed and
 operational trunk and distribution cable, the approximate number of miles
 of aerial plant and the approximate number of miles of underground plant of
 each System as of the date hereof;
  
           (g)  all channel additions in the immediately preceding 12
 months, Subscribers affected and carriage payments (such as launch revenues
 or equipment support) received in the immediately preceding 12 months;
  
           (h)  the cities, towns, townships, villages, and boroughs served
 by each System;
  
           (i)  the number of Subscribers (as defined below) and the number
 of bulk Subscribers receiving each of the services provided by the Systems
 (set forth separately with respect to each such service provided by the
 Systems) and the number of homes passed and marketable homes and how such
 numbers have been calculated; for purposes of this Agreement, the term
 "Subscribers" means any customers of the Company or any of its
 Subsidiaries, except for persons served under bulk contracts, who (i) are
 currently connected to and receiving telephone, video, audio, Internet,
 data, bandwidth or related services from the  Systems, (ii) are being
 charged or have pre-paid the Company's or Subsidiary's standard rates
 (which rates are set forth in Section 3.19(a) of the Company Disclosure
 Schedules) pursuant to the Company's standard form contracts previously
 provided to Parent, (iii) have paid such stated rates in full for at least
 one full month, (iv) are not two or more months delinquent in the payment
 of any invoice from the Company or any of its Subsidiaries, (v) have not,
 in the preceding two months, been given a waiver or forgiveness of service
 charges (other than charges inappropriately billed), (vi) have not received
 any inducements or free services to become connected to the Systems or to
 receive or pay for service, (vii) have not notified the Company or any of
 its Subsidiaries of their intention to cancel service (other than pursuant
 to the Company's customary renewal and cancellation procedures in numbers
 consistent with past history); and (viii) with respect to a hotel, motel or
 other multiple dwelling unit customer which pays less per dwelling unit
 than the rates charged in the relevant area by the applicable provider for
 detached single family homes, such customer shall be considered to be that
 number of basic Subscribers which is equal to revenues from basic service
 generated by such hotel, motel or other customer for the month ending on
 the relevant date (or if such date is not the end of the month, the month
 ending immediately prior to such date) (without regard to non-recurring
 revenues from ancillary services such as installation fees) divided by the
 full rate charged to detached single family homes for such service in the
 relevant area by the applicable provider;
  
           (j)  the Company's monthly churn rate for each service
 (consisting of (i) cancellations of month-to-month service and long-term
 subscriptions prior to expiration and (ii) non-renewal of long-term
 contracts upon expiration) during each full calendar month during the
 twelve calendar month period prior to the date hereof; and
  
           (k)  the amount of unearned revenue for all Subscriber contracts
 with a remaining term of (i) less than or equal to 90 days, (ii) greater
 than 90 days and less than or equal to one year (iii) greater than one year
 and less than or equal to two years, (iv) greater than two years and less
 than or equal to three years and (v) greater than three years.
  
           Section 3.20   Outside Plant/Network; CLEC; Internet Related
 Systems.
  
           (a)  Outside Plant/Network.  The Company's outside plant and
 network consists of six (6) main components: the switch/head-end; the
 Network Operations Center (NOC); the Fiber Optic Transport Facilities; the
 Transport and Campus Hubs; the local Hybrid Fiber Coax (HFC) Distribution
 Center; and the RBOC collocation sites. All of the equipment, hardware, and
 software necessary to operate the business is in good working condition and
 has been installed in accordance with and complies with industry standards
 and Bellcore standards, including all applicable safety standards,
 regulatory specifications and manufacturer guidelines. The outside plant
 and network is constructed using industry accepted guidelines and the
 Company has secured and is in compliance with all of the right-of-ways,
 pole attachments, vendor agreements and all other agreements, including,
 but not limited to, interconnection agreements necessary to operate the
 business. The Ameritech collocation sites have been constructed according
 to Ameritech and Bellcore standards and the Company has complied with all
 of the terms and conditions of the collocation agreements.  The
 distribution facilities of the outside plant network and systems do not
 constitute a trespass, prohibited encumbrance or illegal occupation of land
 of any third person.  Section 3.20(a) of the Company Disclosure Schedules
 contains a complete and accurate list of all third party plant, structures
 and equipment used by the Company.  The Company's network consists of
 approximately 204,479 homes passed, approximately 87,889 marketable homes,
 approximately 40 underground plant miles and approximately 143 aerial plant
 miles.  In addition, the Company has 547 nodes, approximately 151 miles of
 activated plant, 491 right of entry buildings activated and connected to
 the network and 79 bulk buildings activated and connected to the network. 
 Further, the Company has 38 bulk buildings under contract, 15 bulk
 buildings wired, 268 right of entry buildings under contract and 41 right
 of entry buildings wired.
  
           (b)  CLEC Plant/Equipment.  The plant, structures equipment and
 all other assets of the CLEC system of the Company and its Subsidiaries are
 in good working order and repair and comply in all material respects with
 applicable rules, regulations and standards regarding their intended use. 
 Such assets meet, in all material respects, all current industry technical
 performance standards, including industry fiber optic standards, for a
 system of its particular design.  All of the CLEC equipment, hardware,
 software, switch, transmission systems and all other equipment is the most
 recent version of equipment offered by the respective vendors.  The CLEC
 system physically attaches to at least two (2) tandems in the 358 LATA. The
 CLEC System connects to the SS7 network for signaling and corresponding
 features and functions (i.e. voice mail, caller ID etc.).  The Company has
 applied for and received all NXX codes and all other applicable codes in
 order to function as a CLEC and interconnect to the public switch telephone
 network, and the codes and all other equipment, functionality and
 agreements are transferable to Parent.  The Company is providing telephony
 service via collocation within Ameritech's central offices and the leasing
 of unbundled loops and the Company complies with all aspects of the
 collocation agreement and regulations regarding the installation of
 equipment within an Ameritech central office.  The Company is providing
 direct operator service, directory assistance and E911 services.  Except as
 set forth in Section 3.20(b) of the Company Disclosure Schedules, the
 interconnection agreement between the Company and Ameritech and all other
 agreements necessary to operate the CLEC business are in full force and
 effect and are fully transferable to Parent without any required consents.
 The Company and its Subsidiaries have an inventory of spare parts and other
 materials relating to their CLEC business of the type, nature and amount
 consistent with Company's past practices and good CLEC industry practices. 
 Section 3.20(b) of the Company Disclosure Schedules contains a complete and
 accurate list of all third party plant, structures and equipment used by
 the Company and its Subsidiaries.  Except as set forth on Section 3.20(b)
 of the Company Disclosure Schedules, the Company and its Subsidiaries have
 all consents and approvals necessary to use the plant, structures and
 equipment used by the Company and its Subsidiaries.  The rates charged by
 the Company for local telephone service are at least 15% below the rates
 charged by Ameritech.
  
           (c)  Internet Related Systems.  Except as set forth in Section
 3.20(c) of the Company Disclosure Schedules, (i) all of the Internet-
 related Systems, services and platform servers are running, or peaking, at
 no higher than 50% of capacity, (ii) all of the Internet-related Systems'
 services are replicated in a redundant manner across available platform
 servers, (iii) all remote physical points of presence ("POPs") are secure,
 conform to equipment manufacturers' recommended environmental parameters,
 and contain a generator, battery power source, an UPS, and/or a generator-
 battery source-UPS combination to provide AC and/or DC power for a minimum
 of eight hours, (iv) the Subscriber blockage rate for dial-in Subscribers
 is no greater than 1% of Subscriber attempts across the overall network
 infrastructure, (v) the configuration diagrams provided to Parent
 reasonably represent the redundant network facilities between major
 backbone locations, and between remote physical POPs and major network
 concentration points, (vi) the existing power plant(s) at the Company's
 main location is equipped with an uninterrupted power supply with a battery
 back-up of at least 8 hours, (vii) all deployed dial-in modem, modem shelf,
 and corresponding technology conform to the V.90 modem standard, (viii) the
 Company utilizes a DHCP, or other dynamic, IP address allocation scheme
 that conforms to industry standards to support residential Subscribers, and
 (ix) the Company has access to the quantity of IP addresses sufficient to
 support the Company's Subscriber base as currently existing and as
 currently contemplated to exist as of December 31, 2000.
  
           Section 3.21   No Other Operators.  Except as described in
 Section 3.21 of the Company Disclosure Schedules, (i) each System is the
 only multiple video service provider, whether by wireline (telephone or
 cable) or, to the Company's knowledge, wireless (SMATV, MATV, MMDS, ITFS or
 other), presently serving the communities which it serves, (ii) to the
 knowledge of the Company, the entry of no other multiple channel video
 service provider is presently contemplated by any person in the communities
 now served by the Systems, (iii) there are no franchises or other
 authorizations, other than the Franchises that have been issued with
 respect to the communities served by the Systems, and (iv) no person has
 any right to acquire any interest in any cable or pay  television system or
 assets of the Company or any of its Subsidiaries (including any right of
 first refusal or similar right) upon an assignment or transfer of control
 of a Franchise, other than rights of condemnation or eminent domain
 afforded by Law.
  
           Section 3.22   Franchises; Licenses.
  
           (a)  Section 3.22 of the Company Disclosure Schedules contains
 (i)  a true and complete list of all franchises and any amendments thereto,
 new or renewal franchise applications (if any), authorizations, ordinances,
 permits and agreements relating to the Systems or  issued or granted by any
 Governmental Entity (the "Franchises"), and (ii)  all licenses,
 sublicenses, permits, consents, orders, approvals, applications, grants,
 concessions, franchises, authorizations, registrations, filings, waivers,
 variances or clearances under any Law or with any Governmental Entity
 (including the U.S. EPA, U.S. EEOC, OSHA, Federal Trade Commission, U.S.
 Department of Justice, U.S. Department of Commerce, FAA, FCC and municipal
 franchise authorities) including, without limitation, all domestic
 satellite, business radio, CARS band and other microwave licenses, and all
 authorizations and permits relating to the Systems (the "Licenses"),  used
 in or necessary to the Conduct of the business or operations of the Company
 and its Subsidiaries or the Systems.  The Company has delivered to Parent
 true and complete copies of each of the Franchises and Licenses, including
 any amendments thereto.
  
           (b)  Each of the Franchises and Licenses is valid, in full force
 and effect, and enforceable in accordance with its terms against the
 parties thereto.  At Closing, Parent will acquire, through ownership of the
 Company, good and marketable title to all Franchises and Licenses free and
 clear of all Liens.  The Company and its Subsidiaries are validly and
 lawfully operating the Systems under the Franchises and Licenses and the
 Company has fulfilled when due, or has taken all action necessary to enable
 it to fulfill, when due, all of its obligations thereunder.  There has not
 occurred any default (without regard to lapse of time, the giving of
 notice, the election of any person other than the Company, or any
 combination thereof) by the Company nor, to the knowledge of the Company,
 has there occurred any default (without regard to lapse of time, the giving
 of notice, the election of the Company, or any combination thereof) by any
 person other than the Company under any of the Franchises or Licenses. 
 Neither the Company nor, to the Company's knowledge, any other person, is
 in arrears in the performance or satisfaction of its financial, documentary
 service, operational or other obligations under any of the Franchises or
 Licenses, or any agreements entered into pursuant thereto, including,
 without limitation, the payment of all franchise and other fees to relevant
 franchising authorities and no waiver or indulgence has been granted by any
 of the parties thereto.  There is not pending any proceeding, application,
 petition, objection, pleading or other notification with any Governmental
 Entity that questions the validity of any Franchise or License or which
 presents a substantial risk that, if accepted or granted, would result in
 the revocation, cancellation, suspension or any adverse modification of any
 Franchise or License and no franchising authority has commenced, or given
 notice to the Company that it intends to commence, a proceeding to revoke a
 Franchise held by the Company or any of its Subsidiaries.  The Franchises
 and Licenses are sufficient to permit the Company and its Subsidiaries to
 operate the Systems lawfully and in the manner in which they are currently
 operated and intend to be operated.  No franchising authority has advised
 the Company or any of its Subsidiaries in writing, or otherwise notified
 the Company or any of its Subsidiaries of its intention to deny renewal of
 an existing Franchise held by the Company or any of its Subsidiaries.  No
 Governmental Entity or other third party has a right to acquire any
 interest in any System upon an assignment or transfer of control of the
 Company or any of its Subsidiaries.  Neither the Company nor any of its
 Subsidiaries has received, nor has notice that it will receive, from any
 franchising authority, a preliminary assessment that a Franchise should not
 be renewed as provided in Section 626(c)(1) of the Communications Act, nor
 has the Company, any of its Subsidiaries, or any franchising authority
 commenced or requested the commencement of an administrative proceeding
 concerning the renewal of a Franchise as provided in Section 626(c)(1) of
 the Communications Act.
  
