425

OMB APPROVAL

OMB Number: 3235-0060
Expires: April 30, 2009

Estimated average burden

hours per response: 5.00

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported ) January 15, 2007

FairPoint Communications, Inc.

(Exact name of registrant as specified in its charter)

Delaware	333-56365	13-3725229
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

21 East Morehead Street,
Suite 250,
Charlotte, North Carolina	28202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (704) 344-8150

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01               Entry into a Material Definitive Agreement.

On January 15, 2007, FairPoint Communications, Inc. (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Verizon Communications Inc. (“Verizon”) and Northern New England Spinco Inc. (“Spinco”), a newly formed, wholly-owned subsidiary of Verizon that will receive, pursuant to the terms of a Distribution Agreement described below, specified assets primarily used in Verizon’s local exchange and related business in Maine, New Hampshire and Vermont (the “Verizon Northeastern Assets”) following the contribution by Verizon of the Verizon Northeastern Assets to Spinco and the assumption by Spinco of certain related liabilities (the “Contribution”).  Following the Contribution, and subject to the approval of the Merger by the stockholders of the Company and the satisfaction of other closing conditions including receipt of certain regulatory approvals, Verizon will distribute to its stockholders all of the shares of capital stock of Spinco (the “Distribution”), and then Spinco will immediately be merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation (the “Surviving Corporation”).

In order to effect the Contribution and the Distribution, Verizon and Spinco entered into a Distribution Agreement (the “Distribution Agreement”), dated as of January 15, 2007, under which certain specified assets and liabilities will be transferred to subsidiaries of Spinco and certain distributions will made and debt securities issued by Spinco.  The Company as successor by merger to Spinco, will have certain post-closing rights for specified periods to ensure that the assets and liabilities specified in the Distribution Agreement were transferred to Spinco.

In connection with the Merger, on January 15, 2007 the Company also entered into (i) a Transition Services Agreement (the “Transition Services Agreement”) with Northern New England Telephone Operations Inc. and Enhanced Communications of Northern New England Inc. (together, the “Buyers”) and Verizon Information Technologies LLC (the “Supplier”), (ii) a Master Services Agreement (the “Master Services Agreement”) with Capgemini U.S. LLC (“Capgemini”), (iii) an Employee Matters Agreement with Verizon and Spinco (the “Employee Matters Agreement”), (iv) a Tax Sharing Agreement with Verizon and Spinco (the “Tax Sharing Agreement”) and (v) a Termination Agreement (the “Termination Agreement”) with Kelso Investment Associates V, L.P. (“KIA V”), Kelso Equity Partners, L.P. (together with KIA V, “Kelso”) and Thomas H. Lee Equity Fund IV, L.P. (“THL”, and together with Kelso, the “Stockholders”).

Separately, on January 15, 2007, Taconic Telephone Corp., a subsidiary of the Company (“Taconic”), entered into a Partnership Interest Purchase Agreement (the “Interest Purchase Agreement”) with Cellco Partnership d/b/a Verizon Wireless and Verizon Wireless of the East LP pursuant to which Taconic has agreed to sell its 7.5% limited partnership interest in Orange County-Poughkeepsie Limited Partnership (the “Partnership”) to Cellco Partnership.

The foregoing agreements are described in greater detail below.  These descriptions of the terms that the Company believes are material in the Merger Agreement, the Transition Services Agreement, the Distribution Agreement, the Master Services Agreement, the Employee Matters Agreement, the Tax Sharing Agreement, the Termination Agreement and the Interest Purchase Agreement are qualified in their entirety by reference to the full text of such agreements, copies

2

of which are filed, respectively, as Exhibits 2.1, 10.1, 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 hereto and incorporated herein by reference.

Merger Agreement

Subject to the terms and conditions set forth in the Merger Agreement, which has been approved by the boards of directors of the Company and Verizon and by Verizon as the sole stockholder of Spinco, upon the completion of the Merger, all of the issued and outstanding shares of Spinco common stock will be converted into an aggregate number of shares of common stock of the Company equal to 1.5266 times the aggregate number of shares of common stock of the Company outstanding, on a fully diluted basis (excluding certain specified options, restricted stock units, restricted units and certain restricted shares outstanding as of the date of the Merger Agreement), immediately prior to the Merger.

The parties to the Merger Agreement have made to each other certain representations, warranties and covenants, which are qualified by information in confidential disclosure letters delivered together with the Merger Agreement.  While the Company does not believe that these letters contain information that the securities laws require it to publicly disclose, other than information that has already been so disclosed, the disclosure schedules do contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants set forth in the Merger Agreement.  Accordingly, the representations, warranties and covenants should not be relied on as characterizations of the actual state of facts, since they may be modified by the disclosure schedules.

The representations and warranties made by the parties in the Merger Agreement and the pre-closing covenants of the parties thereunder do not survive the closing of the Merger and the Merger Agreement does not contain any post-closing indemnification obligations with respect to these matters.  Verizon has agreed to indemnify the Company for (i) a failure to pay liabilities of Verizon relating to its business other than liabilities assumed by Spinco in the Contribution or a failure by Verizon to perform certain obligations under the Distribution Agreement and (ii) for misstatements or omissions (based on information provided by Verizon) in certain registration statements or the related proxy statement/prospectus to be prepared in connection with the transactions contemplated by the Merger Agreement and the Distribution Agreement (the “SEC Filings”).  The Company has agreed to indemnify Verizon for (i) a failure to pay liabilities related to Spinco’s business or a failure by the Surviving Corporation to perform certain obligations under the Distribution Agreement and (ii) for misstatements or omissions (except for those based on information provided by Verizon) in the SEC Filings.

The parties have agreed to a variety of customary covenants and agreements, including with respect to confidentiality, cooperation (including with respect to regulatory and securities matters), the conduct of Spinco’s and the Company’s business in the ordinary course consistent with past practice and other restrictions on the operation of their respective businesses prior to the consummation of the Merger, public announcements and similar matters.  The covenants and agreements are subject to various limitations specified in the Merger Agreement.  The parties have also agreed that prior to the effectiveness of the Merger, the board of directors of the Company (which shall become the board of directors of the Surviving Corporation) shall consist of nine directors, three of whom shall be designated by the Company and six of whom shall be

3

designated by Verizon.  None of Verizon’s director nominees may be employees of Verizon, its affiliates or Cellco Partnership d/b/a/ Verizon Wireless or any of its subsidiaries.

Unless the Merger Agreement is earlier terminated, the Company is required to submit the Merger Agreement to a stockholder vote even if the board of directors of the Company has withdrawn or otherwise modified its recommendation of the Merger.  The Company and its subsidiaries are prohibited from soliciting competing acquisition proposals and may not discuss a competing acquisition proposal unless the board of directors of the Company determines in good faith that the proposal among other things, would reasonably be expected to lead to a superior proposal.  In such event, the Company may engage in discussions with the prospective acquirer, provided that it promptly notifies Verizon of the competing acquisition proposal and keeps Verizon reasonably informed as to the status of such proposal and provides to Verizon any information given to the prospective acquirer that was not previously provided to Verizon.  The Company may terminate the Merger Agreement to accept a superior proposal, subject to certain conditions and the payment of the termination fee described below.

The Merger Agreement may be terminated in the following circumstances, subject to limitations set forth in the Merger Agreement: (i) by mutual written consent of each of the parties, (ii) by any of the parties if the Merger has not been completed by the first anniversary of the date of the Merger Agreement (such date can be extended by either Verizon or the Company for up to four additional 30 day periods in order to obtain outstanding regulatory consents) (the “End Date”), (iii) by any of the parties if a law is enacted preventing the Merger or a final order has been issued enjoining the Merger, (iv) by Verizon and Spinco, on the one hand, or the Company, on the other hand, upon an incurable material breach of the Merger Agreement by the other party or parties, which breach would result in the failure of the terminating party’s closing conditions to be fulfilled, (v) by any of the parties if the stockholders of the Company do not approve the Merger, (vi) by Verizon or Spinco if the board of directors of the Company withdraws or modifies its recommendation of the Merger or recommends a competing acquisition proposal or if the Company fails to hold the stockholder’s meeting within 60 days after the Securities and Exchange Commission (the “SEC”) clears the proxy statement/prospectus for mailing to the Company’s stockholders, (vii) by the Company to accept a superior acquisition proposal, provided that the Company gives Verizon prior notice and cooperates in good faith with Verizon to permit it to modify the terms of the Merger so that the transactions contemplated by the Merger Agreement (as so modified) can be effected, and upon termination of the Merger Agreement, the Company enters into a definitive agreement for such transaction and pays Verizon the Termination Fee described below, (viii) by the Company if Spinco’s adjusted EBITDA for the last twelve months as of the end of any fiscal quarter of 2007 is less than $450 million and (ix) by Verizon if the Company’s adjusted EBITDA for the last twelve months as of the end of any fiscal quarter of 2007 is less than $103.6 million.  In the event that (a) the Company terminates the Merger Agreement to accept a superior acquisition proposal, (b) Verizon or Spinco terminate the Merger Agreement as a result of the Company’s board of director’s withdrawal or modification of its recommendation of the Merger, or (c)(1) the Company receives a competing acquisition proposal and one of the parties terminates the Merger Agreement due to the passing of the End Date, Verizon or Spinco terminates the Merger Agreement because the Company fails to hold its stockholders meeting within 60 days after the SEC clears the proxy statement/prospectus for mailing to the Company’s stockholders, or the Company’s stockholders fail to approve the Merger (and a competing acquisition proposal shall have been publicly announced prior to the stockholders meeting) and (2) within 12 months after the termination of

4

the Merger Agreement, the Company consummates a business combination transaction or enters into a definitive agreement with respect to such a transaction, then the Company shall pay to Verizon a termination fee of $23.3 million (the “Termination Fee”).  In the event the Merger Agreement is terminated as a result of (x) a failure to receive approval from the stockholders of the Company, (y) the Company’s board of directors withdrawing or modifying its recommendation of the Merger or the Company’s failure to hold the stockholders’ meeting within 60 days after the SEC clears the proxy statement/prospectus for mailing to the Company’s stockholders, or (z) the Company’s acceptance of a superior acquisition proposal, in addition to any Termination Fee due, the Company will promptly reimburse Verizon for certain out-of-pocket costs not to exceed $7.5 million.  If the Merger is consummated, the Surviving Corporation shall bear and be responsible, and shall indemnify and reimburse Verizon and its subsidiaries, for (i) all Merger transfer taxes and (ii) all transfer taxes and all recording, application and filing fees (“Transfer Fees”) associated with the transfer of the Verizon Northeastern Assets in connection with the Distribution Agreement in an amount not to exceed $3.0 million; provided, however, that Verizon shall bear and be responsible for and reimburse the Surviving Corporation for all Transfer Fees in excess of $3.0 million.  The Merger Agreement also provides for the allocation among the parties of certain other fees and expenses related to the proposed transactions.

Consummation of the Merger is subject to the satisfaction of certain conditions, including, among others, (i) the consummation of the Contribution and the Distribution, (ii) the receipt of certain telecommunications regulatory consents, (iii) the expiration or termination of the requisite waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, (iv) the receipt of certain rulings from the Internal Revenue Service and certain tax opinions, (v) the effectiveness of the registration statement to be prepared by the Company in connection with the Merger and of any registration statement to be prepared by Spinco in connection with the Distribution, (vi) the approval of the Merger by the stockholders of the Company, (vii) the absence of any event or development that has had, individually or in the aggregate, a material adverse effect on either business and (viii) the consummation of certain financing transactions by the Company.

Transition Services Agreement

Pursuant to the Transition Services Agreement, the Supplier and its affiliates will provide certain transition services to the Buyers exclusively for the benefit of the Company’s operation of the Verizon Northeastern Assets, excluding the unregulated (long distance) businesses.  In return for such transition services, the Buyers shall pay the Supplier certain fees, including: (i)  for the special services provided by the Supplier in support of preparation by the Company for assumption of full responsibility for performance of such services on its own (“Cutover”) at the rate of $125 per hour for each hour of such special services in excess of 500 and the reasonable out-of-pocket travel related costs and expenses incurred by the Supplier in connection with such services (the “Special Services Fees”); (ii) a one-time payment in the amount of either $34,000,000 or $41,500,000, with the higher amount payable only if Cutover occurs within 3 months following the closing of the Merger, to compensate the Supplier for expenses incurred by it in preparing to provide the transition services (the “Schedule B Services”), (iii) with respect to certain services (“Schedule A Services”) a fixed monthly fee commencing on the closing date of the Merger payable so long as the transition services are provided in the amount of $14,200,000 for each of the first eight months following such closing, $500,000 less than the prior month’s

5

fee for each of the ninth through twelfth month following such closing, $14,700,000 for the thirteenth month following such closing and $500,000 more than the amount paid for the prior month for each successive month that Schedule A Services are provided, (iv) a fixed monthly fee in the amount of $52,000 with respect to certain other services (“Schedule C Services”) payable so long as Schedule C Services are provided by the Supplier, (v) a monthly fixed payment of $2,236,450 and a unit based service fee, as applicable, with respect to certain other transition services (the “Schedule D Services”), (vi) amounts necessary to reimburse the Supplier for costs and expenses of third party suppliers or vendors incidental to the Supplier providing the Schedule C Services and the Schedule D Services, and (vii) applicable taxes (other than income and property taxes) in respect of such fees.

In the event that the Merger Agreement terminates as a result of the failure of the stockholders of the Company to approve the Merger Agreement or as a result of the withdrawal or modification  by the board of directors of the Company of its approval or recommendation of the Merger or the Merger Agreement or as a result of the recommendation by the board of directors to the stockholders of the Company of a competing acquisition proposal or the adoption of a resolution to do any of the forgoing, then the Company will be obligated to pay to the Supplier amounts specified in the Transition Service Agreement, including: (i) any unpaid Special Services Fees, (ii) the number of dollars up to $34,000,000 which equal the number of hours the Supplier and its affiliates have labored to prepare to provide the Schedule B Services multiplied by $125 and (iii) qualified transition expenses previously paid by an affiliate of the Supplier to the Company if and to the extent they exceed $20,000,000.

The term of the Transition Services Agreement extends from January 15, 2007 until the earlier of (i) the termination date of the Merger Agreement, (ii) the date identified in a notice delivered by the Supplier pursuant to the Transition Services Agreement in response to a notice by the Company that it is prepared to accept final Cutover of all transition services, (iii) in respect of early termination of the Schedule A Services, Schedule C Services and Schedule D Services, the date identified in a notice delivered by the Supplier after receipt of a Cutover notice from the Company, which date shall be in the month of January, March, May, July, September or November, (iv) in respect of early termination of the Schedule A Services and the Schedule D Services only, the date identified in a notice delivered by the Supplier after receipt of a Cutover notice from the Company, which date shall be in the month of January, March, May, July, September or November or (v) in respect of early termination of the Schedule C Services only, the date identified in a notice delivered by the Supplier after receipt of a Cutover notice from the Company, which date shall be in the month of January, March, May, July, September or November.

The Transition Services Agreement requires the Company and the Supplier to establish a planning committee consisting of representatives of both the Company and Supplier to discuss, plan and implement terms, conditions and procedures to facilitate Buyers’ independent operation of Spinco’s business.  The Company’s goal is to achieve final Cutover approximately 15 months from the date of the Transition Services Agreement.

Distribution Agreement

Subject to the terms and conditions set forth in the Distribution Agreement, (i) Verizon will transfer or cause to be transferred by one of its subsidiaries to Enhanced Communications of

6

Northern New England Inc. those Verizon Northeastern Assets specified in the Distribution Agreement that are not subject to regulations applicable to incumbent local exchange carriers promulgated by one or more of the State of Vermont Public Service Board, the State of Maine Public Utilities Commission or the New Hampshire Public Utilities Commission (collectively, the “Northeastern Regulators”) and related liabilities specified in the Distribution Agreement; (ii) Verizon will transfer or cause to be transferred by Verizon New England Inc. to Northern New England Telephone Operations, Inc. all of the Verizon Northeastern Assets that are subject to the aforementioned regulations and related liabilities specified in the Distribution Agreement; (iii) Spinco will enter into agreements associated with certain financing transactions to be consummated by Spinco and use a portion of the proceeds thereof to pay to Verizon a dividend in an amount not to exceed Verizon’s estimate of its tax basis in Spinco (the “Special Dividend”); (iv) Spinco will distribute to Verizon certain notes to be issued by Spinco to Verizon in an amount equal to (x) $1.7 billion less (y) the amount of the Special Dividend (the “Spinco Securities”) and (v) Verizon will distribute all of the issued and outstanding shares of common stock, par value $0.10 per share, of Spinco to holders of the outstanding shares of common stock, par value $0.10 per share, of Verizon.

The parties to the Distribution Agreement have agreed that Verizon shall cause to be prepared and delivered to the Surviving Corporation a statement (the “Closing Statement”) setting forth the working capital of Spinco and its subsidiaries as of the opening of business on the Distribution date (the “Distribution Date Working Capital”).  If the amount of the Distribution Date Working Capital exceeds $50.5 million less the amount of certain fees which may be paid to the banks in connection with the Merger and related transactions divided by 0.39579, the Surviving Corporation shall pay to Verizon an amount equal to such excess and if the amount of Distribution Date Working Capital is less than such target amount, Verizon shall pay to the Surviving Corporation an amount equal to such deficit.

Master Services Agreement

Subject to the terms and conditions set forth in the Master Services Agreement, Capgemini will provide the Company with professional services (the “Capgemini Services”) in connection with the transition by the Company of certain business operations from Supplier and its affiliates pursuant to the Transition Services Agreement.  The Capgemini Services will be authorized by the Company on a project-by-project basis pursuant to a work order which shall set forth, among other things, the agreed scope of the Capgemini Services, the fees for such Capgemini Services and the period of performance for such Capgemini Services.

The Company may terminate the Master Services Agreement or any work order relating thereto: (i) in the event of a material breach of the Master Services Agreement or any work order relating thereto by Capgemini, which breach is not cured within 30 days after the receipt of written notice by Capgemini, (ii) in the event of a termination of the Merger Agreement for any reason, upon 30 days prior written notice, (iii) for convenience, at any time upon 30 days prior written notice to Capgemini or (iv) if Capgemini fails to deliver certain key deliverables by the target dates set forth in the work order.  Capgemini may terminate the Master Services Agreement for any failure by the Company to make timely payment of any undisputed fees, which breach is not cured within 30 days after receipt of written notice by the Company, or if there are aggregate disputed fees and expenses in excess of $15.0 million.  A termination by the Company for convenience (or by Capgemini for failure by the Company to make timely payment of any undisputed fees) will require the

7

payment of certain penalties by the Company depending upon the month in which such termination is effected.

Employee Matters Agreement

Pursuant to the Employee Matters Agreement, all Verizon companies’ employees whose primary duties relate to Spinco’s business, excluding certain employees designated by Verizon (the “Spinco Employees”), will be employees of subsidiaries of the Company upon consummation of the Merger.  The Spinco Employees will maintain their benefits which are in place at the time of the Merger and the Spinco Employees’ employment by subsidiaries of the Company upon consummation of the Merger will not trigger severance benefits.

Spinco is required to establish “mirror” plans for Spinco Employees replicating Verizon’s health plans, welfare plans, 401(k)/saving plans and Verizon’s management pension plan and union pension plan.  Assets and liabilities will be transferred to these plans on terms mutually agreeable to the parties.  Verizon will retain liabilities under its long-term incentive plans.  Outstanding Verizon stock options will remain with Verizon but any outstanding options for Spinco Employees will be fully vested upon consummation of the Merger and will be exercisable until the earlier of five years after the consummation of the Merger or the original expiration date under the option.  Restricted stock units and performance stock units will remain under the Verizon plan.  Such units will immediately vest upon the consummation of the Merger, and will be payable on their regularly scheduled date subject to the attainment of any applicable performance goals.  No further deferrals of such units will be allowed by Spinco Employees.  Balances under Verizon’s deferred compensation plans will become 100% vested for Spinco Employees but will remain with Verizon and be paid out as provided for under such plans.  Accrued time-off and leave, incentive and commission programs, and worker’s compensation liabilities will be transferred in full to Spinco for all Spinco Employees.

Spinco and the Company and its subsidiary operating the local telephone business in Maine, New Hampshire and Vermont, which the Company will acquire as a result of the Merger, agreed to assume and honor the collective bargaining agreements related to Spinco’s business that Verizon currently has with the International Brotherhood of Electrical Workers and the Communication Workers of America, including the liabilities related thereto.

From the time of the execution of the Merger Agreement through one year after the consummation of the Merger, Verizon and its subsidiaries are prohibited from soliciting for hire any Spinco Employee and the Company and its subsidiaries are prohibited from soliciting for hire any Verizon Employee.  From the time of the execution of the Merger Agreement through one year after the date specified for the termination of the Schedule A Services in the Transition Services Agreement, Verizon and its subsidiaries and the Company and its subsidiaries are prohibited from soliciting for hire any of the other’s employees or the other’s contractors’ employees engaged in performing transition services.  From the time of the execution of the Merger Agreement through one year after the consummation of the Merger, or, with respect to any Verizon employee providing transition services under the Transition Services Agreement (“Verizon Transition Employee”) and any Company employee engaged in, providing or receiving transition services from Verizon pursuant to the Transition Services Agreement (“Company Transition Employee”), through one year after the end of the date specified for the termination of the Schedule A Services in the Transition Services Agreement, Verizon and its

8

subsidiaries may not employ any Company employee or Company Transition Employee who has voluntarily separated from employment with the Company or any of its subsidiaries within the immediately preceding six months, and the Company and its subsidiaries may not employ any Verizon employee or Verizon Transition Employee who has voluntarily separated from employment with Verizon or Spinco or any of their subsidiaries within the immediately preceding six months.

Tax Sharing Agreement

The Tax Sharing Agreement addresses all federal, state and local tax matters related to the Contribution, Distribution and related transactions, and certain tax matters relating to the Merger; the Company’s and Verizon’s obligations to file tax returns and remit taxes; the Company’s and Verizon’s control over tax contests; and the Company’s and Verizon’s obligations to cooperate after the Merger in tax return preparation and record-keeping matters.  The Tax Sharing Agreement provides that Spinco and the Company shall indemnify Verizon for (i) taxes resulting from any of their actions that disqualify the Distribution and related transactions as tax-free; (ii) taxes resulting from (a) the disqualification of the Distribution due to breaches of representations and covenants or (b) failure to adhere to the basis determinations of Verizon; and (iii) taxes of Spinco or attributable to the Spinco business, other than taxes related to the Distribution and related transactions for which neither Spinco nor the Company is responsible under the Tax Sharing Agreement.  The responsibility for transfer taxes is determined under the Merger Agreement.  Verizon shall indemnify the Company for (i) the taxes of Verizon and its subsidiaries and (ii) taxes of Spinco resulting from the Distribution and related transactions unless, in each case, Spinco or the Company are otherwise responsible for such taxes as described above.  All parties to the Tax Sharing Agreement have agreed to report the Contribution, the Distribution and the Merger as tax free.  The Company has agreed to adhere to Verizon’s determination of the tax basis of the Spinco assets and the value of any tax attribute, such as a net operating loss carryover.

The Company agreed not to take any action which could cause the Distribution to be disqualified as a tax-free spin off, including: for two full years after the Distribution, the Company shall not enter into any agreement, understanding or arrangement or any substantial negotiations involving the acquisition of stock of the Company (including by the Company or its subsidiaries) or a shift of ownership of the Company, and shall not issue additional shares of stock, modify any organizational document or transfer of modify any option, warrant or convertible instrument that is related to an equity interest in the Company, other than certain issuances to service providers provided in an applicable “safe harbor” of the IRS regulations; for two years after the Distribution the Company may not repurchase any stock except as allowed under an IRS revenue procedure; and for two years after the Distribution, (i) the Spinco business must actively continue to operate and (ii) the Company shall not dissolve, liquidate, merge or consolidate unless it is the survivor in a merger or consolidation.  The Company also agreed to not pre-pay, pay down, retire, acquire or significantly modify the Spinco Securities prior to their maturity.  However, the Company may engage in these activities (without limiting its indemnity obligations) if it receives an IRS ruling, Verizon’s consent or a legal opinion reasonably satisfactory to Verizon that the tax-free status of the Contribution, the Distribution and the Merger will not be adversely affected.

9

Termination Agreement

Pursuant to the Nominating Agreement, dated as of February 8, 2005 (the “Nominating Agreement”), by and among the Company and each of the Stockholders, the Stockholders have the right to designate two designees to the Company’s board of directors.  The Termination Agreement provides that the Stockholders will effect the resignation of their respective designees to the board of directors of the Company effective no later than immediately prior to the date and time at which the Merger shall become effective.  The Termination Agreement also provides that effective immediately prior to the date and time at which the Merger shall become effective, the Nominating Agreement shall be deemed terminated in all respects without further action by any party.

Interest Purchase Agreement

Pursuant to the Interest Purchase Agreement, Cellco Partnership d/b/a Verizon Wireless has agreed to purchase Taconic’s 7.5% limited partnership interest (the “Interest”) in the Partnership, which offers wireless service under the name Verizon Wireless in Orange County, New York and Dutchess County, New York.  The purchase price payable for the Interest is $55 million, less the amount of certain distributions in excess of $1 million paid to Taconic by the Partnership in respect of the period from January 1, 2007 to the closing of the purchase of the Interest.  The sale of the Interest is subject to approval by the New York Public Service Commission.  In addition to standard termination rights for failure to satisfy conditions precedent or comply with covenants or by mutual consent of the parties, each of Cellco Partnership and Taconic has the right to terminate the Interest Purchase Agreement if the closing has not occurred within 16 months of the date thereof, provided that such party was not the cause of such failure to close.  If Taconic terminates the Interest Purchase Agreement as a result of the failure to receive the approval of the sale from the New York Public Service Commission on terms reasonably satisfactory to Taconic, Taconic will be required to pay to Cellco Partnership an amount equal to all distributions made by the Partnership in excess of $1 million relating to the period from January 1, 2007 through the date on which Taconic terminates the Interest Purchase Agreement.

Item 2.02               Results of Operations and Financial Condition

On January 16, 2006, the Company held a conference call to discuss the Merger and its preliminary financial results for the year ended December 31, 2006.  A copy of the transcript (the “FairPoint Transcript”) of such conference call is attached to this Current Report as Exhibit 99.1 and is incorporated herein solely for purposes of this Item 2.02 disclosure.  The FairPoint Transcript has been selectively edited to facilitate the understanding of the information communicated during the conference call.

This Current Report and the exhibits hereto may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), including without limitation, statements containing the words “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions and statements related to potential cost savings and synergies expected to be realized in the Merger. Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements. Such factors include those risks described from time to time in the Company’s filings with the SEC, including, without

10

limitation, the risks described in the Company’s most recent Annual Report on Form 10-K on file with the SEC. These factors should be considered carefully and you are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date of this report, and the Company undertakes no duty to update this information.

Item 8.01               Other Events.

A copy of the FairPoint Transcript is being furnished by being attached hereto as Exhibit 99.1.  Such material may be deemed soliciting material in connection with the meeting of the Company’s stockholders to be held pursuant to the Merger Agreement and a prospectus in connection with the issuance of common stock of the Company to stockholders of Spinco in the Merger.

On January 16, 2007, the Company and Verizon held a joint conference call to discuss the Merger.  A copy of the transcript (the “Joint Transcript”) of such conference call is attached to this Current Report as Exhibit 99.2.  The Joint Transcript has been selectively edited to facilitate the understanding of the information communicated during the conference call.  Such material may be deemed soliciting material in connection with the meeting of the Company’s stockholders to be held pursuant to the Merger Agreement and a prospectus in connection with the issuance of common stock of the Company to stockholders of Spinco in the Merger.

The Company intends to file a registration statement, including a proxy statement, and other materials with the SEC in connection with the Merger.  The Company urges investors to read these documents when they become available because they will contain important information.  Investors will be able to obtain free copies of the registration  statement and proxy statement, as well as other filed documents containing information about the Company and the Merger, at www.sec.gov, the SEC’s website.  Investors may also obtain free copies of these documents and the Company’s SEC filings at www.fairpoint.com under the Investor Relations section, or by written request to FairPoint Communications, Inc., 521 E. Morehead Street, Suite 250, Charlotte, NC 28202, Attention: Investor Relations.

The Company, Verizon and the Company’s directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies from Company stockholders with respect to the Merger and related transactions.  Information about the Company’s directors and executive officers is available in the Company’s proxy statement for its 2006 annual meeting of stockholders on April 24, 2006.  Additional information regarding the interests of potential participants will be included in the registration statement and proxy statement and other materials to be filed by the Company with the SEC.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

11

Item 9.01               Financial Statements and Exhibits.

(c) Exhibits
	Exhibit Number	Description
2.1		Agreement and Plan of Merger, dated as of January 15, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint Communications, Inc.
10.1		Transition Services Agreement, dated as of January 15, 2007, by and among Verizon Information Technologies LLC, Northern New England Telephone Operations Inc., Enhanced Communications of Northern New England Inc. and FairPoint Communications, Inc.
10.2		Distribution Agreement, dated as of January 15, 2007, by and between Verizon Communications Inc. and Northern New England Spinco Inc.
10.3		Master Services Agreement, dated as of January 15, 2007, by and between FairPoint Communications, Inc. and Capgemini U.S. LLC
10.4		Employee Matters Agreement, dated as of January 15, 2007, by and among Verizon Communications Inc., Northern New England Spinco Inc. and FairPoint Communications, Inc.
10.5		Tax Sharing Agreement, dated as of January 15, 2007, by and among FairPoint Communications, Inc., Verizon Communications Inc. and Northern New England Spinco Inc.
10.6		Termination Agreement, dated as of January 15, 2007, by and among FairPoint Communications, Inc., Kelso Investment Associates V, L.P., Kelso Equity Partners, L.P. and Thomas H. Lee Equity Fund IV, L.P.
10.7		Partnership Interest Purchase Agreement, dated as of January 15, 2007, by and among Verizon Wireless of the East LP, Cellco Partnership d/b/a Verizon Wireless and Taconic Telephone Corp.
99.1		Transcript of Company conference call on January 16, 2007
99.2		Transcript of joint conference call on January 16, 2007

The information in Items 2.02 and 8.01 of this Current Report, including the exhibits attached hereto with respect to such items, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section.  Such information in this Current Report, including the exhibits, shall not be incorporated by reference into any

12

filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing.

13

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ John P. Crowley
	Name:	John P. Crowley
	Title:	Executive Vice President and
		Chief Financial Officer

Date:  January 19, 2007

EX-2.1

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

DATED AS OF JANUARY 15, 2007

BY AND AMONG

VERIZON COMMUNICATIONS INC.,

NORTHERN NEW ENGLAND SPINCO INC.

AND

FAIRPOINT COMMUNICATIONS, INC.

Table of Contents

		Page
ARTICLE I	Definitions	4
ARTICLE II	The Merger	27
2.1	The Merger	27
2.2	Closing	28
2.3	Effective Time	28
2.4	Effects of the Merger	28
2.5	Certificate of Incorporation and Bylaws of the Surviving Corporation	28
2.6	Directors and Officers of the Surviving Corporation	28
2.7	Potential Restructuring of Transactions	29
ARTICLE III	Conversion of Shares; Exchange of Certificates	29
3.1	Effect on Capital Stock	29
3.2	Distribution of Per Share Merger Consideration	30
3.3	Fractional Shares	33
ARTICLE IV	Representations and Warranties of Verizon	34
4.1	Organization; Qualification	34
4.2	Corporate Authority; No Violation	34
4.3	Information Supplied	36
4.4	Brokers or Finders	36
ARTICLE V	Representations and Warranties of Verizon and Spinco	36
5.1	Organization, Qualification	37
5.2	Capital Stock and Other Matters	37
5.3	Corporate Authority; No Violation	38
5.4	Financial Statements	40
5.5	Absence of Certain Changes or Events	41
5.6	Investigations; Litigation	41
5.7	Compliance with Laws	42
5.8	Proxy Statement/Prospectus; Registration Statements	42
5.9	Information Supplied	42
5.10	Environmental Matters	43
5.11	Tax Matters	44
5.12	Benefit Plans	46
5.13	Labor Matters	48
5.14	Intellectual Property	49
5.15	Material Contracts	49
5.16	Board and Stockholder Approval	50
5.17	Sufficiency of Assets	51
5.18	Spinco Real Property	52
5.19	Communications Regulatory Matters	52

i

		Page
5.20	Company Common Stock	53
5.21	Affiliate Transactions	53
5.22	Certain Entities Not ILECs	54
5.23	Reseller Agreement	54
ARTICLE VI	Representations and Warranties of the Company	54
6.1	Organization; Qualification	55
6.2	Capital Stock and Other Matters	55
6.3	Corporate Authority; No Violation	56
6.4	Company Reports and Financial Statements	58
6.5	Absence of Certain Changes or Events	60
6.6	Investigations; Litigation	60
6.7	Compliance with Laws	61
6.8	Proxy Statement/Prospectus; Registration Statements	61
6.9	Information Supplied	61
6.10	Environmental Matters	62
6.11	Tax Matters	63
6.12	Benefit Plans	65
6.13	Labor Matters	66
6.14	Intellectual Property	67
6.15	Communications Regulatory Matters	67
6.16	Material Contracts	68
6.17	Company Real Property	70
6.18	Opinion of Company Financial Advisor	70
6.19	Brokers or Finders	71
6.20	Takeover Statutes	71
6.21	Certain Board Findings	71
6.22	Vote Required	71
6.23	Affiliate Transactions	71
ARTICLE VII	Covenants and Agreements	72
7.1	Conduct of Business by the Company Pending the Merger	72
7.2	Conduct of Spinco Business Pending the Merger	77
7.3	Proxy Statement/Prospectus; Registration Statements	81
7.4	Stockholders Meeting	84
7.5	Efforts to Close	84
7.6	Regulatory Matters	85
7.7	Employee Matters	90
7.8	Certain Third Party Consents	90
7.9	Tax Matters	93
7.10	Access to Information	94
7.11	No Solicitation by the Company	95
7.12	Director and Officer Matters	97

ii

		Page
7.13	Rule 145 Affiliates	98
7.14	Public Announcements	98
7.15	Notification	98
7.16	Real Property Matters	99
7.17	Control of Other Party’s Business	99
7.18	Financial Statements and Related Information	100
7.19	Directors of the Surviving Corporation	101
7.20	Financing	102
7.21	Accountants	104
7.22	Disclosure Controls	105
7.23	Listing	106
7.24	Required Spinco Business Capital Expenditures	106
7.25	Reseller Agreement	106
7.26	Purchasing Arrangement	106
7.27	Joint Defense Arrangements	108
ARTICLE VIII	Conditions to the Merger	109
8.1	Conditions to the Obligations of Spinco, Verizon and the Company to Effect the Merger	109
8.2	Additional Conditions to the Obligations of Verizon and Spinco	111
8.3	Additional Conditions to the Obligations of the Company	112
ARTICLE IX	Termination, Amendment and Waivers	114
9.1	Termination	114
9.2	Effect of Termination	116
9.3	Amounts Payable in Certain Circumstances	117
9.4	Amendment	117
9.5	Waivers	118
ARTICLE X	Survival; Indemnification	118
10.1	Survival of Representations, Warranties and Agreements	118
10.2	Indemnification	118
10.3	Definitions for Purposes of this Article	120
10.4	Limitation on Claims for Indemnifiable Losses	120
10.5	Defense of Claims	121
10.6	Subrogation	122
10.7	Other Rights and Remedies	123
ARTICLE XI	Miscellaneous	123
11.1	Expenses	123
11.2	Notices	124
11.3	Interpretation; Consent	126
11.4	Severability	127
11.5	Assignment; Binding Effect	127

iii

		Page
11.6	No Third Party Beneficiaries	128
11.7	Limited Liability	128
11.8	Entire Agreement	128
11.9	Governing Law	128
11.10	Counterparts	128
11.11	Waiver of Jury Trial	128
11.12	Jurisdiction; Enforcement	129
11.13	Knowledge Convention	129
Exhibit A	Form of Rule 145 Affiliate Agreement

iv

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of January 15, 2007 (this “Agreement”), is by and among VERIZON COMMUNICATIONS INC., a Delaware corporation (“Verizon”), NORTHERN NEW ENGLAND SPINCO INC., a Delaware corporation (“Spinco”), and FAIRPOINT COMMUNICATIONS, INC., a Delaware corporation (the “Company”).

WHEREAS, Spinco is a newly formed, wholly owned, direct Subsidiary of Verizon;

WHEREAS, on or prior to the Distribution Date (as such term, and each other capitalized term used herein and not defined, is defined in Article I hereof), and subject to the terms and conditions set forth in the Distribution Agreement entered into by and between Verizon and Spinco on the date hereof (the “Distribution Agreement”), Verizon New England Inc., a New York corporation (“Verizon New England”), which is a wholly owned, direct Subsidiary of NYNEX Corporation, a Delaware corporation (“NYNEX”), which is a wholly owned, direct Subsidiary of Verizon, will cause the formation of Northern New England Telephone Operations Inc. (“ILEC Spinco Subsidiary”), which will be a wholly-owned direct Subsidiary of Verizon New England;

WHEREAS, on or prior to the Distribution Date, Verizon New England will transfer to ILEC Spinco Subsidiary certain Spinco Assets and Spinco Liabilities in the manner set forth in the Distribution Agreement and will thereafter distribute all capital stock of ILEC Spinco Subsidiary to NYNEX (such transfers and the distribution, the “First Internal Spinoff”), which in turn will distribute all capital stock of ILEC Spinco Subsidiary to Verizon (the “Second Internal Spinoff” and, together with the First Internal Spinoff, the “Internal Spinoffs”);

WHEREAS, on or prior to the Distribution Date, certain Subsidiaries of Verizon will transfer to Verizon, via intercompany dividends or sales or otherwise, certain Spinco Assets and Spinco Liabilities in the manner set forth in the Distribution Agreement (the “Internal Restructuring”);

WHEREAS, on or prior to the Distribution Date, Spinco will issue to Verizon the Spinco Common Stock (as defined in the Distribution Agreement) and distribute to Verizon the Spinco Securities (as defined in the Distribution Agreement) and pay to Verizon the Special Dividend (as defined in the Distribution Agreement), all of which will occur in exchange for Verizon transferring to Spinco the stock of ILEC Spinco

Subsidiary and certain other Spinco Assets and Spinco Liabilities relating to the non-ILEC portion of the Spinco Business in the manner set forth in the Distribution Agreement (the transactions described in this recital, collectively, the “Contribution”);

WHEREAS, upon the terms and subject to the conditions set forth in the Distribution Agreement, on the Distribution Date, Verizon will distribute all of the issued and outstanding shares of Spinco Common Stock to the Distribution Agent for the benefit of the holders of the outstanding Verizon Common Stock (the “Distribution”);

WHEREAS, at the Effective Time, the parties will effect the merger of Spinco with and into the Company, with the Company continuing as the surviving corporation, all upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of the Company (i) has determined that the Merger and this Agreement are advisable, fair to, and in the best interests of, the Company and its stockholders and has approved this Agreement and the transactions contemplated thereby, including the Merger, and the issuance of shares of Company Common Stock pursuant to the Merger, and (ii) has recommended the adoption by the stockholders of the Company of this Agreement and the approval of the transactions contemplated hereby;

WHEREAS, the Board of Directors of Spinco has (i) determined that the Merger and this Agreement are advisable, fair to and in the best interests of Spinco and its sole stockholder, Verizon, and has approved this Agreement and the Distribution Agreement and the transactions contemplated hereby and thereby, including the Contribution, the Debt Exchange (as defined in the Distribution Agreement), the Distribution and the Merger, and (ii) recommended the adoption by Verizon, as the sole stockholder of Spinco, of this Agreement and the approval of the transactions contemplated hereby;

WHEREAS, the Board of Directors of Verizon has approved this Agreement and the Distribution Agreement and the transactions contemplated hereby and thereby, including the Internal Spinoffs, the Internal Restructuring, the Contribution, the Distribution, the Debt Exchange and the Merger;

WHEREAS, prior to the execution of this Agreement, as an inducement to Verizon’s willingness to enter into this Agreement and incur the obligations set forth herein, the Company’s stockholders who are parties to the Nominating Agreement have entered into the Termination Agreement, dated as of January 15, 2007 (the “Termination

2

Agreement”), pursuant to which such stockholders have agreed, among other things, to cause their designees to the Board of Directors of the Company to resign by no later than immediately prior to the Effective Time and to terminate the Nominating Agreement effective immediately prior to the Effective Time;

WHEREAS, the parties to this Agreement intend that (i) the First Internal Spinoff qualify as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”) and a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (ii) the Second Internal Spinoff qualify as a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (iii) the Contribution, together with the Distribution, qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code; (iv) the Distribution qualify as a distribution of Spinco stock to Verizon stockholders eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (v) no gain or loss be recognized by Verizon for federal income tax purposes in connection with the receipt of the Spinco Securities or the consummation of the Debt Exchange; (vi) the Special Dividend qualify as money transferred to creditors or distributed to shareholders in connection with the reorganization within the meaning of Section 361(b)(1) of the Code, to the extent that Verizon distributes the Special Dividend to its creditors and/or shareholders in connection with the Contribution; (vii) the Merger qualify as a tax-free reorganization pursuant to Section 368 of the Code; and (viii) no gain or loss be recognized as a result of such transactions for federal income tax purposes by any of Verizon, Spinco, and their respective stockholders and Subsidiaries (except to the extent of cash received in lieu of fractional shares); and

WHEREAS, the parties to this Agreement intend that throughout the internal restructurings taken in contemplation of this Agreement, including the Internal Spinoffs and Internal Restructurings, the Contribution and the Distribution, and throughout the Merger, the Spinco Employees shall maintain uninterrupted continuity of employment, compensation and benefits, and also for union represented employees, uninterrupted continuity of coverage under their collective bargaining agreements, in each case as described in the Employee Matters Agreement.