           Section 3.23   Bonds.  Section 3.23 of the Company Disclosure
 Schedules contains an accurate and complete list of all bonds (franchise,
 construction, fidelity, or performance) of the Company and its Subsidiaries
 which are required to be obtained by the Company or any of its Subsidiaries
 and which relate in any way to the ownership or use of their assets and
 properties or the operation of the Systems.
  
           Section 3.24   Commitments.  Except as described in Section 3.24
 of the Company Disclosure Schedules, there are no unfulfilled binding
 commitments for capital improvements which the Company or any of its
 Subsidiaries are obligated to make in connection with the Systems.  There
 are no liabilities to Subscribers or to other users of services of the
 Company and its Subsidiaries, which services are material to the business
 or the Systems, except (i) with respect to deposits made by such
 Subscribers or such other users and (ii) the obligation to supply services
 to Subscribers in the ordinary course of business, pursuant to the
 Franchises.  There are no complaints by Subscribers or other users of the
 services of the Company and its Subsidiaries that, individually or in the
 aggregate, could materially and adversely affect the financial condition,
 assets, liabilities, operations or prospects of the Systems.  Except with
 respect to the persons listed in Section 3.24 of the Company Disclosure
 Schedules, there is no free or discounted service liability (other than as
 a result of bulk service commitments) to Subscribers existing with respect
 to the Systems.  Except with respect to deposits for converters, encoders,
 decoders and related equipment, the Company and its Subsidiaries have no
 obligation or liability for the refund of monies or for the provision of
 rebates to their Subscribers.  Except as set forth in the Franchises, with
 respect to the Systems, neither the Company nor any of its Subsidiaries has
 made a commitment to any franchising entity to maintain a local office in
 any location.  The Company and its Subsidiaries have not made any
 commitment to any of the municipalities served by the Systems to pay
 franchise fees to any such municipality in excess of the amounts set forth
 in the Franchises.  No material restoration, repaving, repair or other work
 (outside of ordinary maintenance) is required to be made by the Company and
 its Subsidiaries to any street, sidewalk or abutting or adjacent area
 pursuant to the requirements of any Law, Franchise, License, Material
 Agreement or other understanding relating to the installation, construction
 and operation of the Systems.
  
           Section 3.25   Brokers.  No broker, investment banker, financial
 advisor or other person, other than Morgan Stanley Dean Witter & Co., the
 fees and expenses of which will be paid by the Company, is entitled to any
 broker's, finder's, financial advisor's or other similar fee or commission
 in connection with the transactions contemplated in this Agreement based
 upon arrangements made by or on behalf of the Company.  The Company has
 provided Parent true and correct copies of all agreements between the
 Company and Morgan Stanley Dean Witter & Co., including, without
 limitations, any fee arrangements.
  
           Section 3.26   Insurance.  The Company has provided Parent with
 copies of all policies of fire, liability, workmen's compensation and other
 forms of insurance owned or held by the Company, all of which are listed in
 Section 3.26 of the Company Disclosure Schedules, together with the
 material terms thereof (including, without limitation, the premiums,
 coverage and dates thereof).  Except as set forth in Section 3.26 of the
 Company Disclosure Schedules, such policies are in adequate amounts and
 cover risks customarily insured against by businesses of the type operated
 by the Company.  All such policies are in full force and effect, all
 premiums with respect thereto covering all periods up to and including the
 Closing will have been paid, and no notice of cancellation or termination
 has been received with respect to any such policy.  Such policies will
 remain in full force and effect through the respective dates set forth in
 Section 3.26 of the Company Disclosure Schedules without the payment of
 additional premiums and will not in any way be affected by, or terminate or
 lapse by reason of, the transactions contemplated by this Agreement.  All
 of such policies have been issued by reputable insurance companies actively
 engaged in the insurance business.  All pending claims, if any, made
 against the Company that are covered by insurance have been disclosed to
 and accepted by the appropriate insurance companies and, to the best
 knowledge of the Company, are being defended by such insurance companies
 and are described in Section 3.26 of the Company Disclosure Schedules and
 no claims have been denied coverage during the last three years.  During
 the last three years, no policy of the Company has been cancelled by the
 issuer thereof, nor have the premiums on any such policy been increased by
 more than 20% over the prior period.  The Company has not been refused any
 insurance with respect to its assets or operations, nor has its coverage
 been limited, by any insurance carrier to which it has applied for any such
 insurance or with which it has carried insurance during the last three
 years.
  
           Section 3.27   Fairness Opinion.  The Company has received the
 opinion of Morgan Stanley & Co. Incorporated  to the effect that, based
 upon and subject to the considerations in its opinion, the consideration to
 be received by the holders of shares of Company Common Stock and Class A
 Preferred Stock in the aggregate is fair from a financial point of view to
 such holders.
  
           Section 3.28   Year 2000 Compliance.
  
           (a)  None of the computer software, computer firmware, computer
 hardware (whether general or special purpose), and other similar or related
 items of automated, computerized, and/or software system(s) that are used
 or relied on by the Company or by any of its Subsidiaries in the conduct of
 their respective businesses will malfunction, cease to function, generate
 incorrect data, or provide incorrect results when processing, providing,
 and/or receiving (i) date-related data into and between the twentieth and
 twenty-first centuries and (ii) date-related data in connection with any
 valid date in the twentieth and twenty-first centuries; and
  
           (b)  None of the products and services sold, licensed, rendered,
 or otherwise provided by the Company or by any of its Subsidiaries in the
 conduct of their respective businesses will malfunction, cease to function,
 generate incorrect data, or produce incorrect results when processing,
 providing, and/or receiving (i) date-related data into and between the
 twentieth and twenty-first centuries and (ii) date-related data in
 connection with any valid date in the twentieth and twenty-first centuries;
 and neither the Company nor any of its Subsidiaries is or shall be subject
 to claims or liabilities arising from their failure to do so; and
  
           (c)  Neither the Company nor any of its Subsidiaries has made
 other representations or warranties regarding the ability of any product or
 service sold, licensed, rendered or otherwise provided by the Company or by
 any of its Subsidiaries in the conduct of their respective businesses to
 operate without malfunction, to operate without ceasing to function, to
 generate correct data, and to produce correct results when processing,
 providing, and/or receiving (i) date-related data into and between the
 twentieth and twenty-first centuries and (ii) date-related data in
 connection with any valid date in the twentieth and twenty-first centuries.
  
           Section 3.29   Full Disclosure.  The Company and its Subsidiaries
 have disclosed to Parent all information material to an investment in the
 Company and its Subsidiaries.  This Agreement, the Company Disclosure
 Schedules, and any certificate required to be delivered pursuant to this
 Agreement and any document or information provided by the Company or its
 representatives to Parent do not contain any misrepresentation of a
 material fact by the Company or its representatives, and do not omit to
 state any material fact necessary to make the statements made by them and
 contained therein not misleading.
  
           Section 3.30   Registered Securities.  Neither the Company nor
 any of its Subsidiaries has any securities registered, or required to be
 registered, under Section 12 of the Exchange Act.
  
  
                                 ARTICLE IV

              REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
  
      Parent and Sub represent and warrant to the Company: 
  
           Section 4.1    Organization.  Each of Parent and Sub is a
 corporation duly organized, validly existing and in good standing under the
 laws of the jurisdiction of its incorporation, has all requisite corporate
 power to own, lease and operate its property and to carry on its business
 as Conducted, and is duly qualified to do business and is in good standing
 as a foreign corporation in each jurisdiction in which the failure to be so
 qualified would have a Parent Material Adverse Effect (as defined below). 
 When used in connection with Parent or any of its Subsidiaries, the term
 "Parent Material Adverse Effect" means any change, event or effect that is
 materially adverse to the business, assets (including intangible assets),
 liabilities, condition (financial or otherwise), operations, results of
 operations or prospects of Parent and its Subsidiaries taken as a whole
 except for such changes, events or effects which are directly the result of
 (i) the entering into or the public announcement of this Agreement or the
 transactions contemplated hereby, (ii) changes in the telecommunications
 industry generally or (iii) changes in general economic (excluding changes
 in the capital markets), regulatory or political conditions in the United
 States; provided, that, in the case of each of (i), (ii) and (iii), the
 impact on Parent is proportionate to the more general impact of the change,
 event or effect.  
  
           Section 4.2    Authority; No Conflict; Required Filings and
 Consents.
  
           (a)  Parent and Sub have all requisite corporate power and
 authority to enter into this Agreement, and Parent and Sub have all
 requisite power and authority to consummate the transactions contemplated
 hereby.  The execution and delivery by Parent and Sub of this Agreement and
 the consummation by Parent and Sub of the transactions contemplated hereby,
 have been duly authorized by all necessary corporate and shareholder action
 on the part of Parent and Sub.  This Agreement and the other agreements
 contemplated herein have been duly executed and delivered by Parent and
 constitute valid and binding obligations of Parent, enforceable in
 accordance with the terms hereof and thereof, except as such enforceability
 may be limited by (i) bankruptcy laws and other similar laws affecting
 creditors' rights generally and (ii) general principles of equity,
 regardless of whether asserted in a proceeding in equity or at law.  
  
           (b)  The execution and delivery of this Agreement by Parent and
 Sub does not, and the consummation by Parent and Sub of the transactions
 contemplated hereby will not, (i) conflict with, or result in any violation
 or breach of any provision of the certificate of incorporation or bylaws of
 Parent or Sub, or (ii) conflict with or violate any permit, concession,
 agreements, instruments, or obligations, franchise, license, judgment,
 order, decree, statute, law, ordinance, rule or regulation applicable to
 Parent or Sub or any of their properties or assets.
  
           (c)  No consent, approval order or authorization of, or
 registration, declaration or filing with, any Governmental Entity is
 required by or with respect to Parent or Sub in connection with the
 execution and delivery of this Agreement, or the consummation of the
 transactions contemplated hereby, except for (i) the filing of a pre-merger
 notification report under the HSR Act, and, in the case of this Agreement
 and certain of the transactions contemplated hereby, (ii) the filing of the
 Articles of Merger with, and the issuance of the Illinois Certificate of
 Merger by, the Secretary of State of the State of Illinois in accordance
 with the Illinois Statute, (iii) the filing of documents to satisfy the
 applicable requirements, if any, of the Exchange Act and state takeover
 laws, (iv) the filing with the SEC of the Registration Statement, (v)
 approval by the Illinois Public Utility Commission and applicable State and
 local franchising authorities and (vi) consents, authorizations, filings,
 approvals and registrations pursuant to the foregoing or set forth in the
 Company Disclosure Schedules.
  
           Section 4.3    SEC Documents.  Parent has filed all required
 reports, proxy statements, forms and other documents with the SEC since
 December 31, 1998 (the "Parent SEC Documents").  As of their respective
 dates, and giving effect to any amendments thereto, (a) the Parent SEC
 Documents complied in all material respects with the requirements of the
 Securities Act or the Exchange Act, as the case may be, and the applicable
 rules and regulations of the SEC promulgated thereunder and (b) none of the
 Parent SEC Documents contained any untrue statement of a material fact or
 omitted to state any material fact required to be stated therein or
 necessary in order to make the statements made therein, in the light of the
 circumstances under which they were made, not misleading.
  
           Section 4.4    Parent Common Stock Issued in the Merger.  The
 shares of Parent Common Stock to be issued in the Merger, in exchange for
 Debentures, in respect of the Contingent Deferred Payment, if any, in
 respect of the Franchise Amount, if any, and in respect of the exercise of
 any Substitute Options have been duly authorized and reserved for issuance
 and when issued and delivered in accordance with the terms of this
 Agreement (or in the case of any Substitute Option, the applicable option
 plan and agreement) will have been validly issued and will have been fully
 paid and nonassessable.
  
           Section 4.5    Litigation.  There is no action, suit or
 proceeding, claim, arbitration or investigation against Parent or Sub
 pending or as to which Parent or Sub has received any written notice of
 assertion which materially threatens the ability of Parent and Sub to
 consummate the transactions contemplated hereby. 
  
           Section 4.6    Interim Operations of Sub.  Sub was formed solely
 for the purpose of engaging in the transactions contemplated by this
 Agreement, has engaged in no other business activities and has conducted
 its operations only as contemplated by this Agreement.
  
           Section 4.7    Brokers.  No broker, investment banker, financial
 advisor or other person, other than Salomon Smith Barney, the fees and
 expenses of which will be paid by Parent or Sub, is entitled to any
 broker's, finder's, financial advisor's or other similar fee or commission
 with the transactions contemplated by this Agreement based upon
 arrangements made by or on behalf of Parent or Sub.
  
           Section 4.8    Tax Matters.
  
           (a)  Neither Parent nor any person related to Parent within the
 meaning of Treasury Regulation Section 1.368-1(e)(3) has a plan or
 intention to reacquire any Parent Common Stock issued in the Merger.
  
           (b)  Parent has no plan or intention to acquire any Exchangeable
 Preferred stock of the Company, or the Debentures, for consideration other
 than Parent Common Stock.
  
           (c)  Parent has no plan or intention to liquidate the Company or
 to cause the Company to merge into another corporation.
  
           (d)  Parent has no plan or intention to cause the Company to
 sell, transfer or otherwise dispose of any of the Company's assets, except
 for dispositions made in the ordinary course of business and transfers
 described in Section 368(a)(2)(C) of the Code and the Treasury Regulations
 issued thereunder.
  
           (e)  Parent has no plan or intention to sell or otherwise dispose
 of any of the Company Stock.
  
           Section 4.9    Financial Statements.  Each of the consolidated
 financial statements (including, in each case, any related notes thereto)
 contained in the Parent SEC Documents (the "Parent Financial Statements")
 complied as to form in all material respects with applicable accounting
 requirements and with the published rules and regulations of the SEC with
 respect thereto, had been prepared in accordance with GAAP applied on a
 consistent basis throughout the periods involved (except as may be
 indicated in the notes thereto or, in the case of the unaudited financial
 statements contained therein (the "Parent Interim Financial Statements"),
 as permitted by Form 10-Q or the Exchange Act regulations promulgated by
 the SEC), and each fairly presented the consolidated financial position of
 Parent and its consolidated Subsidiaries in all material respects as at the
 respective dates thereof and the consolidated results of its operations and
 cash flows for the periods indicated (subject, in the case of the Parent
 Interim Financial Statements, to normal audit adjustments which were not
 and are not expected, individually or in the aggregate, to be material in
 amount).
  
           Section 4.10   Absence of Undisclosed Liabilities.  Parent and
 its Subsidiaries do not have any liabilities or obligations of any nature,
 whether accrued or contingent (whether or not required to be reflected in
 financial statements in accordance with GAAP), and whether due or to become
 due, and there is no existing condition or situation which could reasonably
 be expected to result in any such liabilities or obligations other than (i)
 liabilities reflected in the unaudited consolidated balance sheet of Parent
 dated as of September 30, 1999 (the "Parent Balance Sheet"); (ii) normal or
 recurring immaterial liabilities incurred since December 31, 1998 in the
 ordinary course of business consistent with past practices; and (iii)
 liabilities which would not individually or in the aggregate have a Parent
 Material Adverse Effect.
  
           Section 4.11   Absence of Certain Changes or Events.  Since the
 date of the Parent Balance Sheet, Parent and its Subsidiaries have
 conducted their businesses in the ordinary course, in a manner consistent
 with past practice, and there has not been any event, occurrence or
 development of a state of circumstances or facts which has had or could
 reasonably be expected to have a Parent Material Adverse Effect.
  
  
                                  ARTICLE V

                             CONDUCT OF BUSINESS
  
           Section 5.1    Covenants of the Company.  Except as expressly
 contemplated by this Agreement, during the period from the date of this
 Agreement and continuing until the earlier of the termination of this
 Agreement or the Effective Time, the Company agrees as to itself and its
 Subsidiaries (except to the extent that Parent shall otherwise consent in
 writing), to carry on its business in the usual, regular and ordinary
 course in substantially the same manner as previously conducted, to pay its
 debts when due and pay (or reserve for) all Taxes due with respect to
 periods ending on or before the Effective Time, subject to good faith
 disputes over such debts or Taxes, to timely file (or obtain a valid or
 extension of time to file) all Tax Returns due on or before the Effective
 Time, to pay or perform its other obligations when due, and to use all
 reasonable efforts consistent with past practices and policies to (i)
 preserve intact its present business organization, (ii) keep available the
 services of its present officers and key employees (iii) preserve its
 relationships with customers, suppliers, distributors, licensors, licensees
 and others having business dealings with it, and (iv) keep and maintain its
 respective assets and properties in normal operating condition and repair. 
 Without limiting the generality of the foregoing, the Company shall not
 (and shall not permit any of its Subsidiaries to), without the prior
 written consent of Parent:
  
           (a)  adopt or propose any change in its articles of incorporation
 or bylaws; 
  
           (b)  merge or consolidate with any other person or acquire a
 material amount of assets of any other person;
  
           (c)  sell, lease, license or otherwise dispose of any assets or
 property which are material, individually or in the aggregate, to the
 business of the Company or any of its Subsidiaries except (i) pursuant to
 existing contracts or commitments disclosed in writing to Parent on or
 prior to the date hereof and (ii) in the ordinary course consistent with
 past practice;
  
           (d)  amend, modify or terminate any agreement set forth in
 Section 3.15 of the Company Disclosure Schedules, except as provided in
 Section 6.11 of the Company Disclosure Schedules;
  

           (e)  make any express or deemed election for Tax purposes or any
 offer to settle or compromise or any settlement or compromise of any
 material liability with respect to Taxes;
  
           (f)  accelerate, amend or change the period of exercisability of
 options or restricted stock granted under any employee stock plan of the
 Company or authorize cash payments in exchange for any options granted
 under any of such plans except as required by the terms of such plans or
 any related agreements in effect as of the date of this Agreement;
  
           (g)  transfer or license to any person or entity or otherwise
 extend, amend or modify any rights to the Company Intellectual Property
 Rights other than in the ordinary course of business consistent with past
 practices;
  
           (h)  issue, deliver, sell, purchase, repurchase, redeem or
 otherwise acquire, any shares of its capital stock or securities
 convertible into shares of its capital stock, or subscriptions, rights,
 warrants or options to acquire, or other agreements or commitments of any
 character obligating it to issue any such shares or other convertible
 securities;
  
           (i)  enter into any agreement, arrangement or understanding with
 any affiliate of the Company or its Subsidiaries;
  
           (j)  relinquish any right or privilege without adequate
 consideration or a reasonable business purpose;
  
           (k)  pay, discharge or otherwise satisfy any material claim,
 liability or obligation except in the ordinary course of business and
 consistent with past practice;
  
           (l)  enter into any agreement or arrangements with VTech; or
  
           (m)  take, or agree in writing or otherwise to take, any of the
 actions described in the foregoing clauses (a) through (l) or in clauses
 (i) through (xvi) of Section 3.8, or any action (or omit to take or agree
 to take any action) which is reasonably likely to make any of the Company's
 representations or warranties contained in this Agreement untrue or
 incorrect in any respect at, or as of any time prior to, the Effective
 Time.
  
           Section 5.2    Cooperation.  Subject to compliance with
 applicable law, from the date hereof until the Effective Time, each of
 Parent and the Company shall confer on a regular and frequent basis with
 one or more representatives of the other party to report operational
 matters of materiality and the general status of ongoing operations and
 shall promptly provide the other party or its counsel with copies of all
 filings made by such party with any Governmental Entity in connection with
 this Agreement, the Merger and the transactions contemplated hereby.
  
  
                                 ARTICLE VI

                            ADDITIONAL AGREEMENTS
  
           Section 6.1    No Solicitation.
  
           (a)  The Company shall immediately cease any existing discussions
 or negotiations with any third parties conducted on or prior to the date
 hereof with respect to any Acquisition Proposal (as defined below).  From
 and after the date of this Agreement until the earlier of the Effective
 Time or the termination of this Agreement in accordance with its terms, the
 Company shall not, directly or indirectly, through any officer, director,
 employee, representative or agent, (i) solicit, initiate or encourage any
 inquiries or proposals that constitute, or could reasonably be expected to
 lead to, a proposal or offer for a merger, consolidation, share exchange,
 business combination, sale of substantial assets, sale of shares of capital
 stock (including without limitation pursuant to a tender or exchange offer)
 or similar transaction or series of transactions involving the Company,
 other than the transactions contemplated by this Agreement (any of the
 foregoing inquiries or proposals being referred to in this Agreement as an
 "Acquisition Proposal"), or (ii) engage in negotiations or discussions
 concerning, or provide any non-public information to any person or entity
 relating to, any Acquisition Proposal, or (iii) agree to, approve or
 recommend any Acquisition Proposal.  The Company will promptly communicate
 to Parent any such inquiries or proposals regarding an Acquisition Proposal
 and the terms thereof.
  
           Section 6.2    Access to Information.
  
           (a)  Upon reasonable notice, the Company shall (and shall cause
 each of its Subsidiaries to) afford (i) to the officers, employees,
 independent auditors, legal counsel (including outside legal counsel) and
 other representatives of Parent, reasonable access, during normal business
 hours during the period prior to the Effective Time, to all its properties,
 books, contracts, commitments and records in order that Parent has a full
 opportunity to make such investigation as it reasonably desires to make of
 the Company and its Subsidiaries and (ii) to the independent auditors of
 Parent, reasonable access to the audit work papers and other records of the
 independent auditors of the Company and its Subsidiaries.  Additionally the
 Company and its Subsidiaries will permit Parent to make such reasonable
 inspections of the Company and its Subsidiaries and their respective
 operations during normal business hours as Parent may reasonably require
 and the Company and its Subsidiaries will cause its officers and the
 officers of its Subsidiaries to furnish Parent with such financial and
 operating data and other information with respect to the business and
 properties of the Company and its Subsidiaries as Parent may from time to
 time reasonably request.  During the period prior to the Effective Time,
 the Company shall (and shall cause each of its Subsidiaries to) furnish
 promptly to Parent (i) a copy of each report, schedule, registration
 statement and other document filed or received by it during such period
 pursuant to the requirements of federal securities laws and (ii) all other
 information concerning its business, properties and personnel as Parent may
 reasonably request.
  