NOW, THEREFORE, in consideration of these premises, the representations, warranties, covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound hereby, agree as follows:

3

ARTICLE I

Definitions

1.1“2006 Financial Statements” has the meaning set forth in Section 7.18(a).

1.2“Action” has the meaning set forth in Section 7.12(c).

1.3“Additional Company SEC Documents” has the meaning set forth in Section 6.4(b).

1.4“Affiliate” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person.  The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise; provided, however, that for purposes of this Agreement, (i)  from and after the Distribution Date, no member of either Group shall be deemed an Affiliate of any member of the other Group and (ii) none of Cellco Partnership or any of its Subsidiaries shall be deemed Affiliates or Subsidiaries of Verizon.

1.5“Aggregate Merger Consideration” has the meaning set forth in Section 3.1(a).

1.6“Agreement” has the meaning set forth in the Preamble hereto.

1.7“Alternative Financing” has the meaning set forth in Section 7.20(c).

1.8“Approved for Listing” means, with respect to the shares of Company Common Stock to be issued pursuant to the Merger, that such shares have been approved for listing on the NYSE, subject to official notice of issuance.

1.9“Audited Financial Statements” has the meaning set forth in Section 5.4(a)(i).

4

1.10“Backstop Facility Commitment” means the FairPoint Communications, Inc. Refinancing – Commitment Letter, dated as of the date hereof, from Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc. to the Company, and the related fee letter of even date therewith among the parties thereto.

1.11“Blended Customer Contracts” has the meaning set forth in the Distribution Agreement.

1.12“Business Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by applicable Law to close.

1.13“CALEA” has the meaning set forth in Section 5.19(b).

1.14“Certificate of Merger” has the meaning set forth in Section 2.3.

1.15“Closing” has the meaning set forth in Section 2.2.

1.16“Closing Date” has the meaning set forth in Section 2.2.

1.17“Code” has the meaning set forth in the recitals hereto.

1.18“Commitment Letter” means the Project Nor’easter Commitment Letter, dated as of the date hereof, from Lehman Commercial Paper Inc., Lehman Brothers Inc., Bank of America, N.A., Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc. to the Company, and the related fee letter of even date therewith among the parties thereto.

1.19“Communications Act” means the Communications Act of 1934, as amended.

1.20“Company” has the meaning set forth in the Preamble hereto.

1.21“Company Acquisition” means, in each case other than the Merger or as otherwise specifically contemplated by this Agreement, (i) any merger, consolidation,

5

share exchange, business combination, recapitalization or other similar transaction or series of related transactions involving the Company or any of its Significant Subsidiaries; (ii) any direct or indirect purchase or sale, lease, exchange, transfer or other disposition of the consolidated assets (including stock of the Company Subsidiaries) of the Company and the Company Subsidiaries, taken as a whole, constituting 15% or more of the total consolidated assets of the Company and the Company Subsidiaries, taken as a whole, or accounting for 15% or more of the total consolidated revenues of the Company and the Company Subsidiaries, taken as a whole, in any one transaction or in a series of transactions; (iii) any direct or indirect purchase or sale of or tender offer, exchange offer or any similar transaction or series of related transactions engaged in by any Person following which any Person (including any “group” as defined in Section 13(d)(3) of the Exchange Act) owns 15% or more of the outstanding shares of Company Common Stock; or (iv) any other substantially similar transaction or series of related transactions that would reasonably be expected to prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement or the other Transaction Agreements.

1.22“Company Acquisition Proposal” means any proposal regarding a Company Acquisition.

1.23“Company Adjusted EBITDA” means, for the applicable twelve month period ending with any specified fiscal quarter, the consolidated operating income of the Company and the Company Subsidiaries during such period before interest, taxes, depreciation and amortization calculated in a manner consistent with the definition of “Adjusted Consolidated EBITDA” in the Company Credit Agreement as in effect on the date hereof (excluding, for avoidance of doubt, income attributable to Orange-Poughkeepsie Limited Partnership, a New York limited partnership), plus, without duplication, all fees and expenses incurred by the Company or any of the Company Subsidiaries in connection with this Agreement or any other Transaction Agreement, or the transactions contemplated hereby or thereby, including any Qualified Transition Expenses (but not including any fees and expenses reimbursed or payable by Verizon).

1.24“Company Approvals” has the meaning set forth in Section 6.3(d).

1.25“Company Benefit Plans” has the meaning set forth in Section 6.12(a).

1.26“Company Common Stock” means the common stock, par value $0.01 per share, of the Company.

6

1.27“Company Credit Agreement” means the Credit Agreement, dated as of February 8, 2005, among the Company, Bank of America, N.A., as Syndication Agent, CoBank, ACB and General Electric Capital Corporation as Co-Documentation Agents, Deutsche Bank Trust Company Americas, as Administrative Agent, Deutsche Bank Securities, Inc. and Banc of America Securities LLC, as Joint Lead Arrangers, Deutsche Bank Securities, Inc., Banc of America Securities LLC, Goldman Sachs Credit Partners, L.P. and Morgan Stanley Senior Funding, Inc., as Joint Book Running Managers and the various lenders party thereto from time to time, as amended through the date of this Agreement and as such Company Credit Agreement may be further amended by the proposed fourth amendment thereto, the form of which is attached as Exhibit B to the Backstop Facility Commitment.

1.28“Company Disclosure Letter” has the meaning set forth in the first paragraph of Article VI.

1.29“Company Employee” has the meaning set forth in Section 6.12(a).

1.30“Company Financial Statements” has the meaning set forth in Section 6.4(a)(i).

1.31“Company’s Knowledge” has the meaning set forth in Section 11.13.

1.32“Company Licenses” has the meaning set forth in Section 6.15(a).

1.33 “Company Material Contracts” has the meaning set forth in Section 6.16(a).

1.34“Company Owned Real Property” means all Owned Real Property of the Company or the Company Subsidiaries.

1.35“Company Registration Statement” means the registration statement on Form S-4, including without limitation the Proxy Statement/Prospectus, forming a part thereof, to be filed by the Company with the SEC to effect the registration under the Securities Act of the issuance of the shares of Company Common Stock into which shares of Spinco Common Stock will be converted pursuant to the Merger (as amended and supplemented from time to time).

7

1.36“Company SEC Documents” has the meaning set forth in Section 6.4(a)(v).

1.37“Company Stock Plans” means the FairPoint 1995 Stock Option Plan and the respective award agreements granted thereunder, the FairPoint Amended and Restated 1998 Stock Incentive Plan and the respective award agreements granted thereunder, the FairPoint Amended and Restated 2000 Employee Stock Incentive Plan and the respective award agreements granted thereunder, and the FairPoint 2005 Stock Incentive Plan and the respective award agreements granted thereunder.

1.38“Company Stockholders Meeting” has the meaning set forth in Section 7.4(a).

1.39“Company Subsidiaries” means all direct and indirect Subsidiaries of the Company.

1.40“Company Superior Proposal” has the meaning set forth in Section 7.11(b).

1.41“Company Tax Counsel” has the meaning set forth in Section 7.9(c).

1.42“Company Tax Sharing Agreement” means the Amended and Restated Tax Sharing Agreement, by and among the Company and its Subsidiaries, dated as of November 9, 2000.

1.43“Company Third Party Intellectual Property” means any and all Intellectual Property Rights owned by any Person other than the Company or any of its Subsidiaries that is used in the conduct of the business of the Company and its Subsidiaries.

1.44“Company Voting Debt” has the meaning set forth in Section 6.2(b).

1.45“Confidentiality Agreement” means the December 2005 Confidentiality Agreement between Verizon and the Company.

1.46“Contributing Companies” has the meaning set forth in the Distribution Agreement.

8

1.47“Contract” or “agreement” means any loan or credit agreement, note, bond, indenture, mortgage, deed of trust, lease, sublease, franchise, permit, authorization, license, contract (including collective bargaining agreements, side letters, memoranda of agreement or understanding or any agreement of any kind), instrument, employee benefit plan or other binding commitment, obligation or arrangement, whether written or oral.

1.48“Contribution” has the meaning set forth in the recitals hereto.

1.49“Controlling Person” has the meaning set forth in Section 10.2(a).

1.50“Customer Data” means all customer information obtained in connection with the Spinco Business, in the form and content existing as of the Closing, related to the provisioning of products and services by Spinco or Spinco Subsidiaries in the Territory included in the Spinco Business to current and future customers in the Territory, including name, postal address, email address, telephone number, date of birth, account data, transaction data, demographic data, customer service data, and correspondence, together with any documents and information containing the foregoing; provided, however, the foregoing shall not include (i) any of the foregoing to the extent it is in the possession of Verizon or any U.S. Affiliate and was collected or used other than in connection with the operation of the Spinco Business, (ii) any information included in yellow or white pages listings or directories, in any form, (iii) any information required to be retained by Verizon and/or its Affiliates to comply with applicable law or regulation, (iv) any information publicly available,  and (v) any information received by Verizon or its Affiliates from third parties.

1.51“Debt Exchange” has the meaning set forth in the Distribution Agreement.

1.52 “DGCL” means the General Corporation Law of the State of Delaware.

1.53“Direct Claim” has the meaning set forth in Section 10.5(b).

1.54“Disclosure Letters” means, collectively, the Verizon Disclosure Letter, the Spinco Disclosure Letter and the Company Disclosure Letter.

1.55“Distribution” has the meaning set forth in the recitals hereto.

9

1.56“Distribution Agreement” has the meaning set forth in the recitals hereto.

1.57“Distribution Date” shall mean the date and time that the Distribution shall become effective.

1.58“Distribution Fund” has the meaning set forth in Section 3.2(a).

1.59“Distribution Tax Opinion” means a written opinion of Verizon Tax Counsel, addressed to Verizon and Spinco and dated as of the Distribution Date, in form and substance reasonably satisfactory to Verizon and (solely with respect to issues as to whether Spinco recognizes gain or loss) the Company, to the effect that (i) each of the Internal Spinoffs will qualify as a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code, (ii) the Distribution will qualify as a distribution of Spinco stock to the stockholders of Verizon eligible for nonrecognition under Sections 355(a) and 361(c) of the Code, pursuant to which no gain or loss will be recognized for federal income tax purposes by any of Verizon, Spinco or the stockholders of Verizon, except as to cash received in lieu of fractional shares by the stockholders of Verizon, and (iii) Verizon will not recognize gain or loss for federal income tax purposes in connection with the receipt of the Spinco Securities or the consummation of the Debt Exchange.

1.60“Distribution Tax Representations” has the meaning set forth in Section 7.9(b).

1.61“Distribution Transfer Taxes” means any sales, use, transfer, registration, recording, stamp, value added or other similar taxes or fees arising out of or attributable to the Internal Spinoffs, the Contribution, the Distribution, the Debt Exchange or the Internal Restructuring.

1.62“Effective Time” has the meaning set forth in Section 2.3.

1.63“Employee Matters Agreement” means the Employee Matters Agreement to be entered into among Verizon, Spinco and the Company, in the form attached to the Distribution Agreement.

1.64“Environmental Claim” means administrative or judicial actions, suits, orders, liens, notices, violations or proceedings related to any applicable Environmental Law or Environmental Permit brought, issued or asserted by a Governmental Authority

10

or any third party for compliance, damages, penalties, removal, response, remedial or other action pursuant to any applicable Environmental Law or resulting from the release of a Hazardous Material.

1.65“Environmental Law” means any Law now in effect relating to the environment or Hazardous Materials, including but not limited to the Comprehensive Environmental Response Compensation and Liability Act, 42 USC §6901 et seq.; the Resource Conservation and Recovery Act, 42 USC §6901 et seq.; the Federal Water Pollution Control Act, 33 USC §1251 et seq.; the Toxic Substances Control Act, 15 USC §2601 et seq.; the Clean Air Act, 42 USC §7401 et seq.; the Safe Drinking Water Act, 42 USC §3803 et seq.; the Oil Pollution Act of 1990, 33 USC §2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC §1101 et seq.; the Hazardous Material Transportation Act, 49 USC §1801 et seq.; and any state or local counterparts or equivalents, in each case as amended from time to time.

1.66“Environmental Permits” means all permits, licenses, approvals, authorizations or consents required by or issued by any Governmental Authority under any applicable Environmental Law and includes any and all orders, consent orders or binding agreements issued or entered into by a Governmental Authority under any applicable Environmental Law.

1.67“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.68“ERISA Affiliate” means, with respect to any Person, any other Person or any trade or business, whether or not incorporated, that, together with such first Person, would be deemed a “single employer” within the meaning of section 4001(b) of ERISA.

1.69“Excess Shares” has the meaning set forth in Section 3.3(b).

1.70“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations of the SEC promulgated thereunder.

1.71“Excluded Contract” has the meaning set forth in the Distribution Agreement.

1.72“FCC” means the Federal Communications Commission.

11

1.73“FCC Applications” has the meaning set forth in Section 7.6(c).

1.74“FCC Rules” has the meaning set forth in Section 4.2(c).

1.75“First Internal Spinoff” has the meaning set forth in the recitals hereto.

1.76“Fully Diluted Basis” means as of any date, the aggregate number of shares of Company Common Stock outstanding on such date (including any shares of restricted stock) assuming: (i) the prior exercise of all options and similar rights to purchase Company Common Stock; (ii) the prior conversion into, or exchange for, shares of Company Common Stock of all then issued and outstanding securities which are convertible into, or exchangeable for, shares of Company Common Stock; and (iii) the prior exercise of any similar subscription or other rights to acquire, or to cause the Company to issue, shares of Company Common Stock; provided, however, that the term “Fully Diluted Basis” shall not take into account (A) any shares held in the Company’s treasury, (B) those Company Common Stock options, restricted stock units and restricted units issued prior to the date hereof that are identified on Section 1.76 of the Company Disclosure Letter (along with the exercise price and vesting dates applicable thereto) or any shares of Company Common Stock issued or issuable in respect thereof and (C) those restricted shares of Company Common Stock identified on Section 1.76 of the Company Disclosure Letter (along with the vesting dates applicable thereto).

1.77“GAAP” means United States generally accepted accounting principles.

1.78“Governmental Authority” means any foreign, federal, state or local court, administrative agency, official board, bureau, governmental or quasi-governmental entities, having competent jurisdiction over Verizon, Spinco or the Company, any of their respective Subsidiaries and any other tribunal or commission or other governmental department, authority or instrumentality or any subdivision, agency, mediator, commission or authority of competent jurisdiction.

1.79“Governmental Customer Contract” means any Contract to which a federal, state, county or municipal government or any agency of any of the same, is party and pursuant to said Contract the government or agency is recipient of products or services.

1.80“Group” means the Verizon Group or the Spinco Group, as the case may be.

12

1.81“Hazardous Material” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” “pollutants,” “contaminants,” or any other similar term that defines, lists, or classifies a substance by reason of such substance’s ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “EP toxicity” or adverse affect on human health or the environment, (b) oil, petroleum, or petroleum-derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any radioactive materials, (d) polychlorinated biphenyls, and (e) infectious waste.

1.82“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the rules and regulations promulgated thereunder.

1.83“HSR Agencies” means the Federal Trade Commission and the Antitrust Division of the Department of Justice.

1.84“Idearc Agreements” has the meaning set forth in the Distribution Agreement.

1.85“Identified Persons” has the meaning set forth in Section 7.12(a).

1.86“ILEC” has the meaning set forth in Section 5.22.

1.87“Intellectual Property Agreement” means the Intellectual Property Agreement to be entered into between Verizon and Spinco, in the form attached to the Distribution Agreement.

1.88“Intellectual Property Rights” means all United States and foreign issued and pending patents, trademarks, service marks, slogans, logos, trade names, service names, Internet domain names, trade styles, trade dress and other indicia of origin, and all goodwill associated with any of the foregoing, copyrights, copyrightable works, trade secrets, know-how, processes, methods, designs, computer programs, plans, specifications, data, inventions (whether or not patentable or reduced to practice), improvements, confidential, business and other information and all intangible property, proprietary rights and other intellectual property, and all registrations, applications and renewals (including divisionals, continuations, continuations-in-part, reissues, renewals,

13

registrations, re-examinations and extensions) for, and tangible embodiments of, and all rights with respect to, any of the foregoing.

1.89“Interim Balance Sheet Date” has the meaning set forth in Section 5.4(d).

1.90“Interim Financial Statements” has the meaning set forth in Section 5.4(a)(ii).

1.91“Internal Restructuring” has the meaning set forth in the recitals hereto.

1.92“Internal Spinoffs” has the meaning set forth in the recitals hereto.

1.93 “IRS” means the United States Internal Revenue Service or any successor thereto, including, but not limited to, its agents, representatives and attorneys.

1.94“IRS Ruling” means a private letter ruling from the IRS to the effect that (i) the First Internal Spinoff will qualify as a reorganization under Section 368(a)(1)(D) of the Code and a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (ii) the Second Internal Spinoff will qualify as a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (iii) the Contribution, together with the Distribution, will qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code; (iv) the Distribution will qualify as a distribution of Spinco stock to Verizon stockholders eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (v) Verizon will not recognize gain or loss for federal income tax purposes in connection with the receipt of the Spinco Securities or the consummation of the Debt Exchange; (vi) the Special Dividend will qualify as money transferred to creditors or distributed to shareholders in connection with the reorganization within the meaning of Section 361(b)(1) of the Code, to the extent that Verizon distributes the Special Dividend to its creditors and/or shareholders in connection with the Contribution; and (vii) no gain or loss will be recognized as a result of such transactions for federal income tax purposes by any of Verizon, Spinco, and their respective stockholders and Subsidiaries (except to the extent of cash received in lieu of fractional shares).

1.95“IRS Submission” has the meaning set forth in Section 7.9(a)(i).

14

1.96“Law” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Authority.

1.97[Intentionally omitted.]

1.98“Leased Real Property” has the meaning set forth in the Distribution Agreement.

1.99“Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which any Person holds any Leased Real Property.

1.100“Liens” means all mortgages, deeds of trust, liens, security interests, pledges, leases, conditional sale contracts, claims, charges, liabilities, obligations, privileges, easements, rights of way, limitations, reservations, restrictions, options, rights of first refusal and other encumbrances of every kind.  For the avoidance of doubt, the license of Intellectual Property Rights shall not itself constitute a Lien.

1.101“Losses” has the meaning set forth in Section 10.3(d).

1.102“Material Adverse Effect” means, with respect to any business or Person, any state of facts, change, development, event, effect, condition or occurrence that, individually or in the aggregate, has had or would be reasonably likely to have a materially adverse effect on the business, assets, properties, liabilities or condition (financial or otherwise) of such business or Person and its Subsidiaries, as applicable, taken as a whole, or that, directly or indirectly, prevents or materially impairs or delays the ability of such Person to perform its obligations under this Agreement; but shall not include facts, events, changes, effects or developments (i) (A) generally affecting the rural, regional or nationwide wireline voice and data industry in the United States, including regulatory and political developments and changes in Law or GAAP, or (B) generally affecting the economy or financial markets in the United States, (ii) resulting from the announcement of this Agreement and the transactions contemplated hereby or by the other Transaction Agreements or the taking of any action required by this Agreement or the other Transaction Agreements in connection with the Merger (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships, or any loss of employees resulting therefrom) or (iii) resulting from any natural disaster, or any engagement by the United

15

States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any act or acts of terrorism (except to the extent that any such facts, events, changes, effects or developments referenced in clauses (i) and (iii) have a disproportionate effect on such business or Person and its Subsidiaries); provided, that any fluctuation in the market price of such Person’s publicly traded common stock, separately and by itself, shall not be deemed to constitute a Material Adverse Effect hereunder (it being understood that the foregoing shall not prevent a party from asserting that any fact, change, development, event, effect, condition or occurrence that may have contributed to such fluctuation in market price independently constitutes a Material Adverse Effect).

1.103“ME Lease” has the meaning set forth in Section 7.16(iii).

1.104“ME Premises” has the meaning set forth in Section 7.16(iii).

1.105“Merger” has the meaning set forth in Section 2.1.

1.106“Merger Tax Opinion” has the meaning set forth in Section 7.9(c).

1.107“Merger Transfer Taxes” means any sales, use, transfer, registration, recording, stamp, value added or other similar taxes or fees arising out of or attributable to the Merger.

1.108“Network Element” means any port network device, computer, server or other processing device connected to or used in support of the public switched voice, data, DSL and other networks of the Spinco Business, to the extent such element is located in the states of Maine, Vermont or New Hampshire and is used solely in the support of the Spinco Business.

1.109“Network Element Software” means the Verizon Third Party Intellectual Property consisting of system software and any application software, in each case in the form and content it exists as of the Closing Date, as and to the extent installed on Network Elements owned or leased by Spinco or the Spinco Subsidiaries as of the Closing, certain of which software is listed on Section 1.109 of the Spinco Disclosure Letter along with the Network Elements in which they are installed, but excluding any application software (other than application software that has been specifically designed and dedicated for a Network Element and is required for a Network Element to perform its voice or data function) which is licensed pursuant to an Excluded Contract that (i) is

16

licensed by any Person other than the Network Element supplier, (ii) is not identified on Section 1.109 of the Spinco Disclosure Letter or (iii) is identified on Section 1.109(iii) of the Spinco Disclosure Letter.

1.110“New Financing” means the financing contemplated by the Commitment Letter.

1.111“NH Lease” has the meaning set forth in Section 7.16(ii).

1.112“NH Premises” has the meaning set forth in Section 7.16(ii).

1.113“Non-ILEC Spinco Subsidiary” has the meaning set forth in the Distribution Agreement.

1.114“Nominating Agreement” means that certain Nominating Agreement, dated as of February 8, 2005, by and among the Company, Kelso Investment Associates V, L.P., a Delaware limited partnership, Kelso Equity Partners V, L.P., a Delaware limited partnership, and Thomas H. Lee Equity Fund IV, L.P., a Delaware limited partnership.

1.115“Non-Statutory Intellectual Property” means (i) all unpatented inventions (whether or not patentable), trade secrets, know-how and proprietary information, including but not limited to (in whatever form or medium), discoveries, ideas, compositions, formulas, computer programs (including source and object codes), computer software documentation, database, drawings, designs, plans, proposals, specifications, photographs, samples, models, processes, procedures, data, information, manuals, reports, financial, marketing and business data, and pricing and cost information, correspondence and notes, (ii) United States works of authorship, mask works, copyrights, and copyright and mask work registrations and applications for registration, and (iii) any rights or licenses in the foregoing which may be granted without the payment of compensation or other consideration to any Person; provided, however, that, notwithstanding anything to the contrary, the definition of “Non-Statutory Intellectual Property” shall not include any Statutory Intellectual Property.

1.116“NYNEX” has the meaning set forth in the recitals hereto.

1.117“NYSE” has the meaning set forth in Section 3.3(b).

17

1.118“Order” means any decree, judgment, injunction, writ, ruling or other order of any Governmental Authority.

1.119“Other PUC Applications” has the meaning set forth in Section 7.6(b).

1.120“Owned Real Property” has the meaning set forth in the Distribution Agreement.

1.121“PBGC” means the U.S. Pension Benefit Guaranty Corporation.

1.122“Per Share Merger Consideration” has the meaning set forth in Section 3.1(a).

1.123“Permitted Encumbrances” means (A) statutory Liens for Taxes that are not due and payable as of the Closing Date, or that are being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (B) mechanics liens and similar Liens for labor, materials or supplies provided, incurred in the ordinary course of business for amounts which are not due and payable or are subject to dispute and with respect to which reserves have been established in accordance with GAAP; (C) zoning, building codes and other land use Laws regulating the use or occupancy of such Owned Real Property or the activities conducted thereon which are imposed by any governmental authority having jurisdiction over such Owned Real Property which are not violated by the current use or occupancy of such Owned Real Property or the operation of the business thereon; (D) easements, covenants, conditions, restrictions and other similar matters of record affecting title to any Owned Real Property which do not or would not materially impair the use or occupancy of such Owned Real Property in the operation of the business conducted thereon; and (E) Liens securing indebtedness incurred in connection with the New Financing or disclosed in the Company SEC Documents or the Spinco Financial Statements, as applicable.

1.124“Person” or “person” means a natural person, corporation, company, joint venture, individual business trust, trust association, partnership, limited partnership, limited liability company or other entity, including a Governmental Authority.

1.125“Proprietary Business Information” means any and all non-technical, non-public information included in the Non-Statutory Intellectual Property which is owned by Verizon or its U.S. Affiliates as of the Closing, after giving effect to the assignment

18

contemplated by Section 2.1(a) of the Intellectual Property Agreement, and is used in the Spinco Business as of the Closing Date, but excluding Customer Data.

1.126“Proxy Statement/Prospectus” means the letters to Company stockholders, notices of meeting, proxy statement and forms of proxies to be distributed to Company stockholders in connection with the Merger and the transactions contemplated by this Agreement and any additional soliciting material or schedules required to be filed with the SEC in connection therewith, it being understood that if the Company Registration Statement is not declared effective and mailed to the Verizon stockholders substantially contemporaneously with the mailing of the Proxy Statement/Prospectus to the Company stockholders, then the prospectus included in the Company Registration Statement at the time of its mailing to the Verizon stockholders may be different than the Proxy Statement/Prospectus mailed to the Company stockholders.

1.127“Purchase Letter of Credit” has the meaning set forth in Section 7.26(b).

1.128“Qualified Transition Expenses” means any and all fees, costs, expenses and other amounts incurred or paid by the Company or any of the Company Subsidiaries from and after the date hereof and prior to the Effective Time in connection with the Company’s planning and efforts to integrate and operate the Spinco Business from and after the Closing, including, without limitation, fees, costs and expenses relating to the acquisition of equipment and systems which are primarily dedicated to such purposes, and those in respect of consultants, third party providers, and newly hired employees of the Company or any of its Subsidiaries who are solely dedicated to such purposes other than any employee earning more than $200,000 per year.

1.129“Quarterly Financial Statements” has the meaning set forth in Section 7.18(b).

1.130 “Real Property Interests” means all easements, rights of way, and licenses in the real property of Spinco that are used primarily in the operation of the Spinco Business, and excluding all Spinco Owned Real Property and property and interests subject to Spinco Leases and Spinco Subleases.

1.131“Record Date” has the meaning set forth in the Distribution Agreement.

1.132“Redactable Information” has the meaning set forth in Section 7.9(a)(i).

19

1.133“Registration Statements” means the Company Registration Statement and the Spinco Registration Statement, if any.

1.134“ILEC Spinco Subsidiary” has the meaning set forth in the recitals hereto.

1.135“Regulation S-K” means Regulation S-K promulgated under the Exchange Act.

1.136“Regulatory Law” has the meaning set forth in Section 7.6(e).

1.137“Requisite Approval” has the meaning set forth in Section 6.22.

1.138“Restraint” has the meaning set forth in Section 8.1(h).

1.139“Rule 145 Affiliate” has the meaning set forth in Section 7.13.

1.140“Rule 145 Affiliate Agreement” has the meaning set forth in Section 7.13.

1.141“Ruling Request” has the meaning set forth in Section 7.9(a)(i).

1.142“Sarbanes-Oxley Act” has the meaning set forth in Section 6.4(c).

1.143“SEC” means the U.S. Securities and Exchange Commission.

1.144“Second Internal Spinoff” has the meaning set forth in the recitals hereto.

1.145“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

1.146“Settlement Requirements” has the meaning set forth in Section 10.5(a).

1.147“Significant Subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X promulgated under the Exchange Act.

20

1.148“Solvency Opinion” has the meaning set forth in Section 8.1(l).

1.149“Special Dividend” has the meaning set forth in the Distribution Agreement.

1.150“Specified Contract” has the meaning set forth in Section 7.6(g).

1.151“Spinco” has the meaning set forth in the Preamble hereto.

1.152“Spinco Adjusted EBITDA” means, for the applicable twelve month period ending with any specified fiscal quarter, the operating income during such period of the local exchange carrier portion of the Spinco Business (calculated in a manner consistent with the applicable Interim Financial Statements (without any material changes or modifications to the methods of revenue recognition or allocation of inter-company charges or expenses contained therein)) before interest, taxes, depreciation and amortization, plus (i) the amount of all applicable costs and charges relating to pension and benefit obligations relating to the Spinco Business, determined in a manner consistent with the methodology used for the third quarter of 2006 as illustrated on Section 1.152 of the Spinco Disclosure Letter, and (ii) any special items that are allocated to the Spinco Business in a manner consistent with past practice and reflected in the financial statements of the Spinco Business but are not included by Verizon in its quarterly releases of financial results announcing statements of income before special and non-recurring items (by way of illustration only, Section 1.152 of the Spinco Disclosure Letter describes the special items that applied to the third quarter of 2006).

1.153“Spinco Assets” has the meaning set forth in the Distribution Agreement.

1.154“Spinco Benefit Plans” has the meaning set forth in Section 5.12(a).

1.155“Spinco Business” has the meaning set forth in the Distribution Agreement.

1.156“Spinco Common Stock” means the common stock, par value $0.01 per share, of Spinco.

21

1.157“Spinco Disclosure Letter” has the meaning set forth in the first paragraph of Article V.

1.158“Spinco Employee” has the meaning set forth in Section 5.12(a).

1.159“Spinco Financial Statements” has the meaning set forth in Section 5.4(a)(ii).

1.160“Spinco Group” means Spinco and the Spinco Subsidiaries.

1.161“Spinco’s Knowledge” has the meaning set forth in Section 11.13.

1.162“Spinco Leases” has the meaning set forth in Section 5.18(b).

1.163 “Spinco Liabilities” has the meaning set forth in the Distribution Agreement.

1.164“Spinco Licenses” has the meaning set forth in Section 5.19(a).

1.165“Spinco Material Contracts” has the meaning set forth in Section 5.15(a).

1.166“Spinco Owned Real Property” means all Owned Real Property of Spinco or Spinco Subsidiaries after giving effect to the Contribution.

1.167“Spinco Registration Statement” means the registration statement on Form S-1, if any, or such other form, if any, as may be required by the Securities Act and/or the SEC to be filed by Spinco with the SEC to effect the registration under the Securities Act of the issuance of the shares of Spinco Common Stock to be issued in the Distribution (as amended and supplemented from time to time).

1.168“Spinco Securities” has the meaning set forth in the Distribution Agreement.

1.169“Spinco Stockholder Approval” has the meaning set forth in Section 5.16.

22

1.170“Spinco Subleases” has the meaning set forth in Section 5.18(b).

1.171“Spinco Subsidiaries” means all direct and indirect Subsidiaries of Spinco immediately following the Contribution.

1.172“Spinco Voting Debt” has the meaning set forth in Section 5.2(c).

1.173“State Regulators” has the meaning set forth in Section 5.19(a).

1.174“Statutory Intellectual Property” means all (i) United States patents and patent applications of any kind, (ii) United States works of authorship, mask-works, copyrights, and copyright and mask work registrations and applications for registration, and (iii) trademarks, trade names, trade styles, trade dress, other indicia of origin, service marks, domain names, and any and all applications and registrations for the foregoing.

1.175“Subsidiary” means, with respect to any Person (but subject to the proviso in the definition of Affiliate), a corporation, partnership, association, limited liability company, trust or other form of legal entity in which such Person, a Subsidiary of such Person or such Person and one or more Subsidiaries of such Person, directly or indirectly, has either (i) a majority ownership in the equity thereof, (ii) the power, under ordinary circumstances, to elect, or to direct the election of, a majority of the board of directors or other analogous governing body of such entity, or (iii) the title or function of general partner or manager, or the right to designate the Person having such title or function.

1.176“Supplies” has the meaning set forth in Section 7.26(a).

1.177“Surviving Corporation” has the meaning set forth in Section 2.1.

1.178“Surviving Corporation Indemnitees” means the Surviving Corporation, each Affiliate of the Surviving Corporation (including all Subsidiaries of the Surviving Corporation) and their respective directors, officers, agents and employees.

1.179“Surviving Corporation Releasors” has the meaning set forth in Section 7.12(b).

1.180“Tariffs” has the meaning set forth in Section 7.6(g).

23

1.181“Tax” or “Taxes” means (i) all taxes, charges, fees, duties, levies, imposts, required deposits, rates or other assessments or governmental charges of any kind imposed by any federal, state, local or foreign Taxing Authority, including income, gross receipts, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including Taxes under Section 59A of the Code), custom duties, property (including real, personal or intangible), sales, use, license, capital stock, transfer, franchise, registration, payroll, withholding, social security (or similar), unemployment, disability, value added, alternative or add-on minimum or other taxes, whether disputed or not, and including any interest, penalties or additions attributable thereto; (ii) liability for the payment of any amount of the type described in clause (i) above arising as a result of being (or having been) a member of any consolidated, combined, unitary or similar group or being (or having been) included or required to be included in any Tax Return related thereto (including pursuant to U.S. Treasury Regulation § 1.1502-6); and (iii) liability for the payment of any amount of the type described in clauses (i) or (ii) above as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person.

1.182“Tax-Free Status of the Transactions” means each of the intended tax consequences specified in the twelfth recital hereto.

1.183“Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended tax return, claim for refund or declaration of estimated tax) required to be supplied to, or filed with, a Taxing Authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.

1.184“Tax Sharing Agreement” means the Tax Sharing Agreement to be entered into on the date hereof between Verizon, Spinco and the Company, as such agreement may be amended from time to time.

1.185“Taxing Authority” means any Governmental Authority or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).

1.186“Telecommunications Regulatory Consents” has the meaning set forth in Section 7.6(c).

24

1.187“Termination Agreement” has the meaning set forth in the recitals hereto.

1.188“Termination Date” means the date, if any, on which this Agreement is terminated pursuant to Section 9.1(b).

1.189“Territory” has the meaning set forth in the Distribution Agreement.

1.190“Territory PUC Applications” has the meaning set forth in Section 7.6(c).

1.191“Third-Party Claim” has the meaning set forth in Section 10.5(a).

1.192“Transaction Agreements” means this Agreement, the Distribution Agreement, the Employee Matters Agreement, the Intellectual Property Agreement, the Transition Services Agreement, the Idearc Agreements and the Tax Sharing Agreement.

1.193“Transferred Affiliate Arrangement” has the meaning set forth in the Distribution Agreement.

1.194“Transition Services Agreement” has the meaning set forth in the Distribution Agreement.

1.195“U.S. Affiliate” means any Affiliate of Verizon that is incorporated in and operates solely in the United States, but specifically excluding Verizon Wireless, Telecomunicaciones de Puerto Rico, Inc., Verizon Airfone Inc. and any subsidiaries of the foregoing.

1.196“Verizon” has the meaning set forth in the Preamble hereto.

1.197 “Verizon Approvals” has the meaning set forth in Section 4.2(c).

1.198“Verizon Common Stock” means the common stock, par value $0.10 per share, of Verizon.

25

1.199       “Verizon Disclosure Letter” has the meaning set forth in the first paragraph of Article IV.

1.200       “Verizon Group” means Verizon and the Verizon Subsidiaries.

1.201       “Verizon Indemnitees” means Verizon, each Affiliate of Verizon (including all Subsidiaries of Verizon) and their respective directors, officers, agents and employees.

1.202       “Verizon IP Consent” means any authorizations, approvals, consents or waivers required by any Person, other than Verizon or any of its Subsidiaries, pursuant to their Contract rights (including any right to receive upgrades or maintenance, support or similar services, if any) in respect of any Network Element Software in connection with the consummation by Verizon and its Subsidiaries of the transactions contemplated by the Distribution Agreement or this Agreement.

1.203       “Verizon IP Consent Costs” has the meaning set forth in Section 7.8(b).

1.204       “Verizon New England” has the meaning set forth in the recitals hereto.

1.205       “Verizon Subsidiaries” means all direct and indirect Subsidiaries of Verizon immediately after the Distribution Date, assuming that the Distribution has occurred in accordance with the Distribution Agreement.

1.206       “Verizon Tax Counsel” means Debevoise & Plimpton LLP.

1.207       “Verizon Third Party Consents” means the authorizations, approvals, consents or waivers required by Law, by Governmental Authorities, or other Person, other than Verizon or any of its Subsidiaries, pursuant to their Contract rights (other than authorizations, approvals, consents or waivers related to Verizon Third Party Intellectual Property or constituting Telecommunications Regulatory Consents or other consents in respect of telecommunications regulatory matters) in connection with the consummation by Verizon and its Subsidiaries of the transactions contemplated by the Distribution Agreement or this Agreement.

26

1.208       “Verizon Third Party Intellectual Property” means any and all Intellectual Property Rights owned by any Person other than Verizon or any of its Subsidiaries, that is used in the conduct of the Spinco Business, without regard as to whether Verizon or any of its Subsidiaries has any rights therein or the right to assign such rights to Spinco or the Spinco Subsidiaries.

1.209       “Verizon Wireless” means Cellco Partnership d/b/a Verizon Wireless, a Delaware general partnership.

1.210       “Volume Commitments” has the meaning set forth in Section 7.6(g).

1.211       “WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988, as amended and any similar state or local law, regulation or ordinance.

ARTICLE II

The Merger

2.1           The Merger.  At the Effective Time and upon the terms and subject to the conditions of this Agreement, Spinco shall be merged with and into the Company (the “Merger”) in accordance with the applicable provisions of the DGCL, the separate existence of Spinco shall cease and the Company shall continue as the surviving corporation of the Merger (sometimes referred to herein as the “Surviving Corporation”) and shall succeed to and assume all the rights, powers and privileges and be subject to all of the obligations of Spinco in accordance with the DGCL and upon the terms set forth in this Agreement.

2.2           Closing.  Unless the transactions herein contemplated shall have been abandoned and this Agreement terminated pursuant to Section 9.1, the closing of the Merger and the other transactions contemplated hereby (the “Closing”) shall take place no later than 2:00 p.m., prevailing Eastern time, on the last Friday of the month in which the conditions set forth in Article VIII (other than those that are to be satisfied by action at the Closing) are satisfied or, to the extent permitted by applicable Law, waived unless otherwise agreed upon in writing by the parties (but in any event not earlier than the last Friday of December 2007) (the “Closing Date”) at the offices of counsel to Verizon or such other location as may be reasonably specified in writing by Verizon.

27

2.3           Effective Time.  Upon the terms and subject to the conditions of this Agreement, on the Closing Date, a certificate of merger shall be filed with the Secretary of State of the State of Delaware with respect to the Merger (the “Certificate of Merger”), in such form as is required by, and executed in accordance with, the applicable provisions of the DGCL.  The Merger shall become effective at the time of filing of the Certificate of Merger or at such later time as the parties hereto may agree and as is provided in the Certificate of Merger.  The date and time at which the Merger shall become so effective is herein referred to as the “Effective Time.”

2.4           Effects of the Merger.  At the Effective Time, the effects of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL.  Without limiting the generality of the foregoing, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Spinco shall vest in the Surviving Corporation, and all debts, liabilities, duties and obligations of the Company and Spinco shall become the debts, liabilities, duties and obligations of the Surviving Corporation.

2.5           Certificate of Incorporation and Bylaws of the Surviving Corporation.

(a)           At the Effective Time, the certificate of incorporation of the Company as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation until thereafter duly amended in accordance with such certificate of incorporation and applicable Law.

(b)           At the Effective Time, the bylaws of the Company as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter duly amended in accordance with the certificate of incorporation of the Surviving Corporation, such bylaws and applicable Law.

2.6           Directors and Officers of the Surviving Corporation.  Subject to Section 7.19, the directors of the Company at the Effective Time shall, from and after the Effective Time, be the initial directors of the Surviving Corporation.  The officers of the Company at the Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving Corporation.  Such directors and officers shall serve until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

28

2.7           Potential Restructuring of Transactions.  If, prior to the date on which the Company intends to commence solicitation of proxies for use at the Company Stockholders Meeting, the IRS notifies Verizon that the IRS will not issue the IRS Ruling in whole or in part, then, during the ensuing 30 day period, the parties will collaborate reasonably and in good faith in order to determine a possible alternative structure for the transactions contemplated hereby that the parties determine, with the assistance of their respective tax advisors, will either make likely the receipt from the IRS of the IRS Ruling or eliminate the necessity for an IRS Ruling, in either case, without (a) substantially increasing the costs to any party associated with the transactions contemplated hereby, (b) causing the performance of the covenants and agreements of any party hereunder to become substantially more burdensome, (c) substantially increasing the regulatory or other consents or approvals required to consummate the transactions contemplated hereby, or (d) otherwise resulting in any substantial impediment to the consummation of the transactions contemplated hereby.  In the event the parties reasonably, and in good faith, agree upon such an alternative structure, they shall be obligated, as soon as practicable thereafter, to modify the covenants and agreements set forth in this Agreement and the other Transaction Agreements accordingly to reflect the change in transaction structure referenced in the immediately preceding sentence.  In furtherance of the foregoing, each of the parties shall take all action reasonably necessary to modify the Ruling Request to reflect the transactions as so modified and effectuate the change in transaction structure contemplated by this Section 2.7, and each such party shall use its reasonable best efforts to cause the transactions contemplated hereby, as so modified, to be consummated as soon as practicable thereafter.  To the extent that the filing or effectiveness of the materials necessary for the solicitation of proxies for use at the Company Stockholders Meeting is delayed in order to afford the parties the time necessary to obtain a response with respect to the IRS Ruling such delay will be deemed to not constitute, nor constitute any basis for a claim of, a breach of the Company’s covenants under Article VII hereof or otherwise.  The parties acknowledge that Verizon may elect pursuant to Section 2.4(e) of the Distribution Agreement to change the structure of certain transactions contemplated in the recitals hereto and to make amendments to this Agreement in order to reflect such changes.

ARTICLE III

Conversion of Shares; Exchange of Certificates

3.1           Effect on Capital Stock.  At the Effective Time, by virtue of the Merger and without any action on the part of Spinco, the Company or any holder of any Spinco Common Stock or Company Common Stock:

29

(a)           All of the shares of Spinco Common Stock issued and outstanding immediately prior to the Effective Time (other than shares canceled in accordance with Section 3.1(b)) shall be automatically converted into an aggregate number of duly authorized, validly issued, fully paid and nonassessable shares of Company Common Stock equal to the product of (x) 1.5266 multiplied by (y) the aggregate number of shares of Company Common Stock issued and outstanding, on a Fully Diluted Basis, immediately prior to the Effective Time (the “Aggregate Merger Consideration”), with each such share of Spinco Common Stock issued and outstanding as of the Effective Time to be converted into a number of shares of Company Common Stock equal to (i) the Aggregate Merger Consideration divided by (ii) the aggregate number of shares of Spinco Common Stock issued and outstanding as of immediately prior to the Effective Time (the “Per Share Merger Consideration”).

(b)           Each share of Spinco Common Stock held by Spinco as treasury stock immediately prior to the Effective Time shall be canceled and shall cease to exist and no stock or other consideration shall be issued or delivered in exchange therefor.

(c)           Each share of Spinco Common Stock issued and outstanding immediately prior to the Effective Time, when converted in accordance with this Section 3.1, shall no longer be outstanding and shall automatically be canceled and shall cease to exist.

(d)           Each share of Company Common Stock that is issued and outstanding immediately prior to and at the Effective Time shall remain outstanding following the Effective Time.

3.2           Distribution of Per Share Merger Consideration.

(a)           Agent.  Prior to or at the Effective Time, the Company shall deposit with the Agent (as defined in the Distribution Agreement), for the benefit of persons entitled to receive shares of Spinco Common Stock in the Distribution and for distribution in accordance with this Article III, through the Agent, certificates or book-entry authorizations representing the shares of Company Common Stock (such shares of Company Common Stock being hereinafter referred to as the “Distribution Fund”) issuable pursuant to Section 3.1 upon conversion of outstanding shares of Spinco Common Stock.  The Agent shall, pursuant to irrevocable instructions, deliver the Company Common Stock contemplated to be issued pursuant to Section 3.1 from the

30

shares of Company Common Stock held in the Distribution Fund.  If the Company deposits such shares into the Distribution Fund prior to the Effective Time and the Merger is not consummated, the Agent shall promptly return such shares to the Company.  The Distribution Fund shall not be used for any other purpose.

(b)           Distribution Procedures.  At the Effective Time, all shares of Spinco Common Stock shall be converted into shares of Company Common Stock pursuant to, and in accordance with the terms of this Agreement, immediately following which the Agent shall distribute on the same basis as the shares of Spinco Common Stock would have been distributed in the Distribution and to the persons entitled to receive such Distribution, in respect of the outstanding shares of Verizon Common Stock held by holders of record of Verizon Common Stock on the Record Date, all of the shares of Company Common Stock into which the shares of Spinco Common Stock that otherwise would have been distributed in the Distribution have been converted pursuant to the Merger.  Each person entitled to receive Spinco Common Stock in the Distribution shall be entitled to receive in respect of the shares of Spinco Common Stock otherwise distributable to such person a certificate or book-entry authorization representing the number of whole shares of Company Common Stock that such holder has the right to receive pursuant to this Article III (and cash in lieu of fractional shares of Company Common Stock, as contemplated by Section 3.3) (and any dividends or distributions pursuant to Section 3.2(c)).  The Agent shall not be entitled to vote or exercise any rights of ownership with respect to the Company Common Stock held by it from time to time hereunder.  The Company agrees that, from and after the Effective Time, those holders of record of Verizon Common Stock who have become holders of record of Company Common Stock by virtue of the Distribution and the Merger shall be holders of record of Company Common Stock for all purposes for so long as they hold such Company Common Stock.

(c)           Distributions with Respect to Undistributed Shares.  No dividends or other distributions declared or made after the Effective Time with respect to Company Common Stock with a record date after the Effective Time shall be paid with respect to any shares of Company Common Stock that have not been distributed by the Agent promptly after the Effective Time, whether due to a legal impediment to such distribution or otherwise.  Subject to the effect of applicable Laws, following the distribution of any such previously undistributed shares of Company Common Stock, there shall be paid to the record holder of such shares of Company Common Stock, without interest (i) at the time of the distribution, the amount of cash payable in lieu of fractional shares of Company Common Stock to which such holder is entitled pursuant to Section 3.3 and the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Company Common Stock and (ii) at the appropriate payment date therefor, the amount of dividends or other distributions with a record date after the Effective Time but prior to the distribution of such shares and a

31

payment date subsequent to the distribution of such shares payable with respect to such whole shares of Company Common Stock.

(d)           No Further Ownership Rights in Spinco Common Stock.  All shares of Company Common Stock issued in respect of shares of Spinco Common Stock (including any cash paid pursuant to Section 3.2(c)) shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Spinco Common Stock.

(e)           Termination of Distribution Fund.  Any portion of the Distribution Fund made available to the Agent that remains undistributed to the former stockholders of Spinco on the one-year anniversary of the Effective Time shall be delivered to the Company, upon demand, and any former stockholders of Spinco who have not received shares of Company Common Stock in accordance with this Article III shall thereafter look only to the Company for payment of their claim for shares of Company Common Stock and any dividends, distributions or cash in lieu of fractional shares with respect to such Company Common Stock (subject to any applicable abandoned property, escheat or similar Law).

(f)            No Liability.  Neither Spinco, the Surviving Corporation nor the Agent shall be liable to any holder of any shares of Spinco Common Stock or any holder of shares of Verizon Common Stock for any shares of Company Common Stock (or dividends or distributions with respect thereto or with respect to shares of Spinco Common Stock) or cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g)           Closing of Transfer Books.  From and after the Effective Time, the stock transfer books of Spinco shall be closed and no transfer shall be made of any shares of capital stock of Spinco that were outstanding immediately prior to the Effective Time.

(h)           Withholding Rights.  Spinco, the Company and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of any Spinco Common Stock such amounts as they determine in good faith are required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax Law.  To the extent that amounts are so withheld and paid over to the appropriate Taxing Authority, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the recipient.

32

3.3           Fractional Shares.

(a)           No fractional shares of Company Common Stock shall be issued in the Merger and no dividend or distribution with respect to Company Common Stock shall be payable on or with respect to any fractional share and such fractional share interests will not entitle the owner thereof to any rights of a stockholder of the Company.

(b)           As promptly as practicable following the Effective Time, the Agent shall determine the excess of (x) the number of shares of Company Common Stock delivered to the Agent by the Company pursuant to Section 3.2(a) over (y) the aggregate number of whole shares of Company Common Stock to be distributed in respect of shares of Spinco Common Stock pursuant to Section 3.2(b) (such excess, the “Excess Shares”).  As soon after the Effective Time as practicable, the Agent, as agent for the applicable holders, shall sell the Excess Shares at the then prevailing prices on the New York Stock Exchange (the “NYSE”), in the manner provided in paragraph (c) of this Section 3.3.

(c)           The sale of the Excess Shares by the Agent shall be executed on the NYSE through one or more member firms of the NYSE and shall be executed in round lots to the extent practicable. The Agent shall use all reasonable efforts to complete the sale of the Excess Shares as promptly following the Effective Time as is practicable consistent with obtaining the best execution of such sales in light of prevailing market conditions. Until the net proceeds of any such sale or sales have been distributed in respect of such shares of Spinco Common Stock, the Agent will hold such proceeds in trust for the applicable holders.  The Surviving Corporation shall pay all commissions, transfer taxes and other out-of-pocket transaction costs of the Agent incurred in connection with such sale or sales of Excess Shares.  In addition, the Surviving Corporation shall pay the Agent’s compensation and expenses in connection with such sale or sales. The Agent shall determine the portion of such net proceeds to which each applicable holder shall be entitled, if any, by multiplying the amount of the aggregate net proceeds by a fraction the numerator of which is the amount of the fractional share interest to which such holder of Spinco Common Stock is entitled (after taking into account all shares of Spinco Common Stock then held by such holder) and the denominator of which is the aggregate amount of fractional share interests to which all holders of Spinco Common Stock are entitled.

(d)           As soon as practicable after the determination of the amount of cash, if any, to be paid in respect of Spinco Common Stock with respect to any fractional share interests, the Agent shall pay such amounts to the applicable holders.

33

ARTICLE IV

Representations and Warranties of Verizon

Except as disclosed in the corresponding section of the Disclosure Letter delivered by Verizon to the Company immediately prior to the execution of this Agreement (the “Verizon Disclosure Letter”), Verizon hereby represents and warrants to the Company as follows:

4.1           Organization; Qualification.  Verizon is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Each of Verizon and its Subsidiaries has all requisite corporate power and authority to own, lease and operate the Spinco Assets.  Each of the Contributing Companies is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the Spinco Assets or the nature of the Spinco Business operated by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

4.2           Corporate Authority; No Violation.

(a)           Verizon has the corporate power and authority to enter into this Agreement and each other Transaction Agreement to which it is or as of the Effective Time will be a party and to carry out its obligations hereunder and thereunder.  The execution, delivery and performance by Verizon of this Agreement and each other Transaction Agreement to which it is or as of the Effective Time will be a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Verizon, except for such further action of the Board of Directors of Verizon required to establish the Record Date and the Distribution Date, and the effectiveness of the declaration of the Distribution by the Board of Directors of Verizon (which is subject to the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in the Distribution Agreement).  This Agreement has been duly executed and delivered by Verizon and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding agreement of Verizon, enforceable against Verizon in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).  As of the Distribution Date, each other Transaction Agreement to which Verizon or one of its Subsidiaries is a party will have been duly executed and delivered by Verizon and/or one

34

of its Subsidiaries and, assuming the due authorization, execution and delivery by the other parties thereto, will constitute a legal, valid and binding agreement of Verizon and/or such Subsidiary, as applicable, enforceable against Verizon and/or such Subsidiary, as applicable in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).

(b)           Neither the execution and delivery by Verizon of this Agreement and other Transaction Agreements to which it is a party nor the consummation by Verizon of the transactions contemplated hereby or thereby, or performance by Verizon of any of the provisions hereof or thereof will (i) violate or conflict with any provisions of Verizon’s certificate of incorporation or bylaws; (ii) assuming the consents and approvals contemplated by Section 4.2(c) are obtained, result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under, any Contract to which Verizon or any of its Subsidiaries is a party or by which Verizon or any of its Subsidiaries is bound or affected; (iii) other than in connection with the New Financing (or other action taken by the Company) result in the creation of a Lien on any of the issued and outstanding shares of Spinco Common Stock, capital stock of any Spinco Subsidiary or on any of the Spinco Assets pursuant to any Contract to which Verizon or any of its Subsidiaries (including Spinco and its Subsidiaries) is a party or by which Verizon or its Subsidiaries is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 4.2(c) below are obtained, violate or conflict with any Order or Law applicable to Verizon or any of its Subsidiaries (including Spinco and its Subsidiaries), or any of the properties, business or assets of any of the foregoing, other than, in the case of each of clauses (ii) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

(c)           Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) the Communications Act and applicable rules and regulations thereunder and the rules, regulations, policies, instructions and orders of the FCC (the “FCC Rules”), (vi) approvals required in connection with the transfer of Real Property Interests and the assignment or novation of Governmental Customer Contracts and (vii) the approvals set forth on Section 4.2(c) of the Verizon Disclosure Letter (the approvals contemplated by clauses (i) through (vii), collectively, the “Verizon Approvals”), no authorization, consent or approval of, or filing with, any Governmental Authority is necessary for the consummation by Verizon or Spinco or any of the Contributing Companies of the transactions contemplated by this Agreement and the other Transaction Agreements,

35

except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

4.3           Information Supplied.  All documents that Verizon or any Verizon Subsidiary is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby and by each other Transaction Agreement will comply in all material respects with the provisions of applicable Law.  All information supplied or to be supplied by Verizon or any Verizon Subsidiary in any document, other than the Proxy Statement/Prospectus or the Registration Statements which are addressed in Section 5.8 hereof, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.

4.4           Brokers or Finders.  Other than as set forth in Section 4.4 of the Verizon Disclosure Letter, and other than any arrangement that may be entered into after the date hereof (which shall be the exclusive liability and obligation of Verizon and not any other party hereto), the material terms of which are disclosed to the Company, no agent, broker, investment banker, financial advisor or other similar Person is or will be entitled, by reason of any agreement, act or statement by Verizon or any of its Subsidiaries, directors, officers or employees, to any financial advisory, broker’s, finder’s or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or other Transaction Agreement.

ARTICLE V

Representations and Warranties of Verizon and Spinco

Except as disclosed in the corresponding section of the Disclosure Letter delivered by Spinco to the Company immediately prior to the execution of this Agreement (the “Spinco Disclosure Letter”), Verizon and Spinco, jointly and severally, represent and warrant to the Company as follows:

36

5.1           Organization, Qualification.

(a)           Spinco and each of the Spinco Subsidiaries is, or on the date of its incorporation will be a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation, has, or will have, all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted or as proposed to be conducted, and is, or will be, duly qualified and licensed to do business and is, or will be, in good standing in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.  The copies of the Spinco certificate of incorporation and bylaws and the certificate of incorporation and bylaws (or analogous governing documents) of each Spinco Subsidiary previously made available to the Company are complete and correct copies of such documents as in full force and effect on the date hereof.

(b)           Section 5.1(b) of the Spinco Disclosure Letter sets forth a list of the Spinco Subsidiaries and their respective jurisdictions of incorporation.

5.2           Capital Stock and Other Matters.

(a)           Spinco is a direct, wholly owned Subsidiary of Verizon, and, as of the Effective Time, shall own or hold no assets (other than the capital stock of the Spinco Subsidiaries and any rights held in connection with the New Financing, the Spinco Securities, this Agreement or any other Transaction Agreement).

(b)           As of the date hereof, the authorized capital stock of Spinco consists of 1,000 shares of Spinco Common Stock and 1,000 shares of Spinco Common Stock are issued and outstanding.  No shares of Spinco Common Stock are held by Spinco in its treasury.  All of the issued and outstanding shares of Spinco Common Stock immediately prior to the Effective Time will be validly issued, fully paid and nonassessable and free of pre-emptive rights.

(c)           No bonds, debentures, notes or other indebtedness of Spinco or any of the Spinco Subsidiaries having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of shares of capital stock of Spinco (including Spinco Common Stock) may vote (“Spinco Voting Debt”) are, or immediately prior to the Effective Time will be, issued or outstanding.

37

(d)           Except in connection with the Merger or as otherwise provided for in the Transaction Agreements, there are not, and immediately prior to the Effective Time there will not be, any outstanding, securities, options, warrants, convertible securities, calls, rights, commitments or Contracts of any kind to which Spinco or any Spinco Subsidiary is a party or by which any of them is bound obligating Spinco or any Spinco Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock, Spinco Voting Debt or other voting securities of Spinco or any Spinco Subsidiary or obligating Spinco or any Spinco Subsidiary to issue, grant, extend, redeem, acquire or enter into any such security, option, warrant, convertible security, call, right, commitment or Contract.

(e)           There are not, and immediately prior to the Effective Time there will not be, any stockholder agreements, voting trusts or other Contracts (other than the Distribution Agreement) to which Spinco is a party or by which it is bound relating to voting or transfer of any shares of capital stock of Spinco or the Spinco Subsidiaries.

5.3           Corporate Authority; No Violation.

(a)           Spinco has the corporate power and authority to enter into this Agreement and each of Spinco and the Spinco Subsidiaries has the corporate power and authority to enter into each other Transaction Agreement to which it is, or as of the Effective Time will be, a party and to carry out its obligations hereunder and thereunder.  The execution, delivery and performance by Spinco of this Agreement by Spinco and each applicable Spinco Subsidiary of each other Transaction Agreement to which it is or as of the Effective Time will be a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Spinco and the Spinco Subsidiaries, except for such further action by the Board of Directors of Spinco required to effect the reclassification of the Spinco Common Stock, the distribution of the Spinco Securities to Verizon and the payment of the Special Dividend, each as contemplated by the Distribution Agreement.

(b)           This Agreement has been duly executed and delivered by Spinco and, assuming the due authorization, execution and delivery by the Company and Verizon, constitutes a legal, valid and binding agreement of Spinco, enforceable against Spinco in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).  As of immediately prior to the Effective Time, each other Transaction Agreement to which Spinco or any other Spinco Subsidiary is a party will have been duly executed and delivered by Spinco or the applicable Spinco Subsidiary and will, assuming

38

the due authorization, execution and delivery by the other parties thereto, constitute a legal, valid and binding agreement of Spinco or the applicable Spinco Subsidiary, enforceable against Spinco or the applicable Spinco Subsidiary in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).

(c)           Neither the execution and delivery by Spinco of this Agreement and by Spinco and each applicable Spinco Subsidiary of each other Transaction Agreement to which Spinco or the applicable Spinco Subsidiary is, or as of the Effective Time will be, a party, nor the consummation by Spinco or the applicable Spinco Subsidiary of the transactions contemplated hereby or thereby, or performance by Spinco or the applicable Spinco Subsidiary of the provisions hereof or thereof will (i) violate or conflict with any provision of Spinco or the applicable Spinco Subsidiary’s certificate of incorporation or bylaws; (ii) assuming the consents and approvals referred to in Section 5.3(d) are obtained and subject to Section 5.3(c) of the Spinco Disclosure Letter, result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination or buy-out by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under any Contract which, if it existed on the Distribution Date, would constitute a Spinco Asset; (iii) result in the creation of a Lien, pledge, security interest, claim or other encumbrance on any of the issued and outstanding shares of Spinco Common Stock or capital stock of any Spinco Subsidiary or on any of the Spinco Assets pursuant to any Contract to which Spinco or any Spinco Subsidiary is a party or by which Spinco or any Spinco Subsidiary or any of the Spinco Assets is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 5.3(d) are obtained, violate or conflict with any Order or Law applicable to Spinco or any Spinco Subsidiary, or any of the properties, businesses or assets of any of the foregoing, other than, in the case of each of clauses (ii) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

(d)           Other than the Verizon Approvals, no authorization, consent or approval of, or filing with, any Governmental Authority is necessary for the consummation by Spinco of the transactions contemplated by this Agreement and the other Transaction Agreements to which Spinco is a party, except for such authorizations, consents, approvals or filings that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

39

5.4           Financial Statements.

(a)           Verizon and Spinco have previously made available to the Company complete and correct copies of:

(i)            the audited combined Statements of Selected Assets, Selected Liabilities and Parent Funding of the local exchange businesses and related landline activities of Verizon in the states of Maine, New Hampshire and Vermont (including Internet access, long distance and customer premises equipment services provided to customers in those states) for the fiscal years ended December 31, 2004 and 2005, and the related audited combined statements of income, cash flows and parent funding for the fiscal years ended December 31, 2003, 2004 and 2005, including the notes thereto (collectively, the “Audited Financial Statements”); and

(ii)           the unaudited interim combined Statements of Selected Assets, Selected Liabilities and Parent Funding of the local exchange businesses and related landline activities of Verizon in the states of Maine, New Hampshire and Vermont (including Internet access, long distance and customer premises equipment services provided to customers in those states) for the nine months ended September 30, 2006, and the related unaudited interim combined statements of income and cash flows for the nine months ended September 30, 2006 (collectively, the “Interim Financial Statements” and, together with the Audited Financial Statements, the “Spinco Financial Statements”).

(b)           The Spinco Financial Statements fairly present in all material respects, and any other financial statements prepared and delivered in accordance with Section 7.3(h) will fairly present in all material respects, the financial position of the Spinco Business as of the respective dates thereof, and the results of operations and changes in cash flows, changes in parent funding or other information included therein for the respective periods or as of the respective dates then ended, in each case except as otherwise noted therein and subject, where appropriate, to normal year-end audit adjustments.  The Spinco Financial Statements and such other financial statements have been or will be prepared in accordance with GAAP, applied on a consistent basis, except as otherwise noted therein.

(c)           As of the date hereof, neither Spinco nor any of the Spinco Subsidiaries is required to file any form, report, registration statement, prospectus or other document with the SEC.

40

(d)           Except for liabilities incurred in the ordinary course of business, consistent with past practice, since the date of the balance sheet included in the Interim Financial Statements (the “Interim Balance Sheet Date”) or as set forth in the Spinco Financial Statements or the notes thereto, since the Interim Balance Sheet Date, Verizon and its Subsidiaries conducting the Spinco Business have not incurred any liabilities or obligations arising from the Spinco Business that are of a nature that would be required to be disclosed on a combined balance sheet prepared consistently with the Interim Financial Statements or in the notes thereto prepared in conformity with GAAP, other than liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

5.5           Absence of Certain Changes or Events.  Except as specifically contemplated by this Agreement or the other Transaction Agreements, since the Interim Balance Sheet Date, the Spinco Business has been conducted in the ordinary course, consistent with past practice, and there has not been any event, occurrence, development or state of circumstances or facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.  From the Interim Balance Sheet Date to the date hereof, none of Verizon, Spinco or any of their respective Subsidiaries has taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 7.2 if taken without the Company’s consent after the date hereof.

5.6           Investigations; Litigation.  Except as set forth in Section 5.6 of the Spinco Disclosure Letter:

(a)           There is no material investigation or review pending (or, to Spinco’s Knowledge, threatened) by any Governmental Authority with respect to Spinco or any of the Spinco Subsidiaries, or with respect to Verizon or any Verizon Subsidiary relating to the Spinco Business.

(b)           There are no actions, suits, grievances, arbitrations, investigations or proceedings pending (or, to Spinco’s Knowledge, threatened) against or affecting Spinco or any of the Spinco Subsidiaries or any of their respective properties or otherwise affecting the Spinco Business at law or in equity before, and there are no Orders of any Governmental Authority, in each case, which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

41

5.7           Compliance with Laws.  The Subsidiaries of Verizon conducting the Spinco Business are and since January 1, 2004 have been, in compliance with all, and have received no notice of any violation (as yet unremedied) of any, Laws applicable to such Subsidiaries of Verizon or any of their respective properties or assets or otherwise affecting the Spinco Business, except where such non-compliance, default or violation has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.  Notwithstanding anything contained in this Section 5.7, no representation or warranty shall be deemed to be made in this Section 5.7 in respect of environmental, Tax, employee benefits, labor or communications Laws matters, which are the subject of the representations and warranties made in Sections 5.10, 5.11, 5.12, 5.13 and 5.19 of this Agreement, respectively.

5.8           Proxy Statement/Prospectus; Registration Statements.  None of the information regarding Verizon or its Subsidiaries, Spinco or the Spinco Subsidiaries, or the Spinco Business, or the transactions contemplated by this Agreement or any other Transaction Agreement that is provided by Verizon or Spinco or any of their respective Subsidiaries specifically for inclusion in, or incorporation by reference into, the Proxy Statement/Prospectus or the Registration Statements will, in the case of the definitive Proxy Statement/Prospectus or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement/Prospectus and any amendment or supplement thereto, and at the time of the Company Stockholders Meeting, or, in the case of the Registration Statements, at the time such registration statement becomes effective, at the time of the Company Stockholders Meeting (in the case of the Company Registration Statement), at the Distribution Date and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.  Any Spinco Registration Statement will comply in all material respects with the provisions of the Securities Act, and the rules and regulations promulgated thereunder, except that no representation is made by Verizon or Spinco with respect to information provided by the Company specifically for inclusion in, or incorporation by reference into, any Spinco Registration Statement.

5.9           Information Supplied.  All documents that Spinco or any Spinco Subsidiary is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby or by any other Transaction Agreement will comply in all material respects with the provisions of applicable Law.  All information supplied or to be supplied by Spinco or any Spinco Subsidiary in any document, other than the Proxy Statement/Prospectus or the Registration Statements, which is addressed in Section 5.8, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of

42

filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.

5.10         Environmental Matters.  Except as set forth in Section 5.10 of the Spinco Disclosure Letter:

(a)           All material Environmental Permits required pursuant to any Environmental Law for operation of the Spinco Business (i) have been obtained by the Subsidiaries of Verizon conducting the Spinco Business and (ii) are currently in full force and effect.  Subsidiaries of Verizon conducting the Spinco Business are in material compliance with all material Environmental Permits required pursuant to any material Environmental Law for operation of the Spinco Business.

(b)           To Spinco’s Knowledge, the Subsidiaries of Verizon conducting the Spinco Business are, and at the Effective Time Spinco and Spinco Subsidiaries will be in material compliance with all applicable Environmental Laws with respect to the Spinco Business.  To Spinco’s Knowledge, there are no events, conditions, circumstances, activities, practices or incidents related to the Spinco Business which would, or would reasonably be likely to, give rise to any Environmental Claim reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

(c)           There is no civil, criminal or administrative action, suit, demand, Environmental Claim, hearing, notice, or demand letter, notice of violation, investigation or proceeding pending or, to Spinco’s Knowledge, threatened against the Subsidiaries of Verizon conducting the Spinco Business related to any Environmental Permit or any applicable Environmental Law or any plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

(d)           To Spinco’s Knowledge, the Subsidiaries of Verizon conducting the Spinco Business have not generated, stored, used, emitted, discharged or disposed of any Hazardous Material in the conduct of the Spinco Business except in material compliance with applicable Environmental Law.  To Spinco’s Knowledge, Verizon and its Subsidiaries have made available to the Company for its review copies of those reports, audits, studies or analyses in their possession,

43

custody or control that are material to the representations made in this Section 5.10.

(e)           The Subsidiaries of Verizon conducting the Spinco Business (i) have not, within the past seven years, received any written request for information, and have not been notified that they are a potentially responsible party, under the Comprehensive Environmental Response, Compensation or Liability Law in connection with the conduct of the Spinco Business and (ii) to Spinco’s Knowledge, have not, within the past seven years, been, and are not reasonably likely to be, subject to liability for any Environmental Claim arising under or pursuant to such laws in connection with the conduct of the Spinco Business.

5.11         Tax Matters.

(a)           Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Spinco Business, (i) all Tax Returns relating to the Spinco Business required to be filed have been filed, (ii) all such Tax Returns are true and correct in all respects as filed or have been subsequently amended to make such Tax Returns true and correct and not further amended, (iii) all Taxes shown as due and payable on such Tax Returns, and all Taxes (whether or not reflected on such Tax Returns) relating to the Spinco Business required to be paid, have been timely paid in full, (iv) all Taxes relating to the Spinco Business for any taxable period (or a portion thereof) beginning on or prior to the Closing Date (which are not yet due and payable) have been properly accrued for in the Spinco Financial Statements and (v) Verizon and the Subsidiaries of Verizon conducting the Spinco Business have duly and timely withheld all Taxes required to be withheld in respect of the Spinco Business and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.

(b)           Except as set forth in Section 5.11(b) of the Spinco Disclosure Letter, no written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to any Subsidiary of Verizon conducting the Spinco Business or the Spinco Business, and no power of attorney with respect to any such Taxes, has been filed or entered into with any Taxing Authority.

44

(c)           Except as set forth in Section 5.11(c) of the Spinco Disclosure Letter, (i) no audits or other administrative proceedings or proceedings before any Taxing Authority are presently pending with regard to any Taxes or Tax Return of any Subsidiary of Verizon conducting the Spinco Business or the Spinco Business, as to which any Taxing Authority has asserted in writing any claim which, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business, and (ii) no Taxing Authority is now asserting in writing any deficiency or claim for Taxes or any adjustment to Taxes with respect to which any Subsidiary of Verizon conducting the Spinco Business or the Spinco Business may be liable with respect to income or other material Taxes which has not been fully paid or finally settled.

(d)           Except as set forth in Section 5.11(d) of the Spinco Disclosure Letter, no Subsidiary of Verizon conducting the Spinco Business (i) is a party to or bound by or has any obligation under any Tax separation, sharing or similar agreement or arrangement other than the Tax Sharing Agreement, (ii) is or has been a member of any consolidated, combined or unitary group for purposes of filing Tax Returns or paying Taxes (other than a group of which Verizon is the common parent corporation) or has any potential liability for Taxes of another Person (other than Verizon or any of the Verizon Subsidiaries) under Treasury Regulations § 1.1502-6 or (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any predecessor provision or any similar provision of state or local law.

(e)           None of the Spinco Assets is subject to any Tax lien (other than liens for Taxes that are not yet due and payable).

(f)            Section 5.11(f) of the Spinco Disclosure Letter lists all foreign jurisdictions in which any Subsidiary of Verizon conducting the Spinco Business files a material Tax Return.

(g)           No Subsidiary of Verizon conducting the Spinco Business has agreed to make or is required to make any adjustment for a taxable period ending after the Effective Time under Section 481(a) of the Code by reason of a change in accounting method or otherwise, except where such adjustments have not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.

(h)           No Subsidiary of Verizon conducting the Spinco Business has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of

45

Section 355(a)(1)(A) of the Code) in a distribution of stock (other than the Distribution) qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in connection with the Merger.

(i)            No Subsidiary of Verizon conducting the Spinco Business does so through, and no Spinco Assets are held by, a partnership, limited liability company treated as a partnership for tax purposes, or any other flow-through entity that, in each case, is not wholly owned by Verizon or wholly owned by Subsidiaries of Verizon.

(j)            None of Verizon or any Subsidiary of Verizon conducting the Spinco Business has taken or agreed to take any action that is reasonably likely to (nor is any of them aware of any agreement, plan or other circumstance that would) prevent the Tax-Free Status of the Transactions.

(k)           No Subsidiary of Verizon conducting the Spinco Business has engaged in any listed transaction, or any reportable transaction the principal purpose of which was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the Code.

5.12         Benefit Plans.

(a)           Section 5.12(a) of the Spinco Disclosure Letter lists each “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other benefit, bonus, incentive, deferred compensation, stock option (or other equity-based compensation), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, whether or not subject to ERISA and whether written or oral, sponsored, maintained or contributed to or required to be contributed to by any Subsidiary of Verizon conducting the Spinco Business, to which Spinco or any of the Spinco Subsidiaries will be a party on the Distribution Date, as provided in the Employee Matters Agreement, or in which any Person who is currently, has been or, on or prior to the Effective Time, is expected to become an employee of any Subsidiary of Verizon conducting the Spinco Business (a “Spinco Employee”) will be a participant on the Distribution Date, or with respect to which any Subsidiary of Verizon conducting the Spinco Business has any material liability (the “Spinco Benefit Plans”).

(b)           No material liability under Title IV (including Sections 4069 and 4212(c) of ERISA) or Section 302 of ERISA has been or as of the Effective Time will have been incurred by any Subsidiary of Verizon conducting the Spinco Business or any ERISA

46

Affiliate of any of them, and no condition exists that would reasonably be expected to result in any Subsidiary of Verizon conducting the Spinco Business incurring any such liability, other than liability for premiums due to the PBGC as of the Distribution Date.  Except as disclosed in Section 5.12(b) of the Spinco Disclosure Letter, the present value of accrued benefits under each Spinco Benefit Plan that is subject to Title IV of ERISA, determined based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, will not exceed the then current value of the assets of such plan allocable to such accrued benefits.

(c)           Except as disclosed in Section 5.12(c) of the Spinco Disclosure Letter, (i) no Spinco Benefit Plan is or will be at the Effective Time a “multiemployer plan,” as defined in Section 3(37) of ERISA and (ii) none of the Subsidiaries of Verizon conducting the Spinco Business or any ERISA Affiliate of any of them has made or suffered or will as of the Effective Time have made or suffered a “complete withdrawal” or a “partial withdrawal,” as such terms are respectively defined in Section 4203 and 4205 of ERISA, the liability for which has not been satisfied in full.

(d)           Each Spinco Benefit Plan has been, or for periods on or prior to the Distribution Date will have been, operated and administered in all material respects in accordance with its terms and applicable Law, including ERISA and the Code.  All contributions and premium payments required to be made with respect to any Spinco Benefit Plan have now been, or on the Distribution Date will have been, timely made, except as may otherwise be specifically permitted under the terms of the Employee Matters Agreement.  Except as set forth in Section 5.12(d) of the Spinco Disclosure Letter, there are no pending or, to Spinco’s Knowledge, threatened claims by, on behalf of or against any of the Spinco Benefit Plans in effect as of the date hereof or any Assets thereof, that, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business, and no matter is pending (other than routine qualification determination filings, copies of which have been furnished to the Company or will be promptly furnished to the Company when made) before the IRS, the United States Department of Labor or the PBGC with respect to any Spinco Benefit Plan.

(e)           Each Spinco Benefit 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 trust maintained under any Spinco Benefit Plan intended to satisfy the requirements of Section 501(c)(9) of the Code has satisfied such requirements and, in either such case, no event has occurred or condition is known to exist that would reasonably be expected to have a material adverse effect on such tax-qualified status for any such Spinco Benefit Plan or any such trust.

47

(f)            Except as contemplated by this Agreement and each other Transaction Agreement, no Spinco Benefit Plan or employment arrangement, no similar plan or arrangement sponsored or maintained by Verizon in which any Spinco Employee is, or on the Distribution Date will be, a participant and no contractual arrangement between any Subsidiary of Verizon conducting the Spinco Business and any third party exists, or on the Distribution Date will exist, that could result in the payment to any current, former or future director, officer, stockholder or employee of any of the Subsidiaries of Verizon conducting the Spinco Business, or of any entity the assets or capital stock of which have been acquired by a Subsidiary of Verizon conducting the Spinco Business, of any money or other property or rights or accelerate or provide any other rights or benefits to any such individual as a result of the consummation of the transactions contemplated by the Transaction Agreements (including the Distribution), whether or not (a) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning of Section 280G of the Code) or (b) some other subsequent action or event would be required to cause such payment, acceleration or provision to be triggered.

5.13         Labor Matters.  Except to the extent listed in Section 5.13(a) of the Spinco Disclosure Letter, no Subsidiary of Verizon conducting the Spinco Business is a party to, or bound by, any collective bargaining agreement, employment agreement or other Contract, in each case, with a labor union or labor organization.  Except to the extent listed in Section 5.13(b) of the Spinco Disclosure Letter and except for such matters which have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business, (a) as of the date hereof, there are no strikes or lockouts with respect to Spinco Employees, (b) there is no unfair labor practice, charge, complaint, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to Spinco’s Knowledge, threatened against any of the Subsidiaries of Verizon conducting the Spinco Business, (c) there are no actual or, to Spinco’s Knowledge, threatened claims, arbitrations, litigation or consent decrees relating to employment Laws, terms and conditions of employment and wages and hours pertaining to Spinco Employees or employment practices affecting Spinco Employees in the Spinco Business and (d) the Subsidiaries of Verizon conducting the Spinco Business are in compliance with all applicable Laws respecting (i) employment and employment practices, (ii) terms and conditions of employment and wages and hours, (iii) collective bargaining and labor relations practices, (iv) layoffs, and (v) immigration.  As of the date hereof, no Subsidiary of Verizon conducting the Spinco Business has any liabilities under the WARN Act as a result of any action taken by any Subsidiary of Verizon conducting the Spinco Business and that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

48

5.14         Intellectual Property.

(a)           Section 5.14(a) of the Spinco Disclosure Letter contains a complete and accurate list of all Statutory Intellectual Property owned by Spinco.  For the avoidance of doubt, the post-Closing ownership of and/or rights in such Statutory Intellectual Property and other intellectual property shall be apportioned between Spinco and the Spinco Subsidiaries, on the one hand, and Verizon and its other Affiliates, on the other, in accordance with the Intellectual Property Agreement.

(b)           Except as disclosed in Section 5.14(b) of the Spinco Disclosure Letter, neither Verizon nor any of its U.S. Affiliates, including the Subsidiaries of Verizon conducting the Spinco Business, have received since January 1, 2002 any written charge, complaint, claim, demand or notice alleging any interference, infringement, misappropriation or violation by the Spinco Business of (including any claim that the Subsidiaries of Verizon conducting the Spinco Business must license or refrain from using) any Verizon Third Party Intellectual Property material to the Spinco Business.