           (b)  The parties will hold any information provided pursuant to
 Section 6.2(a) in confidence in accordance with the terms and conditions of
 the letter agreement dated September 21, 1999, between the Company and
 Parent (the "Confidentiality Agreement").  No information or knowledge
 obtained in any investigation pursuant to this Section 6.2 shall affect or
 be deemed to modify any representation or warranty contained in this
 Agreement or the conditions to the obligations of the parties to consummate
 the Merger.
  
           Section 6.3    Consents.  Each of Parent and the Company shall
 use all reasonable efforts to obtain all necessary consents, waivers and
 approvals, and to make all necessary notifications or filings under any of
 Parent's or the Company's material agreements, contracts, licenses or
 leases, whether oral or written, as may be necessary or advisable to
 consummate the Merger and the other transactions contemplated by this
 Agreement.
  
           Section 6.4    Public Disclosure.  No press release or
 announcement with respect to the Merger or this Agreement shall be issued
 by the Company or Parent without the prior consent of the Company or
 Parent, except as such release or announcement may be required by law, rule
 or regulation.
  
           Section 6.5    Tax-Free Reorganization.  The Company's
 shareholders, Parent and the Company shall use commercially reasonable
 efforts to cause the Merger to be treated as a reorganization within the
 meaning of Section 368(a) of the Code.  Parent shall take no action
 following the Closing that would reasonably be expected to cause it not to
 be so treated; provided, however, that Parent is permitted to provide funds
 (i) to make payments under any Debentures and (ii) to the Company for the
 payment to Shareholders who dissent to the Merger if, in either case,
 Parent in its reasonable discretion determines that the Company has
 insufficient funds to make such payments.
  
           Section 6.6    Affiliate Agreements.  Upon the execution of this
 Agreement, the Company will provide Parent a list of those persons who are
 "affiliates" of the Company, within the meaning of Rule 145 promulgated
 under the Securities Act ("Rule 145").  The Company shall use its
 reasonable efforts to deliver or cause to be delivered to Parent prior to
 the Effective Time from each of the affiliates of the Company, an executed
 Affiliates Agreement, substantially in the form attached hereto as Exhibit
 D ("Affiliates Agreement").  Parent shall be entitled to place appropriate
 legends on the certificates evidencing any Parent Common Stock to be
 received by such affiliates of the Company pursuant to the terms of this
 Agreement, and to issue appropriate stop transfer instructions to the
 transfer agent for the Parent Common Stock, consistent with the terms of
 the Affiliates Agreements.
  
           Section 6.7    Commercially Reasonable Efforts.  Subject to the
 terms and conditions of this Agreement, each party hereto will use all
 commercially reasonable efforts to take, or cause to be taken, all actions
 and to do, or cause to be done, all things necessary, proper or advisable
 under applicable laws and regulations to consummate the transactions
 contemplated by this Agreement; provided that Parent and its affiliates
 shall not be required to agree to any consent decree or order in connection
 with any objections of the Department of Justice or Federal Trade
 Commission to the transactions contemplated by this Agreement.
  
           Section 6.8    Certain Filings.  The parties hereto shall
 cooperate with one another (a) in determining whether any action by or in
 respect of, or filing with, any governmental body, agency or official, or
 authority is required, or any actions, consents, approvals or waivers are
 required to be obtained from parties to any material contracts, in
 connection with the consummation of the transactions contemplated by this
 Agreement and (b) in seeking any such actions, consents, approvals or
 waivers or making any such filings, furnishing information required in
 connection therewith and seeking timely to obtain any such actions,
 consents, approvals or waivers.
  
           Section 6.9    Further Assurances.  At and after the Effective
 Time, the officers and directors of the Surviving Corporation will be
 authorized to execute and deliver, in the name and on behalf of the Company
 or Sub, any documents, certificates, agreements, deeds, bills of sale,
 assignments, assurances or other writings and to take and do, in the name
 and on behalf of the Company or Sub, any other actions and things to vest,
 perfect or confirm of record or otherwise in the Surviving Corporation any
 and all right, title and interest in, to and under any of the rights,
 properties or assets of the Company acquired or to be acquired by the
 Surviving Corporation as a result of, or in connection with, the Merger.
  
           Section 6.10   Notification of Certain Matters.  The Company
 shall give prompt notice to Parent, and Parent and Sub shall give prompt
 notice to the Company, of the occurrence, or failure to occur, of any event
 of which it has knowledge, which occurrence or failure to occur would be
 likely to cause (a) any representation or warranty contained in this
 Agreement to be untrue or inaccurate in any respect at any time from the
 date of this Agreement to the Effective Time, or (b) any material failure
 of the Company or Parent and Sub, as the case may be, or of any officer,
 shareholder, director, employee or agent thereof, to comply with or satisfy
 any covenant, condition or agreement to be complied with or satisfied by it
 under this Agreement.  The delivery of any notice pursuant to this Section
 6.10 shall not limit or otherwise affect the remedies available hereunder
 to the party receiving such notice.
  
           Section 6.11   Affiliate Transactions.  Prior to the Effective
 Time, the Company shall use commercially reasonable efforts to amend,
 modify or terminate the transactions with affiliates set forth in Section
 3.15 of the Company Disclosure Schedules in the manner specified in Section
 6.11 of the Company Disclosure Schedules.
  
           Section 6.12   Shareholders Meeting.  The Company shall as
 promptly as practicable duly call, give notice of, convene and hold a
 meeting of its shareholders (the "Company Shareholders Meeting") in
 accordance with the Illinois Statute and applicable federal securities
 laws, for the purpose of voting on this Agreement and shall, through its
 Board of Directors, recommend to its shareholders the approval and adoption
 of this Agreement, the Merger and the other transactions contemplated
 hereby.  Neither the Board of Directors of the Company nor any committee
 thereof shall (i) withdraw or modify or propose to withdraw or modify, in a
 manner adverse to Parent, such approval or recommendation, (ii) approve or
 recommend any Acquisition Proposal other than the Merger or (iii) enter
 into any agreement with respect to an Acquisition Proposal other than the
 Merger.
  
           Section 6.13   Proxy Statement; Registration Statement; Board
 Recommendation.
  
           (a)  As promptly as practical after the execution of this
 Agreement, Parent and the Company shall prepare and Parent shall file with
 the SEC the Registration Statement (as defined below).  The Company and
 Parent shall use all reasonable efforts to cause the Registration Statement
 to become effective as soon after such filing as practicable.  The Company
 shall furnish Parent with all information concerning the Company and the
 holders of its capital stock and shall take such other action as Parent may
 reasonably request in connection with the Registration Statement and the
 issuance of the shares of Parent Common Stock.  If at any time prior to the
 Effective Time any event or circumstance relating to the Company, Parent or
 any of their respective Subsidiaries, affiliates, officers or directors
 should be discovered by such party which should be set forth in an
 amendment or a supplement to the Registration Statement or
 Proxy/Prospectus, such party shall promptly inform the other thereof and
 take appropriate action in respect thereof.
  
           (b)  The Company and Parent shall make any necessary filings with
 respect to the Merger, the Debenture Offer, and the Contingent Deferred
 Payment under the Securities Act and the Exchange Act and the rules and
 regulations thereunder, and Parent shall use its reasonable best efforts to
 take any action required to be taken under state securities or "blue sky"
 laws in connection with the issuance of the shares of Parent Common Stock
 in accordance with the provisions of this Agreement.
  
           (c)  The Proxy Statement shall contain the recommendation of the
 Company's Board of Directors in favor of approval of this Agreement and the
 transactions contemplated hereby.
  
           (d)  The information to be supplied by the Company for inclusion
 in the registration statement on Form S-4 pursuant to which (i) the offer
 to exchange Parent Common Stock for the Debentures shall be registered with
 the SEC and (ii) shares of Parent Common Stock to be issued in the Merger
 and pursuant to the Debenture Offer and in respect of the Contingent
 Deferred Payment, if any, and the Franchise Amount, if any, will be
 registered with the SEC (the "Registration Statement"), shall not at the
 time the Registration Statement is declared effective by the SEC contain
 any untrue statement of a material fact or omit to state any material fact
 required to be stated in the Registration Statement or necessary in order
 to make the statements in the Registration Statement, in light of the
 circumstances under which they were made, not misleading.  The proxy
 statement (the "Proxy Statement") to be sent to the shareholders of the
 Company in connection with the solicitation of votes to approve and adopt
 this Agreement shall not, and the documents to be sent to the applicable
 holders of securities in connection with the Notes Offer, the Notes
 Solicitation, the Debenture Offer and the Debenture Solicitation (each as
 defined in Section 6.16(a)) (collectively, the "Offer Documents") shall
 not, (i) on the date the Proxy Statement and the Offer Documents, as
 applicable, are first mailed to security holders of the Company or (ii) at
 the Effective Time, contain any statement which, at such time and in light
 of the circumstances under which it is made, is false or misleading with
 respect to any material fact, or omit to state any material fact necessary
 in order to make the statements made therein not false or misleading or
 necessary to correct any statement in any earlier communication with
 respect to the solicitation of votes which has become false or misleading. 
 The Offer Documents will conform with all applicable requirements of the
 Exchange Act.
  
           Section 6.14   Nasdaq Listing.  Parent shall use its reasonable
 efforts to cause the shares of Parent Common Stock to be issued in the
 Merger, in exchange for Debentures, in respect of the Contingent Deferred
 Payment, if any, and the Franchise Amount, if any, to be approved for
 quotation on Nasdaq, subject to official notice of issuance.
  
           Section 6.15   Letter of Independent Auditors.  The Company and
 Parent shall  use all reasonable efforts to cause to be delivered to the
 other (i) "comfort letters" of Arthur Andersen LLP, the Company's
 independent auditors, and of PriceWaterhouseCoopers llp, Parent's
 independent auditors, in each case dated and delivered the date on which
 the Registration Statement shall become effective and as of the Effective
 Time, and addressed to the Boards of Directors of the Company and Parent,
 in form and substance reasonably satisfactory to the other and customary in
 scope and substance for letters delivered by independent auditors in
 connection with registration statements similar to the Registration
 Statement and (ii) the consent of each such auditor as to the inclusion of
 such "comfort letters" and applicable financial statements in the
 Registration Statement.
  
           Section 6.16   Treatment of Company Debt and Exchangeable
 Preferred.
  