(c)           Except as disclosed in Section 5.14(c) of the Spinco Disclosure Letter, to Spinco’s Knowledge, there are no Liens on any Customer Data, personnel data of Spinco Employees who become employees of the Surviving Corporation or its Subsidiaries at Closing, or Proprietary Business Information.

(d)           Subject to obtaining the required Verizon IP Consents and to complying with the terms and conditions of any Contracts applicable to Network Element Software, the Surviving Corporation and its Subsidiaries, immediately after the Effective Time, shall have the right to use the Network Element Software in accordance with such Verizon IP Consents and such Contracts.

5.15         Material Contracts.

(a)           Except for this Agreement, each other Transaction Agreement, the documents relating to the New Financing and the Spinco Securities, the Spinco Benefit Plans and except as disclosed in Section 5.15(a) of the Spinco Disclosure Letter, neither Verizon nor any of its Subsidiaries with respect to the Spinco Business is, as of the date hereof, a party to or bound by any “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC and as would be applicable to the Spinco Business only) (all Contracts of the type described in this Section 5.15(a) and any other such Contracts that may be entered into by Verizon or any Subsidiary of Verizon after the date hereof and prior to the Effective Time being referred to herein as “Spinco Material

49

Contracts”).  Complete and correct copies of all Spinco Material Contracts have been provided to the Company.

(b)           Except as set forth in Section 5.15(b) of the Spinco Disclosure Letter, (i) neither Verizon nor any Subsidiary of Verizon is in breach of or default under the terms of any Spinco Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business, (ii) to Spinco’s Knowledge, no other party to any Spinco Material Contract is in breach of or in default under the terms of any Spinco Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business and (iii) each Spinco Material Contract is a valid and binding obligation of Verizon or any Subsidiary of Verizon which is a party thereto and, to Spinco’s Knowledge, of each other party thereto, and is in full force and effect, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights generally and (B) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

5.16         Board and Stockholder Approval.  The Boards of Directors of Verizon and Spinco, in each case, at a meeting duly called, have unanimously approved this Agreement and declared it advisable.  As of the date hereof, the sole stockholder of Spinco is Verizon.  Immediately after execution of this Agreement, Verizon will approve and adopt (the “Spinco Stockholder Approval”), as Spinco’s sole stockholder, all aspects of this Agreement and the other Transaction Agreements and the transactions contemplated hereby and thereby which require the consent of Spinco’s stockholder under the DGCL, Spinco’s certificate of incorporation or Spinco’s bylaws.  The approval of Verizon’s stockholders is not required to effect the transactions contemplated by the Distribution Agreement, this Agreement or the other Transaction Agreements.  Upon obtaining the Spinco Stockholder Approval, the approval of Spinco’s stockholders after the Distribution Date will not be required to effect the transactions contemplated by this Agreement, including the Merger, unless this Agreement is amended in accordance with Section 251(d) of the DGCL after the Distribution Date and such approval is required, solely as a result of such amendment, under the DGCL, Spinco’s certificate of incorporation or Spinco’s bylaws or by the IRS.

50

5.17Sufficiency of Assets.

(a)After giving effect to the Contribution and the other transactions described in or contemplated by the Distribution Agreement, and subject to the receipt of all applicable approvals and consents, including those contemplated by Section 5.3(d), Spinco, together with the Spinco Subsidiaries, will have, in all material respects, good and valid title to, or in the case of leased property, valid leasehold interests in, all of the material Spinco Assets, except where the failure to have had such good and valid title or valid leasehold interest would not be material to Spinco or the Spinco Business as currently conducted.

(b)Subject to the immediately following sentence, the assets of Spinco and the Spinco Subsidiaries as at the Closing Date (assuming the consummation of the Contribution) and the services to be provided pursuant to the Transition Services Agreement will be sufficient to permit the Surviving Corporation and its Subsidiaries to carry on the functional operation of the incumbent local exchange carrier portion of the Spinco Business in the Territory (consisting of local exchange service, intraLATA toll service, network access service, enhanced voice and data services, DSL services and wholesale services) immediately following the Effective Time (x) in all material respects, in compliance with Law and (y) in a manner consistent with the operation of such portions of the Spinco Business immediately prior to the Effective Time.  Notwithstanding the foregoing, it is understood and agreed that:  (i) the Company and the Surviving Corporation are not being assigned the Excluded Contracts and those assets and services listed or described in Section 5.17(b) of the Spinco Disclosure Letter, which assets and services are necessary for the conduct of such portion of the Spinco Business, (ii) the administrative and regional headquarters management employees currently operating or advising the Spinco Business will not be transferred to Spinco and the Spinco Subsidiaries and the immediately preceding sentence assumes that the Surviving Corporation will provide such equivalent personnel as may be appropriate for the benefit of the Spinco Business, (iii) the immediately preceding sentence assumes that Surviving Corporation will take all of the Transition Services offered by Verizon’s Affiliates under the Transition Services Agreement, (iv) without limiting Section 5.14, the immediately preceding sentence does not purport to address the existence or sufficiency of any rights in or licenses to any Intellectual Property, (v) the immediately preceding sentence shall not be deemed a representation or warranty as to any revenue, costs or expenses associated with the conduct of such portion of the Spinco Business immediately following the Effective Time and (vi) the immediately preceding sentence assumes the receipt of all necessary authorizations, approvals, consents or waivers required by Law, by Governmental Authorities or other third Persons pursuant to their Contract rights in connection with the transactions contemplated by the Distribution Agreement and this Agreement and pursuant to the Transaction Agreements.

51

5.18Spinco Real Property.

(a)Section 5.18(a) of the Spinco Disclosure Letter sets forth the address of all real property that is or will be following the Contribution Spinco Owned Real Property the loss of which would be material and adverse to the Spinco Business. After giving effect to the Contribution and the other transactions contemplated by the Distribution Agreement, Spinco, or the Spinco Subsidiaries, and subject to the receipt of all applicable consents or approvals will have, in all material respects, good and valid and marketable title to all of the Spinco Owned Real Property identified on such Section of the Spinco Disclosure Letter free and clear of all encumbrances other than Permitted Encumbrances.  Except as set forth on Section 5.18(a) of the Spinco Disclosure Letter, neither Verizon nor any of its Subsidiaries has leased or otherwise granted any third party any right to use or occupy any of the Spinco Owned Real Property identified on such Section of the Spinco Disclosure Letter, and except as set forth on Section 5.18(a) of the Spinco Disclosure Letter, there are no outstanding options, rights of refusal, rights of first offer, rights of reverter or other third party rights in Spinco Owned Real Property identified on such Section of the Spinco Disclosure Letter.

(b)Section 5.18(b) of the Spinco Disclosure Letter sets forth a list of the real property leases which are leases of Spinco as of the date hereof (“Spinco Leases”).  Section 5.18(b) of the Spinco Disclosure Letter sets forth the subleases in respect of Spinco Leases as of the date hereof (the “Spinco Subleases”).  Spinco has previously made available to the Company complete and correct copies of each of the Spinco Leases and Spinco Subleases.  Except as set forth in Section 5.18(b) of the Spinco Disclosure Letter with respect to Spinco Leases and Spinco Subleases (i) each is enforceable in accordance with its terms, subject to bankruptcy, insolvency and other similar Laws affecting the rights of creditors generally and subject to the exercise of judicial discretion in accordance with principles of equity, (ii) there is no material default or material breach of a covenant by Verizon or any of its Subsidiaries, (iii) no event has occurred which with or without the giving of notice or lapse of time, or both, would constitute such a material default or material breach and (iv) there has been no collateral assignment or other security interest and they are not subject to any encumbrance other than Permitted Encumbrances.

5.19Communications Regulatory Matters.

(a)Spinco and the Spinco Subsidiaries hold, or on the Distribution Date will hold, all permits, licenses, franchises, waivers, orders, approvals, concessions, registrations and other authorizations issued or provided by the FCC, state public service or public utility commissions (the “State Regulators”) or other Governmental Authority

52

under all Laws currently in effect, which are necessary for Spinco and/or the Spinco Subsidiaries to own their respective assets or operate the applicable portion of the Spinco Business as currently conducted, (“Spinco Licenses”), except such Spinco Licenses the failure of which to so hold would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Spinco Business.

(b)Verizon and each of the Contributing Companies in the conduct of the Spinco Business has complied since January 1, 2004 with, and currently is not in violation of, any requirement of Law of a Governmental Authority relating to communications regulatory matters to which Spinco or the Spinco Business is subject, except to the extent that any such non-compliance or violation would not reasonably be expected to result in any material burden, fine or consequence on the Spinco Business or as set forth in Section 5.19(b) of the Spinco Disclosure Letter.  Without limiting the foregoing, there is not pending, nor to Verizon’s or Spinco’s Knowledge, threatened against Verizon or any of its Subsidiaries any application, action, petition, objection or other pleading, or any proceeding with the FCC or any State Regulators which questions or contests the validity of, or any rights of the holder under, or seeks the non-renewal or suspension of any Spinco License.  Since January 1, 2004, neither Verizon nor any of the Contributing Companies has received written notice of an investigation or review by any Governmental Authority with respect to a material violation by Verizon or any of the Contributing Companies (with respect to the use or operation of the Spinco Assets) of any requirement of Law relating to the Spinco Business, excluding any notice in respect of a matter that has been withdrawn or resolved without the imposition of material penalties, burdens or fines and except as set forth in Section 5.19(b) of the Spinco Disclosure Letter.  Spinco (a) is capable of providing local number portability in material compliance with 47 U.S.C. § 251(b)(2) and the implementing rules of the FCC; (b) complies in all material respects with the requirements of the Communications Assistance for Law Enforcement Act, 47 U.S.C. § 1001 et seq., and the implementing rules of the FCC (“CALEA”); and (c) is capable of providing 911 service in material compliance with 47 U.S.C. § 251(e)(3) and the implementing rules of the FCC.

5.20Company Common Stock.  Neither Verizon nor Spinco owns (directly or indirectly, beneficially or of record) nor is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of the Company (other than as contemplated by this Agreement), in each case other than any ownership by pension or other benefit plans sponsored for employees of Verizon and/or its Subsidiaries.

5.21Affiliate Transactions.  Except as specifically provided in this Agreement or any of the other Transaction Agreements or as disclosed in Section 5.21 of the Spinco Disclosure Letter, there are no transactions or Contracts of the type that would be

53

required to be disclosed by Subsidiaries of Verizon conducting the Spinco Business under Item 404 of Regulation S-K if such companies were a company subject to such Item between or among (a) Verizon, Spinco or any Spinco Subsidiary, on the one hand, and (b) any individual who is a “named executive officer” (as such term is defined in Section 402 of Regulation S-K) of Verizon, Spinco or any Spinco Subsidiary, on the other hand, in each case to the extent such transactions or Contracts relate to the Spinco Business but in each case excluding compensation received as an employee in the ordinary course.

5.22Certain Entities Not ILECs.  None of Verizon Business Global, LLC, Verizon Global Networks Inc., Verizon Select Services Inc., Verizon Federal Inc., Federal Network Systems LLC or Verizon Network Integration Corp. is an Incumbent Local Exchange Carrier (“ILEC”), as that term is defined in 47 U. S. C. §251(h), and no such entity provides local exchange services as an ILEC in the States of Maine, Vermont or New Hampshire.

5.23Reseller Agreement.  Verizon has been advised by Verizon Wireless that (i) Verizon Wireless has received the Company’s “Application for Reseller Status” and (ii) if that application is approved by Verizon Wireless in accordance with its standard practices, then Verizon Wireless will be prepared at the Effective Time to enter into a reseller agreement with the Company for a two year term on Verizon Wireless’s otherwise standard terms and conditions as of the date of execution of such reseller agreement (including, without limitation, those related to volume of business); provided that there is no material change in the information set forth in the Company’s “Application for Reseller Status” from the time of its submission through the time of execution of such reseller agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed in the corresponding section of the Disclosure Letter delivered by the Company to Verizon and Spinco immediately prior to the execution of this Agreement (the “Company Disclosure Letter”), the Company represents and warrants to Verizon and Spinco as follows:

54

6.1Organization; Qualification.

(a)The Company is a corporation duly organized, validly existing and in good standing under the Laws of Delaware, has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, and is duly qualified and licensed to do business and is in good standing in each jurisdiction in which the ownership or leasing of its property or the conduct of its business requires such qualification, except for jurisdictions in which the failure to be so qualified or to be in good standing would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  The copies of the Company’s certificate of incorporation and bylaws and the certificate of incorporation and bylaws (or analogous governing documents) of any Company Subsidiary that is a Significant Subsidiary of the Company, previously made available to Verizon and Spinco are complete and correct copies of such documents as in full force and effect on the date hereof.

(b)Section 6.1(b) of the Company Disclosure Letter sets forth a list of the Company Subsidiaries and their respective jurisdictions of incorporation or organization, together with a designation of those Company Subsidiaries constituting Significant Subsidiaries of the Company.

6.2Capital Stock and Other Matters.

(a)The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock and 100,000,000 shares of preferred stock of the Company.  As of the date hereof, (i) 35,268,443 shares of Company Common Stock were issued and outstanding (including 603,363 shares of restricted stock), 1,308,297 shares of Company Common Stock were reserved for issuance pursuant to the Company Stock Plans; (ii) no shares of Company Common Stock were held by the Company in its treasury or by its Subsidiaries; and (iii) no shares of preferred stock of the Company were issued and outstanding.  All of the issued and outstanding shares of Company Common Stock are validly issued, fully paid and nonassessable and free of preemptive rights and were issued in compliance with all applicable securities Laws, including, without limitation, all applicable registration requirements under the Securities Act (unless an exemption from registration was available for a particular issuance).

(b)No bonds, debentures, notes or other indebtedness of the Company or any of the Company Subsidiaries having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of shares of

55

capital stock of the Company (including Company Common Stock) may vote (“Company Voting Debt”) are, or at the Distribution Date will be, issued or outstanding.

(c)Except as set forth in Section 6.2(a) above or as set forth in Section 6.2(c) of the Company Disclosure Letter, there are no outstanding securities, options, warrants, convertible securities, calls, rights, commitments or Contracts of any kind to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound obligating the Company or any of the Company Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of Company Common Stock, Company Voting Debt or other voting securities of the Company or any of the Company Subsidiaries or obligating the Company or any of the Company Subsidiaries to issue, grant, extend, redeem, acquire or enter into any such security, option, warrant, convertible security, call, right, commitment, agreement, arrangement, undertaking or Contract.

(d)Except as set forth in Section 6.2(d) of the Company Disclosure Letter or as contemplated by this Agreement, there are no stockholders agreements, voting trusts or other Contracts to which the Company is a party or by which it is bound relating to voting or transfer of any shares of capital stock of the Company or the nomination of any directors thereof.

6.3Corporate Authority; No Violation.

(a)The Company has the corporate power and authority to enter into this Agreement and each other Transaction Agreement to which it is, or as of the Effective Time will be, a party, and subject to obtaining the Requisite Approval, to carry out its obligations hereunder.  The execution, delivery and performance by the Company of this Agreement and each other Transaction Agreement to which it is or as of the Effective Time will be a party and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company, subject to obtaining the Requisite Approval.

(b)This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Verizon and Spinco, constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).  As of immediately prior to the Effective Time, each other

56

Transaction Agreement to which the Company is a party will have been duly executed and delivered by the Company and will, assuming the due authorization, execution and delivery by the other parties thereto, constitute a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms (except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, or by principles governing the availability of equitable remedies).

(c)Except as set forth in Section 6.3(c) of the Company Disclosure Letter, neither the execution and delivery by the Company of this Agreement and each other Transaction Agreement to which the Company is, or as of the Effective Time will be, a party, nor the consummation by the Company of the transactions contemplated hereby or thereby, or performance by the Company of any of the provisions hereof or thereof will (i) violate or conflict with any provision of the Company’s certificate of incorporation or bylaws; (ii) assuming the consents and approvals referred to in Section 6.3(d) below are obtained, result in a default (or an event that, with notice or lapse of time or both, would become a default) or give rise to any right of termination by any third party, cancellation, amendment or acceleration of any obligation or the loss of any benefit under, any Contract to which the Company or any of the Company Subsidiaries is a party or by which the Company or any of the Company Subsidiaries is bound or affected; (iii) other than in connection with the New Financing and, if consummated, the financing contemplated by the Backstop Facility Commitment, result in the creation of a Lien, pledge, security interest, claim or other encumbrance on any of the issued and outstanding shares of Company Common Stock or on any of the assets of the Company or any of the Company Subsidiaries pursuant to any Contract to which the Company or any of the Company Subsidiaries is a party or by which the Company or the Company Subsidiaries is bound or affected; or (iv) assuming the consents and approvals contemplated by Section 6.3(d) below are obtained, violate or conflict with any Order or Law applicable to the Company or any of the Company Subsidiaries, or any of the properties, business or assets of any of the foregoing, other than, in the case of each of clauses (ii) through (iv), any such violation, conflict, default, right, loss or Lien which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

(d)Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Securities Act, (iii) the Exchange Act, (iv) the HSR Act, (v) the Communications Act and applicable rules and regulations thereunder and the FCC Rules, (vi) the approvals set forth in Section 6.3(d) of the Company Disclosure Letter, and (vii) the Requisite Approval (collectively, the “Company Approvals”), no authorization, consent or approval of, or filing with any Governmental Authority is necessary for the consummation by the Company of the transactions contemplated by this Agreement, except for such authorizations, consents, approvals or filings that, if not obtained or

57

made, would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

6.4Company Reports and Financial Statements.

(a)The Company has previously made available to Spinco complete and correct copies of:

(i)the Company’s Annual Report on Form 10-K filed with the SEC under the Exchange Act for the year ended December 31, 2005, including the Company’s audited consolidated balance sheet at December 31, 2005 and 2004, and the related audited consolidated statements of operations, cash flows and stockholder’s equity for the fiscal years ended December 31, 2005, 2004 and 2003 (the “Company Financial Statements”);

(ii)the Company’s Quarterly Report on Form 10-Q filed with the SEC under the Exchange Act for the quarter ended September 30, 2006;

(iii)the definitive proxy statement in respect of the Company’s 2006 annual meeting of stockholders, filed by the Company with the SEC under the Exchange Act on March 27, 2006;

(iv)all current reports on Form 8-K (excluding any Form 8-K that is deemed “furnished” under the Exchange Act) filed by the Company with the SEC under the Exchange Act since January 1, 2006 and prior to the date hereof; and

(v)each other form, report, schedule, registration statement and definitive proxy statement filed by the Company or any of its Subsidiaries with the SEC since January 1, 2006 and prior to the date hereof (collectively, and together with the items specified in clauses (i) through (iv) above, the “Company SEC Documents”).

(b)As of their respective filing dates (and if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), the Company SEC Documents complied in all material respects, and each other form, report, schedule, registration statement and definitive proxy statement filed by the Company or any of its Subsidiaries after the date hereof and prior to the Effective Time (the “Additional

58

Company SEC Documents”) will comply in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and none of such Company SEC Documents when filed contained, or will contain, an untrue statement of a material fact or omitted, or will omit, to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The audited consolidated financial statements and unaudited consolidated interim financial statements included in the Company SEC Documents and the Additional Company SEC Documents (including any related notes and schedules) and the Company Financial Statements fairly present in all material respects, or will fairly present in all material respects, the financial position of the Company and its consolidated Subsidiaries as of the respective dates thereof and the results of operations and changes in cash flows, changes in stockholder’s equity or other information included therein for the periods or as of the respective dates then ended, subject, where appropriate, to normal year-end audit adjustments in each case in accordance with past practice and GAAP, consistently applied, during the periods involved (except as otherwise stated therein).  Since its initial public offering in February 2005, the Company has timely filed all reports, registration statements and other filings required to be filed with the SEC under the rules and regulations of the SEC.  Except as set forth in the Company SEC Documents filed prior to the date hereof or as set forth in Section 6.4(b) of the Company Disclosure Letter or liabilities incurred in the ordinary course of business, consistent with past practice, since September 30, 2006, the Company and the Company Subsidiaries have not incurred any liability or obligation that is of a nature that would be required to be disclosed on a consolidated balance sheet of the Company and the Company Subsidiaries or in the footnotes thereto prepared in conformity with GAAP, other than liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

(c)The Company and the Company Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  The Company has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of the Company required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”).

59

6.5Absence of Certain Changes or Events.  Except as specifically contemplated by this Agreement, or except as set forth in Section 6.5 of the Company Disclosure Letter, since September 30, 2006, each of the Company and the Company Subsidiaries has conducted its business in the ordinary course, consistent with past practice, and there has not been any event, occurrence, development or state of circumstances or facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  From September 30, 2006 to the date hereof, none of the Company or any of the Company Subsidiaries has taken any action or failed to take any action, which action or failure, as the case may be, would constitute a breach of Section 7.1 if taken without the consent of Verizon and Spinco after the date hereof.

6.6Investigations; Litigation.  Except as described in the Company SEC Documents or in Section 6.6 of the Company Disclosure Letter:

(a)There is no material investigation or review pending (or, to the Company’s Knowledge, threatened) by any Governmental Authority with respect to the Company or any of the Company Subsidiaries.

(b)There are no actions, suits, grievances, arbitrations, investigations or proceedings pending (or, to the Company’s Knowledge, threatened) against or affecting the Company or any of the Company Subsidiaries or any of their respective properties at law or in equity before, and there are no Orders of, any Governmental Authority, in each case which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

60

6.7Compliance with Laws.  The Company and the Company Subsidiaries are, and since January 1, 2004 have been, in compliance with all, and have received no notice of any violation (as yet unremedied) of any, Laws, applicable to the Company, such Company Subsidiaries or any of their respective properties or assets, except where such non-compliance, default or violation has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  Notwithstanding anything contained in this Section 6.7, no representation or warranty shall be deemed to be made in this Section 6.7 in respect of environmental, Tax, employee benefits, labor or communications Laws matters, which are the subject of the representations and warranties made in Sections 6.10, 6.11, 6.12, 6.13 and 6.15 of this Agreement, respectively.

6.8Proxy Statement/Prospectus; Registration Statements.  None of the information regarding the Company or the Company Subsidiaries or the transactions contemplated by this Agreement provided by the Company specifically for inclusion in, or incorporation by reference into, the Proxy Statement/Prospectus or the Registration Statements will, in the case of the definitive Proxy Statement/Prospectus or any amendment or supplement thereto, at the time of the mailing of the definitive Proxy Statement/Prospectus and any amendment or supplement thereto, and at the time of the Company Stockholders Meeting, or, in the case of the Registration Statements, at the time such registration statement becomes effective, at the time of the Company Stockholders Meeting (in the case of the Company Registration Statement), at the Distribution Date and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading.  The Company Registration Statement and the Proxy Statement/Prospectus will comply in all material respects with the provisions of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, except that no representation is made by the Company with respect to information provided by Verizon or Spinco specifically for inclusion in, or incorporation by reference into, the Company Registration Statement or the Proxy Statement/Prospectus.

6.9Information Supplied.  All documents that the Company is responsible for filing with any Governmental Authority in connection with the transactions contemplated hereby or by any other Transaction Agreement will comply in all material respects with the provisions of applicable Law.  All information supplied or to be supplied by the Company in any document, other than the Proxy Statement/Prospectus and Registration Statements, which are addressed in Section 6.8, filed with any Governmental Authority in connection with the transactions contemplated hereby and by the other Transaction Agreements will be, at the time of filing, at the Distribution Date and at the Effective Time, true and correct in all material respects.

61

6.10Environmental Matters.  Except as set forth in Section 6.10 of the Company Disclosure Letter:

(a)All material Environmental Permits required pursuant to any Environmental Law for operation of the business of the Company and each of the Company Subsidiaries (i) have been obtained by the Company and each of the Company Subsidiaries and (ii) are currently in full force and effect.  The Company and each of the Company Subsidiaries are in material compliance with all material Environmental Permits required pursuant to any material Environmental Law for operation of the business of the Company and each of the Company Subsidiaries.

(b)To the Company’s Knowledge, the Company and each of the Company Subsidiaries are, and at the Effective Time will be in material compliance with all applicable Environmental Laws with respect to the business of the Company and each of the Company Subsidiaries.  To the Company’s Knowledge, there are no events, conditions, circumstances, activities, practices or incidents related to the business of the Company and of any of the Company Subsidiaries which would, or would reasonably be likely to, give rise to any Environmental Claim reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and the Company Subsidiaries.

(c)There is no civil, criminal or administrative action, suit, demand, Environmental Claim, hearing, notice, or demand letter, notice of violation, investigation or proceeding pending or, to the Company’s Knowledge, threatened against the Company or any of the Company Subsidiaries related to any Environmental Permit or any applicable Environmental Law or any plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and the Company Subsidiaries.

(d)To the Company’s Knowledge, the Company and each of the Company Subsidiaries have not generated, stored, used, emitted, discharged or disposed of any Hazardous Material except in material compliance with applicable Environmental Law.  To the Company’s Knowledge, the Company and the Company Subsidiaries have made available to Verizon for its review copies of those reports, audits, studies or analyses in their possession, custody or control that are material to the representations made in this Section 6.10.

62

(e)The Company and each of the Company Subsidiaries (i) have not, within the past seven years, received any written request for information, and have not been notified that they are a potentially responsible party, under the Comprehensive Environmental Response, Compensation or Liability Law and (ii) to the Company’s Knowledge, have not, within the past seven years, been, and are not reasonably likely to be, subject to liability for any Environmental Claim arising under or pursuant to such laws.

6.11Tax Matters.

(a)Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (i) all Tax Returns relating to the Company and the Company Subsidiaries required to be filed have been filed, (ii) all such Tax Returns are true and correct in all respects as filed or have been subsequently amended to make such Tax Returns true and correct and not further amended, (iii) all Taxes shown as due and payable on such Tax Returns, and all Taxes (whether or not reflected on such Tax Returns) relating to the Company or any the Company Subsidiary required to be paid, have been timely paid in full, (iv) all Taxes relating to the Company and the Company Subsidiaries for any taxable period (or a portion thereof) beginning on or prior to the Closing Date (which are not yet due and payable) have been properly accrued for in the books and records of the Company, and (v) the Company and the Company Subsidiaries have duly and timely withheld all Taxes required to be withheld and such withheld Taxes have been either duly and timely paid to the proper Taxing Authority or properly set aside in accounts for such purpose and will be duly and timely paid to the proper Taxing Authority.

(b)Except as set forth in Section 6.11(b) of the Company Disclosure Letter, no written agreement or other written document waiving or extending, or having the effect of waiving or extending, the statute of limitations or the period of assessment or collection of any Taxes relating to the Company or any Company Subsidiary, and no power of attorney with respect to any such Taxes, has been filed or entered into with any Taxing Authority.

(c)Except as set forth in Section 6.11(c) of the Company Disclosure Letter, no audits or other administrative proceedings or proceedings before any Taxing Authority are presently pending with regard to any Taxes or Tax Return of the Company or any Company Subsidiary, as to which any Taxing Authority has asserted in writing any claim which, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, and no Taxing Authority is now asserting in writing any deficiency or claim for Taxes or any adjustment to Taxes

63

with respect to which the Company or any Company Subsidiary may be liable with respect to income or other material Taxes which has not been fully paid or finally settled.

(d)Neither the Company nor any Company Subsidiary (i) is a party to or bound by or has any obligation under any Tax separation, sharing or similar agreement or arrangement other than the Tax Sharing Agreement and the Company Tax Sharing Agreement, (ii) is or has been a member of any consolidated, combined or unitary group for purposes of filing Tax Returns or paying Taxes (other than a group of which the Company is the common parent corporation) or has any potential liability for Taxes of another Person (other than the Company or any of the Company Subsidiaries under Treasury Regulations § 1.1502-6) or (iii) has entered into a closing agreement pursuant to Section 7121 of the Code, or any predecessor provision or any similar provision of state or local law.

(e)None of the assets of the Company or any of the Company Subsidiaries is subject to any Tax lien (other than liens for Taxes that are not yet due and payable).

(f)Section 6.11(f) of the Company Disclosure Letter lists all foreign jurisdictions in which the Company or any Company Subsidiary files a material Tax Return.

(g)Neither the Company nor any Company Subsidiary has agreed to make or is required to make any adjustment for a taxable period ending after the Effective Time under Section 481(a) of the Code by reason of a change in accounting method or otherwise, except where such adjustments have not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

(h)Neither the Company nor any Company Subsidiary has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code.

(i)Neither the Company nor any of the Company Subsidiaries has taken or agreed to take any action that is reasonably likely to (nor are any of them aware of any agreement, plan or other circumstance that would) prevent the Tax-Free Status of the Transactions.

64

(j)Neither the Company nor any Company Subsidiary has engaged in any listed transaction, or any reportable transaction the principal purpose of which was tax avoidance, within the meaning of Sections 6011, 6111 and 6112 of the Code.

6.12Benefit Plans.

(a)Section 6.12(a) of the Company Disclosure Letter lists each “employee benefit plan” (as defined in Section 3(3) of ERISA), and all other benefit, bonus, incentive, deferred compensation, stock option (or other equity-based compensation), severance, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, whether or not subject to ERISA and whether written or oral, sponsored, maintained or contributed to or required to be contributed to by the Company or any of the Company Subsidiaries, to which the Company or any of the Company Subsidiaries is a party or in which any Person who is currently, has been or, prior to the Effective Time, is expected to become an employee of the Company or any of the Company Subsidiaries (a “Company Employee”) is a participant (the “Company Benefit Plans”), or with respect to which the Company or any of the Company Subsidiaries has or could have any material liability.

(b)No material liability under Title IV (including Sections 4069 and 4212(c) of ERISA) or Section 302 of ERISA has been incurred by the Company, any of the Company Subsidiaries or any ERISA Affiliate of any of them, and no condition exists that would reasonably be expected to result in the Company, any of the Company Subsidiaries or any ERISA Affiliate of any of them incurring any such liability, other than liability for premiums due to the PBGC.  The present value of accrued benefits under each Company Benefit Plan that is subject to Title IV of ERISA, determined based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, did not exceed, as of its latest valuation date, the then current value of the assets of such plan allocable to such accrued benefits.

(c)(i) No Company Benefit Plan is a “multiemployer plan,” as defined in Section 3(37) of ERISA and (ii) none of the Company, the Company Subsidiaries or any ERISA Affiliate of any of them has made or suffered a “complete withdrawal” or a “partial withdrawal,” as such terms are respectively defined in Sections 4203 and 4205 of ERISA, the liability for which has not been satisfied in full.

(d)Each Company Benefit Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including, ERISA and

65

the Code.  All contributions required to be made with respect to any Company Benefit Plan have been timely made, except for outstanding contributions in the ordinary course.  Except as set forth in Section 6.12(d) of the Company Disclosure Letter, there are no pending or, to the Company’s Knowledge, threatened claims by, on behalf of or against any of the Company Benefit Plans in effect as of the date hereof or any Assets thereof, that, if adversely determined would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and no matter is pending (other than routine qualification determination filings, copies of which have been furnished to Verizon and Spinco or will be promptly furnished to Verizon and Spinco when made) with respect to any of the Company Benefit Plans before the IRS, the United States Department of Labor or the PBGC.

(e)Each Company Benefit 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 trust maintained under any Company Benefit Plan intended to satisfy the requirements of Section 501(c)(9) of the Code has satisfied such requirements and, in either such case, no event has occurred or condition is known to exist that would reasonably be expected to have a material adverse effect on such tax-qualified status for any such Company Benefit Plan or any such trust.

(f)No Company Benefit Plan or employment arrangement, and no contractual arrangements between the Company and any third party, exists that could result in the payment to any current, former or future director, officer, stockholder or employee of the Company or any of the Company Subsidiaries, or of any entity the assets or capital stock of which have been acquired by the Company or a Company Subsidiary, of any money or other property or rights or accelerate or provide any other rights or benefits to any such individual as a result of the consummation of the transactions contemplated by the Transaction Agreements whether or not (a) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning of Section 280G of the Code) or (b) some other subsequent action or event would be required to cause such payment, acceleration or provision to be triggered.

6.13Labor Matters.  Except to the extent listed in Section 6.13 of the Company Disclosure Letter, neither the Company nor any of the Company Subsidiaries is a party to, or bound by, any collective bargaining agreement, employment agreement or other Contract, in each case, with a labor union or labor organization.  Except for such matters which have not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (a) as of the date hereof, there are no strikes or lockouts with respect to Company Employees, (b) there is no unfair labor practice, charges, complaint, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the Company’s Knowledge, threatened against

66

the Company or any of the Company Subsidiaries, (c) there are no actual or, to the Company’s Knowledge, threatened claims, arbitrations, litigation or consent decrees relating to employment Laws, terms and conditions of employment and wages and hours pertaining to employees of the Company or its Subsidiaries or employment practices affecting such employees and (d) the Company and the Company Subsidiaries are in compliance with all applicable Laws respecting (i) employment and employment practices, (ii) terms and conditions of employment and wages and hours, (iii) collective bargaining and labor relations practices, (iv) layoffs, and (v) immigration.  As of the date hereof, neither the Company nor any of the Company Subsidiaries has any liabilities under the WARN Act as a result of any action taken by the Company and that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

6.14Intellectual Property.

(a)Section 6.14(a) of the Company Disclosure Letter contains a complete and accurate list of all Statutory Intellectual Property owned by the Company or any of the Company Subsidiaries.

(b)Except as disclosed in Section 6.14(b) of the Company Disclosure Letter, neither the Company nor any Company Subsidiaries has received since January 1, 2002 any written charge, complaint, claim, demand or notice alleging any interference, infringement, misappropriation or violation by the business of the Company of (including any claim that the Company Subsidiaries conducting the business of the Company must license or refrain from using) any Company Third Party Intellectual Property material to the business of the Company.

(c)Except as disclosed in Section 6.14(c) of the Company Disclosure Letter, to the Company’s Knowledge, there are no Liens on any Intellectual Property owned by the Company or any of the Company Subsidiaries.

6.15Communications Regulatory Matters.

(a)The Company and the Company Subsidiaries hold, and on the Distribution Date will hold, all permits, licenses, franchises, waivers, orders, approvals, concessions, registrations and other authorizations issued or provided by the FCC, county and municipal franchising authorities and the State Regulators under all Laws currently in effect, which are necessary for the Company and/or the Company Subsidiaries to own their respective assets or operate the applicable portion of the business of the Company as

67

currently conducted, (“Company Licenses”), except such Company Licenses the failure of which to so hold would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.  The Company or the Non-ILEC Spinco Subsidiary has in full force and effect, or will have in full force and effect as of the Closing Date, authority to provide non-facilities-based international services between the U.S. and all permitted international points pursuant to 47 U.S.C. §214 and 47 C.F.R. 63.18.

(b)The Company and each of the Company Subsidiaries in the conduct of its business has complied since January 1, 2004 with, and currently is not in violation of, any requirement of Law of a Governmental Authority relating to communications regulatory matters to which the Company or any of the Company Subsidiaries is subject, except to the extent that any such non-compliance or violation would not reasonably be expected to result in any material burden, fine or consequence on the business of the Company and the Company Subsidiaries taken as a whole or as set forth in Section 6.15(b) of the Company Disclosure Letter.  Without limiting the foregoing, there is not pending, nor to the Company’s Knowledge, threatened against the Company or any of the Company Subsidiaries any application, action, petition, objection or other pleading, or any proceeding with the FCC or any State Regulators which questions or contests the validity of, or any rights of the holder under, or seeks the non-renewal or suspension of any Company License.  Since January 1, 2004, neither the Company nor any of the Company Subsidiaries has received written notice of an investigation or review by any Governmental Authority with respect to a material violation by the Company or any of the Company Subsidiaries of any requirement of Law, excluding any notice in respect of a matter that has been withdrawn or resolved without the imposition of material penalties, burdens or fines.  The Company (a) is capable of providing local number portability in material compliance with 47 U.S.C. § 251(b)(2) and the implementing rules of the FCC; (b) complies in all material respects with the requirements of the CALEA; and (c) is capable of providing 911 service in material compliance with 47 U.S.C. § 251(e)(3) and the implementing rules of the FCC.

6.16Material Contracts.

(a)Except for this Agreement, each other Transaction Agreement, the Company Benefit Plans and except as filed as an exhibit to any Company SEC Document or as disclosed in Section 6.16(a) of the Company Disclosure Letter, as of the date hereof, neither the Company nor any of the Company Subsidiaries, as of the date hereof, is a party to or bound by any “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all Contracts of the type described in this Section 6.16(a) and any other such Contracts that may be entered into by the Company or any Company Subsidiary after the date hereof and prior to the Effective Time being referred to herein as

68

“Company Material Contracts”).  Complete and correct copies of all Company Material Contracts have been provided to Verizon.

(b)The Company has entered into an agreement with CapGemini to assist with the planning of the operation of the Spinco Business after the Closing Date (other than with respect to those services that will be provided by an Affiliate of Verizon under the Transition Services Agreement), and after the end of the term of the Transition Services Agreement with respect to all billing, customer care, technical support and other similar back office functions of the Spinco Business.  The Company represents that as of the Closing Date, it will have the capability to assume responsibility for all of the operations of the Spinco Business (other than with respect to those services that will be provided by an Affiliate of Verizon under the Transition Services Agreement), and, as of the end of the term of the Transition Services Agreement, it will have the capability to assume responsibility for all other operations of the Spinco Business.  The Company represents that, as of the Closing, it will have the capability to deliver comparable products and services comprising the Spinco Business to customers at service levels and at a quality no less favorable than those provided by Verizon New England in the Territory as of immediately prior to the Closing.

(c)Except as set forth in Section 6.16(c) of the Company Disclosure Letter, (i) neither the Company nor any Company Subsidiary is in breach of or default under the terms of any Company Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (ii) to the Company’s Knowledge, no other party to any Company Material Contract is in breach of or in default under the terms of any Company Material Contract where such breach or default has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and (iii) each Company Material Contract is a valid and binding obligation of the Company or any Company Subsidiary which is a party thereto and, to the Company’s Knowledge, of each other party thereto, and is in full force and effect, except that (A) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors’ rights generally and (B) equitable remedies of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(d)The Company has delivered to Verizon a complete and correct copy of the Commitment Letter and the Backstop Facility Commitment.  Such agreements are in full force and effect as of the date hereof.  Except as set forth in Section 6.16(d) of the Company Disclosure Letter, the Company is not a party to any other agreement with any

69

of the counterparties thereto relating to the New Financing or the financing contemplated by the Backstop Facility Commitment.

6.17Company Real Property.

(a)Section 6.17(a) of the Company Disclosure Letter sets forth the address of all real property that is Company Owned Real Property the loss of which would be material and adverse to the business of the Company and its Subsidiaries.  The Company has, in all material respects, good and valid and marketable title to all of the Company Owned Real Property identified on such Section of the Company Disclosure Letter, free and clear of all encumbrances other than Permitted Encumbrances.  Except as set forth on Section 6.17(a) of the Company Disclosure Letter, none of the Company or the Company Subsidiaries has leased or otherwise granted any third party any right to use or occupy any of the Company Owned Real Property identified on such Section of the Company Disclosure Letter; and except as set forth on Section 6.17(a) of the Company Disclosure Letter, there are no outstanding options, rights of refusal, rights of first offer or rights of reverter or other third party rights in Company Owned Real Property identified on such Section of the Company Disclosure Letter.

(b)Except as set forth on Section 6.17(b) of the Company Disclosure Letter, with respect to leases and subleases of real property to which the Company or its Subsidiaries is a party, (i) each is enforceable in accordance with its terms, subject to bankruptcy, insolvency and other similar Laws affecting the rights of creditors generally and subject to the exercise of judicial discretion in accordance with principles of equity, (ii) there is no material default or material breach of a covenant by the Company or any Company Subsidiaries, (iii) no event has occurred which with or without the giving of notice or lapse of time, or both , would constitute such a material default or material breach and (iv) there has been no collateral assignment or other security interest and they are not subject to any encumbrance other than Permitted Encumbrances.

6.18Opinion of Company Financial Advisor.  The Company has received the written opinion of Deutsche Bank Securities Inc., to the effect that, as of the date thereof, and based upon and subject to the matters set forth therein, the Aggregate Merger Consideration to be delivered by the Company in respect of the Spinco Common Stock pursuant to the Merger Agreement is fair, from a financial point of view, to the Company and the holders of Company Common Stock.  The Company has previously delivered a copy of such opinion to Verizon.

70

6.19Brokers or Finders.  Except with respect to the Persons set forth in Section 6.19 of the Company Disclosure Letter, no agent, broker, investment banker, financial advisor or other similar Person is or will be entitled, by reason of any agreement, act or statement by the Company, or any of the Company Subsidiaries, directors, officers or employees, to any financial advisory, broker’s, finder’s or similar fee or commission, to reimbursement of expenses or to indemnification or contribution in connection with any of the transactions contemplated by this Agreement or any other Transaction Agreement.  The material terms of the engagement letters between each of the Company’s financial advisors and the Company have been provided to Verizon.

6.20Takeover Statutes.  Other than Section 203 of the DGCL, no “fair price,” “moratorium,” “control share acquisition,” “business combination,” “stockholder protection” or other similar anti-takeover statute or regulation enacted under Delaware law, or, to the Company’s Knowledge, under the law of any other jurisdiction, will apply to this Agreement, the Merger or the transactions contemplated hereby or thereby.  The action of the Board of Directors of the Company in approving this Agreement and the transactions provided for herein is sufficient to render inapplicable to this Agreement, the Merger and the transactions contemplated hereby or thereby and the transactions provided for herein, the restrictions on “business combinations” (as defined in Section 203 of the DGCL) as set forth in Section 203 of the DGCL.

6.21Certain Board Findings.  The Board of Directors of the Company, at a meeting duly called and held, (i) has determined that this Agreement and the transactions contemplated hereby, including the Merger, and the issuance of shares of Company Common Stock pursuant to the Merger, are advisable, fair to and in the best interests of the Company and the stockholders of the Company, (ii) approved this Agreement and the transactions contemplated hereby, including the Merger and (iii) has resolved to recommend that the stockholders of the Company entitled to vote thereon adopt this Agreement at the Company Stockholders Meeting.

6.22Vote Required.  The only vote of the stockholders of the Company required under the DGCL, the NYSE rules or the Company’s certificate of incorporation for adoption of this Agreement and the approval of the transactions contemplated hereby, is the affirmative vote of the holders of a majority in voting power of all outstanding shares of Company Common Stock at the Company Stockholders Meeting (sometimes referred to herein as the “Requisite Approval”).

6.23Affiliate Transactions.  Except as specifically provided in this Agreement or any of the other Transaction Agreements or as disclosed in the Company SEC Reports, there are no transactions or Contracts of the type required to be disclosed by the

71

Company under Item 404 of Regulation S-K between or among (a) the Company or any Company Subsidiary, on the one hand, and (b) any individual who is a “named executive officer” or director of the Company (as such term is defined in Section 402 of Regulation S-K), on the other hand.

ARTICLE VII

COVENANTS AND AGREEMENTS

7.1Conduct of Business by the Company Pending the Merger.  Following the date of this Agreement and prior to the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 9.1, except as may be consented to in writing by Verizon (which consent shall not be unreasonably withheld, conditioned or delayed) or as expressly contemplated by a Transaction Agreement or as set forth in Section 7.1 of the Company Disclosure Letter, the Company covenants and agrees that each of the Company and the Company Subsidiaries shall conduct its operations in accordance with its ordinary course of business, consistent with past practice and in compliance with all Laws applicable to it or to the conduct of its business, and use all commercially reasonable efforts to preserve intact its present business organization, maintain rights and franchises, keep available the services of its current officers and key employees and preserve its relationships with customers and vendors in such a manner that its goodwill and ongoing businesses would not reasonably be anticipated to be impaired in any material respect.  Following the date of this Agreement and prior to the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 9.1 (and notwithstanding the immediately preceding sentence) except (i) as may be required by Law, (ii) as may be consented to in writing by Verizon (which consent shall not be unreasonably withheld, conditioned or delayed, except in the case of clauses (a), (b), (d), (e), (f), (h), (n), (p) and, in respect of the foregoing clauses, (q) of this Section 7.1, with respect to which such consent may be withheld in Verizon’s sole discretion), (iii) as may be expressly contemplated by this Agreement or the other Transaction Agreements, or (iv) as set forth in Section 7.1 of the Company Disclosure Letter, the Company shall not, nor shall it permit any of the Company Subsidiaries to:

(a)(i) declare or pay any dividends on or make other distributions in respect of any shares of its capital stock or partnership interests (whether in cash, securities or property), except for the declaration and payment of cash dividends or distributions paid on or with respect to a class of capital stock all of which shares of capital stock, as the case may be, of the applicable corporation are owned directly or indirectly by the Company and the payment of regular quarterly dividends each in an amount not to exceed $0.39781 per share at times consistent with the dividend payment practices of the Company in 2006 (including a final partial regular quarterly dividend to the extent permitted pursuant to the Company

72

Credit Agreement and paid from existing funds or existing borrowing capacity, to be declared and paid to pre-Closing Company stockholders, pro rated for the number of days elapsed between (x) the beginning of the quarterly period in which the Effective Time occurs and (y) the day immediately preceding the Effective Time); (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock; or (iii) redeem, repurchase or otherwise acquire, or permit any Subsidiary to redeem, repurchase or otherwise acquire, any shares of its capital stock (including any securities convertible or exchangeable into such capital stock), except pursuant to the terms of the securities outstanding on the date hereof or pursuant to the existing terms of a Company Benefit Plan;

(b)issue, deliver or sell, or authorize any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into, or any rights, warrants or options to acquire, any such shares or other Company Voting Debt or convertible securities, other than (i) the issuance of shares of Company Common Stock upon the exercise of stock options or the vesting of restricted stock units or restricted stock that are outstanding on the date hereof pursuant to the Company Benefit Plans; (ii) issuances by a wholly owned Subsidiary of the Company of its capital stock to such Subsidiary’s parent or another wholly owned Subsidiary of the Company; and (iii) the granting of full fair market value stock options, or the granting of restricted stock units or restricted units in the ordinary course of business, consistent with the Company’s past practices, provided that, in no event shall the vesting and exercisability of any such newly granted option, restricted stock unit or restricted unit accelerate or shall any additional rights be conveyed, on account of the transactions contemplated hereby;

(c)amend the Company’s certificate of incorporation or bylaws, or amend any Company Subsidiary’s certificate of incorporation or bylaws (or other similar organizational documents);

(d)acquire or agree to acquire by merger or consolidation, or by purchasing a substantial or controlling equity interest in, or the assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or division or business unit thereof or otherwise acquire or agree to acquire any material assets (other than the acquisition of equipment and other assets used in the operations of the existing business of the Company and the Company Subsidiaries in the ordinary course consistent with past practice), but in all cases excluding any

73

acquisition of equity or assets that constitute a business unit, division or all or substantially all of the assets of the transferor;

(e)sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, any of its assets (including capital stock of Subsidiaries of the Company but excluding (i) surplus real property not used in telephone operations, (ii) inventory and obsolete equipment, in each case, in the ordinary course of business consistent with past practice and (iii) any Lien required to be created pursuant to the Company Credit Agreement or any facility entered into pursuant to the Backstop Facility Commitment);

(f)incur any indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or guarantee any debt securities of others or enter into any material Lease (whether such Lease is an operating or capital Lease) or enter into any interest rate hedge, other than the incurrence of additional indebtedness (i) under the Company Credit Agreement or any facility entered into pursuant to the Backstop Facility Commitment (x) in 2007 in an amount not to exceed $50 million (beyond amounts outstanding under the Company Credit Agreement as of January 1, 2007 and net of any prepayments or repayments effected during 2007) and (y) in 2008 in an amount not to exceed an additional $50 million (beyond amounts outstanding under the Company Credit Agreement (or any facility entered into pursuant to the Backstop Facility Commitment) as of December 31, 2007 and net of any prepayments or repayments effected during 2008), (ii) pursuant to any customer Contract, vendor Contract or real property Lease entered into in the ordinary course of business consistent with past practice and (iii) in connection with equipment leasing in the ordinary course of business consistent with past practice;

(g)except in the ordinary course of business, consistent with past practice, and except for Qualified Transition Expenses, incur or commit to any individual capital expenditure or any obligation or liability in connection with any capital expenditure in excess of $2,000,000 or incur or commit to aggregate capital expenditures or obligations or liabilities in connection with any capital expenditure in excess of $4,000,000, in each case, other than capital expenditures or obligations or liabilities in connection therewith to repair or replace facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance), or as contemplated by the Company’s 2007 capital expenditure budget, which is set forth in Section 7.1(g) of the Company Disclosure Letter, or

74

the 2008 capital expenditure budget, to the extent it is substantially similar in all material respects to the 2007 capital expenditure budget or is approved by Verizon (such approval not to be unreasonably withheld or delayed), provided that this Section 7.1(g) shall not permit any action otherwise prohibited by Section 7.1(d);

(h)(i) other than in the ordinary course of business, consistent with past practice in 2006, grant any increases in the compensation of any of its directors, officers or employees, provided that such increase shall not exceed 4% in the aggregate for all such persons (as compared to levels and amounts as of January 1, 2007); (ii) pay or agree to pay to any director, officer or employee, whether past or present, any pension, retirement allowance or other employee benefit not required or contemplated by any of the existing benefit, severance, termination, pension or employment plans, Contracts or arrangements as in effect on the date hereof; (iii) enter into any new, or materially amend any existing, employment or severance or termination, Contract with any director, officer or employee; (iv) accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options or other stock-based compensation; or (v) become obligated under any new pension plan, welfare plan, multiemployer plan, employee benefit plan, severance plan, benefit arrangement or similar plan or arrangement that was not in existence on the date hereof, or amend any such plan or arrangement in existence on the date hereof if such amendment would have the effect of materially enhancing any benefits thereunder;

(i)establish, adopt, enter into, terminate or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers, employees or any of their beneficiaries, except as contemplated by the Employee Matters Agreement, as is necessary to comply with applicable law, or, in each case, as would not result in a material increase in the cost of maintaining such collective bargaining agreement, plan, trust, fund, policy or arrangement;

(j)authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of the Company or any of the Company Subsidiaries;

(k)make any material change in its methods of accounting in effect at September 30, 2006 or change its fiscal year except for changes required by a change in GAAP or required by the auditors of the Company and the Company Subsidiaries;

75

(l)enter into or amend any agreement or arrangement with any Affiliate of the Company or any Company Subsidiary, other than with wholly owned Company Subsidiaries, on terms less favorable to the Company or such Company Subsidiary, as the case may be, than could be reasonably expected to have been obtained with an unaffiliated third party on an arm’s-length basis;

(m)except in the ordinary course of business, consistent with past practice, or as required by law, modify, amend, terminate, renew or fail to use commercially reasonable efforts to renew any Company Material Contract to which the Company or any of the Company Subsidiaries is a party or waive, release or assign any material rights or claims thereunder or enter into any Company Material Contract not in the ordinary course of business consistent with past practice;

(n)except as would not be expected to materially and adversely affect the Company or any of its Affiliates or the Surviving Corporation on a going-forward basis after the Effective Time, (i) make or rescind any material express or deemed election relating to Taxes, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where the Company has the capacity to make such binding election, (ii) settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, (iii) amend any material Tax Returns or (iv) change in any material respect any of its methods of reporting income or deductions for federal income tax purposes from those expected to be employed in the preparation of its federal income tax return for the taxable year ending December 31, 2006 (unless such change is required by Law); provided, however, that the Company may make or rescind any such election, settle or compromise any such claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy, change any such method of reporting or amend any such Tax Return without Verizon’s and Spinco’s prior written consent if the amount of Tax liabilities or other Tax detriments relating to such action does not exceed $10,000,000;

(o)except in the ordinary course of business, consistent with past practice, pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (which includes the payment of final and unappealable judgments) or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, or

76

incurred in the ordinary course of business since the date of such financial statements;

(p)amend or waive the performance of any provision of the Termination Agreement, the Commitment Letter or the Backstop Facility Commitment; or

(q)agree or commit to do any of the foregoing actions.

7.2Conduct of Spinco Business Pending the Merger.  Following the date of this Agreement and prior to the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 9.1, except as may be consented to in writing by the Company or as expressly contemplated by a Transaction Agreement or as set forth in Section 7.2 of the Spinco Disclosure Letter, Verizon and Spinco jointly and severally covenant and agree that Verizon and the Contributing Companies (in regard to the Spinco Business only) and each of Spinco and the Spinco Subsidiaries shall conduct its operations in accordance with its ordinary course of business, consistent with past practice and in compliance with all Laws applicable to it or to the conduct of its business, and use all commercially reasonable efforts to preserve intact its present business organization, maintain rights and franchises, keep available the services of its key employees and preserve its relationships with customers and vendors in such a manner that its goodwill and ongoing businesses would not reasonably be anticipated to be impaired in any material respect.  Following the date of this Agreement and prior to the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 9.1 (and notwithstanding the immediately preceding sentence) except (i) as may be required by Law, (ii) as may be consented to in writing by the Company (which consent shall not be unreasonably withheld, conditioned or delayed), (iii) as may be expressly contemplated by this Agreement or the other Transaction Agreements, (iv) as required to permit the ordinary course operation of Verizon’s cash management system prior to the Effective Time, including any distributions of cash in connection therewith, or (v) as set forth in Section 7.2 of the Spinco Disclosure Letter, Spinco shall not, nor shall Verizon and Spinco permit any of the Spinco Subsidiaries or, to the extent applicable, any of the Contributing Companies with respect to the Spinco Business to:

(a)issue, deliver or sell, or authorize any shares of Spinco’s capital stock or capital stock of any Spinco Subsidiary of any class, or any rights, warrants or options to acquire, any such shares, convertible securities including additional options or other equity-based awards that could be converted into any option to acquire Spinco Common Stock or the capital stock of any Spinco Subsidiary pursuant to the Employee Matters Agreement or otherwise, other than (i) pursuant to this Agreement, pursuant to the Distribution Agreement or required

77

in connection with the Contribution and (ii) issuances by a wholly owned Subsidiary of Spinco of its capital stock to such Subsidiary’s parent or another wholly owned Subsidiary of Spinco;

(b)adopt any provision of, or otherwise amend, the certificate of incorporation or bylaws (or other similar organizational documents) of Spinco or any Spinco Subsidiary in any manner that would prevent or materially impair or delay the consummation of the transactions contemplated by this Agreement;

(c)acquire or agree to acquire by merger or consolidation, or by purchasing a substantial or controlling equity interest in or the assets of, or by any other manner, any business or any corporation, partnership, limited liability entity, joint venture, association or other business organization or division thereof or otherwise acquire or agree to acquire any material assets (excluding the acquisition of equipment and other assets used in the operations of the Spinco Business in the ordinary course consistent with past practice), but in all cases excluding any acquisition of equity or assets that constitute a business unit, division or all or substantially all of the assets of the transferor;

(d)sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, or agree to sell, lease, license or otherwise encumber or subject to any Lien or otherwise dispose of, any of the assets that would constitute Spinco Assets as of the Distribution Date (including capital stock of Spinco Subsidiaries but excluding (i) surplus real property not used in telephone operations and (ii) inventory and obsolete equipment, in each case, in the ordinary course of business consistent with past practice);

(e)incur any indebtedness for borrowed money or guarantee or otherwise become contingently liable for any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of Spinco or any of its Subsidiaries or guarantee any debt securities of others or enter into any material Lease (whether such Lease is an operating or capital Lease) in each case to any third Person, other than (i) the incurrence of additional indebtedness to fund ordinary course capital requirements of Spinco and the Spinco Subsidiaries, (ii) pursuant to any customer Contract, vendor Contract or real property Lease entered into in the ordinary course of business consistent with past practice, (iii) in connection with equipment leasing in the ordinary course of business, consistent with past practice and (iv) as contemplated by the New Financing, the Spinco Securities or the Distribution Agreement or required in connection with the Contribution;

78

(f)except in the ordinary course of business, consistent with past practice, incur or commit to any individual capital expenditure or any obligation or liability in connection with any capital expenditure, or incur or commit to aggregate capital expenditures or obligations or liabilities in connection with any capital expenditure, in each case, other than capital expenditures or obligations or liabilities in connection therewith to repair or replace facilities destroyed or damaged due to casualty or accident (whether or not covered by insurance), or as contemplated by the 2007 capital expenditure budget of Verizon for the Spinco Business, which is set forth in Section 7.2(f) of the Spinco Disclosure Letter, or the 2008 capital expenditure budget, to the extent it is substantially similar in all material respects to the 2007 capital expenditure budget (except as set forth in Section 7.2(f) of the Spinco Disclosure Letter) or is approved by the Company, provided that this Section 7.2(f) shall not permit any action otherwise prohibited by Section 7.2(c);

(g)authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation or dissolution of Spinco or any of its Subsidiaries;

(h)(i) other than in the ordinary course of business, consistent with past practice in 2006, grant any material increases in the compensation of any of its directors, officers or employees, provided that such increase shall not exceed 4% in the aggregate for all such persons (as compared to the levels and amounts as of January 1, 2007); (ii) pay or agree to pay to any director, officer or employee, whether past or present, any pension, retirement allowance or other employee benefit not required or contemplated by any of the existing benefit, severance, termination, pension or employment plans, Contracts or arrangements as in effect on the date hereof; (iii) enter into any new, or materially amend any existing, employment or severance or termination, Contract with any director, officer or employee; (iv) accelerate the vesting of, or the lapsing of restrictions with respect to, any stock options or other stock-based compensation; or (v) become obligated under any new pension plan, welfare plan, multiemployer plan, employee benefit plan, severance plan, benefit arrangement or similar plan or arrangement that was not in existence on the date hereof, or amend any such plan or arrangement in existence on the date hereof if such amendment would have the effect of materially enhancing any benefits thereunder, except, in the case of the foregoing clauses (i) through (v), to the extent Verizon or the Verizon Subsidiaries retain any liability in respect of such action (any such retained liability to be deemed a Verizon Liability (as defined in the Distribution Agreement));

79

(i)establish, adopt, enter into, terminate or amend any collective bargaining agreement, plan, trust, fund, policy or arrangement for the benefit of any current or former directors, officers, employees or any of their beneficiaries, except as contemplated by the Employee Matters Agreement, as is necessary to comply with applicable Law, or, in the aggregate, in the ordinary course of business consistent with past practice;

(j)make any material change in Verizon’s methods of accounting with respect to the Spinco Business in effect at the Interim Balance Sheet Date except for changes required by a change in GAAP or required by the auditors of Verizon and the Verizon Subsidiaries;

(k)except as would not be expected to materially and adversely affect Spinco or any of its Subsidiaries or the Spinco Business, or the Surviving Corporation on a going-forward basis after the Effective Time, (i) make or rescind any material express or deemed election relating to Taxes of Spinco or any of its Subsidiaries or the Spinco Business, including elections for any and all joint ventures, partnerships, limited liability companies or other investments where Verizon or Spinco has the capacity to make such binding election (other than any election necessary in order to obtain the IRS Ruling and/or the Distribution Tax Opinion), (ii) settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes of Spinco or any of its Subsidiaries or the Spinco Business, (iii) amend any material Tax Returns of Spinco or any of its Subsidiaries or relating to the Spinco Business or (iv) change in any material respect any method of reporting income or deductions of Spinco or any of its Subsidiaries or the Spinco Business for federal income tax purposes from those expected to be employed in the preparation of its federal income tax return for the taxable year ending December 31, 2006 (unless such change is required by Law), provided, however, that Spinco may make or rescind any such election, settle or compromise any such claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy, change any such method of reporting or amend any such Tax Return without the Company’s prior written consent if the amount of Tax liabilities or other Tax detriments relating to such action does not exceed $15,000,000;

(l)pay, discharge or satisfy any material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business, consistent with past practice (which includes the payment of final and unappealable judgments) or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the Interim Financial Statements (or

80

the notes thereto) of Spinco included in the Spinco Financial Statements, or incurred in the ordinary course of business since the date of such financial statements;

(m)enter into or amend any agreement or arrangement relating to the Spinco Business that would constitute a Transferred Affiliate Arrangement and which constitutes a Spinco Asset or Spinco Liability (as defined in the Distribution Agreement) with any Affiliate of Verizon or any Verizon Subsidiary (other than Spinco or a Spinco Subsidiary), on terms less favorable to Spinco or such Spinco Subsidiary, as the case may be, than could be reasonably expected to have been obtained with an unaffiliated third party on an arm’s-length basis;

(n)except in the ordinary course of business consistent with past practice, or as required by Law, modify, amend, terminate, renew or fail to use commercially reasonable efforts to renew any Spinco Material Contract or waive, release or assign any material rights or claims thereunder or enter into any Spinco Material Contract not in the ordinary course of business consistent with past practice;

(o)amend the Distribution Agreement without the consent of the Company; or

(p)agree to commit to take any of the foregoing actions.

7.3Proxy Statement/Prospectus; Registration Statements.

(a)As promptly as practicable following the date hereof, the Company, Verizon and Spinco shall prepare, and (as promptly as practicable following the Company’s receipt from Verizon of the 2006 Financial Statements as contemplated by Section 7.18) the Company shall file with the SEC, the Company Registration Statement, including the Proxy Statement/Prospectus with respect to the transactions contemplated by this Agreement, and the Company shall use its commercially reasonable efforts to have such Proxy Statement/Prospectus cleared by the SEC under the Exchange Act and the Company Registration Statement declared effective by the SEC under the Securities Act, as promptly as practicable after such filings or at such other time as Verizon, Spinco and the Company may agree; and

81

(b)As promptly as practicable following the mailing of the Proxy Statement/Prospectus by the Company, if required by the SEC and/or the Securities Act, Verizon, Spinco and the Company shall prepare, and Spinco shall file with the SEC, the Spinco Registration Statement with respect to the Distribution, and Spinco shall use its commercially reasonable efforts to have such Spinco Registration Statement declared effective by the SEC under the Securities Act prior to the Distribution Date.

(c)The Company shall, as promptly as practicable after receipt thereof, provide to Verizon copies of any written comments and advise Verizon of any oral comments with respect to the Proxy Statement/Prospectus and the Company Registration Statement received from the SEC.  Spinco shall, as promptly as practicable after receipt thereof, provide to the Company copies of any written comments and advise the Company of any oral comments with respect to any Spinco Registration Statement received from the SEC.

(d)The Company shall provide Verizon with a reasonable opportunity to review and comment on any amendment or supplement to the Proxy Statement/Prospectus or Company Registration Statement prior to filing the same with the SEC, and with a copy of all such filings made with the SEC.  No amendment or supplement to the Proxy Statement/Prospectus or the Company Registration Statement will be made by the Company without the approval of Verizon (such approval not to be unreasonably withheld, conditioned or delayed).  The Company will advise Verizon promptly after it receives notice thereof, of the time when the Company Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order, of the suspension of the qualification of the Company Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or of any request by the SEC for amendment of the Proxy Statement/Prospectus or the Company Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information.

(e)Spinco shall provide the Company with a reasonable opportunity to review and comment on any amendment or supplement to any Spinco Registration Statement prior to filing the same with the SEC, and with a copy of all such filings made with the SEC.  No amendment or supplement to any Spinco Registration Statement will be made by Spinco without the approval of the Company (such approval not to be unreasonably withheld, conditioned or delayed).  Spinco will advise the Company promptly after it receives notice thereof, of the time when any Spinco Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order, of the suspension of the qualification of the Spinco Common Stock issuable in connection with the Distribution for offering or sale in any jurisdiction, or of any request

82

by the SEC for amendment of any Spinco Registration Statement or comments thereon and responses thereto or requests by the SEC for additional information.

(f)As promptly as practicable after the date on which the SEC shall clear (whether orally or in writing) the Proxy Statement/Prospectus and, if required by the SEC as a condition to the mailing of the Proxy Statement/Prospectus, the date on which the Company Registration Statement shall have been declared effective, the Company shall mail, or cause to be mailed, the Proxy Statement/Prospectus to its stockholders.

(g)If, at any time prior to the Effective Time, any event or circumstance should occur that results in the Proxy Statement/Prospectus or one or both of the Registration Statements containing an untrue statement of a material fact or omitting to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading, or that otherwise should be described in an amendment or supplement to the Proxy Statement/Prospectus or one or both of the Registration Statements, Verizon and the Company shall promptly notify each other of the occurrence of such event and then the applicable party shall promptly prepare, file and clear with the SEC and, in the case of the Proxy Statement/Prospectus, mail, or cause to be mailed, to the Company’s stockholders each such amendment or supplement.

(h)Verizon and Spinco agree to promptly provide the Company with the information concerning Verizon, Spinco and their respective Affiliates required to be included in the Proxy Statement/Prospectus and the Company Registration Statement.  In furtherance of the foregoing, Verizon and Spinco shall use all commercially reasonable efforts to, or shall use all commercially reasonable efforts to cause its representatives to, furnish as promptly as practicable to the Company such additional financial and operating data and other information as to the Spinco Business as the Company may require to complete the Proxy Statement/Prospectus and the Company Registration Statement in accordance with the Exchange Act (including any financial statements required to be included therein).

(i)The Company agrees to promptly provide Spinco with the information concerning the Company and its Affiliates required to be included in any Spinco Registration Statement.  In furtherance of the foregoing, the Company shall use all commercially reasonable efforts to, or shall use all commercially reasonable efforts to cause its representatives to, furnish as promptly as practicable to Spinco such additional financial and operating data and other information as to the business of the Company as Spinco may require to complete any Spinco Registration Statement in accordance with the Securities Act (including any financial statements required to be included therein).

83

7.4Stockholders Meeting.

(a)As promptly as practicable following the date hereof and the date on which the SEC shall clear (whether orally or in writing) the Proxy Statement/Prospectus and, if required by the SEC as a condition to the mailing of the Proxy Statement/Prospectus, the Company Registration Statement shall have been declared effective, the Company shall call a special meeting of its stockholders (the “Company Stockholders Meeting”) to be held as promptly as practicable for the purpose of voting upon (i) the adoption of this Agreement, (ii) the issuance of shares of Company Common Stock pursuant to the Merger and (iii) the matters to be considered by the Company’s stockholders at the 2007 annual meeting of the Company set forth in Section 7.4(a) of the Company Disclosure Letter if the Company elects to combine the special meeting with such annual meeting.  This Agreement shall be submitted for adoption to the stockholders of the Company at such special meeting.  The Company shall deliver, or cause to be delivered, to the Company’s stockholders the Proxy Statement/Prospectus in definitive form in connection with the Company Stockholders Meeting at the time and in the manner provided by the applicable provisions of the DGCL, the Exchange Act and the Company’s certificate of incorporation and bylaws and shall conduct the Company Stockholders Meeting and the solicitation of proxies in connection therewith in compliance with such statutes, certificate of incorporation and bylaws.

(b)Subject to Section 7.11(c), the Board of Directors of the Company shall recommend that the Company’s stockholders adopt this Agreement, and such recommendation shall be set forth in the Proxy Statement/Prospectus.  Unless and until this Agreement shall have been terminated in accordance with its terms, the Company shall comply with its obligations under Section 7.4(a) whether or not its Board of Directors withdraws, modifies or changes its recommendation regarding this Agreement or recommends any other offer or proposal.

7.5Efforts to Close.  Subject to the terms and conditions of the applicable Transaction Agreement, each of the parties hereto agrees to use 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 to consummate and make effective in accordance with the terms of the Transaction Agreements the transactions contemplated by the Transaction Agreements, including executing such documents, instruments or conveyances of any kind that may be reasonably necessary or advisable on the terms set forth herein to carry out any of the transactions contemplated by the Transaction Agreements; provided, that such additional documents, instruments and conveyances shall not (w) provide for additional representations or warranties, (x) impose additional obligations or liabilities on any party, (y) delay the consummation of the transactions contemplated by this Agreement or (z) be inconsistent with the express terms of any Transaction Agreement.

84

7.6Regulatory Matters.

(a)Subject to the terms and conditions set forth in this Agreement, each of Verizon, Spinco and the Company shall use all commercially reasonable efforts (subject to, and in accordance with, applicable Law) to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the Merger and the other transactions contemplated by this Agreement, including (i) the obtaining of all necessary actions or notations, waivers, consents and approvals, including the Company Approvals and the Verizon Approvals, from any Governmental Authority and the making of all necessary registrations and filings and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Authority, and (ii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated by this Agreement.

(b)Within 30 days after the date hereof, the Company shall deliver to Verizon a list, determined in good faith, of the State Regulators other than those in Maine, Vermont and New Hampshire with respect to which the Company believes an application is required to obtain such regulator’s consent to effect the transfer of control of the Spinco Business and to cause such authorities to permit consummation of the transactions contemplated hereby or by the Distribution Agreement.  Such list shall not name any jurisdiction other than those specified in Section 7.6(b) of the Company Disclosure Letter.  Within 15 days of Verizon’s receipt of such list from the Company, Verizon shall deliver to the Company a list, determined in good faith, of any additional State Regulators with respect to which Verizon believes the foregoing criteria are met.  Such list shall not name any jurisdiction other than those specified in Section 7.6(b) of the Company Disclosure Letter.  Any jurisdiction appearing on either of the lists provided by the Company and Verizon shall be a jurisdiction in which the parties shall make the applicable regulatory filing pursuant to Section 7.6(c)(iii) (such filings, the “Other PUC Applications”).

(c)Subject to the terms and conditions herein provided and without limiting the foregoing, each of Verizon, Spinco and the Company shall (i) within 120 days after the date hereof make their respective filings and thereafter make any other required submissions under the HSR Act, (ii) promptly (but in no event later than 30 days after the date hereof) file all applications requiring prior approval or other submissions required to be filed with (x) the FCC (the “FCC Applications”), except those submissions addressed in paragraphs 7.6(e), (f) and (g), below, which shall be made as set forth in those paragraphs, and except those applications that may be filed with the FCC for “immediate

85

approval” under 47 C.F.R. Section 1.948(j)(2) or for approval that permits operation upon application under 47 C.F.R. Section 90.159(c), and (y) State Regulators in the states of Maine, Vermont and New Hampshire (the “Territory PUC Applications”), to effect the transfer of control of the Spinco Business, any federal and state approvals in the states of Maine, Vermont and New Hampshire pertaining to asset transfers or changes in control, and to cause such authorities to permit consummation of each of the transactions contemplated hereby or by the Distribution Agreement and respond as promptly as practicable to any additional requests for information received from the FCC or any State Regulator by any party to a FCC Application or a Territory PUC Application, (iii) as promptly as practicable after the determination of the Other PUC Applications in accordance with Section 7.6(b) (but in no event later than 60 days after the date hereof), file all Other PUC Applications with the applicable State Regulators and respond as promptly as practicable to any additional requests for information received from any State Regulator by any party to an Other PUC Application (the consent of such State Regulators and the consents referred to in clause (ii) of this Section 7.6(c) the “Telecommunications Regulatory Consents”), (iv) use all commercially reasonable efforts to cure not later than the Effective Time any violations or defaults under any FCC Rules or rules of any State Regulator, (v) use all commercially reasonable efforts to cooperate with each other in (x) determining whether any filings are required to be made with, or consents, permits, authorizations or approvals are required to be obtained from any other Governmental Authorities in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and (y) timely making all such filings and timely seeking all such consents, permits, authorizations or approvals, (vi) use all commercially reasonable efforts to take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or advisable to consummate and make effective the transactions contemplated hereby all such further action as reasonably may be necessary to obtain all regulatory consents in respect of telecommunications matters and to resolve such objections, if any, as the HSR Agencies, state antitrust enforcement authorities or competition authorities of any other nation or other jurisdiction or any other Person may assert under relevant antitrust or competition laws with respect to the transactions contemplated hereby; and (vii) subject to applicable legal limitations and the instructions of any Governmental Authority, keep each other apprised of the status of matters relating to the completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by the Company, Verizon or Spinco, as the case may be, or any of their respective Subsidiaries, from any third party and/or any Governmental Authority with respect to such transactions.

(d)In furtherance and not in limitation of the covenants of the parties contained in this Section 7.6, if any administrative or judicial action or proceeding, including any proceeding by a private party, is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement or the Transaction

86

Agreements as violative of any Regulatory Law or otherwise, each of the Company, Verizon and Spinco shall cooperate in all respects with each other and use all commercially reasonable efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement, provided that the foregoing obligations shall not apply to a final order of a State Regulator in the States of Vermont, New Hampshire or Maine.  None of Verizon, Spinco or the Company shall settle any such action, suit or proceeding or fail to perfect on a timely basis any right to appeal any judgment rendered or order entered against such party therein without having previously consulted with the other parties.  Notwithstanding the foregoing or any other provision of this Agreement, nothing in this Section 7.6 shall limit a party’s right to terminate this Agreement pursuant to Section 9.1(b) or 9.1(c) so long as such party has, prior to such termination, complied with its obligations under this Section 7.6.

(e)If any objections are asserted with respect to the transactions contemplated hereby or the Transaction Agreements under any Regulatory Law or if any suit is instituted by any Governmental Authority or any private party recommending or seeking to deny the granting of any Telecommunications Regulatory Consent or challenging any of the transactions contemplated hereby as violative of any Regulatory Law or otherwise, each of the Company, Verizon and Spinco shall use all commercially reasonable efforts to resolve any such objections or challenge as such Governmental Authority or private party may have to such transactions under such Regulatory Law so as to permit consummation of the transactions contemplated by the Transaction Agreements.  For purposes of this Agreement, “Regulatory Law” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, the Communications Act and all other federal, state or foreign, if any, statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other laws that relate to the granting of regulatory consents in respect of telecommunications matters or are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition, whether in the communications industry or otherwise through merger or acquisition.  The Company and not Verizon will make all required filings, as may be required under applicable law, with the FCC and the State Regulators relating to transfers of customers and compliance with carrier change authorization, notification and verification rules.

(f)To the extent necessary to comply with state laws, regulations and FCC Rules including those prohibiting “slamming” as set forth in 47 C.F.R. Section 64.1120, at least 60 days prior to Closing Date as reasonably anticipated by any party, (i) the Company shall, at its own expense, prepare and deliver to Verizon a draft notice providing the information required by 47 C.F.R. Section 64.1120(e) addressed to the

87

telecommunications customers of Spinco and the Spinco Subsidiaries, after giving effect to the Contribution, it being understood that Verizon shall have the opportunity to review and comment on the contents of such notice; and (ii) Verizon shall, at the Company’s cost and expense (which shall be a reimbursement of Verizon’s fully allocated cost), cause such notice to be delivered to such customers at least 30 days before the Closing Date as reasonably anticipated by any party by a direct mailing or in accordance with such method of notice and notification period that the FCC or State Regulators may order or require.  For the avoidance of doubt, the Company and not Verizon, will be primarily responsible for making all required filings with the FCC and the State Regulators relating to transfers of customers and compliance with carrier change authorization, notification and verification rules.  Verizon and/or Spinco will be responsible for preparing, distributing, and filing (at Spinco’s expense) any notices relating to “discontinuance, reduction, or impairment” of service to the customers of Spinco and the Spinco Subsidiaries after giving effect to the Contribution required by 47 C.F.R. Sections 63.19 and 63.71.

(g)At or prior to the Effective Time, the Company, at its own expense, shall adopt (to the extent permitted by State Regulators) the tariffs, price lists, schedules of rates, or other statements of terms and conditions, including, without limitation, special customer arrangements, special assemblies, price flex arrangements, and individual customer based arrangements of Verizon New England and Verizon Select Services Inc. for telecommunications services, which are applicable in whole or in part in Maine, New Hampshire, or Vermont, are effective under applicable laws and regulations, and are in effect immediately prior to the Effective Time (collectively, the “Tariffs”).  The Company shall maintain the Tariffs in effect at least until the end of the service term specified in (i) the Tariffs (to the extent permitted by State Regulators), (ii) agreements implementing such Tariffs with customers served by Verizon Affiliates under retained Blended Customer Contracts identified in Section 1.1(a) of the Disclosure Letter to the Distribution Agreement and the agreements of customers who do not provide Verizon Third Party Consents under this Agreement (each a “Specified Contract”) and (iii) agreements implementing such Tariffs with Persons who are Affiliates of Verizon New England on or before the Closing Date, and any optional renewal term exercisable by customers which are party to a Specified Contract  or such Affiliates in such agreements or Tariffs.  The Company further agrees that, to the extent such Tariffs or agreements implementing such Tariffs contain rates and charges or other terms and conditions based on volume of service, amount of purchase or spend, or similar volume commitments by the customers which are party to a Specified Contract or such Affiliates (the “Volume Commitments”), the Company will reduce such Volume Commitments pro-rata, without a change in rates and charges or other terms and conditions under such Tariffs or agreements, to reflect the fact that the customers which are party to a Specified Contract or such Affiliates may, after Closing, take service from Verizon New England and the Company and not from Verizon New England or the Company alone.  The pro-rata

88

reduction shall be equal to or exceed the amount of the Volume Commitment provided by Verizon New England after Closing.  By way of example, and not by limitation, if after Closing, such Affiliate purchased 75% of a Volume Commitment from Company and 25% of a Volume Commitment from Verizon New England, then Company would reduce the Volume Commitment by 25% in affected Tariffs and agreements implementing such Tariffs.  At its own expense, the Company shall make all filings and take all other actions as may be required by applicable laws and regulations to make the Tariffs and pro-rata reductions of Volume Commitments adopted or made by the Company under this Section 7.6(g) legally effective not later than the Effective Time.  If the applicable State Regulators do not permit, in whole or in part, the adoption of such Tariffs by the Company or the maintenance of such Tariffs during the service terms described above in this Section 7.6(g), then from and after the Effective Time and through the date on which the Company would no longer have been required under this Section 7.6(g) to maintain the applicable Tariffs had such State Regulators permitted their adoption, the Company will provide service terms, rates and services equivalent to the Tariffs, including reductions in Volume Commitments, by means and methods acceptable to the applicable State Regulators.

(h)Effective no later than the Effective Time, Verizon shall cause Verizon New England to relinquish voluntarily any certificate of public good or any other equivalent franchise or authorization under Law, including prior Law, to provide ILEC regulated intrastate services, which it possesses in Maine, New Hampshire and Vermont and to have obtained the approvals of the applicable public utility commissions in Maine, New Hampshire, and Vermont for the revocation, termination or transfer to ILEC Spinco Subsidiary of such authorizations and franchises and for its abandonment and discontinuance of all ILEC regulated intrastate services subject to the jurisdiction of such commissions.  Promptly after the Effective Time, but in no event later than 30 days thereafter, Verizon New England shall file to withdraw its intrastate tariffs or schedules of rates, terms and conditions for ILEC regulated intrastate services.

89

7.7Employee Matters.  Throughout the internal restructurings and merger taken in contemplation of this Agreement, including the Internal Spinoffs and Internal Restructurings, the Contribution, Distribution, and the Merger, the Spinco Employees shall maintain uninterrupted continuity of employment, compensation and benefits, and, also for union-represented employees, uninterrupted continuity of representation for purposes of collective bargaining and uninterrupted continuity of coverage under their collective bargaining agreements, in each case as contemplated by and described in the Employee Matters Agreement.

7.8Certain Third Party Consents.