           (a)  As soon as is reasonably practicable after the date hereof,
 the Parent or, at Parent's election, the Company shall commence (i) (A) an
 offer (the "Notes Offer") to purchase for cash all of the Company's
 outstanding 12-1/4 Senior Discount Notes Due 2008 (the "Notes") coupled
 with (B) a solicitation as part of the Notes Offer (the "Notes
 Solicitation") of consents to the amendments to the Indenture, dated as of
 February 15, 1998, with respect to the Notes (the "Notes Indenture") set
 forth on Exhibit F hereto from the holders of not less than a majority in
 aggregate principal amount of the Notes outstanding (the consents from such
 holders, the "Requisite Note Consents") at an aggregate price for the Notes
 Offer and the Notes Solicitation not greater than 101% of Accreted Value
 (as defined in the Notes Indenture) and (ii) subject to the Company's
 compliance with paragraph (c) below, (A) an offer to exchange all of the
 13-3/4% Subordinated Exchange Debentures Due 2010 (the "Debentures") (the
 "Debenture Offer") for shares of Parent Common Stock, valued at a price per
 share equal to the average volume weighted trading prices of Parent Common
 Stock on Nasdaq for the five trading day period ending one trading day
 prior to the date of the exchange, coupled with (B) a solicitation as part
 of the Debenture Offer (the "Debenture Solicitation") of consents to the
 amendments to the Company's articles of incorporation and the Indenture
 governing the Debentures set forth on Exhibit F hereto from the holders of
 not less than a majority of the Exchangeable Preferred (or holders of not
 less than a majority in aggregate principal amount of the Debentures, as
 applicable) outstanding (the consents from such holders, the "Requisite
 Debenture Consents") at an aggregate price not greater than 101% of the
 principal amount of the Debentures plus accrued and unpaid interest to the
 date of purchase.  The Notes Offer, Debenture Offer, the Notes Solicitation
 and the Debenture Solicitation (including the applicable amendments) shall
 be conducted in accordance with all applicable rules and regulations of the
 SEC and other applicable laws and shall be on terms (including the terms of
 the proposed amendments) reasonably determined by Parent (including the
 appointment of a dealer manager selected by Parent), provided that the
 Company shall not be required to purchase the Notes, or Debentures pursuant
 to the Notes Offer or the Debenture Offer, and the proposed amendments, if
 approved, shall not become operative, unless Parent has consummated the
 Merger.  The Company agrees that promptly following the date the Requisite
 Note Consents and the Requisite Debenture Consents are obtained it will
 execute a supplemental indenture and an amendment to the Company's articles
 of incorporation, as applicable, containing the proposed amendments that by
 their terms shall become operative only upon consummation of the Merger and
 the Notes Offer and the Debenture Offer.
  
           (b)  Each of Parent and the Company agrees to cooperate, and to
 cause its officers, employees, counsel and accountants to cooperate, and
 use its reasonable best efforts to consummate the Notes Offer, Debenture
 Offer, the Notes Solicitation and the Debenture Solicitation as soon as
 reasonably practicable following the date hereof, to comply in all material
 respects with all laws and regulations applicable thereto, to participate
 in any "road shows" or other solicitation activities relating to the
 foregoing and to prepare and, if necessary, execute all other documents in
 form and substance reasonably satisfactory to Parent and/or the Company, as
 the case may be, as may be necessary to consummate the Notes Offer,
 Debenture Offer, the Notes Solicitation and the Debenture Solicitation. If
 at any time prior to the Effective Time any information relating to Parent
 or the Company, or any of their respective affiliates, officers or
 directors, should be discovered by Parent or the Company which should be
 set forth in an amendment or supplement to the documents mailed to holders
 in respect of the Notes Offer, Debenture Offer, the Notes Solicitation and
 the Debenture Solicitation so that such document would not include any
 misstatement of a material fact or omit to state any material fact
 necessary to make the statements therein, in light of the circumstances
 under which they were made, not misleading, the party which discovers such
 information shall promptly notify the other party hereto and, to the extent
 required by law, rules or regulations, an appropriate amendment or
 supplement describing such information shall  promptly be prepared and, if
 required, filed with the SEC and disseminated to the holders of Notes and
 the Debentures and/or the Exchangeable Preferred.
  
           (c)  The Company agrees to provide appropriate written notice to
 the holders of the Exchangeable Preferred in accordance with Section 4B of
 the Company's articles of incorporation such that the Exchangeable
 Preferred shall be exchanged into the Debentures on February 15, 2000 in
 accordance with Section 4 of the Company's articles of incorporation and on
 February 15, 2000 the Company shall exchange all shares of Exchangeable
 Preferred for the Debentures in an aggregate principal amount equal to the
 sum of the Liquidation Preference (as defined in the Company's articles of
 incorporation) plus a payment equal to accumulated and unpaid dividends
 thereon to the date of the exchange (which the Company shall elect to pay
 in Debentures) in accordance with Section 4 of the Company's articles of
 incorporation; provided, however, that Parent and the Company shall use
 their reasonable efforts to obtain consents from the holders thereof to
 effect such exchange prior to February 15, 2000.
  
           Section 6.17   Employee Matters.  Prior the Closing, but
 contingent thereon and following the Effective Time, Parent and the Company
 shall create a bonus pool (the "Bonus Pool") having the terms and
 conditions set forth on Exhibit G hereto, in which certain employees of the
 Company listed on Exhibit G hereto will be entitled to participate to the
 extent of their respective percentage interest listed thereon.
  
           Section 6.18   280G Approval.  Prior to the Closing, the Company
 shall satisfy the approval requirements of Section 280G(b)(5)(B) of the
 Code with respect to all payments to be made to disqualified individuals
 (withing the meaning of Section 280G of the Code) in connection with the
 transactions contemplated hereby, including, without limitation, the Bonus
 Pool and no such payments shall be made unless such approval is obtained.
  
           Section 6.19   Director and Officer Liability.  Parent shall
 cause the Surviving Corporation, and the Surviving Corporation hereby
 agrees, to do the following:
  
           (a)  The Surviving Corporation shall from and after the Effective
 Time indemnify and hold harmless the present and former officers and
 directors of the Company (each an "Indemnified Person") in respect of acts
 or omissions occurring at or prior to the Effective Time to the fullest
 extent provided under the Company's certificate of incorporation and bylaws
 in effect on the date hereof, provided that such indemnification shall be
 subject to any limitation imposed from time to time by applicable law.
  
           (b)  For six (6) years after the Effective Time, the Surviving
 Corporation shall use its best efforts to provide officers' and directors'
 liability insurance in respect of acts or omissions occurring prior to the
 Effective Time covering each such Indemnified Person currently covered by
 the Company's officers' and directors' liability insurance policy on terms
 with respect to coverage and amount no less favorable than those of such
 policy in effect on the date hereof, provided that, in satisfying its
 obligation under this Section 6.19(b), the Surviving Corporation shall not
 be obligated to pay premiums in excess of 200% of the amount per annum the
 Company paid in its last full fiscal year, which amount the Company has
 represented to Parent as being $75,000.
  
           (c)  If the Surviving Corporation or any of its successors or
 assigns (i) consolidates with or merges into any other Person and shall not
 be the continuing or surviving corporation or entity of such consolidation
 or merger, or (ii) transfers or conveys all or substantially all of its
 properties and assets to any Person, then, and in each such case, to the
 extent necessary, proper provision shall be made so that the successors and
 assigns of the Surviving Corporation, as the case may be, shall assume the
 obligations set forth in this Section 6.19.
  
           (d)  These rights shall survive consummation of the Merger and
 are intended to benefit, and shall be enforceable by each Indemnified
 Person.
  
           Section 6.20   Employee Benefits after the Effective Time. 
 During the period commencing at the Effective Time and ending on the first
 anniversary thereof, Parent and/or its Subsidiaries shall use their
 reasonable efforts to cause those employees of the Surviving Corporation or
 any of its Subsidiaries who were employed by the Company or any of its
 Subsidiaries as of the Effective Time ("Company Employees") to be eligible
 to participate in employee benefit plans providing benefits no less
 favorable, in the aggregate (but excluding the Key Management Performance
 Plan), than the employee benefit plans that similarly situated employees of
 Subsidiaries of Parent are eligible to participate.  To the extent any
 Company Employee participates in any employee benefit plan maintained by
 Parent or its Subsidiaries after the Effective Time (a "Parent Plan"), such
 Company Employee shall be credited under such Parent Plan, for all purposes
 other than benefit accrual under any defined benefit retirement plan or
 retiree medical plan and other than vesting under any compensation plan
 (other than, except as provided herein, with respect to Substitute Options)
 maintained by Parent or its Subsidiaries, with service prior to the
 Effective Time with the Company and its Subsidiaries to the same extent
 service with Parent and its Subsidiaries would be so credited.  With
 respect to the plan year in which the Effective Time occurs under any
 Parent Plan providing for medical or dental benefits, Parent shall cause
 the dollar amount of all expenses incurred by Company Employees and their
 eligible dependents during such year to be credited for purposes of
 satisfying such Parent Plan's deductible and copayment limitations for such
 plan year, to the extent such expenses would have been credited under the
 corresponding Plan prior to the Effective Time.  The Company Employees
 shall be subject to other personnel policies and practices of Parent and
 its Subsidiaries in the same manner as similarly situated employees of
 Subsidiaries of Parent.  For purposes of this Section 6.20, "employee
 benefit plan" has the meaning ascribed to such term under Section 3(3) of
 ERISA.
  
           Section 6.21   ISP Plan.  Pursuant to an agreement between the
 Company and the holders of options under the 21st Century Telecom Group,
 Inc. 1999 ISP Stock Plan (the "1999 ISP Plan"), the Company shall cause
 (and shall enter into agreements with the holders of options granted
 thereunder providing for) the 1999 ISP Plan to be terminated prior to the
 Closing and all of the options outstanding thereunder to be cancelled in
 return for the grant, to each holder of such options, of the right to
 receive a pro rata portion of the ISP Option Amount, if any, determined in
 accordance with Exhibit I.
  

                                 ARTICLE VII

                            CONDITIONS TO MERGER
  
           Section 7.1    Conditions to Each Party's Obligation to Effect
 the Merger.  The respective obligations of each party to this Agreement to
 effect the Merger shall be subject to the satisfaction prior to the Closing
 Date of the following conditions:
  
           (a)  HSR Act.  The waiting period applicable to the consummation
 of the Merger under the HSR Act shall have expired or been terminated.
  
           (b)  Shareholder Approval.  This Agreement shall have been
 approved and adopted by (i) two-thirds of the outstanding shares of Company
 Voting Common Stock and Class A Preferred Stock, voting together as a
 class, and (ii) a majority of the outstanding shares of Class A Preferred
 Stock in accordance with the applicable provisions of the Illinois Statute
 and the Company's articles of incorporation.
  
           (c)  Governmental Approvals.  All authorizations, consents,
 orders or approvals of any Governmental Entity required to consummate the
 transactions contemplated by this Agreement shall have been obtained and be
 in effect.
  
           (d)  No Injunctions or Restraints; Illegality.  No temporary
 restraining order, preliminary or permanent injunction or other order
 issued by any court of competent jurisdiction or other legal or regulatory
 restraint or prohibition preventing the consummation of the Merger or
 limiting or restricting Parent's conduct or operation of the business of
 Parent or the Company after the Merger shall have been issued and be in
 effect, nor shall any proceeding brought by an administrative agency or
 commission or other Governmental Entity, seeking any of the foregoing be
 pending, nor shall there be any action taken, or any statute, rule,
 regulation or order enacted, entered, enforced or deemed applicable to the
 Merger which makes the consummation of the Merger illegal or prevents or
 prohibits the Merger.
  
           (e)  Registration Statement.  The Registration Statement shall
 have been declared effective by the SEC under the Securities Act and shall
 not be the subject of any stop order or proceeding by the SEC seeking a
 stop order.
  
           (f)  Nasdaq Listing.  The shares of Parent Common Stock to be
 issued in the Merger, in exchange for Debentures, in respect of the
 Contingent Deferred Payment, if any, and the Franchise Amount, if any,
 shall have been approved for quotation on Nasdaq, subject to official
 notice of issuance. 
  