(a)Verizon and Spinco shall use commercially reasonable efforts to identify and obtain prior to the Closing any material Verizon Third Party Consents necessary to be obtained to authorize, approve or permit the consummation of the transactions contemplated by the Distribution Agreement or this Agreement.  If such Verizon Third Party Consents have not been obtained prior to the Closing, Verizon and the Surviving Corporation shall use commercially reasonable efforts thereafter to obtain such Verizon Third Party Consents for a period of six months following the Closing; provided, however, that Verizon and the Company (or, for periods following the Closing, the Surviving Corporation) shall not be required to pay more than $1,000,000 in the aggregate to obtain all Verizon Third Party Consents sought pursuant to this Section 7.8(a) (inclusive of any amounts paid in respect of Verizon IP Consents as provided in Section 7.8(b) and any costs associated with the separation of any Blended Customer Contract as provided in Section 7.8(e)) with any such payment borne 60% by Verizon and 40% by the Company (on a dollar for dollar basis), provided that such limitation shall not apply to any filing, recordation or similar fees payable to any Governmental Authority, which filing, recordation or similar fees shall be paid by the Company or the Surviving Corporation.

(b)Promptly following the date hereof and, if the Closing occurs, for a period of six months following the Closing Date, Verizon shall use, and shall cause its Affiliates to use, commercially reasonable efforts, in cooperation with the Surviving Corporation, to identify and thereafter obtain Verizon IP Consents.  The parties shall bear the costs of obtaining any Verizon IP Consent (collectively, the “Verizon IP Consent Costs”) as provided in Section 7.8(b) of the Verizon Disclosure Letter.  For the avoidance of doubt, (i) Verizon IP Consents shall include any authorization, approval, consent, waiver or replacement license of a third Person required to permit the Company and the Subsidiaries, as applicable, to retain rights to any material Network Element Software that is made available to one or more Contributing Companies pursuant to an Excluded Contract and (ii) except to the extent provided otherwise in Section 7.8(b) of the Verizon Disclosure Letter, Verizon IP Consent Costs shall not include the costs attributable to obtaining

90

for the benefit of Surviving Corporation or its Subsidiaries any upgrade or maintenance, support or other service used or useful in the operation of material Network Element Software following the Closing.

(c)Notwithstanding anything to the contrary contained herein, but subject to the obligations set forth in this Section 7.8(c), to the extent any Verizon Third Party Consent or Verizon IP Consent is required in connection with the consummation of the transactions contemplated by the Distribution Agreement or this Agreement and such Verizon Third Party Consent or Verizon IP Consent is not received prior to the Closing, then, (i) if applicable, the Contract that is the subject of such Verizon Third Party Consent shall not be assigned in the Contribution or (ii) if applicable, to the extent any such Contract requiring a Verizon Third Party Consent may only be enjoyed by an Affiliate of Verizon, such Contract shall be transferred to another Affiliate of Verizon, and Verizon agrees to use commercially reasonable efforts to make the benefits of any such Contract available to the Surviving Corporation and its Subsidiaries for a period of one year following the Closing Date, subject to (x) the assumption of all obligations in respect of such Contract by the Surviving Corporation and the Subsidiaries, (y) the limitations on required payments set forth in Sections 7.8(a) and 7.8(b) and (z) Section 7.8(f).

(d)Verizon shall use its commercially reasonable efforts to deliver to the Company within 60 days of the date hereof (i) a list of all third parties who are counterparties to an Excluded Contract and which Verizon reasonably believes were paid an aggregate of $100,000 or more in calendar year 2006 by Verizon or its Subsidiaries as indicated in the accounts payable system of Verizon in respect of such Contract and (ii) to the extent not prohibited pursuant to confidentiality obligations contained in any such Contract, either (a) a copy of such Contract (if such Contract is in writing) or (b) a description of the products/services which are the subject of the Contract.

(e)With respect to Blended Customer Contracts, Verizon and the Company will use commercially reasonable efforts to obtain prior to the Closing or, if not obtained, will use commercially reasonable efforts for 180 days following the Closing to obtain from the counterparty to each Blended Customer Contract any needed consent to separate the portion of such Contract that relates to the goods or services purchased from or supplied to the Spinco Business under such Blended Customer Contract, it being agreed that Verizon shall not be required to grant any consideration to any counterparty to such a Blended Customer Contract except to the extent of any consent costs that are included in the amounts for which Verizon is responsible pursuant to Section 7.8(a).  The Contract constituting the separated portion of any Blended Customer Contract that relates to the Spinco Business as described in the preceding sentence shall be assumed by and become

91

the responsibility of Spinco (or the Surviving Corporation to the extent it is separated following the Closing).

(f)In the event any customer Contract that would have been assigned in the Contribution as a Spinco Asset but for the failure to obtain a Verizon Third Party Consent is not assigned or any Blended Customer Contract that would have been assumed in part by Spinco pursuant to Section 7.8(e) but for the failure of the counterparty to consent to such assumption is not assumed, then (i) to the extent such Contract involves the provision to the customer thereunder of ILEC services that are a part of the Spinco Business, Verizon shall use the Surviving Corporation and its Subsidiaries succeeding to the Spinco Business to provide such services to such customer subject to the rights, if any, of such customer under such Contract to consent thereto and (ii) to the extent such Contract involves the provision to the customer thereunder of non-ILEC services, Verizon shall continue to provide such services to such customer in accordance with such Contract.  With respect to ILEC services delivered by the Surviving Corporation and its Subsidiaries in respect of such Contracts, Verizon shall either (A) remit to the Surviving Corporation amounts received from the applicable customers in accordance with the applicable Tariff (which the Surviving Corporation shall have mirrored in accordance with Section 7.6(g)) or, if applicable, in accordance with the last sentence of Section 7.6(g), in each case including as to payment terms or (B) make payment to the Surviving Corporation in accordance with the terms of the applicable Transferred Affiliate Arrangement, including as to payment terms.  With respect to non-ILEC services and ILEC services delivered by Verizon or its Subsidiaries under such Contracts without the assistance of the Surviving Corporation or its Subsidiaries, Verizon shall remit to the Surviving Corporation its net amounts received (after payment of third party costs and any applicable taxes) in respect of the delivery of such services to such customers, which payment shall be made by Verizon promptly after its receipt of such revenues and in any event no later than 45 days thereafter.  The provisions of this Section 7.8(f) shall exclusively govern the circumstances described in the first sentence hereof, notwithstanding any other provision of this Agreement or the Distribution Agreement.

(g)Verizon will use its commercially reasonable efforts to identify to the Company prior to the Closing any Verizon Guarantees (as defined in the Distribution Agreement) and any Spinco Guarantees (as defined in the Distribution Agreement).

92

7.9Tax Matters.

(a)IRS Rulings.

(i)As soon as reasonably practicable after the date of this Agreement, Verizon and the Company, as to matters germane to the Merger, shall submit to the IRS a request (the “Ruling Request”) for (A) the IRS Ruling, and (B) any other ruling in connection with the Contribution, the Distribution or the Merger that Verizon, in consultation with the Company, deems to be appropriate.  The initial Ruling Request and any supplemental materials submitted to the IRS relating thereto (each, an “IRS Submission”) shall be prepared by Verizon.  Verizon shall provide the Company with a reasonable opportunity to review and comment on each IRS Submission prior to the filing of such IRS Submission with the IRS as provided in Section 10.01 of the Tax Sharing Agreement; provided that Verizon may redact from any IRS Submission any information (“Redactable Information”) that (A) Verizon, in its good faith judgment, considers to be confidential and not germane to the Company’s or Spinco’s obligations under this Agreement or any of the other Transaction Agreements, and (B) is not a part of any other publicly available information, including any non-confidential filing.

(ii)Verizon shall provide the Company with copies of each IRS Submission as filed with the IRS promptly following the filing thereof; provided that Verizon may redact any Redactable Information from the IRS Submission.  Each of Verizon, Spinco and the Company agrees to use its commercially reasonable efforts to obtain the IRS Ruling and the other rulings set forth in the Ruling Request, including providing such appropriate information and representations as the IRS shall require in connection with the Ruling Request and any IRS Submissions.  Solely for the avoidance of doubt, nothing in this Section 7.9(a)(ii) shall provide grounds for Verizon, Spinco or the Company to alter any obligation or limitation imposed upon it under this Agreement.

(b)Distribution Tax Opinion.  Each of Verizon, Spinco and the Company agrees to use its commercially reasonable efforts to obtain the Distribution Tax Opinion.  The Distribution Tax Opinion shall be based upon the IRS Ruling, any other rulings issued by the IRS in connection with the Ruling Request, and customary representations and covenants, including those contained in certificates of Verizon, Spinco, the Company and others, reasonably satisfactory in form and substance to Verizon Tax Counsel (such representations and covenants, the “Distribution Tax Representations”).  Each of Verizon, Spinco and the Company shall deliver to Verizon Tax Counsel, for purposes of the Distribution Tax Opinion, the Distribution Tax Representations.

93

(c)Merger Tax Opinions.  Verizon and Spinco, on the one hand, and the Company, on the other hand, shall cooperate with each other in obtaining, and shall use their respective commercially reasonable efforts to obtain, a written opinion of their respective tax counsel, Paul, Hastings, Janofsky & Walker LLP, in the case of the Company (“Company Tax Counsel”), and Verizon Tax Counsel, in the case of Verizon and Spinco, in form and substance reasonably satisfactory to the Company and Verizon, respectively (each such opinion, a “Merger Tax Opinion”), dated as of the Effective Time, to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the Merger will be treated as a tax-free reorganization within the meaning of Section 368(a) of the Code.  Each of the Company, Verizon and Spinco shall deliver to Company Tax Counsel and Verizon Tax Counsel for purposes of the Merger Tax Opinions customary representations and covenants, including those contained in certificates of the Company, Verizon, Spinco and others, reasonably satisfactory in form and substance to Company Tax Counsel and Verizon Tax Counsel.

(d)Prior to the Effective Time, each of Verizon, Spinco and the Company agrees to use its reasonable best efforts to cause the Tax-Free Status of the Transactions.

7.10Access to Information.  Upon reasonable notice, each of Verizon, Spinco and the Company shall, subject to applicable Law, afford to each other and to each other’s respective officers, employees, accountants, counsel and other authorized representatives, reasonable access during normal business hours, from the date hereof through to the date which is the earlier of the Effective Time or the date on which this Agreement is terminated pursuant to Section 9.1, to its and its Subsidiaries’ officers, employees, accountants, consultants, representatives, plants, properties, Contracts (other than Excluded Contracts), commitments, books, records (including Tax Returns) and any report, schedule or other document filed or received by it pursuant to the requirements of the federal or state securities laws, and shall use all commercially reasonable efforts to cause its respective representatives to furnish promptly to the others such additional financial and operating data and other information in its possession, as to its and its Subsidiaries’ respective businesses and properties as the others or their respective duly authorized representatives, as the case may be, may reasonably request, it being understood that in no event will any party be required to provide access to its accountants’ work papers and, in the case of Spinco and Verizon, the foregoing obligations will be limited to information regarding the Spinco Business.  The parties hereby agree that the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any party or its representatives thereunder and hereunder.

94

7.11No Solicitation by the Company.

(a)Except as set forth in Sections 7.11(b) through (d) hereof, the Company agrees that, following the date of this Agreement and prior to the earlier of the Effective Time or the date on which this Agreement is terminated pusuant to Section 9.1, neither it nor any Company Subsidiary shall, and that it shall use reasonable best efforts to cause its and each of the Company Subsidiary’s officers, directors, employees, advisors and agents not to, directly or indirectly, (i) knowingly solicit, initiate or encourage any inquiry or proposal that constitutes or could reasonably be expected to lead to a Company Acquisition Proposal, (ii) provide any non-public information or data to any Person relating to or in connection with a Company Acquisition Proposal, engage in any discussions or negotiations concerning a Company Acquisition Proposal, or otherwise knowingly facilitate any effort or attempt to make or implement a Company Acquisition Proposal, (iii) approve, recommend, agree to or accept, or propose publicly to approve, recommend, agree to or accept, any Company Acquisition Proposal, or (iv) approve, recommend, agree to or accept, or propose to approve, recommend, agree to or accept, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement related to any Company Acquisition Proposal.  Without limiting the foregoing, any violation of the restrictions set forth in the preceding sentence by any of the Company Subsidiaries or any of the Company’s or the Company Subsidiaries’ officers, directors, employees, agents or representatives (including any investment banker, attorney or accountant retained by the Company or the Company Subsidiaries) shall be a breach of this Section 7.11(a) by the Company.  The Company agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Persons conducted heretofore with respect to any Company Acquisition Proposal (except with respect to the transactions contemplated by this Agreement).

(b)Nothing contained in this Agreement shall prevent the Company or the Company’s Board of Directors from, prior to the adoption of this Agreement by the holders of Company Common Stock, engaging in any discussions or negotiations with, or providing any non-public information to, any Person, if and only to the extent that (i) the Company receives from such Person an unsolicited bona fide Company Superior Proposal or a Company Acquisition Proposal that the Company’s Board of Directors determines in good faith (after consultation with a financial advisor of nationally recognized reputation) would reasonably be expected to lead to a Company Superior Proposal, (ii) the Company’s Board of Directors determines in good faith (after consultation with its legal advisors) that its failure to do so would reasonably be expected to result in a breach of the Board of Directors’ fiduciary duties under applicable Law, (iii) prior to providing any information or data to any Person in connection with a proposal by any such Person, (A) the Company’s Board of Directors receives from such Person an executed confidentiality agreement no less restrictive than the Confidentiality

95

Agreement and (B) such information has been provided to Verizon (or is provided to Verizon at the same time it is provided to such Person, to the extent not previously provided or made available to Verizon) and (iv) prior to providing any non-public information or data to any Person or entering into discussions or negotiations with any Person, the Company’s Board of Directors notifies Verizon promptly of any such inquiry, proposal or offer received by, any such information requested from, or any such discussions or negotiations sought to be initiated or continued with, the Company, any Company Subsidiary or any of their officers, directors, employees, advisors and agents indicating, in connection with such notice, the material terms and conditions of the Company Acquisition Proposal and the identity of the Person making such Company Acquisition Proposal.  The Company agrees that it shall keep Verizon reasonably informed, on a reasonably prompt basis, of the status and material terms of any such proposals or offers, any changes thereto, and the status of any such discussions or negotiations and will notify Verizon promptly of any determination by the Company’s Board of Directors that a Company Superior Proposal has been made.  For purposes of this Agreement, a “Company Superior Proposal” means any proposal or offer made by a third party to acquire, directly or indirectly, by merger, consolidation or otherwise, for consideration consisting of cash and/or securities, at least a majority of the shares of the Company Common Stock then outstanding or all or substantially all of the assets of the Company and the Company Subsidiaries and otherwise on terms which the Board of Directors of the Company (after consultation with its legal and financial advisors) determines in its good faith judgment to be more favorable to the Company’s stockholders than the Merger (taking into account all of the terms and conditions of such proposal and of this Agreement as well as any other factors deemed relevant by the Board of Directors of the Company) and reasonably capable of being consummated on the terms so proposed, taking into account all financial, regulatory, legal and other aspects of such proposal.

(c)Prior to the adoption of this Agreement by the holders of Company Common Stock, the Board of Directors of the Company may, if it concludes in good faith (after consultation with its legal advisors) that failure to do so would result in a breach of its fiduciary duties under applicable Law, withdraw or modify its recommendation of the Merger, but only at a time that is after the third Business Day following Verizon’s receipt of written notice from the Company advising Verizon of its intention to do so.  Notwithstanding any withdrawal or modification of recommendation pursuant to this Section 7.11(c), Verizon shall have the option, exercisable within five Business Days after such withdrawal or modification, to cause the Board of Directors to submit this Agreement to the stockholders of the Company for the purpose of adopting this Agreement.

(d)Nothing in this Agreement shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a)

96

promulgated under the Exchange Act or from making any disclosure to the Company stockholders if, in the good faith judgment of the Board of Directors of the Company (after consultation with its legal advisors), it is required to do so in order to comply with its fiduciary duties to the Company’s stockholders under applicable Law; provided, however, that neither the Company nor its Board of Directors nor any committee thereof shall approve or recommend, or propose publicly to approve or recommend, a Company Acquisition Proposal unless the Company has first terminated this Agreement pursuant to Section 9.1(h) hereof and has otherwise complied with the provisions thereof.

7.12Director and Officer Matters.

(a)From and after the date hereof, the Company, the Surviving Corporation and their respective Subsidiaries shall provide such cooperation and assistance as Verizon may reasonably request to enable, if Verizon so chooses, Verizon or a Subsidiary thereof to maintain following the Closing, at Verizon’s expense, directors’ and officers’ liability insurance policies and fiduciary liability insurance policies covering each person who is, or has been at any time prior to the Effective Time, an officer or director of Verizon or a Contributing Company and each person who served at the request of a Contributing Company as a director, officer, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise, including any person serving in such capacity with respect to Spinco or a Spinco Subsidiary (the “Identified Persons”).

(b)Effective as of the Effective Time, the Surviving Corporation, on behalf of itself, its Subsidiaries and their respective successors and assigns, and for all parties claiming by, through or under them (the “Surviving Corporation Releasors”), hereby irrevocably release, remise and forever discharge each of the Identified Persons, and each of their respective estates and heirs, of and from any and all claims, whether presently known or unknown, which any Surviving Corporation Releasor has or may have of any kind arising out of or pertaining to acts or omissions, or alleged acts or omissions, by the Identified Persons in the capacities specified in Section 7.12(a) prior to the Closing.

(c)In the event of any claim, action, suit, arbitration, proceeding or investigation (“Action”) arising out of or pertaining to acts or omissions, or alleged acts or omissions, by the Identified Persons in the capacities specified in Section 7.12(a) prior to the Closing, from and after the Effective Time the Surviving Corporation and its Subsidiaries shall provide reasonable cooperation, at Verizon’s expense, in defense of any such Action.

97

7.13Rule 145 Affiliates.  Spinco shall, at least 10 days prior to the Effective Time, cause to be delivered to the Company a list, reviewed by its counsel, identifying any persons who will be, in its reasonable judgment, at the Effective Time, “affiliates” of Spinco for purposes of Rule 145 promulgated by the SEC under the Securities Act (each, a “Rule 145 Affiliate”).  Spinco shall furnish such information and documents as the Company may reasonably request for the purpose of reviewing such list.  Spinco shall use all commercially reasonable efforts to cause each person who is identified as a Rule 145 Affiliate in the list furnished pursuant to this Section 7.13 to execute a written agreement (each, a “Rule 145 Affiliate Agreement”), substantially in the form of Exhibit A to this Agreement, at or prior to the Effective Time.

7.14Public Announcements.  Verizon and the Company shall consult with each other and shall mutually agree upon any press release or public announcement relating to the transactions contemplated by this Agreement and neither of them shall issue any such press release or make any such public announcement prior to such consultation and agreement, except as may be required by applicable Law or by obligations pursuant to any listing agreement with any national securities exchange or automated inter-dealer quotation system, in which case the party proposing to issue such press release or make such public announcement shall use all commercially reasonable efforts to consult in good faith with the other party before issuing any such press release or making any such public announcement.

7.15Notification.

(a)Verizon shall give notice to the Company, and the Company shall give notice to Verizon, of any occurrence or non-occurrence of any fact or event that would reasonably be expected to cause the failure of Verizon or its Affiliates or the Company or its Affiliates, as the case may be, to comply with or satisfy, in any material respect, any closing condition pursuant to Article VIII.

(b)Each of the parties hereto shall keep the others informed on a timely basis as to (i) the status of the transactions contemplated by the Transaction Agreements and the obtaining of all necessary and appropriate exemptions, rulings, consents, authorizations and waivers related thereto and (ii) the status of any other material regulatory proceeding, pending as of the date hereof or arising prior to the Effective Time, affecting the Spinco Business or the business of the Company and its Subsidiaries, as applicable, including making available to the other parties copies of all material communications with State Regulators in connection with any such proceeding.

98

7.16Real Property Matters.  Promptly after the execution of this Agreement:

(i)the parties will negotiate in good faith a mutually acceptable arrangement allowing Verizon and its Affiliates to occupy and use following the Closing the property located at 875 Holt Avenue, Manchester, New Hampshire in substantially the same manner insofar as practicable as such property is occupied and used by them (other than in connection with the Spinco Business) during the 12 month period prior the Closing Date;

(ii)the parties will negotiate in good faith a mutually acceptable lease arrangement allowing Verizon and/or its Affiliates to continue to occupy and use a portion of the property located at 770 Elm Street, Manchester, New Hampshire (the “NH Premises”) pursuant to a gross lease arrangement (the “NH Lease”) whereby Verizon and/or its Affiliate(s) shall (A) occupy the entire first floor of the NH Premises (to the extent consistent with its or their current occupancy), (B) be permitted to remain at the NH Premises for an initial term of five  years from the date of execution of the NH Lease, (C) pay a market rental rate to be agreed upon by the parties, (D) have two consecutive five-year options to extend the initial term and (E) contain such other terms as the parties may reasonably agree, and in connection therewith shall consider in good faith the form of lease agreement proposed by Verizon to the Company prior to the date hereof; and

(iii)the parties will negotiate in good faith a mutually acceptable lease arrangement allowing Verizon and/or its Affiliates to continue to occupy and use a portion of the property located at 59 Park Street, Bangor, Maine (the “ME Premises”) pursuant to a gross lease arrangement (the “ME Lease”) whereby Verizon and/or its Affiliate(s) shall (A) occupy the entire fourth floor of the ME Premises (to the extent consistent with its or their current occupancy), (B) be permitted to remain at the ME Premises for an initial term of five years from the date of execution of the ME Lease, (C) pay a market rental rate to be agreed upon by the parties, (D) have two consecutive five-year options to extend the initial term and (E) contain such other terms as the parties may reasonably agree, and in connection therewith shall consider in good faith the form of lease agreement proposed by Verizon to the Company prior to the date hereof.

7.17Control of Other Party’s Business.  Nothing contained in this Agreement shall give Verizon or Spinco, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time.  Nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct the operations of the business of Spinco and the Spinco Subsidiaries prior to the Effective Time.  Prior

99

to the Effective Time, Verizon and the Company shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its respective operations.

7.18Financial Statements and Related Information.

(a)Verizon will deliver to the Company at Verizon’s expense, as soon as practicable, and in any event no later than 90 days after the end of the 2006 fiscal year, audited Statements of Selected Assets, Selected Liabilities and Parent Funding of the local exchange businesses and related landline activities of Verizon in the states of Maine, New Hampshire and Vermont (including Internet access, long distance and customer premises equipment services provided to customers in those states) for such fiscal year (collectively, such combined financial statements, together with the notes thereto, the “2006 Financial Statements”), which will comply with the reporting requirements of the SEC under Regulation S-X promulgated under the Exchange Act (either initially or as amended in response to any SEC comment), together with an unqualified opinion of Verizon’s independent accounting firm, Ernst & Young LLP, it being agreed that the cost of such audit shall be borne by Verizon.  The 2006 Financial Statements will be prepared in accordance with GAAP and Regulation S-X promulgated under the Exchange Act applied on a consistent basis throughout the period involved using the same accounting principles, practices, methodologies and policies used in preparing the Audited Financial Statements (except as may otherwise be required by GAAP or as may be expressly disclosed therein) and present fairly, in all material respects, the financial position and operating results of the Spinco Business as of the dates and for the periods indicated therein.

(b)Beginning with the calendar quarter ending on March 31, 2007, Verizon will deliver to the Company, promptly upon their being prepared (and in any event no later than 60 days after the end of each calendar quarter), unaudited Statements of Selected Assets, Selected Liabilities and Parent Funding of the local exchange businesses and related landline activities of Verizon in the states of Maine, New Hampshire and Vermont (including Internet access, long distance and customer premises equipment services provided to customers in those states) (the “Quarterly Financial Statements”).  Such balance sheet and statements of income and cash flows shall be prepared from the books and records of Verizon and the Contributing Companies (to the extent relating to the Spinco Business) in accordance with GAAP applied on a consistent basis throughout the periods involved using the same accounting principles, practices, methodologies and policies used in preparing the Spinco Financial Statements (except as may otherwise be required under GAAP) and present fairly, in all material respects, the financial position and operating results of the Spinco Business as of the dates and for the periods indicated therein.

100

(c)           On or prior to such date as the Quarterly Financial Statements are required to be delivered by Verizon to the Company, Verizon shall deliver to the Company, in writing, a calculation of Spinco Adjusted EBITDA as of the end of such quarter, together with a certificate of an authorized representative of Verizon stating that such calculation is an accurate calculation made in accordance with the definition of “Spinco Adjusted EBITDA” provided herein.

(d)           No later than three Business Days following the filing of any quarterly report on Form 10-Q in respect of a fiscal quarter, the Company shall deliver to Verizon, in writing, a calculation of Company Adjusted EBITDA as of the end of such quarter, together with a certificate of an authorized representative of the Company stating that such calculation is an accurate calculation made in accordance with the definition of “Company Adjusted EBITDA” provided herein.

7.19         Directors of the Surviving Corporation.  The Company, Verizon and Spinco shall take all action reasonably necessary to cause the Board of Directors of the Company immediately prior to the Effective Time to consist of nine members, (i) six of whom shall be designated by Verizon and (ii) three of whom will be designated by the Company, which directors shall be evenly distributed among the Company’s three classes of directors and shall be the Board of Directors of the Surviving Corporation.  One of the Company’s designees shall serve as chairman of the board.  Within 75 days following the date of this Agreement, Verizon shall give the Company written notice setting forth its designees to the Surviving Corporation’s Board of Directors and such information with respect to each of its designees as is required to be disclosed in the Proxy Statement/Prospectus or the proxy statement for such annual meeting.  Promptly after Verizon gives such notice to the Company, and in any event within 10 days thereafter, the Company shall notify Verizon of its designees to the Surviving Corporation’s Board of Directors.  Two of the Verizon designees shall be persons prepared to commence service as directors of the Company from and after the date that the Requisite Approval of the Company’s stockholders is obtained, and to continue to serve in such capacity after the Effective Time, it being the understanding of the parties that two of the Company’s current directors will resign at or prior to the date of  the Company Stockholders Meeting and will be replaced by such Verizon designees at or after the date of the Company Stockholders Meeting upon reasonable prior notice by the Company to Verizon.  The designees of each of Verizon and the Company will be equally distributed among the classes of the Board of Directors of the Surviving Corporation, as each of Verizon and the Company shall specify.  Without limiting the foregoing and prior to the Effective Time, the Company shall take all actions necessary to obtain the resignations of all members of its Board of Directors who will not be directors of the Surviving Corporation and for the Board of Directors of the Company to fill such vacancies with the new directors contemplated by this Section 7.19.  None of Verizon’s director nominees under

101

this Section 7.19 will be employees of Verizon, its Affiliates or Cellco Partnership or any of its Subsidiaries.

7.20         Financing.

(a)           Verizon shall have the right to designate, in consultation with the Company, the final form of the Spinco Securities and related agreements (including registration rights arrangements and indenture) embodying the terms set forth in Exhibit C of the Distribution Agreement and to prepare the documents related thereto, provided that (i) the Company shall have the right and obligation, in consultation with Verizon, to negotiate and approve covenants that are generally consistent with then current market practice for 144A debt offerings and economic terms of the Spinco Securities and related agreements (including registration rights arrangements and indenture) that are not specified on Exhibit C of the Distribution Agreement as long as such covenants and economic terms are consistent with Exhibit C of the Distribution Agreement and shall allow the Spinco Securities to be valued at par upon issuance (including, for the avoidance of doubt, for purposes of the Debt Exchange if Verizon elects to consummate such Debt Exchange at the time of Closing) and allow for the timely consummation of the Debt Exchange (if elected by Verizon) and (ii) any other material terms of the Spinco Securities and related agreements that are not addressed by clause (i) of this Section 7.20(a) or on Exhibit C of the Distribution Agreement shall be subject to the joint approval of the parties, acting reasonably.  For the avoidance of doubt, if Verizon elects to consummate the Debt Exchange, it shall have the sole right to structure the arrangements relating thereto with underwriters, arrangers and other third parties relating to the Debt Exchange; provided that Verizon shall keep the Company reasonably updated regarding such arrangements.

(b)           Each of Verizon, Spinco and the Company shall cooperate in connection with the preparation of all documents and the making of all filings required in connection with the New Financing, the Spinco Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange) and shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all other things necessary, proper or advisable to consummate the New Financing, the issuance of the Spinco Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange) and the other transactions contemplated in connection therewith.  Without limiting the generality of the foregoing, each of Verizon, Spinco and the Company shall use their respective commercially reasonable efforts to cause their respective employees, accountants, counsel and other representatives to cooperate with each other in (i) participating in meetings, drafting sessions, due diligence sessions, management presentation sessions, “road shows” and sessions with rating agencies in connection with the syndication or marketing of the New Financing, the Spinco

102

Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange), (ii) preparing offering memoranda, private placement memoranda, prospectuses and similar documents deemed reasonably necessary by Verizon, Spinco or the Company, to be used in connection with consummating the New Financing, the issuance of the Spinco Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange), (iii) executing and delivering all documents and instruments deemed reasonably necessary by Verizon, Spinco or the Company to consummate the New Financing, the issuance of the Spinco Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange), including any underwriting or placement agreements, pledge and security documents, other definitive financing documents, including any intercreditor or indemnity agreements, or other requested certificates or documents as may be reasonably requested in connection with the New Financing, the Spinco Securities or the Debt Exchange (if Verizon elects to consummate the Debt Exchange), provided, however, that (A) no such agreements or documents shall impose any monetary obligation or liability on Spinco or the Company prior to the Effective Time and (B) Verizon shall not be obligated to incur any obligations in connection with the New Financing (other than the obligation to pay Spinco Debt Expenses as provided in the Distribution Agreement and the non-monetary cooperation obligations set forth above in this Section 7.20(b)), (iv) disclosing the terms and conditions of the New Financing, the Spinco Securities and the Debt Exchange (if Verizon elects to consummate the Debt Exchange), as reasonably appropriate, in the Registration Statements, and (v) taking all other actions reasonably necessary in connection with the New Financing, including any such actions required to permit the assumption by the Surviving Corporation of the debt that is part of the New Financing and the Spinco Securities at the Effective Time.  The obligations of Verizon, Spinco and the Company under this Section 7.20(b) with respect to the New Financing shall also apply to any Alternative Financing (as defined below).

(c)           No party shall modify any term of the Commitment Letter (or any related fee agreement) without the consent of the Company and Verizon.  Spinco and the Company, acting reasonably, shall jointly participate in the negotiation of the definitive agreements relating to the New Financing, consistent with the terms and conditions of the Commitment Letter.  If for any reason any portion of the New Financing becomes unavailable or is insufficient to consummate the transactions contemplated by the Transaction Documents, the Company shall, as promptly as practicable following such event, take all actions necessary to obtain, in consultation with Verizon, and consummate on such terms as may then be available, including from alternate sources, alternative financing for the same purposes as the purposes of the New Financing (“Alternative Financing”).  Any commitment fees associated with any Alternative Financing shall be borne by the Company.  Verizon shall cooperate with the Company’s efforts to seek to obtain the Alternative Financing but shall not be obligated to incur any obligations in connection with the Alternative Financing (other than the obligation to pay Spinco Debt

103

Expenses as provided in the Distribution Agreement and the non-monetary cooperation obligations set forth Section 7.20(b)).

(d)           The Company shall take all actions necessary to satisfy all conditions to the New Financing (or, if applicable, the Alternative Financing) that are within its control, including arranging for the payoff, termination and/or cancellation of all loan documents in respect of indebtedness of the Company that is contemplated by any commitment letter associated with the New Financing or any Alternative Financing to be repaid at the Closing with the proceeds from the New Financing or any Alternative Financing.

(e)           The Company, if it does not enter into the amendment to the Company Credit Agreement contemplated by the Backstop Facility Commitment and thereby obtain the consent disclosed in Section 6.3(c) of the Company Disclosure Letter, shall enter into the documentation for, and draw on the facility contemplated by, the Backstop Facility Commitment prior to the expiration of the Backstop Facility Commitment (including any extension thereof that may be entered into with the consent of Verizon, not to be unreasonably withheld, delayed or conditioned), such draw to be in an amount sufficient to refinance in full the Company Credit Agreement and pay all related fees.

7.21         Accountants.

(a)           In connection with the information regarding the Spinco Business or the transactions contemplated by this Agreement provided by Spinco specifically for inclusion in, or incorporation by reference into, the Proxy Statement/Prospectus and the Registration Statements, Verizon shall use all commercially reasonable efforts to cause to be delivered to the Company letters of Ernst & Young LLP, dated the date on which each of the Registration Statements shall become effective and dated the Closing Date, and addressed to the Company, in form and substance reasonably satisfactory to the Company and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Registration Statements.

(b)           The Company shall use all commercially reasonable efforts to cause KPMG LLP, the independent auditors of the Company, to provide any unqualified opinions, consents or customary comfort letters with respect to the financial statements of the Company needed in connection with the New Financing, the Spinco Registration Statement and/or the Debt Exchange (if Verizon elects to consummate the Debt Exchange).  The Company agrees to allow Verizon’s accounting representatives the

104

opportunity to review any such financial statements required in connection therewith and to allow such representatives reasonable access to the Company and the Company Subsidiaries and supporting documentation with respect to the preparation of such financial statements; provided that such access shall not include any right to review the working papers of the independent auditors of the Company and the Company Subsidiaries.

(c)           In connection with the information regarding the Company or the Company Subsidiaries or the transactions contemplated by this Agreement provided by the Company specifically for inclusion in, or incorporation by reference into, the Proxy Statement/Prospectus and the Registration Statements, the Company shall use all commercially reasonable efforts to cause to be delivered to Spinco letters of KPMG LLP, dated the date on which each of the Registration Statements shall become effective and dated the Closing Date, and addressed to Verizon and Spinco, in form and substance reasonably satisfactory to Verizon and customary in scope and substance for letters delivered by independent public accountants in connection with registration statements similar to the Registration Statements.

(d)           Verizon shall use all commercially reasonable efforts to cause Ernst & Young LLP, the independent auditors of Spinco, to provide any unqualified opinions, consents or customary comfort letters with respect to the financial statements regarding the Spinco Business needed in connection with the New Financing, the Proxy Statement/Prospectus, the Company Registration Statement and/or the Debt Exchange (if Verizon elects to consummate the Debt Exchange).  Verizon agrees to allow the Company’s accounting representatives the opportunity to review any such financial statements required in connection therewith and to allow such representatives reasonable access to records of the Contributing Companies and supporting documentation with respect to the preparation of such financial statements; provided, that such access shall not include any right to review the working papers of the independent auditors of Verizon and its Subsidiaries.

7.22         Disclosure Controls.  Each of Verizon and the Company shall use its commercially reasonable efforts to enable the Company to implement such programs and take such steps as are reasonably necessary to (i) develop a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) intended to ensure that after the Effective Time material information relating to the Surviving Corporation is timely made known to the management of the Surviving Corporation by others within those entities, (ii) cooperate reasonably with each other in preparing for the transition and integration of the financial reporting systems of Spinco and the Spinco Subsidiaries with the Company’s financial reporting systems following

105

the Effective Time and (iii) otherwise enable the Surviving Corporation to maintain compliance with the provisions of Section 404 of the Sarbanes-Oxley Act.

7.23         Listing.  As promptly as reasonably practicable following the date hereof and at least 30 days prior to the date that any party reasonably expects all of the required regulatory approvals to have been obtained, the Company shall make application to the NYSE for the listing of the shares of Company Common Stock to be issued pursuant to the transactions contemplated by this Agreement and use all reasonable best efforts to cause such shares to be Approved for Listing.

7.24         Required Spinco Business Capital Expenditures.  Verizon and the Verizon Subsidiaries shall (i) during the year ended December 31, 2007, incur expenses for capital improvements in respect of the Spinco Business (accounted for consistently with the Audited Financial Statements) in an amount not less than $137,500,000 (pro rated for any portion of such year that precedes the Effective Time) and (ii) during the year ended December 31, 2008, incur expenses for capital improvements in respect of the Spinco Business (accounted for consistently with the Audited Financial Statements) in an amount not less than $11,000,000 per month; provided, that any such expenses incurred in 2007 to the extent such expenses exceed $137,500,000 will be credited against such expenses that Verizon and the Verizon Subsidiaries would otherwise be obligated to incur in 2008 pursuant to this Section 7.24.

7.25         Reseller Agreement.  Verizon shall use commercially reasonable efforts to cause Verizon Wireless to enter into a reseller agreement with the Company at the Effective Time on the terms and conditions described in Section 5.23; provided that the Company’s “Application for Reseller Status” has at such time been approved by Verizon Wireless in accordance with its standard practices and there has been no material change in the information set forth in such application from the time of its submission through the Effective Time.

7.26         Purchasing Arrangement.

(a)           On any single occasion within 30 days of the date on which the parties reasonably anticipate the Closing to occur, the Company may request that Verizon cause its Subsidiaries to purchase equipment, inventory or spare parts of the type typically purchased by them for use in the conduct of the Spinco Business pursuant to Contracts between Verizon or its Subsidiaries  and third party vendors (“Supplies”) other than (i) any third-party intellectual property including software and (ii) any Network Element for which the Company has not obtained the written consent of the applicable third party to

106

use Network Element Software.  Any such request by the Company shall be made in writing and shall identify the types and quantities of Supplies the Company desires that Verizon cause to be purchased.  Promptly thereafter, and after consultation with the relevant third party vendors where Verizon deems it appropriate, Verizon shall inform the Company of the anticipated cost of such purchase.  The price to be paid by the Company for any given item of the Supplies shall be the greater of the average price paid by Verizon and its Subsidiaries to such vendor for such item in the preceding 12 month period and the price then payable by Verizon and its Subsidiaries for such item.

(b)           The Company shall submit to Verizon a single purchase order for the actual amount of such Supplies that it desires be purchased at such price or prices and shall provide Verizon with a letter of credit (which may be replaced at any time by a new letter of credit) securing the full amount of such purchases (the “Purchase Letter of Credit”).  Promptly after the Company submits its purchase order for Supplies to Verizon, Verizon shall submit a purchase order or orders for such Supplies to its applicable vendor or vendors (unless any such purchase order cannot be submitted in accordance with the terms of the applicable Contract with such vendor).  Verizon shall provide to the Company a copy of all invoices received from the applicable vendor or vendors in respect of the purchase of the Supplies promptly after Verizon’s receipt of such invoices.  Within three Business Days following delivery by Verizon to the Company of a copy of the invoice received from the applicable vendor or vendors in respect of the purchase of the Supplies, the Company shall pay to Verizon the full amount due in respect of such invoice by wire transfer of immediately available funds.  If such payment is not timely made, the Purchase Letter of Credit shall permit Verizon to draw against it for the full purchase price of such Supplies.  Upon the Company’s payment in full to Verizon of the purchase price in respect of all invoices for any Supplies ordered by the Company hereunder, Verizon shall surrender the Purchase Letter of Credit to the Company.

(c)           Verizon shall take delivery of the Supplies on behalf of the Company and shall notify the Company promptly after the delivery of such Supplies.  The Company shall take delivery of, and remove from the facilities of Verizon and its Subsidiaries, any Supplies ordered by Verizon or its Subsidiaries on behalf of the Company promptly after the Effective Time, or after any earlier delivery of such Supplies at the Company’s election.  Verizon shall provide the Company with commercially reasonably access during regular business hours on reasonable prior notice for purposes of such removal.  The Company shall promptly pay or reimburse Verizon for any costs arising out of damage caused by the Company’s removal of any such Supplies.  Verizon shall have no liability to the Company in respect of any casualty to or loss of such Supplies.  Verizon shall store such Supplies under conditions that are substantially similar to those conditions under which Verizon and its Subsidiaries store similar Supplies ordered in the ordinary course of their business.