           Section 7.2    Additional Conditions to Obligations of Parent and
 Sub.  The obligations of Parent and Sub to effect the Merger are subject to
 the satisfaction of each of the following conditions, any of which may be
 waived, in writing, exclusively by Parent and Sub:
  
           (a)  Representations and Warranties.  The representations and
 warranties of the Company set forth in this Agreement shall be true and
 correct in all respects as of the date of this Agreement and as of the
 Closing Date as though made on and as of the Closing Date (except that to
 the extent such representations and warranties expressly speak as of an
 earlier date, such representations and warranties shall be true in all
 respects as of such specified date) without regard to any materiality or
 Material Adverse Effect exceptions or qualifications contained therein,
 except for such failures to be true and correct which in the aggregate do
 not, and could not reasonably be expected to, have a Material Adverse
 Effect, and Parent shall have received a certificate signed on behalf of
 the Company by the chief executive officer and the chief financial officer
 of the Company to such effect.
  
           (b)  Performance of Obligations.  The Company shall have
 performed in all material respects all obligations required to be performed
 by it under this Agreement at or prior to the Closing Date and Parent shall
 have received a certificate signed on behalf of the Company by the chief
 executive officer and the chief financial officer of the Company to such
 effect.
  
           (c)  Material Consents.  Parent shall have received or be
 reasonably satisfied that it will receive, in each case in form and
 substance to its reasonable satisfaction, the consents set forth in Section
 7.2(c) of the Company Disclosure Schedules, and no such consent,
 authorization or approval shall have been revoked.
  
           (d)  Escrow Agreement.  The Escrow Agreement in the form attached
 hereto as Exhibit B shall have been executed and delivered to Parent by the
 Company and the Shareholder Representative.
  
           (e)  Voting and Lock-Up Agreements.  A Voting and Lock-Up
 Agreement in the form annexed hereto as Exhibit C shall have been executed
 and delivered to Parent by the number of persons required to satisfy the
 shareholder approval requirements set forth in Section 7.1(b), and each
 Voting and Lock-Up Agreement and each such irrevocable proxy included
 therewith shall be in full force and effect.
  
           (f)  Affiliate Agreements.  An Affiliate Agreement in the form
 annexed hereto as Exhibit D shall have been executed and delivered to
 Parent by each director and officer and each applicable affiliate of the
 Company and each Affiliate Agreement shall be in full force and effect.
  
           (g)  Employment, Consulting and Non-compete Agreements. 
 Employment, Consulting and Non-compete Agreements, in form and substance
 reasonably satisfactory to Parent, shall have been executed and delivered
 to Parent by each person set forth on Section 7.2(g) of the Company
 Disclosure Schedules, and such agreements shall be in full force and
 effect.
  
           (h)  Notes and Exchangeable Preferred.  Holders of at least a
 majority in aggregate principal amount of Notes and holders of a majority
 of the Exchangeable Preferred shall have tendered and not withdrawn Notes
 and Debentures pursuant to the Notes Offer and the Debenture Offer and the
 Company shall have received each of the Requisite Note Consents and the
 Requisite Preferred Consents and none of such consents shall have been
 withdrawn, each in accordance with the provisions of Section 6.16.
  
           (i)  FIRPTA Certificate.  Parent shall have received from the
 Company and each of its Subsidiaries a certificate, satisfying the
 provisions of Treasury Regulations Section 1.1445-2(c)(3), and otherwise in
 form and substance reasonably satisfactory to Parent, certifying that an
 interest in the Company or any of its Subsidiaries is not a U.S. real
 property interest (a "FIRPTA Certificate").  Notwithstanding anything to
 the contrary expressed or implied herein, if Company and each of its
 Subsidiaries fails to provide Parent with a FIRPTA Certificate, Parent
 shall be entitled to withhold the requisite amounts in accordance with
 Section 1445 of the Code.
  
           (j)  Expense Certificates.  Parent shall have received the
 Expense Certificate, in form and substance reasonably satisfactory to
 Parent.
  
           (k)  Dissenting Shares.  The number of Dissenting Shares shall be
 less than five percent (5%) of the issued and outstanding shares of Company
 Stock.
  
           (l)  Credit Agreement.  The Company shall have terminated its
 Credit Agreement, dated as of August 5, 1998, including any amendments
 thereto, on terms reasonably satisfactory to Parent.
  
           (m)  Waiver of Accelerated Vesting.  The Company shall have
 obtained consents, reasonably acceptable to Parent, from each of the
 holders of Company Stock Options set forth on Section 7.2(m) of the Company
 Disclosure Schedules, waiving any acceleration of vesting of such options
 that may occur as a result of the consummation of the transactions
 contemplated hereby, and the option plans with respect to such options
 shall have been amended to provide the same, and such consents and such
 amendments shall be in full force and effect.
  
           Section 7.3    Additional Conditions to Obligations of the
 Company.  The obligation of the Company to effect the Merger is subject to
 the satisfaction of each of the following conditions, any of which may be
 waived, in writing, exclusively by the Company:
  
           (a)  Representations and Warranties.  The representations and
 warranties of Parent set forth in this Agreement shall be true and correct
 in all respects as of the date of this Agreement and as of the Closing Date
 as though made on and as of the Closing Date (except that to the extent
 such representations and warranties expressly speak as of an earlier date,
 such representations and warranties shall be true in all respects as of
 such specified date) without regard to any materiality or Material Adverse
 Effect exceptions or qualifications contained therein, except for such
 failures to be true and correct which in the aggregate do not, and could
 not reasonably be expected to, have a Parent Material Adverse Effect.
  
           (b)  Performance of Obligations.  Parent and Sub shall have
 performed in all material respects all obligations required to be performed
 by them under this Agreement at or prior to the Closing Date.
  
           (c)  Tax Letter.  Parent shall have executed and delivered to the
 Company the letter attached hereto as Exhibit H (the "Tax Letter") or in
 the event that Parent is unable to execute and deliver such Tax Letter, the
 Company shall have received a written opinion of Piper Marbury Rudnick & Wolfe LLP, in form and substance reasonably satisfactory to the Company,
 based on facts, representations and assumptions set forth in such opinion
 that are consistent with the state of facts existing at the Effective Time,
 to the effect that (i) the Merger will be treated for federal income tax
 purposes as a reorganization within the meaning of Section 368(a) of the
 Code and (ii) each of Parent and the Company will be a party to such
 reorganization.  In rendering such opinion, counsel may obtain and rely
 upon representations and covenants, in form and substance satisfactory to
 counsel, including those contained in certificates of officers of Parent,
 Sub, the Company and others.
  
  

                                ARTICLE VIII

                          TERMINATION AND AMENDMENT
  
           Section 8.1    Termination.  This Agreement may be terminated at
 any time prior to the Effective Time  by:
  
           (a)  the mutual written consent of Parent and the Company;
  
           (b)  Parent in the event that any condition set forth in Section
 7.1 and 7.2 hereof shall not be satisfied and shall not be reasonably
 capable of being remedied by May 31, 2000;  provided, that Parent shall
 have given at least 15 days prior notice of such failure to be satisfied
 and such condition shall not have been satisfied by the later of such date
 or the expiration of such 15 day period;
  
           (c)  the Company in the event that any condition set forth in
 Section 7.1 and 7.3 hereof shall not be satisfied and shall not be
 reasonably capable of being remedied by May 31, 2000;  provided that the
 Company shall have given at least 15 days prior notice of such failure to
 be satisfied and such failure to be satisfied and such condition shall not
 have been satisfied by the later of such date or the expiration of such 15
 day period;
  
           (d)  Parent in the event that the requisite shareholder vote
 specified in Section 7.1(b) shall not have been obtained by May 31, 2000;
 or
  
           (e)  Either Parent or the Company if the Closing has not occurred
 by the close of business on May 31, 2000; provided, however, that no party
 may terminate this Agreement pursuant to clause (b), (c) or (d) above, or
 pursuant to this clause (e), if the failure of the applicable condition in
 Section 7.1, 7.2 or 7.3 (as the case may be) to be satisfied or the failure
 of the Closing to occur on or before the date required in this Section
 8.1(e) results from the material breach by Parent in the case of a
 termination by Parent, or the Company in the case of a termination by the
 Company.
  
           Section 8.2    Procedure and Effect of Termination.  In the event
 of termination of the Agreement by a party hereto pursuant to Section 8.1,
 written notice thereof shall forthwith be given by the terminating party to
 the other parties hereto, and this Agreement shall thereupon terminate and
 become void and have no effect, and the transactions contemplated hereby
 shall be abandoned without further action by the parties hereto, except
 that the provisions of Section 6.2(b) and this Section 8.2 shall remain in
 full force and effect and surviving termination of this Agreement;
 provided, however, that such termination shall not relieve any party hereto
 of any liability for any breach of this Agreement (other than non-willful
 breaches of representations, warranties and covenants, as to which no party
 shall be liable hereunder); provided, further, that in the event that
 Parent and Sub shall fail to close the transactions contemplated hereby
 either (i) in breach of this Agreement or (ii) by virtue of the failure of
 any of the conditions set forth in Section 7.1, 7.2 or 7.3 hereof to be
 satisfied, other than the conditions set forth in Section 7.1(b) hereof
 (Shareholder Approval), Section 7.1(d) hereof (Injunctions) (to the extent
 such action is brought or taken by any equity or debt holder of the
 Company), Section 7.2(h) hereof (Notes and Exchangeable Preferred) or
 Section 7.2(k) hereof (Dissenting Shares), then Parent shall make a
 $25,000,000 investment (the "Investment") in the Company on the terms and
 conditions substantially set forth on Exhibit E-1 hereto and pursuant to a
 mutually acceptable purchase agreement, (which Parent and the Company shall
 negotiate and enter into on or prior to March 31, 2000) which investment
 the Company acknowledges to be a reasonable representation of its potential
 damages for breach hereunder and which payment shall be the sole and
 exclusive remedy by the Company for a breach of this Agreement by Parent or
 Sub; provided further, Parent shall not be obligated to make any such
 investment in the event that the failure to close is the result of a breach
 by the Company of any of its representations, warranties or covenants
 hereunder.  Within 5 business days after the date hereof, Parent shall
 deliver to the Company a letter from a reputable financial institution in a
 form reasonably acceptable to the Company (at such time, to be set forth in
 Exhibit E-2 hereto) to the effect that it will maintain a balance in
 Parent's account at such financial institution sufficient to make the
 Investment when due.
  
           Section 8.3    Amendment.  This Agreement may not be amended
 except by an instrument in writing signed on behalf of each of the parties
 hereto.  This Agreement may be amended by the parties hereto, by action
 taken or authorized by their respective Boards of Directors, at any time
 before or after approval of the matters presented in connection with the
 Merger by the shareholders of the Company, but, after any such approval, no
 amendment shall be made which by law requires further approval by such
 stockholders and shareholders without such further approval.
  
           Section 8.4    Extension; Waiver.  At any time prior to the
 Effective Time, the parties hereto, by action taken or authorized by their
 respective Boards of Directors, may, to the extent legally allowed, (i)
 extend the time for the performance of any of the obligations or other acts
 of the other parties hereto, (ii) waive any inaccuracies in the
 representations and warranties contained herein or in any document
 delivered pursuant hereto and (iii) waive compliance with any of the
 agreements or conditions contained herein.  Any agreement on the part of a
 party hereto to any such extension or waiver shall be valid only if set
 forth in a written instrument signed on behalf of such party.
  
           Section 8.5    Fees and Expenses.  All fees and expenses incurred
 in connection with this Agreement and the transactions contemplated hereby
 shall be paid by the party incurring such expenses, whether or not the
 Merger is consummated.
  