107

(d)           Verizon shall use commercially reasonable best efforts to make any returns of Supplies that the Company may request, and shall promptly remit to the Company any refund received from a vendor in respect of such a return.  Solely to the extent that the Company or its applicable Subsidiary is unable to bring such a claim on its own behalf, Verizon shall assist the Company by making any good faith warranty claims against a vendor in respect of such Supplies that the Company may request be brought and shall promptly remit to the Company the proceeds of any such claim.  The Company shall pay or promptly reimburse any costs and expenses that Verizon and its Subsidiaries may incur in respect of its obligations under this Section 7.26(d).

(e)           If this Agreement is terminated pursuant to Section 9.1, (i) the Company shall take delivery of and remove from the facilities of Verizon and its Subsidiaries in accordance with Section 7.26(c) any Supplies ordered by Verizon or its Subsidiaries on behalf of the Company promptly after such termination or, if such Supplies have not been delivered at the time of such termination, promptly after Verizon gives notice to the Company that such Supplies have been delivered, and (ii) if any such Supplies have not been so removed within 10 Business Days of the later of (A) the termination of this Agreement and (B) if such Supplies have not been delivered to Verizon or its Subsidiaries at the time of termination, Verizon’s notice to the Company that such Supplies have been delivered, then such Supplies shall become the property of Verizon to be used or disposed of in its sole discretion.

7.27         Joint Defense Arrangements.  Prior to the Closing, Verizon and the Company, each acting reasonably, shall negotiate the terms of a joint defense agreement that will set forth the procedures for defending and resolving any threatened or filed litigation that constitutes in part a Spinco Liability (as defined in the Distribution Agreement) and a Verizon Liability (as defined in the Distribution Agreement) on a basis that provides for the active involvement and cooperation of each of Verizon and the Surviving Corporation, it being understood that lead counsel defending such litigation shall be selected by Verizon (after reasonable consultation with the Company, if such counsel was not selected prior to the Effective Time) and that neither Verizon nor the Surviving Corporation shall have the authority to bind the other party in any settlement of such litigation without the written consent of such other party.  The parties agree that such agreement shall incorporate an equitable procedure for limiting the liability of an indemnity party in the event a settlement offer is accepted by such party and rejected by the counterparty, taking into account the party which is most likely to suffer the greater amount of Losses (including for such purposes payments hereunder), and a more adverse settlement or resolution results.

108

ARTICLE VIII

CONDITIONS TO THE MERGER

8.1           Conditions to the Obligations of Spinco, Verizon and the Company to Effect the Merger.  The respective obligations of each party to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, written waiver by Verizon and the Company) at or prior to the Effective Time of the following conditions:

(a)           Each of the Internal Spinoffs, the Internal Restructuring, the Contribution, and the Distribution shall have been consummated, in each case, in accordance with the Distribution Agreement, the IRS Ruling (unless the parties agree in writing upon and implement an alternative structure for the transactions contemplated hereby that eliminates the need for an IRS Ruling as contemplated by Section 2.7 hereof) and the Distribution Tax Opinion; provided that this Section 8.1(a) shall not be a condition to the consummation of the Merger by any party whose failure to comply with its obligations and/or covenants set forth in this Agreement, the Tax Sharing Agreement or the Distribution Agreement gives rise to the failure of the Internal Spinoffs, the Internal Restructuring, the Contribution, or the Distribution to have been consummated.

(b)           Any applicable waiting period under the HSR Act shall have expired or been terminated.

(c)           (i) No regulatory proceeding before any State Regulator that is pending as of the date hereof or arises prior to the Effective Time, and affects either the Spinco Business or the business of the Company and its Subsidiaries, shall have been resolved by final order of the applicable regulator on terms that, and (ii) no condition shall have been imposed in connection with obtaining any Telecommunications Regulatory Consent that, would reasonably be expected, when taken together, to have a Material Adverse Effect on the Surviving Corporation (disregarding for such purposes any request or requirement of a Governmental Authority (A) to make capital expenditures substantially consistent with the amounts and general categories of expenditures set forth in (x) the Company’s 2007 capital expenditure budget set forth in Section 7.1(g) of the Company Disclosure Letter for its existing operations in Maine, New Hampshire and Vermont or (y) Verizon’s 2007 capital expenditure budget for the Spinco Business set forth in Section 7.2(f) of the Spinco Disclosure Letter or (B) to abide by any public statements made by the Company with respect to the anticipated

109

types of services or service levels to be delivered by the Surviving Corporation) or Verizon (assuming for purposes of this Section 8.1(c) that the business, assets, properties and liabilities of Verizon were comparable in size to that of the Surviving Corporation).  For purposes of this Section 8.1(c), any determination of whether any condition shall have been imposed in connection with obtaining any Telecommunications Regulatory Consent that would reasonably be expected to have a Material Adverse Effect on the Surviving Corporation shall include consideration of the financial effect on the Surviving Corporation of any final order that may be issued denying the Company a waiver of Sections 61.41(b) and (c) of the FCC’s rules, 47 C.F.R. 61.41(b), (c).

(d)           All of the Telecommunications Regulatory Consents shall be final and in full force and effect.

(e)           The Registration Statements shall have become effective in accordance with the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order; all necessary permits and authorizations under state securities or “blue sky” laws, the Securities Act and the Exchange Act relating to the issuance and trading of shares of Company Common Stock to be issued pursuant to the Merger shall have been obtained and shall be in effect; and such shares of Company Common Stock and such other shares required to be reserved for issuance pursuant to the Merger shall have been Approved for Listing.

(f)            The Requisite Approval shall have been obtained, in accordance with applicable Law and the rules and regulations of the NYSE.

(g)           No court of competent jurisdiction or other Governmental Authority shall have issued an Order that is still in effect restraining, enjoining or prohibiting the Contribution, the Distribution or the Merger.

(h)           No action shall have been taken, and no statute, rule, regulation or executive order shall have been enacted, entered, promulgated or enforced by any Governmental Authority with respect to the Contribution, the Distribution and the Merger or the other transactions contemplated hereby or by the Distribution Agreement or by the Employee Matters Agreement that, individually or in the aggregate, would (i) restrain, enjoin or prohibit the consummation of the Internal Spinoffs, the Internal Restructuring, the Contribution, the Distribution or the Merger or the other transactions contemplated hereby or by the Distribution

110

Agreement or (ii) impose any burdens, liabilities, restrictions or requirements thereon or on Verizon, Spinco or the Company with respect thereto that would reasonably be expected to have a Material Adverse Effect on Verizon (assuming for purposes of this Section that the business, assets, properties and liabilities of Verizon were comparable in size to that of the Surviving Corporation) or the Surviving Corporation following the Merger (collectively, a “Restraint”), and no Governmental Authority shall have instituted or threatened to institute and not withdrawn any proceeding seeking any such Restraint.

(i)            The Company shall have consummated the New Financing or the Alternative Financing and the Spinco Securities shall have been issued.

(j)            Unless the parties agree in writing upon and implement an alternative structure for the transactions contemplated hereby that eliminates the need for an IRS Ruling as contemplated by Section 2.7 hereof, Verizon and Spinco (and, to the extent applicable, the Company) shall have received the IRS Ruling in form and substance reasonably satisfactory to Verizon, Spinco and the Company, and such IRS Ruling shall continue to be valid and in full force and effect.

(k)           The Company shall have received a Merger Tax Opinion from Company Tax Counsel, in form and substance reasonably satisfactory to the Company, and Verizon shall have received a Merger Tax Opinion and a Distribution Tax Opinion from Verizon Tax Counsel, in form and substance reasonably satisfactory to Verizon.

(l)            Verizon and the Company shall have received the opinion of a nationally recognized independent valuation firm selected by Verizon attesting to the solvency of the Surviving Corporation on a pro forma basis immediately after the Effective Time, which opinion shall be in customary form (the “Solvency Opinion”).

8.2           Additional Conditions to the Obligations of Verizon and Spinco.  The obligation of Verizon and Spinco to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law, waiver by Verizon) at or prior to the Effective Time of the following additional conditions:

(a)           The Company shall have performed in all material respects all obligations and complied in all material respects with all covenants required by

111

this Agreement to be performed or complied with by it at or prior to the Effective Time.

(b)           Each of the representations and warranties of the Company (i) set forth in Article VI (other than Sections 6.2(a) and 6.3(a)) of this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though such representations and warranties were made on and as of such date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period; provided, however, that for purposes of this clause, such representations and warranties shall be deemed to be true and correct unless the failure or failures of all such representations and warranties to be so true and correct, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and (ii) set forth in Sections 6.2(a) and 6.3(a) of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date.

(c)           The Company shall have delivered to Verizon a certificate, dated as of the Effective Time, of a senior officer of the Company certifying the satisfaction by the Company of the conditions set forth in subsection (a) and (b) of this Section 8.2.

(d)           Except as disclosed in the Company Disclosure Letter or as expressly contemplated by the Transaction Agreements, since September 30, 2006, there shall have been no event, occurrence, development or state of circumstances or facts that has had, individually or in the aggregate, a Material Adverse Effect on the Company.

(e)           The Company shall have entered into the applicable Transaction Agreements, and to the extent timely, performed them in all material respects, and each such agreement shall be in full force and effect.

8.3           Additional Conditions to the Obligations of the Company.  The obligation of the Company to consummate the Merger shall be subject to the fulfillment (or, to the extent permitted by applicable Law waiver by the Company) at or prior to the Effective Time of the following additional conditions:

112

(a)           Spinco and Verizon shall have performed in all material respects and complied in all material respects with all covenants required by this Agreement to be performed or complied with by them at or prior to the Effective Time.

(b)           Each of the representations and warranties of Verizon and Spinco (i) set forth in Article IV and Article V (other than Sections 4.2(a) and 5.3(a)) of this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though such representations and warranties were made on and as of such date, except for representations and warranties that speak as of an earlier date or period which shall be true and correct as of such date or period; provided, however, that for purposes of this clause, such representations and warranties shall be deemed to be true and correct unless the failure or failures of all such representations and warranties to be so true and correct, without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such representations or warranties, would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Verizon or Spinco and (ii) set forth in Sections 4.2(a) and 5.3(a) of this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date.

(c)           Verizon and Spinco shall have delivered to the Company a certificate, dated as of the Effective Time, of a senior officer of each of Verizon and Spinco certifying the satisfaction of the conditions set forth in subsection (a) and (b) of this Section 8.3.

(d)           Spinco and Verizon (or a Subsidiary thereof) shall have entered into the applicable Transaction Agreements, and to the extent timely, performed them in all material respects, and each such agreement shall be in full force and effect.

(e)           Except as disclosed in the Spinco Disclosure Letter or as expressly contemplated by the Transaction Agreements, since the Interim Balance Sheet Date, there shall have been no event, occurrence, development or state of circumstances or facts that has or would have, individually or in the aggregate, a Material Adverse Effect on Spinco or the Spinco Business.

(f)            The Company shall have received the consent of lenders under the Company Credit Agreement holding at least 51% of the aggregate outstanding term loans and revolving commitments thereunder to effect the Merger; provided,

113

that this condition shall be deemed satisfied upon consummation of the New Financing or the Alternative Financing.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVERS

9.1           Termination.  Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and the transactions contemplated hereby may be abandoned prior to the Effective Time, whether before or after the Requisite Approval:

(a)           by the mutual written consent of each party hereto, which consent shall be effected by action of the Board of Directors of each such party;

(b)           by any party hereto if the Effective Time shall not have occurred on or before the first anniversary of the date of this Agreement, provided that such period may be extended by Verizon or the Company upon written notice for one or more 30-day periods, not to exceed 120 days in the aggregate, to the extent all closing conditions herein are capable of being satisfied as of such time other than the condition regarding receipt of Telecommunications Regulatory Consents; provided, further, that the right to terminate this Agreement pursuant to this Section 9.1(b) shall not be available to any party whose failure to perform any of its obligations under this Agreement required to be performed by it at or prior to such date has been a substantial cause of, or substantially contributed to, the failure of the Merger to have become effective on or before such date;

(c)           by any party hereto if, (i) a statute, rule, regulation or executive order shall have been enacted, entered or promulgated prohibiting the consummation of the Merger or (ii) an Order shall have been entered permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such Order shall have become final and non-appealable and the party seeking to terminate this Agreement pursuant to this clause 9.1(c)(ii) shall have used all commercially reasonable efforts to remove such Order, other than a final order of a State Regulator in the state of Vermont, New Hampshire or Maine;

(d)           by the Company, if either Verizon or Spinco shall have breached or failed to perform in any material respect any of its respective representations, warranties, covenants or other agreements contained in this Agreement, which

114

breach or failure to perform (i) would result in a failure of a condition set forth in Section 8.1 or 8.3 and (ii) cannot be cured by the Termination Date, provided that the Company shall have given Verizon and Spinco written notice, delivered at least 30 days prior to such termination, stating the Company’s intention to terminate this Agreement pursuant to this Section 9.1(d) and the basis for such termination;

(e)           by Verizon and Spinco, if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would result in a failure of a condition set forth in Section 8.1 or 8.2 and (ii) cannot be cured by the Termination Date, provided that Verizon and Spinco shall have given the Company written notice, delivered at least 30 days prior to such termination, stating Verizon and Spinco’s intention to terminate the Agreement pursuant to this Section 9.1(e) and the basis for such termination;

(f)            by Verizon and Spinco or the Company if, at the Company Stockholders’ Meeting (including any adjournment, continuation or postponement thereof), the Requisite Approval shall not be obtained; except that the right to terminate this Agreement under this Section 9.1(f) shall not be available to the Company where the failure to obtain the Requisite Approval shall have been caused by the action or failure to act of the Company and such action or failure to act constitutes a material breach by the Company of this Agreement;

(g)           by Verizon and Spinco, if (i) the Board of Directors of the Company (or any committee thereof), shall have withdrawn or modified its approval or recommendation of the Merger or this Agreement, approved or recommended to the Company stockholders a Company Acquisition Proposal or resolved to do any of the foregoing, or (ii) the Company fails to call and hold the Company Stockholders Meeting within 60 days after the date on which the SEC shall clear (whether orally or in writing) the Proxy Statement/Prospectus and, if required by the SEC as a condition to the mailing of the Proxy Statement/Prospectus, the date of effectiveness of the Company Registration Statement;

(h)           by the Company if the Board of Directors of the Company determines in good faith that a Company Acquisition Proposal constitutes a Company Superior Proposal, except that the Company may not terminate this Agreement pursuant to this Section 9.1(h) unless and until (i) three business days

115

have elapsed following delivery to Verizon of a written notice of such determination by the Board of Directors of the Company and during such three business day period the Company (x) informs Verizon of the terms and conditions of the Company Acquisition Proposal and identity of the person making the Company Acquisition Proposal and (y) otherwise cooperates in good faith with Verizon with respect thereto with the intent of enabling Verizon and Spinco to agree to a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby (as so modified) may be effected, (ii) at the end of such three business day period the Board of Directors of the Company continues to determine in good faith that the Company Acquisition Proposal constitutes a Company Superior Proposal, (iii) simultaneously with such termination the Company enters into a definitive acquisition, merger or similar agreement to effect the Company Superior Proposal and (iv) the Company pays to Verizon the amount specified and within the time period specified in Section 9.3;

(i)            by the Company, by written notice to Verizon given by the Company within 15 days of the later to occur of the delivery to the other party, with respect to any fiscal quarter in 2007, of (x) any quarterly financial information delivered by Verizon pursuant to Section 7.18(c) and (y) any quarterly financial information delivered by the Company pursuant to Section 7.18(d), if such financial information delivered by Verizon indicates that Spinco Adjusted EBITDA as of the end of such quarter is less than $450,000,000; or

(j)            by Verizon, by written notice to the Company given by Verizon within 15 days of the later to occur of the delivery to the other party, with respect to any fiscal quarter in 2007, of (x) any quarterly financial information delivered by Verizon pursuant to Section 7.18(c) and (y) any quarterly financial information delivered by the Company pursuant to Section 7.18(d), if such financial information delivered by the Company indicates that Company Adjusted EBITDA as of the end of such quarter is less than $103,600,000.

9.2           Effect of Termination.  In the event of termination of this Agreement pursuant to Section 9.1, this Agreement shall terminate (except for the Confidentiality Agreement referred to in Section 10.1, the provisions of Section 9.3 and ARTICLE XI, without any liability on the part of any party or its directors, officers or stockholders except as set forth in Section 9.3; provided, that nothing in this Agreement shall relieve any party of liability for fraud or willful breach of this Agreement or the Distribution Agreement prior to such termination.

116

9.3           Amounts Payable in Certain Circumstances.

(a)           In the event that (i) the Company terminates this Agreement pursuant to Section 9.1(h), (ii) Verizon and Spinco terminate this Agreement pursuant to clause (i) of Section 9.1(g) or (iii) (A) any Person (other than Verizon, Spinco or any of their Affiliates) shall have made a Company Acquisition Proposal after the date hereof and prior to the Termination Date, and thereafter this Agreement is terminated by any party pursuant to Section 9.1(b) or by Verizon or Spinco pursuant to clause (ii) of Section 9.1(g) (and a Company Acquisition Proposal is outstanding at such time) or by any party pursuant to Section 9.1(f) (and a Company Acquisition Proposal shall have been publicly announced prior to the Company Stockholders’ Meeting) and (B) within twelve months after the termination of this Agreement, any Company Acquisition shall have been consummated or any definitive agreement with respect to any Company Acquisition Proposal (other than, in each case, with Verizon, Spinco or any of their Affiliates) shall have been entered into, then the Company shall pay Verizon a fee, in immediately available funds, in the amount of $23.3 million at the time of such termination, in the case of a termination described in clause (i) or (ii) above, or upon the occurrence of the earliest event described in clause (iii)(B), in the event of a termination described in clause (iii), and in each case the Company shall be fully released and discharged from any other liability or obligation resulting from or under this Agreement, except with respect to any fraud or willful breach of this Agreement; provided, however, that for purposes of Section 9.3(a) only, (i) all references to 15% in the definition of Company Acquisition shall be deemed to be references to 50% and (ii) clause (i) of the definition of Company Acquisition shall read as follows: “any merger, consolidation, share exchange, business combination, recapitalization or other similar transaction or series of related transactions involving the Company or any of its Significant Subsidiaries following which the stockholders of the Company or any such Significant Subsidiary immediately prior to such transactions (or series of transactions) do not hold and own greater than 60% of the issued and outstanding equity securities of the Company or such Significant Subsidiary (or the successor thereof), as the case may be”.

(b)           In the event that this Agreement is terminated pursuant to Section 9.1(f), Section 9.1(g) or Section 9.1(h), the Company shall, in addition to any payment obligations under Section 9.3(a), five days following such termination, reimburse Verizon for all other out-of-pocket costs and expenses incurred in connection with this Agreement and the Transaction Agreements in an amount not to exceed $7.5 million.

9.4           Amendment.  This Agreement may be amended by Verizon, Spinco and the Company at any time before or after adoption of this Agreement by the stockholders of the Company; provided, however, that after such adoption, no amendment shall be made that by Law or in accordance with the rules of any relevant stock exchange or

117

automated inter-dealer quotation system requires further approval by such stockholders without such further approval.  This Agreement may not be amended except by an instrument in writing signed by Verizon, Spinco and the Company.

9.5           Waivers.  At any time prior to the Effective Time, Verizon and Spinco, on the one hand, and the Company, on the other hand, may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or acts of Verizon and Spinco or the Company, as applicable; (ii) waive any inaccuracies in the representations and warranties of Verizon and Spinco or the Company, as applicable, contained herein or in any document delivered pursuant to this Agreement; and (iii) waive compliance with any of the agreements or conditions of Verizon and Spinco or the Company, as applicable, contained herein; provided, however, that no failure or delay by Verizon, Spinco or the Company in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right hereunder.  Any agreement on the part of Verizon, Spinco or the Company to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.

ARTICLE X

SURVIVAL; INDEMNIFICATION

10.1         Survival of Representations, Warranties and Agreements.  The covenants and agreements that expressly state that they are to be performed following the Closing pursuant to the Distribution Agreement or this Agreement (including, without limitation, Sections 10.2 to 10.7 hereof) shall survive the Effective Time in accordance with their respective terms and all other covenants and agreements herein and therein shall terminate and shall not survive the Closing.  None of the representations or warranties in this Agreement or in any certificate or instrument delivered pursuant to this Agreement or any other covenant or agreement set forth herein shall survive the Effective Time.  The Confidentiality Agreement shall survive the execution and delivery of this Agreement and any termination of this Agreement, and the provisions of the Confidentiality Agreement shall apply to all information and material furnished by any party or its representatives thereunder or hereunder.

10.2         Indemnification.

(a)           If the Closing occurs, the Surviving Corporation, ILEC Spinco Subsidiary and Non-ILEC Spinco Subsidiary, jointly and severally, shall indemnify, defend and hold

118

harmless (i) the Verizon Indemnitees from and against all Losses arising out of or due to the failure of any member of the Spinco Group (A) to timely pay or satisfy any Spinco Liabilities, or (B) to perform any of its obligations under this Agreement or the Distribution Agreement and (ii) Verizon and each Person, if any, who controls, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (any such person being hereinafter referred to as a “Controlling Person”), Verizon from and against, and pay or reimburse each of the foregoing for, all Losses, arising out of or resulting from, directly or indirectly, or in connection with any untrue statement or alleged untrue statement of a material fact contained in or incorporated by reference into either of the Registration Statements or in the Proxy Statement/Prospectus (or any amendment or supplement thereto) or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Surviving Corporation shall not be responsible for information provided by Verizon as to itself and its Subsidiaries, including Spinco, specifically for inclusion in, or incorporation by reference into, any such Proxy Statement/Prospectus or the Registration Statements.

(b)           If the Closing occurs, Verizon shall indemnify, defend and hold harmless (i) the Surviving Corporation Indemnitees from and against all Losses arising out of or due to the failure of any member of the Verizon Group (A) to timely pay or satisfy any Verizon Liabilities or (B) to perform any of its obligations under this Agreement or the Distribution Agreement and (ii) the Surviving Corporation and each Controlling Person of the Surviving Corporation from and against, and pay or reimburse each of the foregoing for, all Losses arising out of or resulting from, directly or indirectly, or in connection with any untrue statement or alleged untrue statement of a material fact contained in or incorporated by reference into the Registration Statements or in the Proxy Statement/Prospectus (or any amendment or supplement thereto) or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but only with respect to information provided by Verizon as to itself and its Subsidiaries, including Spinco, specifically for inclusion in, or incorporation by reference into, any such Proxy Statement/Prospectus or the Registration Statements.

(c)           Notwithstanding anything to the contrary set forth herein, indemnification or other claims relating to any Transaction Agreement (other than the Distribution Agreement) or relating to any ongoing commercial agreement between any member of the Verizon Group and any member of the Spinco Group, shall be governed by the terms of such agreement and not by this Article X, and indemnification for all matters relating to Taxes shall be governed by terms, provisions and procedures of the Tax Sharing Agreement and not this Article X.

119

10.3         Definitions for Purposes of this Article.

(a)           “Indemnification Payment” means any amount of Losses required to be paid pursuant to this Agreement;

(b)           “Indemnitee” means any Person entitled to indemnification under this Agreement, either a Verizon Indemnitee or a Surviving Corporation Indemnitee as the case may be;

(c)           “Indemnitor” means any person or entity required to provide indemnification under this Agreement; and

(d)           “Losses” means any losses, liabilities, damages, deficiencies, costs and expenses (including reasonable out-of-pocket attorneys’ and consultants’ fees and expenses and including the reasonable costs and expenses of investigating and defending any indemnification claim), including all Taxes resulting from indemnification payments hereunder (1) reduced by the amount of insurance proceeds recovered from any Person with respect thereto (after deducting related costs and expenses); and (2) excluding any such losses, liabilities, damages, costs and expenses to the extent that the underlying liability or obligation is the result of any action taken or omitted to be taken by any Indemnitee.

10.4         Limitation on Claims for Indemnifiable Losses.  Notwithstanding anything to the contrary contained herein:

(a)           No claim may be asserted by any Spinco Indemnitee under this Article X arising from any failure to transfer any Spinco Asset to Spinco unless such claim is asserted, if at all, within 18 months from the Closing Date.

(b)           No Indemnitor shall be liable to or obligated to indemnify any Indemnitee hereunder for any consequential, special, multiple, punitive or exemplary damages including, but not limited to, damages arising from loss or interruption of business, profits, business opportunities or goodwill, or any cost or expense related thereto, except to the extent such damages are payable to or have been recovered by a third person and are the subject of a Third Party Claim for which indemnification is available under the express terms of this Article X.

120

(c)           Verizon and the Company shall cooperate with each other with respect to resolving any claim or liability with respect to which one party is obligated to indemnify the other party (or its Affiliates) hereunder, including by making commercially reasonable efforts to mitigate the Losses and resolve any such claim or liability prior to initiating litigation.

10.5         Defense of Claims.

(a)           Third Party Claims.  If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action or proceeding by any entity that is not either a Surviving Corporation Indemnitee or a Verizon Indemnitee (each, a “Third Party Claim”) against such Indemnitee, with respect to which an Indemnitor is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnitor prompt written notice thereof, but in any event not later than ten calendar days after receipt of notice of such Third Party Claim, provided, however, that the failure of an Indemnitee to notify the Indemnitor within the time period set forth herein shall only relieve the Indemnitor from its obligation to indemnify to the extent that the Indemnitor is materially prejudiced by such failure or delay (whether as a result of the forfeiture of substantive rights or defenses or otherwise).  Upon receipt of notification of a Third Party Claim, the Indemnitor shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof at such Indemnitor’s expense with counsel reasonably satisfactory to the Indemnitee, provided that the Indemnitor shall not have the right to assume the defense of any Third Party Claim in the event such Third Party Claim is primarily for injunctive relief or criminal penalty of the Indemnitee, and in any such case, the reasonable fees and expenses of counsel to the Indemnitee in connection with such Third Party Claim shall be considered “Losses” for purposes of this Agreement.  Whether or not the Indemnitor elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof; provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (1) the employment of such separate counsel has been specifically authorized in writing by the Indemnitor; (2) the Indemnitor has failed to assume the defense of such Third Party Claim within 20 calendar days after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee; or (3) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnitor and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more good faith defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnitor or that the Indemnitor and Indemnitee have actual material conflicting interests with respect to such claim, demand, action or cause of action.  Notwithstanding the foregoing, the Indemnitor shall not be liable for the fees and disbursements of more than one counsel for all Indemnitees in connection with any one proceeding or any similar or related proceedings arising from

121

the same general allegations or circumstances.  Without the prior written consent of an Indemnitee, which shall not be unreasonably withheld or delayed, the Indemnitor will not enter into any settlement of or consent to the entry of judgment in connection with any Third Party Claim that (i) would lead to liability or create any financial or other obligation on the part of the Indemnitee, (ii) does not contain, as an unconditional term thereof, the release of the Indemnitee from all liability in respect of such Third Party Claim or such Third Party Claim is not dismissed against the Indemnitee with prejudice and without the imposition of any financial or other obligation on the Indemnitee or (iii) admits the liability or fault of the Indemnitee (the “Settlement Requirements”).  If a settlement offer solely for money damages (and otherwise satisfying the Settlement Requirements) is made to resolve a Third Party Claim and the Indemnitor notifies the Indemnitee in writing of the Indemnitor’s willingness to accept the settlement offer and pay the amount called for by such offer without reservation of any rights or defenses against the Indemnitee and if the Indemnitee fails to consent to such settlement offer within ten calendar days after its receipt of such notice, Indemnitee may continue to contest such claim, free of any participation by the Indemnitor, and the amount of any ultimate liability with respect to such Third Party Claim that the Indemnitor has an obligation to pay hereunder shall be limited to the lesser of (x) the amount of the settlement offer that the Indemnitee declined to accept plus the Losses of the Indemnitee relating to such Third Party Claim through the date of its rejection of the settlement offer or (y) the aggregate Losses of the Indemnitee with respect to such claim.  The party controlling any defense shall keep the other party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider in good faith all reasonable recommendations made by the other party with respect thereto.

(b)           Direct Claims. Any claim by an Indemnitee for Losses that do not result from a Third Party Claim (each, a “Direct Claim”) shall be asserted by giving the Indemnitor prompt written notice thereof, but in any event not later than 60 calendar days after the incurrence thereof or such Indemnitee’s actual knowledge of such event (whichever is later), provided, however, that the failure of an Indemnitee to notify the Indemnitor within the time period set forth herein shall only relieve the Indemnitor from its obligation to indemnify to the extent that the Indemnitor is materially prejudiced by such failure or delay (whether as a result of the forfeiture of substantive rights or defenses or otherwise), and the Indemnitor will have a period of 30 calendar days within which to respond in writing to such Direct Claim.  If the Indemnitor does not so respond within such 30 calendar day period, the Indemnitor will be deemed to have accepted such claim.  If the Indemnitor rejects such claim, the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article X.

10.6         Subrogation.  If after the making of any Indemnification Payment, the amount of the Losses to which such payment relates is reduced by recovery, settlement or

122

otherwise under any insurance coverage, or pursuant to any claim, recovery, settlement or payment by or against any other Person, the amount of such reduction (less any costs, expenses, premiums or Taxes incurred in connection therewith) as and when actually received by the Indemnitee will promptly be repaid by the Indemnitee to the Indemnitor.  Upon making any Indemnification Payment, the Indemnitor will, to the extent of such Indemnification Payment, be subrogated to all rights of the Indemnitee against any third party that is not an Affiliate of the Indemnitee in respect of the Losses to which the Indemnification Payment relates; provided that (a) the Indemnitor shall then be in compliance with its obligations under this Agreement in respect of such Losses, and (b) until the Indemnitee recovers full payment of its Losses, all claims of the Indemnitor against any such third party on account of said Indemnification Payment will be subrogated and subordinated in right of payment to the Indemnitee’s rights against such third party.  Without limiting the generality or effect of any other provision of this Article X, each such Indemnitee and Indemnitor will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights.

10.7         Other Rights and Remedies.  Following the Closing, the sole and exclusive remedy at law for Verizon or the Company and all Affiliates thereof for any claim (whether such claim is framed in tort, contract or otherwise), arising out of a breach of any representation, warranty, covenant or other agreement in this Agreement other than a claim for fraud or willful misconduct under this Agreement or the Distribution Agreement, shall be a claim by Verizon or the Company for indemnification pursuant to this Article X.

ARTICLE XI

MISCELLANEOUS

11.1         Expenses.  Except as expressly set forth in any Transaction Agreement, each party shall bear its own fees and expenses in connection with the transactions contemplated hereby; provided, however, that:

(i)            Verizon shall on a monthly basis between the date hereof and the Closing (or the earlier termination hereof) reimburse the Company for 60.421% of Qualified Transition Expenses, such reimbursement to be made within 30 calendar days from the date upon which an invoice is delivered by the Company to Verizon, together with reasonable supporting documentation; provided further that reimbursement for such Qualified Transition Expenses shall not exceed $40 million in the aggregate and if the Merger is consummated, the Surviving

123

Corporation shall reimburse Verizon for certain out of pocket costs as contemplated by clause (ii) below, other than the amounts referred to in this clause (i), the audit fees referred to in Section 7.18(a), the Spinco Debt Expenses (as defined in the Distribution Agreement), and the fees and expenses of Verizon’s financial and legal advisors,

(ii)           if the Merger is consummated, the Surviving Corporation shall bear and be responsible, and shall indemnify and reimburse Verizon and the Verizon Subsidiaries for, (A) all Merger Transfer Taxes and (B) all Distribution Transfer Taxes and all recording, application and filing fees associated with the transfer of the Spinco Assets in connection with the transactions contemplated by the Distribution Agreement (including without limitation, the transfer of Spinco Owned Real Property and Real Property Interests such as railroad crossing rights and easements), such amount in the case of clause (B) not to exceed $3 million, with Verizon to bear and be responsible for and to reimburse the Surviving Corporation for all such amounts in excess of $3 million (it being agreed that the Surviving Corporation reasonably will consult with Verizon from time to time regarding such expenditures and take reasonable efforts to seek to minimize such amounts);

(iii)          if the Debt Exchange is consummated, Verizon shall pay and be responsible for any fees and reimbursable expenses of the counterparties to such Debt Exchange, provided that the Surviving Corporation shall be responsible for any other costs that may be incurred in connection with issuing the Spinco Securities and consummating the Debt Exchange, including any printing costs, trustees fees and roadshow expenses (but excluding, for the avoidance of doubt, the costs of legal and financial advisors to Verizon); and

(iv)          Verizon shall pay the fees and reimbursable expenses of the independent valuation firm referred to in Section 8.1(l) that are incurred in connection with the preparation and delivery of the Solvency Opinion.

If any party pays an amount that is the responsibility of another party pursuant to this Section 11.1, such party shall be promptly reimbursed by the party responsible for such amount.

11.2         Notices.  Any notice required to be given hereunder shall be sufficient if in writing, and sent by facsimile transmission (provided that any notice received by facsimile transmission or otherwise at the addressee’s location on any business day after

124

5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next business day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows:

If to Spinco (prior to the Effective Time) or Verizon, to:

Verizon Communications Inc.
140 West Street
New York, NY 10007
Facsimile:  (908) 766-3813
Attn:Marianne Drost, Esq.

Senior Vice President, Deputy General Counsel and

Corporate Secretary

and

Verizon Communications Inc.
One Verizon Way
Basking Ridge, NJ 07920-1097
Facsimile:  (908) 696-2068
Attn:  Dale Chamberlain, Esq.

With a copy to (which shall not constitute notice):

Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Facsimile:  (212) 909-6836
Attn:  Kevin M. Schmidt

If to the Company, to:

FairPoint Communications, Inc.
521 E. Morehead St., Ste. 250
Charlotte, NC 28202
Facsimile:  704.344.1594
Attn:Peter G. Nixon

Chief Operating Officer

and

FairPoint Communications, Inc.
521 E. Morehead St., Ste. 250

125

Charlotte, NC 28202
Facsimile: 704.344.1594
Attn:Shirley J. Linn

Executive Vice President and General Counsel

With a copy to (which shall not constitute notice):

Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, NY  10022
Facsimile No.:  (212) 230-7700
Attn:Thomas E. Kruger

or to such other address as any party shall specify by written notice so given, and such notice shall be deemed to have been delivered as of the date so telecommunicated, personally delivered or mailed.  Any party to this Agreement may notify any other party of any changes to the address or any of the other details specified in this paragraph; provided that such notification shall only be effective on the date specified in such notice or five business days after the notice is given, whichever is later.  Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to be receipt of the notice as of the date of such rejection, refusal or inability to deliver.  Verizon and Spinco shall provide to the Company in a manner consistent with this Section 11.2 copies of any notices that either may deliver to the other under the Distribution Agreement.

11.3         Interpretation; Consent.

(a)           When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated.  The table of contents to this Agreement is 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 words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant thereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement,

126

instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.  References to a person are also to its permitted successors and assigns.

(b)           Each of the parties has participated in the drafting and negotiation of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement must be construed as if it is drafted by all the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this Agreement.  For avoidance of doubt, “consistent with past practice” when used with respect to Spinco or any of its Subsidiaries shall mean the past practice of Verizon and its Subsidiaries with respect to the conduct of the Spinco Business.

(c)           Any matter disclosed in any particular Section or Subsection of the Spinco Disclosure Letter, the Verizon Disclosure Letter or the Company Disclosure Letter shall be deemed to have been disclosed in any other Section or Subsection of this Agreement, with respect to which such matter is relevant so long as the applicability of such matter to such Section or Subsection is reasonably apparent on its face.

(d)           Unless otherwise expressly stated in this Agreement, any right of consent, approval or election given to any party hereto may be exercised by such party in its sole discretion.

11.4         Severability.  If any provision of this Agreement or the application of any such provision to any Person or circumstance, shall be declared judicially to be invalid, unenforceable or void, such decision shall not have the effect of invalidating or voiding the remainder of this Agreement, it being the intent and agreement of the parties hereto that this Agreement shall be deemed amended by modifying such provision to the extent necessary to render it valid, legal and enforceable while preserving its intent or, if such modification is not possible, by substituting therefor another provision that is legal and enforceable and that achieves the same objective.

11.5         Assignment; Binding Effect.  Neither this Agreement nor any of the rights, benefits or obligations hereunder may be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of all of the other parties, and any purported assignment without such consent shall be null and void.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the

127

benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

11.6         No Third Party Beneficiaries.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than Verizon, Spinco and the Company and their respective successors and permitted assigns) any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, and no Person (other than as so specified) shall be deemed a third party beneficiary under or by reason of this Agreement.

11.7         Limited Liability.  Notwithstanding any other provision of this Agreement, no stockholder, director, officer, Affiliate, agent or representative of any of the parties hereto, in its capacity as such, shall have any liability in respect of or relating to the covenants, obligations, representations or warranties of such party under this Agreement or in respect of any certificate delivered with respect hereto or thereto and, to the fullest extent legally permissible, each of the parties hereto, for itself and its stockholders, directors, officers and Affiliates, waives and agrees not to seek to assert or enforce any such liability that any such Person otherwise might have pursuant to applicable Law.

11.8         Entire Agreement.  This Agreement (together with the other Transaction Agreements, the Confidentiality Agreement, the exhibits and the Disclosure Letters and the other documents delivered pursuant hereto) constitutes the entire agreement of all the parties hereto and supersedes all prior and contemporaneous agreements and understandings, both written and oral, between or among the parties, or any of them, with respect to the subject matter hereof.

11.9         Governing Law.  Except to the extent relating to the consummation of the Merger, which shall be consummated in accordance with the DGCL, this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to the conflicts of law principles thereof.

11.10       Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one agreement binding on the parties hereto, notwithstanding that not all parties are signatories to the original or the same counterpart.

11.11       WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,

128

SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

11.12       JURISDICTION; ENFORCEMENT.  THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED.  IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES LOCATED IN THE STATE OF NEW YORK, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.  IN ADDITION, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF NEW YORK IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE STATE OF NEW YORK.

11.13       Knowledge Convention.  As used herein, the phrase “Spinco’s Knowledge” and similar phrases shall mean all matters actually known to the following individuals: Stephen E. Smith, Ellen Corcoran, Dale Chamberlain, Leonard Suchyta, David Feldman, Bruce Beausejour and Karen Zacharia.  As used herein, the phrase “Company’s Knowledge” and similar phrases shall mean all matters actually known to the following individuals: Eugene B. Johnson, Peter G. Nixon, Walter E. Leach, Jr., John Crowley and Shirley J. Linn.

[SIGNATURE PAGE FOLLOWS]

129

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

VERIZON COMMUNICATIONS INC.
By:	/s/ John W. Diercksen
	Name: John W. Diercksen
	Title: Executive Vice President—Strategy
	Development and Planning
NORTHERN NEW ENGLAND
SPINCO INC.
By:	/s/ Stephen E. Smith
	Name: Stephen E. Smith
	Title: Vice President
FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ Eugene B. Johnson
	Name: Eugene B. Johnson
	Title: Chief Executive Officer

130

EX-10.1

Exhibit 10.1

EXECUTION COPY

TRANSITION SERVICES AGREEMENT

by and among

VERIZON INFORMATION TECHNOLOGIES LLC,

NORTHERN NEW ENGLAND TELEPHONE OPERATIONS INC.,

ENHANCED COMMUNICATIONS OF NORTHERN NEW ENGLAND INC.

and

FAIRPOINT COMMUNICATIONS, INC.