  
                                 ARTICLE IX

                               INDEMNIFICATION
  
           Section 9.1    Survival.  No claim for indemnification by the
 shareholders under this Agreement shall be made by Parent later than one
 year after the Closing; provided that if a claim or notice is given in
 accordance with Article IX or Article X with respect to any representation
 or warranty prior to such expiration date, the claim shall continue
 indefinitely until such claim is finally resolved.
  
           Section 9.2    Obligations of the Shareholders.
  
           (a)  From and after the Effective Time, by acceptance of the
 Merger Consideration pursuant to Article II hereof, the shareholders agree,
 jointly and severally, to indemnify and hold harmless the Surviving
 Corporation, Parent, Sub and their respective directors, officers,
 employees, affiliates, agents, successors and assigns (collectively, the
 "Indemnified Parties") from and against any and all Losses (as defined
 below) of any such person, directly or indirectly, as a result of, or based
 upon or arising from, (i) any inaccuracy in or breach or nonperformance of
 any of the representations, warranties, covenants, or agreements made by or
 of the Company or any shareholder in this Agreement including in any
 certificate delivered pursuant hereto without regard to any qualification
 or exception with respect to materiality, Material Adverse Effect or
 knowledge contained therein, (ii) any liability for Taxes for which the
 Company's shareholders are obligated to indemnify the Indemnified Parties
 pursuant to Article X (without duplication thereof) and (iii) any
 inaccuracies in the Expense Certificate (together, the "Indemnified
 Losses").
  
           (b)  The obligation of the shareholders to indemnify the
 Indemnified Parties for Indemnified Losses is subject to the following
 limitations:  (x) the shareholders shall not be required to provide
 indemnification to any Indemnified Party pursuant to Section 9.2(a)(i) or
 (ii) of this Agreement unless the aggregate amount of Indemnified Losses
 incurred by all Indemnified Parties pursuant to such provision exceeds
 $3,500,000, and then the Indemnified Parties shall be entitled to the
 indemnification for the amount in excess of $1,750,000; and (y) in no event
 shall the aggregate obligation of the shareholders to indemnify the
 Indemnified Parties pursuant to this Agreement exceed the sum of the
 Escrowed Consideration and the Contingent Deferred Payment and in no event
 shall such obligation be payable except out of the Escrowed Consideration
 and the Contingent Deferred Payment.  In the event that any indemnification
 obligations with respect to the matters referred to above are in excess of
 the Escrowed Consideration then, in addition to the rights of the
 Indemnified Parties to seek indemnification with respect to such matters,
 the Indemnified Parties shall have the right to reduce the amount of the
 Contingent Deferred Payment, if any, by the amount of such excess.
  
           (c)  In the event that, and at such time as, the payment of any
 Indemnified Losses in respect of which the shareholders are obligated
 results in a reduction of Taxes actually paid by an Indemnified Party, then
 the amount of Escrowed Consideration due to the Indemnified Party shall
 reflect the amount in Taxes actually paid by such Indemnified Party below
 the amount of Taxes that would have been paid solely but for the tax effect
 of the payment by such Indemnified Party of such Loss.
  
           (d)  The amount of any Indemnified Losses for which the
 Indemnified Parties are owed in accordance with this Section 9.2 shall be
 reduced by the aggregate of any amounts, less any payments or out-of-pocket
 expenses made by any Indemnified Party, actually recovered by such
 Indemnified Party under insurance policies with respect to such Losses.
  
           Section 9.3    Indemnification Procedures.
  
           (a)  In the event that any action, proceeding, complaint or
 litigation is commenced by a third party involving a claim for which the
 shareholders may be liable to a  Indemnified Party hereunder (an "Asserted
 Liability"), the Indemnified Party shall promptly notify the Shareholder
 Representative in writing of such Asserted Liability (the "Claim Notice");
 provided that no delay on the part of the  Indemnified Party in giving any
 such Claim Notice shall relieve the shareholders of any indemnification
 obligation hereunder unless (and then solely to the extent that) the
 shareholders are materially prejudiced by such delay.  The Shareholder
 Representative shall have sixty (60) days (or less if the nature of the
 Asserted Liability requires) from its receipt of the Claim Notice (the
 "Notice Period") to notify the  Indemnified Party whether or not the
 Shareholder Representative desires, at the shareholders' sole cost and
 expense and by counsel of its own choosing, which shall be reasonably
 satisfactory to the Indemnified Party, to defend against such Asserted
 Liability.  If the Shareholder Representative undertakes to defend against
 such Asserted Liability, (i) the Shareholder Representative shall use its
 commercially reasonable best efforts to defend and protect the interests of
 the Indemnified Party with respect to such Asserted Liability, (ii) the
 Indemnified Party, prior to or during the period in which the Shareholder
 Representative assumes the defense of such matter, may take such reasonable
 actions as the Indemnified Party deems necessary to preserve any and all
 rights with respect to such matter, without such actions being construed as
 a waiver of the Indemnified Party's rights to defense and indemnification
 pursuant to this Agreement, (iii) the Shareholder Representative shall not,
 without the prior written consent of the Indemnified Party, consent to any
 settlement which (A) does not contain an unconditional release of the
 Indemnified Party from the subject matter of the settlement, (B) imposes
 any liabilities or obligations on the  Indemnified Party, and (C) with
 respect to any non-monetary provision of such settlement, could, in the
 Indemnified Party's judgment, have a material adverse effect on the
 business operations, assets, properties or prospects of the Company or the 
 Indemnified Party (for purposes of this clause (iii) an effect shall be
 deemed "material" if it involves $100,000 or more) and (iv) in the event
 that the Shareholder Representative undertakes to defend against such
 Asserted Liability, unless otherwise agreed to in writing between Parent
 and the Shareholder Representative, the Shareholder Representative shall be
 deemed to have agreed that it will indemnify the Indemnified Party pursuant
 to, and subject to the conditions and limitations set forth in, the
 provisions of this Article IX.  Notwithstanding the foregoing, in any
 event, the  Indemnified Party shall have the right to control, pay or
 settle any Asserted Liability which the Shareholder Representative shall
 have undertaken to defend so long as the  Indemnified Party shall also
 waive any right to indemnification therefor by the Shareholder
 Representative.  If the Shareholder Representative undertakes to defend
 against such Asserted Liability, the Indemnified Party shall cooperate to
 the extent reasonable (during regular business hours) with the Shareholder
 Representative and its counsel in the investigation, defense and settlement
 thereof.  If the Indemnified Party desires to participate in any such
 defense it may do so at its sole cost and expense.  If the Shareholder
 Representative does not undertake within the Notice Period to defend
 against such Asserted Liability, then the Shareholder Representative shall
 have the right to participate in any such defense at the shareholders' sole
 cost and expense (out of the Escrowed Consideration), but, in such case,
 the Indemnified Party shall control the investigation and defense and may
 settle or take any other actions the Indemnified Party deems reasonably
 advisable without in any way waiving or otherwise affecting the Indemnified
 Party's rights to indemnification pursuant to this Agreement.  The 
 Indemnified Party and the Shareholder Representative agree to make
 available to each other, their counsel and other representatives, all
 information and documents available to them which relate to such claim or
 demand.  The Indemnified Party and the Shareholder Representative and the
 Company and its employees also agree to render to each other such
 assistance and cooperation as may reasonably be required to ensure the
 proper and adequate defense of such claim or demand.
  
           (b)  In the event that a Indemnified Party should have a claim
 against the shareholders hereunder which it determines to assert, but which
 does not involve a claim or demand being asserted against or sought to be
 collected from it by a third party, such claim shall be resolved in the
 manner described in the Escrow Agreement.
  
           (c)  The provisions of this Section 9.3 shall not apply to any of
 the provisions of Article X, which shall be governed solely and exclusively
 by the terms thereof.
  
           Section 9.4    Shareholder Representative.  Each shareholder, by
 acceptance of Merger Consideration, shall be deemed to have designated and
 appointed Edward T. Joyce with full power of substitution (the "Shareholder
 Representative") as the representative of any such shareholder to perform
 all such acts as are required, authorized or contemplated by this Agreement
 to be performed by the shareholders (including, without limitation, any
 acts, agreements, amendments or resolution of disputes related to the
 Contingent Deferred Payment (including any amendments to any of the targets
 and other provisions of Exhibit A hereto) and any matters referred to in
 Article IX or X hereof) and hereby acknowledges that the Shareholder
 Representative shall be the only person authorized to take any action so
 required, authorized or contemplated by this Agreement by any shareholder. 
 Each shareholder is thereby deemed to have further acknowledged that the
 foregoing appointment and designation shall be deemed to be coupled with an
 interest and shall survive the death or incapacity of such shareholder. 
 Each shareholder is thereby deemed to have authorized the other parties
 hereto to disregard any notice or other action taken by each shareholder
 pursuant to this Agreement except for the Shareholder Representative.  The
 other parties hereto are and will be entitled to rely on any action so
 taken or any notice given by the Shareholder Representative and are and
 will be entitled and authorized to give notices only to the Shareholder
 Representative for any notice contemplated by this Agreement to be given to
 any such shareholder.
  
           Section 9.5    Certain Definitions.
  
           (a)  For purposes of this Agreement, "Loss" means any action,
 cost, damage, disbursement, expense, liability, loss, injury, deficiency,
 penalty, diminution in value, settlement or obligation of any kind or
 nature (collectively, "Claims For Losses"), including but not limited to
 interest, penalties, fines, legal, accounting, and other professional fees
 and expenses incurred in the investigation, collection, prosecution,
 determination and defense of Claims For Losses, amounts paid in settlement,
 any incidental or consequential damages and any punitive damages payable to
 third parties that may be imposed on or otherwise incurred or suffered by
 the specified person.
  
  
                                  ARTICLE X

                                 TAX MATTERS
  
           Section 10.1   Indemnification by the Company Shareholders. 
 Subject to the conditions and limitations set forth in Sections 9.1 and
 9.2, each of the Company's shareholders shall be liable for, and shall hold
 Parent, the Surviving Corporation, each Subsidiary, and their respective
 affiliates harmless from and against, (i) any and all Taxes imposed on or
 with respect to the Company or any of its Subsidiaries for any taxable
 period (or portion thereof) ending on or before the Closing Date (a "Pre-
 Closing Period"), other than (x) Taxes incurred in the ordinary course of
 business in any taxable period (or portion thereof) beginning after the
 date of the Company Balance Sheet, (y) Taxes for which reserves have been
 provided on the Company Balance Sheet, and (z) Taxes arising out of the
 transactions contemplated by this Agreement (including, without limitation,
 Section 6.16), (ii) any and all Taxes imposed on or with respect to the
 Company or any of its Subsidiaries as a result of any of the Company's (or
 any of its Subsidiaries') being or having been a member of any group of
 companies that files or has filed a Tax Return on a consolidated, combined,
 affiliated or unitary basis for any Pre-Closing Period (other than a group
 the common parent of which was the Company), (iii) any and all Taxes
 imposed on or with respect to the Company or any of its Subsidiaries as a
 result of any breach or inaccuracy of any representation or warranty
 contained in Section 3.9 or any covenant contained in this Article X
 (without duplication), (iv) any and all Taxes imposed upon or with respect
 to Parent, the Surviving Corporation, the Company, or any of its
 Subsidiaries or any of their respective affiliates as a result of any
 inaccuracy in the certificate referred to or any in Section 7.2(i), and (v)
 and any and all Taxes or any other payments required to be made after the
 Closing Date by the Company or any of its Subsidiaries under any Tax
 sharing, indemnity, allocation or other similar agreement or arrangement in
 effect at any time on or prior to the Closing Date.
  
           Section 10.2   Allocation of Taxes.
  
           (a)  In the case of any Tax that is imposed on a periodic basis
 and is payable for a period that begins on or before the Closing Date and
 ends after the Closing Date, the portion of such Tax that shall be
 allocable to the portion of the period ending at the end of the day on the
 Closing Date shall (i) in the case of any Taxes, other than income Taxes
 and Taxes based upon or related to receipts, be deemed to be in the amount
 of such Taxes for the entire period, multiplied by a fraction the numerator
 of which is the number of calendar days in the period ending on (and
 including) the Closing Date and the denominator of which is the number of
 calendar days in the entire period, and (ii) in the case of any income
 Taxes and Taxes based upon or related to receipts, be deemed equal to the
 amount which would be payable if the taxable year ended at the end of the
 day on the Closing Date.  Any refunds for such a period shall be prorated,
 based upon the method employed in clause (i) or (ii) of the preceding
 sentence, as applicable.  Clause (i) of the second preceding sentence shall
 be applied with respect to Taxes, if any, for such period relating to
 capital (including net worth or long-term debt) or intangibles by reference
 to the level of such items on the Closing Date.
  
           (b)  The portion of any Taxes that are imposed on a periodic
 basis, payable for a period that begins on or before the Closing Date and
 ends after the Closing Date and not allocable to the portion of such period
 ending on the Closing Date pursuant to Section 10.3(a) shall be allocable
 to the portion of the period beginning after the Closing Date.
  
           Section 10.3   Mutual Cooperation; Contests.
  
           (a)  Mutual Cooperation.  As soon as practicable, but in any
 event within 30 days after either the Shareholder Representative's or
 Parent's request, Parent shall deliver to the Shareholders Representative
 or each of the Company's shareholders shall deliver to Parent, as the case
 may be, such information and other data relating to the Tax Returns and
 Taxes of the Company and each of its Subsidiaries and shall provide such
 other assistance as may reasonably be requested, to cause the completion
 and timely filing of all Tax Returns or to respond to audits by any taxing
 authority with respect to any Tax Returns or taxable periods or to
 otherwise enable each of the Company's shareholders, Parent, the Surviving
 Corporation, any of the Subsidiaries or their respective affiliates to
 satisfy their accounting or Tax requirements. 
  
           (b)  Contests.  Whenever any taxing authority asserts a claim,
 makes an assessment or otherwise disputes the amount of Taxes for which the
 Company shareholders are or may be liable under this Agreement, Parent
 shall, if informed of such an assertion, inform the Shareholder
 Representative within five (5) business days, and the Company's
 shareholders shall have the right to control any resulting proceedings and
 to determine whether and when to settle any such claim, assessment or
 dispute to the extent such proceedings or determinations affect the amount
 of Taxes for which the Company shareholders may be liable under this
 Agreement; provided, that Parent shall have the right to consent, which
 consent shall not be unreasonably withheld, to any settlement to the extent
 such proceedings or settlement materially affect the amount of Taxes
 imposed on the Company or any of its Subsidiaries for periods beginning
 after the Pre-Closing Periods.  Whenever any taxing authority asserts a
 claim, makes an assessment or otherwise disputes the amount of Taxes for
 which Parent is liable under this Agreement, Parent shall have the right to
 control any resulting proceedings and to determine whether and when to
 settle any such claim, assessment or dispute; provided, that the
 Shareholder Representative shall have the right to consent, which consent
 shall not be unreasonably withheld, to any settlement to the extent such
 proceedings materially affect the amount of Taxes for which the Company
 shareholders are or may be liable under this Agreement.
  
           (c)  Resolution of Disagreements Between Company Shareholders and
 Parent.  The resolution of disagreements between Company's shareholders and
 Parent as to the amount of Taxes shall be resolved in the manner described
 in the Escrow Agreement.
  
           Section 10.4   Other Tax Agreements.
  
           (a)  Notwithstanding anything in any other agreement to the
 contrary, all Tax allocation or Tax sharing agreements or similar
 arrangements of any kind to which the Company or any of its Subsidiaries is
 a party on or prior to the Closing Date (other than this Agreement) shall
 cease and terminate as of the Closing Date.
  
           (b)  All transfer, sales, stamp, registration, excise and similar
 Taxes on or with respect Merger shall be borne by the Company's
 shareholders.
  
  
                                 ARTICLE XI

                                MISCELLANEOUS
  
           Section 11.1   Notices.  All notices and other communications
 hereunder shall be in writing and shall be deemed given if delivered
 personally, telecopied (which is confirmed), sent by nationally-recognized,
 overnight courier or mailed by registered or certified mail (return receipt
 requested) to the parties at the following addresses (or at such other
 address for a party as shall be specified by like notice):
  
           (a)  if to Parent or Sub, to:
  
                     RCN Corporation 
                     105 Carnegie Center 
                     Princeton, NJ  08540-6215 
                     Attention:  General Counsel 
                     Telecopy:  (609) 734-3830 
  
                     with a copy to: 

  
                     Skadden, Arps, Slate, Meagher & Flom LLP 
                     919 Third Avenue (prior to January 14, 2000) 
                     New York, New York  10022-3897 
                     Four Times Square (after January 14, 2000) 
                     New York, New York 10036 
                     Attention:  Howard L. Ellin, Esq. 
                     Telecopy:  (212) 735-2000 
  
           (b)  if to the Company, to:
  
                     21st Century Telecom Group, Inc. 
                     350 North Orleans, Suite 600 
                     Chicago, IL 60654-1509 
                     Attention:  President 
                     Telecopy:  (312) 955-2111 
  
                     with a copy to: 
  
                     Piper Marbury Rudnick & Wolfe LLP 
                     1200 Nineteen Street 
                     Washington, D.C.  20036-2412 
                     Telecopy:  (202) 223-2085 
                     Attention:  Edwin M. Martin Jr., Esq. 
  
           (c)  if to the Shareholder Representative, to:
  
                     Edward T. Joyce
                     11 South LaSalle Street, Suite 1600
                     Chicago, IL  60603
                     Attention:  Edward T. Joyce 
                     Telecopy:  (312) 641-0360 
  
           Section 11.2   Interpretation; Certain Definitions.
  
           (a)  When a reference is made in this Agreement to a section,
 such reference shall be to a Section of this Agreement unless otherwise
 indicated.  The table of contents and headings contained in this Agreement
 are for reference purposes only and shall not affect in any way the meaning
 or interpretation of this Agreement.  Whenever the words "include",
 "includes" or "including" are used in this Agreement they shall be deemed
 to be followed by the words "without limitation."  The phrase "made
 available" in this Agreement shall mean that the information referred to
 has been made available if requested by the party to whom such information
 is to be made available.  The phrases "the date of this Agreement", "the
 date hereof", and terms of similar import, unless the context otherwise
 requires, shall be deemed to refer to the date first above written.  The
 phrase "to the knowledge" of a person, and terms of similar import, shall
 mean both the actual knowledge of a person or its executive officers and
 what such person or its officers should have known after reasonable
 investigation.  The term "person" means an individual, corporation,
 partnership, limited liability company, association, trust or other entity
 or organization, including a government or political subdivision or an
 agency or instrumentality thereof.

          Section 11.3   Counterparts.  This Agreement may be executed in
 two or more counterparts, all of which shall be considered one and the same
 agreement and shall become effective when two or more counterparts have
 been signed by each of the parties and delivered to the other parties, it
 being understood that all parties need not sign the same counterpart.
  
           Section 11.4   Entire Agreement; No Third Party Beneficiaries. 
 This Agreement (including the Confidentiality Agreement and other documents
 and the instruments referred to herein) (a) constitutes the entire
 agreement and supersedes all prior agreements and understandings, both
 written and oral, among the parties with respect to the subject matter
 hereof, and (b) is not intended to confer upon any person other than the
 parties hereto any rights or remedies hereunder.
  
           Section 11.5   Governing Law.  This Agreement shall be governed
 by and construed in accordance with the laws of the State of Delaware
 applicable to contracts made and to be performed therein, without giving
 effect to laws that might otherwise govern under applicable principles of
 conflicts of law, provided that any matter relating to the mechanics and
 legal consequences of the Merger shall be governed by Illinois law.
  
           Section 11.6   Jurisdiction.  Except as otherwise expressly
 provided in this Agreement, the parties hereto agree that any suit, action
 or proceeding seeking to enforce any provision of, or based on any matter
 arising out of or in connection with, this Agreement or the transactions
 contemplated hereby shall be brought in the United States District Court
 for the District of Delaware or any other Delaware State court sitting in
 Wilmington, Delaware and each of the parties hereby consents to the
 jurisdiction of such courts (and or the appropriate appellate courts
 therefrom) in any such suit, action proceeding and irrevocably waives, to
 the fullest extent permitted by law, any objection which it may now or
 hereafter have to the laying of the venue of any such suit, action or
 proceeding in any such court or that any such suit, action or proceeding
 which is brought in any such court has been brought in an inconvenient
 forum.  Process in any such suit, action or proceeding may be served on any
 party anywhere in the world, whether within or without the jurisdiction of
 any such court.  Without limiting the foregoing, each party agrees that
 service of process on such party as provided in Section 11.1 shall be
 deemed effective service of process on such party as provided in Section
 11.1 shall be deemed effective service of process on such party.
  
           Section 11.7   WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO
 HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
 PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
 CONTEMPLATED HEREBY.
  
           Section 11.8   Assignment.  Neither this Agreement nor any of the
 rights, interests or obligations hereunder shall be assigned by any of the
 parties hereto (whether by operation of law or otherwise) without the prior
 written consent of the other parties.  Subject to the preceding sentence,
 this Agreement will be binding upon, inure to the benefit of and be
 enforceable by the parties and their respective successors and permitted
 assigns.
  
           Section 11.9   Severability.  It is the desire and intent of the
 parties that the provisions of this Agreement be enforced to the fullest
 extent permissible under the law and public policies applied in each
 jurisdiction in which enforcement is sought.  Accordingly, in the event
 that any provision of this Agreement would be held in any jurisdiction to
 be invalid, prohibited or unenforceable for any reason, such provision, as
 to such jurisdiction, shall be ineffective, without invalidating the
 remaining provisions of this Agreement or affecting the validity or
 enforceability of such provisions in any other jurisdiction. 
 Notwithstanding the foregoing, if such provision could be more narrowly
 drawn so as not to be invalid, prohibited or unenforceable in such
 jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn,
 without invalidating the remaining provisions of this Agreement or
 affecting the validity or enforceability of such provisions in any other
 jurisdiction.

           IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
 Agreement to be signed by their respective officers thereunto duly
 authorized as of the date first written above. 
  
  
 21st CENTURY TELECOM GROUP, INC.       RCN CORPORATION


 By:  /s/ Robert J. Currey              By: /s/ Zachary Julius        
     ------------------------------        -----------------------------
     Name: Robert J. Currey                Name: Zachary Julius           
     Title: President and Chief            Title:  Senior Vice President  
            Executive Officer                      Corporate Development  


                                        21st HOLDING CORP.


                                        By: /s/ Zachary Julius       
                                           -----------------------------
                                           Name: Zachary Julius 
                                           Title:  Senior Vice President
                                                   Corporate Development
                                           
     The undersigned hereby acknowledges his appointment as the Shareholder
 Representative and his willingness to fulfill the duties of the Shareholder
 Representative as contemplated by this Agreement. 

  
                                        SHAREHOLDER REPRESENTATIVE


                                        By: /s/ Edward T. Joyce             
                                           ------------------------------
                                           Name: Edward T. Joyce