January 15, 2007

Table of Contents
			Page
ARTICLE I
DEFINITIONS
ARTICLE II
TRANSITION SERVICES
2.1		Transition Services and Fees	7
2.2		Third-Party Vendor Costs	8
2.3		Special Services and Fees	8
2.4		Schedule B Fee	9
2.5		Service Administration	9
2.6		Supplier to Pay Its Affiliates and Vendors	9
2.7		Supplier Cutover Planning Services	9
2.8		Performance by Buyers and FairPoint	9
2.9		Services Not to Be Withheld	10
ARTICLE III
SCOPE OF SERVICES; CHANGES
3.1		General Scope	10
3.2		Changes in Scope	11
ARTICLE IV
CUTOVER REPORTS
4.1	Cutover Plan		12
ARTICLE V
THIRD-PARTY INTELLECTUAL PROPERTY
5.1	Intellectual Property		14
5.2	Obtaining Waivers or Licenses		15
5.3	Alternatives		16
ARTICLE VI
PAYMENT FOR TRANSITION SERVICES

i

		Page
6.1	Payment Upon Termination	17
6.2	Closing Date Service Payments	17
6.3	Subsequent Service Invoices and Payment.	18
6.4	Invoices	18
6.5	Late Payment	18
6.6	Surviving Obligations	19
ARTICLE VII
SERVICE LEVEL COMMITMENTS
7.1	General	19
7.2	Supplier Cooperation	19
7.3	Correction	19
ARTICLE VIII
PERSONNEL AND SYSTEMS PROVIDING TRANSITION SERVICES
8.1	Personnel	20
8.2	Intellectual Property, Equipment and Systems	20
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
EMPLOYMENT OF CONTRACTORS OR THIRD PARTIES
10.1	Subcontractors	20
10.2	Subcontractor Payments	21
ARTICLE XI
SINGLE POINT OF CONTACT; DISPUTE RESOLUTION
11.1	Single Point of Contact	21
11.2	Dispute Resolution	21
ARTICLE XII
POLICIES, PROCEDURES AND TRAINING

ii

					Page
12.1				Policies and Procedures	22
12.2				Training	22
12.3				No Warranty	22
ARTICLE XIII
TERM
13.1			Term		22
13.2			Full Term Cutover Notice		23
13.3			Notice of Readiness for Early Cutover in Respect of Schedule A, Schedule C and Schedule D Services.		23
13.4			Notice of Readiness for Early Cutover in Respect of Schedule A Services and Schedule D Services Only		24
13.5			Notice of Readiness for Early Cutover in Respect of Schedule C Services Only		24
13.6			Cutover Date Notice		24
ARTICLE XIV
TERMINATION
14.1			Termination of Agreement.		25
14.2			Post Expiration Continuation of Services		26
14.3			Survival		26
ARTICLE XV
LIMITATION ON LIABILITIES
15.1		Limitation on Liabilities			26
15.2		No Warranties; No Special Damages			27
15.3		Exceptions to Limitations			27
ARTICLE XVI
INDEMNIFICATION
16.1	Indemnification by Surviving Corporation				27
16.2	Indemnification by Supplier				28
16.3	Tax Indemnification				28
16.4	Indemnification Procedure- Defense of Claims.				28
16.5	Surviving Liability.				30
ARTICLE XVII
TAXES

iii

						Page
17.1					Taxes	31
ARTICLE XVIII
RECORDS; ACCESS
18.1				Records		31
18.2				Access to Books, Records, Personnel		32
ARTICLE XIX
DISPUTE RESOLUTION
19.1			General			32
19.2			Initiation			32
19.3			Arbitration Request			33
19.4			Injunctive Relief and Specific Performance.			33
ARTICLE XX
PLANT WORK RULES AND RIGHT OF ACCESS
20.1		Compliance				34
20.2		Access to Facilities				34
20.3		Computer Matters				34
ARTICLE XXI
INSURANCE
21.1	Coverage					35
21.2	Self-insurance					35
21.3	Rating					35
21.4	Subrogation					35
21.5	Indemnification					36
ARTICLE XXII
MISCELLANEOUS
22.1	Notices					36
22.2	Assignment; Exclusivity					38
22.3	Amendments					38
22.4	Headings/Captions					38
22.5	Entire Agreement					38
22.6	Waiver					39

iv

		Page
22.7	Counterparts	39
22.8	Governing Law	39
22.9	Further Assurances	40
22.10	Severability	40
22.11	No Third-Party Beneficiary	40
22.12	Independent Contractor	40
22.13	Governing Provisions	40
22.14	Force Majeure	41
22.15	Confidentiality	41

v

TRANSITION SERVICES AGREEMENT

Transition Services Agreement, dated as of January 15, 2007, by and among Verizon Information Technologies LLC (“Supplier”), Northern New England Telephone Operations Inc. and Enhanced Communications of Northern New England Inc. (collectively, “Buyers”) and FairPoint Communications, Inc. FairPoint (“FairPoint” and following the Closing, the “Surviving Corporation”).

RECITALS

WHEREAS, Verizon Communications Inc., Northern New England Spinco Inc., and FairPoint have entered into an Agreement and Plan of Merger, dated as of the date hereof (the “Merger Agreement”), pursuant to which FairPoint will be the surviving entity in a merger (“Merger”) with Northern New England Spinco Inc.; and Verizon Communications Inc. and Northern New England Spinco Inc. have entered into a Distribution Agreement, dated as of the date hereof (the “Distribution Agreement”);

WHEREAS, Buyers will be, after the consummation of the Merger, subsidiaries of the Surviving Corporation;

WHEREAS, after the Merger, the Surviving Corporation and Buyers will operate certain businesses including, but not limited to, businesses which provide local exchange and long distance telecommunications services in the States of Maine, New Hampshire and Vermont which businesses were formerly operated by Affiliates of Supplier;

WHEREAS, Supplier and its Affiliates have employees with expertise and capabilities to provide the Transition Services described herein and in the attached Schedules; and

WHEREAS, Buyers, FairPoint and Supplier (each, a “party” and collectively, the “parties”) desire to enter into an agreement whereby Supplier and its Affiliates, on the terms and conditions set forth in this Agreement, will provide certain Transition Services to the Buyers exclusively for the benefit of the Spinco Business and not for the benefit of FairPoint’s or Surviving Corporation’s other Affiliates.

AGREEMENT

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows.

ARTICLE I

DEFINITIONS

Capitalized terms used in this Agreement or its Schedules but not defined herein or therein shall have the meanings given them in the Merger Agreement.  Other capitalized terms, as used herein, have the meanings set forth below or elsewhere in this Agreement.

“Agreement” means this Transition Services Agreement, together with the Schedules attached hereto and made a part hereof.

“Applicable Rate” means the three-month LIBOR rate published on Telerate Page 3750 as of 11:00 a.m. London time, on the date which is two days prior to the date such rate is determined less 10 basis points, such rate to be reset every 90 days.

“Approved Third-Party Intellectual Property” has the meaning set forth in Section 5.1(ii) hereto.

“Buyers” has the meaning set forth in the preamble hereto.

“Change of Control” means (i) any transaction or series of transactions in which any person or group (within the meaning of Rule 13d-5 under the Securities Exchange Act and Sections 13(d) and 14(d) of the Securities Exchange Act) that is a direct or indirect “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act), acquires by way of a stock issuance, stock purchase, tender offer, merger, consolidation or other business combination or otherwise, greater than 50% of the total voting power entitled to vote in the election of directors of either of the Buyers, or the Surviving Corporation, (ii) any merger, consolidation, reorganization or other business combination with a Person in which either of the Buyers or the Surviving Corporation does not survive, (iii) any merger, consolidation, reorganization or other business combination in which either of the Buyers or the Surviving Corporation survives, but the shares of common stock outstanding of either of the Buyers or Surviving Corporation or its ultimate controlling Affiliate immediately prior to such merger, consolidation, reorganization or other business combination represent 50% or less of the voting power of either of the Buyers or the Surviving Corporation after such merger, consolidation, reorganization or other business combination and (iv) any transaction or series of transactions in which assets comprising more than 50% of the total assets of either of the

2

Buyers or Surviving Corporation and its Subsidiaries (in value) are sold to another Person.

“Change Request” has the meaning set forth in Section 3.2(b) hereto.

“Conforming Change” has the meaning set forth in Section 3.2(a) hereto.

“Contributing Companies” has the meaning set forth in the Distribution Agreement.

“Cutover” has the meaning set forth in Section 4.1(b) hereto.

“Cutover Plan” has the meaning set forth in Section 4.1(e) hereto.

“Cutover Planning Committee” has the meaning set forth in Section 4.1(a) hereto.

“Direct Claim” has the meaning set forth in Section 16.4(b).

“Distribution Agreement” has the meaning set forth in the Recitals hereto.

“FairPoint” has the meaning set forth in the preamble hereto.

“FairPoint Cutover Preparation Tasks” has the meaning set forth in Section 4.1(f).

“Final Cutover Date” has the meaning set forth in Section 13.6 hereto.

“Fixed Monthly Service Fee” has the meaning set forth in Section 2.1(a) hereto.

“Force Majeure Event” has the meaning set forth in Section 22.14 hereto.

“Indemnitee” means a Supplier Indemnitee or a FairPoint Indemnitee, as the case may be.

3

“Indemnitor” means any person or entity required to provide indemnification under this Agreement.

“Initial Payment” has the meaning set forth in Section 6.2 hereto.

“Holdover Period” has the meaning set forth in Section 14.2.

“Intellectual Property” has the meaning set forth in the Intellectual Property Agreement which is one of the Transaction Agreements as defined in the Merger Agreement.

“Losses” has the meaning set forth in the Merger Agreement.

“Merger” has the meaning set forth in the Recitals hereto.

“Merger Agreement” has the meaning set forth in the Recitals hereto.

“Notice Effective Date” has the meaning set forth in Sections 13.3, 13.4 and 13.5 hereto.

“Preliminary Cutover Plan” means the written document prepared by Supplier which includes, without limitation, a plan which identifies specific business and systems deliverables to be delivered by Supplier to Buyer in stages.  The plan includes, without limitation, the extraction of data contained in certain electronic databases of the Spinco Business in two test extracts and one final extract and the transfer of such data to the Surviving Corporation or its designee in an existing format defined by Supplier.  The plan shall also include a description of the activities that must be performed by Supplier and Buyers to transfer customer service responsibility for long distance customers of the Spinco Business to Buyers. Additionally, the plan shall include a description of the activities that must be undertaken by Supplier and Buyers to transfer customer service responsibility for the dial-up, DSL and fiber to the premises (aka Fios) data and other ISP customers of Spinco Business to Buyers.  Further, the plan shall also include a description of the activities that must be undertaken by Supplier and Buyers should Schedule A Services and Schedule D Services be terminated prior to the termination of Schedule C Services and a description of the activities that must be undertaken by Supplier and Buyers if Schedule C Services were to be terminated prior to the termination of Schedule A Services and Schedule D Services and a description of the activities that

4

must be undertaken by Supplier and Buyers if Schedule C Services were to be terminated prior to the termination of Schedule A Services and Schedule D Services.

“Preliminary FairPoint Cutover Preparation Tasks” means a written document prepared by FairPoint which identifies those activities that FairPoint must undertake and complete to be prepared for cutover.

“Schedule A Fee” has the meaning set forth in Section 2.1(b) hereto.

“Schedule A Services” has the meaning set forth in Section 2.1 hereto.

“Schedule B Fee” has the meaning set forth in Section 2.4 hereto.

“Schedule B Services” has the meaning set forth in Section 2.4 hereto.

“Schedule C Fees” has the meaning set forth in Section 2.1(c) hereto.

“Schedule C Services” has the meaning set forth in Section 2.1 hereto.

“Schedule D Fees” has the meaning set forth in Section 2.1(d) hereto.

“Schedule D Services” has the meaning set forth in Section 2.1 hereto.

“Senior Executive Officers” means, in the case of FairPoint, Peter Nixon, and in the case of Supplier, Stephen E. Smith.

“Service Modification” has the meaning set forth in Section 3.2(b) hereto.

“Settlement Requirements” has the meaning set forth in Section 16.4(a).

“Single Point of Contact” has the meaning set forth in Section 11.1 hereto.

“Special Services” has the meaning set forth in Section 2.3 hereto.

5

“Special Services Fee” has the meaning set forth in Section 2.3 hereto.

“Spinco Business” has the meaning set forth in the Distribution Agreement.

“Supplier” has the meaning set forth in the preamble hereto.

“Supplier License Fees” has the meaning set forth in Section 2.2 hereto.

“Supplier Cutover Planning Services” has the meaning set forth in Section 4.1(b) hereto.

“Supplier Indemnitees” has the meaning set forth in Section 16.1 hereto.

“Surviving Corporation” has the meaning set forth in the preamble hereto.

“Team Leader” has the meaning set forth in Section 4.1(a) hereto.

“Termination Schedule” has the meaning set forth in Section 4.1(a) hereto.

“Tax” has the meaning set forth in the Merger Agreement.

“Third Party Claim” has the meaning set forth in Section 16.4(a).

“Third-Party Contractors” has the meaning set forth in Section 10.1 hereto.

“Third-Party Intellectual Property” has the meaning set forth in the Merger Agreement.

“Third-Party Vendor Costs” has the meaning set forth in Section 2.2 hereto.

“Third-Party Vendors” has the meaning set forth in Section 2.2 hereto.

“Transition Service” has the meaning set forth in Section 2.1 hereto.

6

“Unit-Based Service Fee” has the meaning set forth in Section 2.1(d) hereto

ARTICLE II

TRANSITION SERVICES

2.1           Transition Services and Fees.

(a)   Following the Closing, and subject to the terms and conditions hereof, Supplier shall arrange for, procure, aggregate and otherwise cause its Affiliates and their employees to provide to the Buyers for use in the Spinco Business during the term hereof the services listed on Schedule A (collectively “Schedule A Services” and each service a “Schedule A Service”), the services listed on Schedule C (collectively, the Schedule C Services” and each service, a “Schedule C Service”) and the services listed on Schedule D (collectively the “Schedule D Services” and each service a “Schedule D Service”) the Schedule A Services, Schedule C Services and the Schedule D Services  (collectively, the “Transition Services” and each service, a “Transition Service”).  Each of Schedule A, Schedule C  and  Schedule D includes, for each Transition Service, (i) a description of the service (or group of related services) to be performed and (ii) significant performance requirements of Supplier or its Affiliates and Buyers and other special terms and conditions relating directly to the services to be performed.

(b)   The Schedule A Services shall be provided for the following monthly fee (each a “Schedule A Fee”): 

For the first eight months after the closing Date:	$14,200,000 per month
For each month beginning in the ninth month after closing	$500,000 less than for the prior month
For the thirteenth month	$14,700,000 per month
For each month following the thirteenth month until termination of the Schedule A Services	$500,000 more than the amount paid with respect to the prior month, provided that no increase shall occur after 60 calendar days after the Notice Effective Date with respect to early termination pursuant to Section 13.3, 13.4 or 13.5 hereof.

7

For example, in the tenth month, the Schedule A Fee shall be $13,200,000 and in the fourteenth month the Schedule A Fee shall be $15,200,000.  The Schedule A Fee is exclusive of any Taxes, which shall be allocated as provided in Article XVII.

(c)           The Schedule C Services shall be provided for the fees described in Schedule C (the “Schedule C Fees”), stated as a monthly fixed payment (a “Fixed Monthly Service Fee”).  The Schedule C Fees are exclusive of any Taxes, which shall be allocated as provided in Article XVII.

(d)           The Schedule D Services shall be provided for the fees described in Schedule D (the “Schedule D Fees”), stated as a monthly fixed payment (a “Fixed Monthly Service Fee”) or a “Unit Based Service Fee” as applicable. The Schedule D Fees are exclusive of any Taxes, which shall be allocated as provided in Article XVII.

2.2           Third-Party Vendor Costs.  In order to provide the Transition Services, the parties acknowledge and agree that it may be necessary for Supplier to pay third-party suppliers or vendors (“Third-Party Vendors”) incremental or other costs and expenses or new costs or expenses incidental to Supplier’s providing transition support for the Buyers, including without limitation, product and service fees, programming fees, Taxes, maintenance fees, initiation and set-up costs and license fees and costs (including attorney’s fees) associated with any obtaining licenses, approvals, waivers or rights relating to Third-Party Intellectual Property as described in Article V.  Collectively such incremental costs and expenses payable to third parties described in the preceding sentence are “Third-Party Vendor Costs”.  Third-Party Vendor Costs associated with Schedule A Services shall be paid by Supplier.  Third-Party Vendor Costs associated with Schedule C and Schedule D Services are in addition to the Schedule C  and Schedule D Fees described in Section 2.1(c) and 2.1(d) and are payable by Buyers or FairPoint to Supplier pursuant to Article VI.

2.3           Special Services and Fees.  Buyers or FairPoint may request that Supplier or its Affiliates participate in meetings, telephone calls, or other consultations for Buyers or FairPoint to perform their respective requirements as described in Schedule A,

8

Schedule C or Schedule D (“Special Services”).  Supplier shall consider all requests for Special Services in good faith, and shall provide such Special Services, where in Supplier’s judgment Supplier or its Affiliates can provide such Special Services without materially adversely disproportionately or unreasonably impacting Supplier’s or its Affiliates’ then current operations and planned future work loads and without violating any applicable law, regulation or agreement; and further provided that Supplier and its Affiliates shall have no obligation to share Verizon Proprietary Business Information or provide any training to FairPoint or its representatives or agents.   After the first 500 hours of Special Services which shall be provided by Supplier to FairPoint without cost and related to planning for the receipt of the Transition Services,  FairPoint shall pay Supplier for Special Services at the rate of $125 per hour (the “Special Service Fee”).  FairPoint shall also reimburse Supplier for all reasonable pre-approved out-of-pocket travel-related costs and expenses in connection with providing Special Services hereunder.

2.4           Schedule B Fee.  Prior to the Closing, Supplier and its Affiliates shall provide the services listed in Schedule B (the “Schedule B Services”) for the fee described on Schedule B (the “Schedule B Fee”), which fee is exclusive of Taxes.  FairPoint shall pay Supplier the Schedule B Fee in the amount and at the time specified in Schedule B.

2.5           Service Administration.  Supplier shall administer this Agreement with respect to the delivery of Transition Services.  As more fully described in Article XI and subject to specific arrangements set forth in Schedule A, Schedule C and Schedule D, Supplier shall coordinate all communications, questions and problem resolution with respect to all Transition Services.

2.6           Supplier to Pay Its Affiliates and Vendors.  Without limiting the obligation of the Buyers under Article VI, Supplier shall be responsible to pay its Affiliates for any Transition Services or Special Services provided and pay Third-Party Vendors for Third-Party Vendor Costs.

2.7           Supplier Cutover Planning Services.  Supplier shall provide the Supplier Cutover Planning Services described in Article IV at no additional cost.

2.8           Performance by Buyers and FairPoint.  Subject to Section 14.2, the Buyers and FairPoint shall perform in a timely fashion those tasks, and provide the personnel, facilities and accurate information, as are expressly set forth in the Schedules hereto.  In addition, the Buyers and FairPoint agree to use commercially-reasonable efforts to

9

cooperate with Supplier and its Affiliates, and to perform, in a timely fashion, those additional commercially-reasonable tasks directly related to the performance of the Transition Services which Supplier may reasonably request.  FairPoint’s and Buyers’ failure to cooperate with Supplier in the manner requested shall not relieve Supplier of its obligations hereunder, except and to the extent that such failure would preclude or materially interfere with performance by Supplier of a particular component of the Transition Services.

2.9           Services Not to Be Withheld.  Subject to Supplier’s rights under Article XIV and provided none of  Buyers or FairPoint is in default of its obligation to pay fees or has refused to pay fees hereunder in bad faith, or has had a Change of Control, Supplier shall not intentionally withhold the provision of  any or all of the Schedule A Services, or substantially all of the Schedule C Services or Schedule D Services for any reason during the term of this Agreement.  If Supplier breaches or threatens to breach the provisions of this Section, Supplier agrees that FairPoint and Buyers will be irreparably harmed, and, without any additional findings of irreparable injury or harm or other considerations of public policy, FairPoint and/or Buyers shall be entitled to apply to a court of competent jurisdiction for and, provided FairPoint and/or Buyers follow the appropriate procedural requirements (including notice and an affidavit that none of Buyers or FairPoint has failed to make all undisputed payments or is in material breach), Supplier shall not oppose the granting of an injunction compelling specific performance by the Supplier of its obligations under this Agreement without the necessity of posting any bond or other security.  Supplier further agrees not to oppose any such application for injunctive relief.

ARTICLE III

SCOPE OF SERVICES; CHANGES

3.1           General Scope.  Each Transition Service described on Schedule A, Schedule C and Schedule D is limited to such functionality as was included in the same service which was provided to Verizon New England Inc. or any of the Contributing Companies, as applicable, on the date immediately prior to the Closing Date, unless the service descriptions on the Schedules hereto specifically indicate otherwise.  Unless otherwise specifically stated in the Schedules hereto, Transition Services are provided only in respect of the Spinco Business as conducted (or substantially as conducted) on the Closing Date by Buyers or their Affiliates as successors to one or more of the Contributing Companies, as defined in the Distribution Agreement, and such services are not provided in respect of, or in support of, or in combination with, any other business operation or interests of Buyers, Surviving Corporation or their Affiliates.  Except as specifically described in the Schedules hereto or this Agreement, neither Supplier nor its

10

Affiliates shall have any obligation to provide any additional, modified, general or customized services.

3.2           Changes in Scope.

(a)   The parties acknowledge and agree that Supplier and its Affiliates shall provide the Transition Services utilizing systems, databases, reports, formats and processes used to support Verizon New England Inc. (and the Contributing Companies as to the respective service they received) immediately prior to the Closing Date, and except as otherwise specifically described herein or in the Schedules hereto, Supplier and its Affiliates are not obligated to make any modification or customization of any such systems, databases, reports, formats or processes.  Supplier and its Affiliates will adhere to the policies, practices and methodologies used to support Verizon New England Inc. and the Contributing Companies immediately prior to the Closing Date.  During the term of this Agreement, Supplier may at any time modify the Transition Services, as necessary or desirable, to allow for continued or conforming use of the then-existing systems and databases and to allow for continued or conforming adherence to the then-existing policies, practices and methodologies, which Supplier or its Affiliates will use to provide similar services to Verizon New England Inc. or the Contributing Companies after the Closing (each, a “Conforming Change”).  Provided that the Conforming Change complies with applicable law, neither Buyers nor Surviving Corporation shall be responsible for any additional costs in connection with such Conforming Change, and Supplier shall reimburse Buyers for all of Buyers’ reasonable out-of-pocket costs in connection with the implementation of such Conforming Change.  Prior to the implementation of a Conforming Change, Supplier will provide the Buyers with written notice of such change contemporaneously with the notice provided to Verizon New England Inc. or the Contributing Companies, as applicable.

(b)   In addition to Conforming Changes, during the term, the Buyers or FairPoint may request that Supplier agree to modify any of the Transition Services to comply with then-existing law or requirements of a Governmental Authority (a “Service Modification”).  Buyers or FairPoint shall deliver to Supplier’s Single Point of Contact (as defined in Article XI) a written description of the proposed change (each, a “Change Request”).

(c)   Supplier shall provide all proposed Service Modifications.  Supplier shall make commercially reasonable efforts to complete and implement Service Modifications at the time or on the schedule required by law or requirements of the Governmental Authority, taking into account Supplier’s pre-existing work load,

11

service obligations and requirements of law in respect of its Affiliates.  The Supplier’s time expended to implement a Service Modification (other than a Service Modification required to be implemented by applicable law or any governmental order generally applicable to all telecommunications operators as in effect prior to the Closing Date but not any Service Modification which is part of any order of a Governmental Authority issued in connection with the Merger) shall be billed to Buyers as Special Services.  The Buyers shall reimburse Supplier for its costs and out-of pocket expenses associated with implementation and delivery of any post-Closing Service Modification (other than a Service Modification required to be implemented by applicable law or any governmental order generally applicable to all telecommunications operators as in effect prior to the Closing Date but not any Service Modification which is part of any order of a Governmental Authority issued in connection with the Merger).  FairPoint shall reimburse Supplier for its cost and out-of-pocket expenses associated with implementation and delivery of any pre-Closing Service Modification (except as provided above).

(d)   If a Conforming Change occurs or a Change Request is approved in accordance with this Article III, the definition of Transition Services and the Schedules hereto will be deemed amended to reflect the implementation of the Conforming Change or Service Modification as well as any other terms and conditions agreed upon by the parties in writing.

ARTICLE IV

CUTOVER REPORTS

4.1           Cutover Plan.

(a)   As of the date hereof, Supplier and FairPoint shall establish a planning committee (the “Cutover Planning Committee”) consisting of two representatives of both Supplier and FairPoint (or their Affiliates), to discuss and plan the delivery by Supplier to Buyer of specific business and system deliverables, including without limitation the extraction of data contained in certain electronic databases of the Supplier no later than 15 months after the Closing Date. Each of FairPoint, on the one hand, and the Supplier, on the other hand, shall designate a member of the Cutover Planning Committee as team leader (“Team Leader”) who shall have the primary responsibility and accountability for making team assignments for his/her party, coordinating communications between party teams, and assessing and reporting progress planning and implementing the Cutover Plan as described below.  Each Party will devote adequate planning resources to their portion of the Cutover Planning

12

Committee to allow for timely planning consistent with timelines established in the Cutover Plan, the Deliverable Schedule and FairPoint Cutover Preparation Tasks.  The Parties expect to invite other employees or contractors to participate in specialized areas related to the Cutover Plan based on their areas of expertise and responsibility as it relates to the operation of the Spinco Business.  The activities of the Cutover Planning Committee shall be conducted consistent with all applicable requirements of law, regulation and contracts, including antitrust and telecommunications laws.

(b)   Within 30 calendar days following the date hereof, the Cutover Planning Committee shall hold its initial meeting to commence planning and preparation for the Buyers to cease using all Transition Services and thereafter to operate the Spinco Business using FairPoint’s and/or Surviving Corporation’s own systems and services or those of other third parties (the “Cutover”).  The services provided by the Supplier in connection with planning the Cutover are “Supplier Cutover Planning Services”.

(c)   Within 90 calendar days following the date hereof, Supplier shall deliver to FairPoint Supplier’s preliminary draft of a cutover plan (the “Preliminary Cutover Plan”) The Preliminary Cutover Plan shall include, among other provisions, a plan for activities and tasks that will be completed prior to and immediately following the Cutover Date, and those matters relating to ISP cutover described on Schedule E hereto.

(d)   The Cutover Planning Committee shall review the Preliminary Cutover Plan.  Within 30 calendar days following receipt, FairPoint may make suggestions for modification and amendment to the Preliminary Cutover Plan.  Supplier shall review all such suggestions in good faith and consider, among other factors, their commercial reasonableness, technical feasibility, the anticipated implementation period, available Supplier and Affiliate resources, and existing Supplier and Affiliate obligations and activities.  Within 30 calendar days following receipt of the FairPoint suggestions for modification, Supplier shall accept or reject any or all such suggestions in its reasonable discretion and resubmit to FairPoint the Preliminary Cutover Plan.  In addition, Supplier will provide a detailed deliverable schedule based on a target cutover date. This schedule, which shall become part of the Cutover Plan, shall include projected time lines for delivery of Supplier deliverables which are sufficient to allow Buyers’ testing where applicable, and the final deliverable dates in respect of all portions of the Spinco Business.  The final documents delivered to FairPoint by Supplier after good faith consideration of FairPoint modification suggestions shall constitute the “Cutover Plan” Under no circumstances may the Cutover Plan contradict the express terms of this Agreement, unless unanimously agreed to by the Cutover Planning Committee.

13

(e)   Within 90 calendar days following the date hereof, FairPoint shall deliver to Supplier a preliminary description of its proposed cutover tasks (the “Preliminary FairPoint Cutover Preparation Tasks”).  The Preliminary FairPoint Cutover Preparation Tasks shall include, among other provisions, a suggested cutover date using a target cutover of approximately15 months from the date hereof, a plan for activities and tasks related to pre-cutover acceptance, testing and processing of Supplier’s data extracts, and the plan to establish FairPoint systems and processes in order to allow Buyers to function independent of Supplier and its Affiliates.[ The Preliminary FairPoint Cutover Preparation Tasks will provide for post-exit regular data feeds to the Supplier such that the Supplier may meet its Schedule A Service obligations related to DSL service with the understanding that such data feeds are provided at no cost to Supplier.]

(f)    The Cutover Planning Committee shall review the Preliminary FairPoint Cutover Preparation Tasks.  Within 30 days following receipt, Supplier shall review and may make suggestions in its reasonable discretion for modification and amendment to the Preliminary FairPoint Cutover Preparation Tasks.  Within 30 days after receipt of Supplier’s suggestions for modification and suggested cutover date, FairPoint shall accept any or all such suggestions and resubmit to Supplier the Preliminary FairPoint Cutover Preparation Tasks.  The final document delivered to Supplier after incorporation of Supplier modification suggestions shall constitute the “FairPoint Cutover Preparation Tasks”.

(g)   In addition to the scheduled reviews and meetings described in the Section 4.1, after delivery of the Cutover Plan, the Cutover Planning Committee and/or Team Leaders shall have additional meetings (telephonically or otherwise) not more frequently than weekly to consider the status of the various plans and consider any mutually-agreed additional plans or schedules.

ARTICLE V

THIRD-PARTY INTELLECTUAL PROPERTY

5.1           Intellectual Property.  Buyers understand that certain rights and licenses to use Third-Party Intellectual Property may be required to provide Transition Services.  Within 60 days after the date of this Agreement, Supplier will commence commercially-reasonable efforts to identify licensors of Third-Party Intellectual Property and determine whether consents or waivers are necessary to be obtained from such licensors in order to provide Transition Services.

14

5.2           Obtaining Waivers or Licenses.

(a)   Subject to the last sentence of Section 6.1, within 90 days after the date of the Agreement, Supplier or its Affiliates shall commence commercially-reasonable efforts to obtain, at Supplier’s sole cost and expense, any necessary rights, waivers or licenses to use any and all Third-Party Intellectual Property necessary to provide Schedule A Services and Schedule B Services to the Buyers.  Subject to any contrary provision of Schedule C or Schedule D, Supplier shall make similar efforts to obtain any necessary rights, waivers or licenses to use any and all Third-Party Intellectual Property necessary to provide Schedule C Services and Schedule D Services at Buyers’ sole cost and expense.

(b)   To the extent licensors of Third-Party Intellectual Property demand payment of license or other fees for the right to use Third-Party Intellectual Property to deliver Schedule C Services or Schedule D Services, Supplier shall use commercially-reasonable efforts to communicate such demands to FairPoint.  FairPoint may direct Supplier to accept or reject such licensor demands and may authorize Supplier in making counteroffers and otherwise direct fee negotiations for a period not to exceed 30 days after receipt of licensor demands.

(c)   If no agreement with licensors of Third-Party Intellectual Property in connection with Schedule C Services is reached within 30 days after such licensor’s first demand, Supplier will resume its sole and exclusive efforts to obtain necessary licenses and rights on commercially-reasonable terms.  Supplier may enter into agreements to pay fees in its sole discretion.  All negotiated license fees in respect of Schedule C Services and Schedule D Services shall be paid by Supplier as Third-Party Vendor Costs.  FairPoint shall reimburse Supplier for all such fees paid as described in Article VI.

(d)   FairPoint agrees to reimburse Supplier for all of its costs and expenses incurred in seeking licenses, waivers or rights from all licensors of Third-Party Intellectual Property in connection with Schedule C Services and Schedule D Services including, without limitation, attorneys’ fees which are Third-Party Vendor Costs.

(e)   FairPoint agrees to cooperate as reasonably necessary to assist Supplier with obtaining such licenses.  From time to time, Supplier may provide FairPoint with a list of Third Party Intellectual Property for which it is seeking waivers or licenses as described in subsection (a) above. Within 30 days after receipt of any such list FairPoint shall advise Supplier in writing of any such Third Party Intellectual Property,

15

that FairPoint has a license (or will have immediately following Closing) such that it will not be necessary for Supplier to obtain licenses or waivers in respect of the same.

(f)    Supplier’s obligation to provide each Transition Service shall be contingent upon receipt of all necessary third-party approvals, licenses and rights.  Failure to receive such approvals, licenses or rights on a timely basis, after Supplier uses its commercially-reasonable efforts, shall be cause for termination of this agreement with respect to any and all Transition Services affected by the failure to receive such approvals, licenses or rights.

5.3           Alternatives.

(a)   If after commercially-reasonable efforts to obtain a license have been undertaken as described in Section 5.2 above, any Third-Party Intellectual Property in connection with Schedule C Services or Schedule D Services is not available to Supplier for any reason, Supplier shall suggest specific product alternatives or alternative providers, if known, and if available, provide such information to FairPoint within 120 calendar days of the date Supplier is finally advised that such Third-Party Intellectual Property is not available.  Supplier shall obtain a license for the most commercially-reasonable alternative, at FairPoint’s sole cost and expense in connection with Schedule C Services or Schedule D Services.  If Supplier does not suggest an alternative in respect of Schedule C Services or Schedule D Services as applicable, then FairPoint may suggest an appropriate commercially-available alternative for Supplier’s approval, which approval shall not be unreasonably withheld.  Supplier shall obtain a license to the alternative suggested by FairPoint, at FairPoint’s sole cost and expense in connection with Schedule C Services and Schedule D Services as Third-Party Vendor Costs.   If no alternatives are available or approved, then the affected Transition Service shall not be provided.

(b)   If Third-Party Intellectual Property is only available to be licensed directly by Buyers or FairPoint, Supplier shall so notify FairPoint and FairPoint shall obtain for its own account or for Buyers’ account and at FairPoint’s cost and expense (not a Third-Party Vendor Cost) in connection with Schedule C Services and Schedule D Services and at Supplier’s cost and expense in connection with Schedule A and B Services,  such Third-Party Intellectual Property and the right for Supplier to use such Third-Party Software in the provision of Transition Services for a term not to exceed 16 months after the Closing Date.

16

(c)   FairPoint Intellectual Property .  “FairPoint Intellectual Property” is that Intellectual Property created by FairPoint or developed by a third party on behalf of or at the direction of FairPoint, in which FairPoint has all right, title and interest and which is utilized in the performance of the Transition Services.  FairPoint grants Supplier a limited, non-exclusive, revocable, worldwide, paid up license to use FairPoint Intellectual Property solely for the purpose of providing the Transition Services.

ARTICLE VI

PAYMENT FOR TRANSITION SERVICES

6.1           Payment Upon Termination.  In the event that the Merger Agreement is terminated prior to the Closing in circumstances described in Section 9.3(b) of the Merger Agreement, Supplier will invoice FairPoint for (i) any Special Services Fees, including all pre-approved travel costs in connection with the performance of such Special Services, which for greater certainty, does not include any fee for the 500 hours of Special Services described in Section 2.3 above, or any Special Service Fees which have been paid  previously (ii) the number of dollars which is equal to the number of hours Supplier, its Affiliates or contractors have labored to provide Schedule B Services multiplied by the Special Service Fee in an amount not to exceed $34 million; (iii) the amount of Qualified Transition Expenses that exceeds $20 million; and (iv) (without duplication) any and all Taxes arising from or relating to such payments.  FairPoint shall pay such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.  Notwithstanding anything herein to the contrary, Supplier shall be under no obligation to incur any fees other than Special Service Fees prior to the date when FairPoint’s stockholders have approved the merger contemplated by the Merger Agreement.

6.2           Closing Date Service Payments.  On the Closing Date, the Buyers shall pay Supplier in advance the sum of: (i) Fourteen Million Two Hundred Thousand Dollars ($14,200,000) for Schedule A Services, (ii) the Schedule C Fees for one month, (iii) the Schedule D Fixed Monthly Service Fees for one month (iv) Third-Party Vendor Costs, if any covering the Schedule C Services and Schedule D Services to be provided during the first month after Closing plus, (v) any Taxes arising from or relating to such payments.  The payments described in Sections (i) through (v) collectively the “Initial Payment”.

17

6.3           Subsequent Service Invoices and Payment.

(a)   Prior to the beginning of the second month after Closing the Supplier will invoice in advance for each month of the term thereafter for (i) the Schedule A Fee at the rate specified in Section 2.1(b), (ii) the Schedule C Fixed Monthly Service Fee, (iii) the Schedule D Fixed Monthly Service Fee (iv) Third-Party Vendor Costs, if any, (without duplicating any Third-Party Vendor Fee previously paid in advance pursuant to Section 6.2(iii) above) covering Schedule C  Services and Schedule D Services to be provided in the immediately-following month, and (iv) any Taxes arising from or relating to such payments.  The Buyers shall pay such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.

(b)   Within 30 calendar days after the end of the first month after Closing and each month of the term thereafter and within 30 calendar days after the last day of the term hereof, Supplier shall invoice the Buyers in arrears for (i) the Schedule D Unit-Based Service Fees and Special Service Fees covering all Transition Services provided in the immediately preceding calendar month, or a pro-rata portion of such fees for any partial month and (ii) any Taxes arising from or relating to such payments.  The Buyers shall pay each such invoice, less any amounts disputed in writing, within 15 calendar days of receipt.

(c)   If the Buyers or FairPoint in good faith dispute owing any amount stated on an invoice, they shall notify Supplier in writing stating the amount of the dispute and giving the reasons for the dispute.  The dispute shall be resolved pursuant to the provisions of Article XIX below.

(d)   All payments by the Buyers or FairPoint under this Agreement shall be in U.S. dollars by wire transfer of immediately available funds to Supplier’s designated account.

6.4           Invoices.  All invoices for amounts due under this Agreement on which Taxes would be due shall indicate the jurisdiction of taxation for such Tax.  In addition, with each invoice, Supplier shall provide Buyers or FairPoint with a reasonably-detailed breakdown of the Third-Party Vendor Costs and other charges included on such invoice; provided that Supplier received such a breakdown from such third parties.

6.5           Late Payment.  All amounts due Supplier under this Agreement that are not paid within 30 calendar days of their due date (other than any amount which is properly disputed) shall bear interest at the Applicable Rate from the due date until paid.

18

6.6           Surviving Obligations.  FairPoint upon early termination of this Agreement pursuant to Section 14.1(a), or Buyers upon early termination of this Agreement pursuant to Sections 14.1(b), or (c), as applicable shall be responsible for paying amounts due or owing to Supplier up to the effective date of such termination.  To the extent FairPoint or the Buyers have made any advance payments of Fixed Monthly Service Fees or Third-Party Vendor Costs at the time of early termination, and Supplier has been credited for or is not obligated to pay such Third-Party Vendor Costs, Supplier will issue a credit to the Buyers or FairPoint for the unused portion of any such payments.  Buyers’ and FairPoint’s obligations to reimburse Supplier for any Third- Party Vendor Costs paid by Supplier shall survive termination of any or all Transition Services or this Agreement.

ARTICLE VII

SERVICE LEVEL COMMITMENTS

7.1           General.  Supplier and its Affiliates shall devote such time, effort and resources to the performance of Transition Services specified in Schedule A, Schedule C and Schedule D in a manner that generally meets any applicable service levels and other requirements set forth in Schedule A, Schedule C and Schedule D; provided, however, that the parties agree that the obligations of Supplier and its affiliates are to tender performance and that its ability to perform will be, or may be, adversely affected by the Buyers’ or FairPoint’s failure to perform its obligations described in Section 2.8.  Supplier further agrees that it and its Affiliates shall perform the Transition Services (i) in compliance with applicable law and any governmental or regulatory requirements and (ii) with the same overall standards of quality, timeliness and efficiency as such services are then being provided by Supplier’s Affiliates to Verizon New England Inc. taking into account reasonable fluctuations that occur from month to month.

7.2           Supplier Cooperation.  Supplier shall, and shall cause its Affiliates to, use commercially reasonable efforts to cooperate with FairPoint and its Affiliates, and to perform, in a timely fashion, its obligations prior to the Closing Date and after the Closing Date; provided, that such efforts shall not require Supplier and its Affiliates to (x) incur additional expenses, obligations or liabilities other than as expressly required herein, (y) disproportionably or unreasonably interfere, either individually or in the aggregate, with the conduct of the Verizon Business or (z) be inconsistent with the express terms of this Agreement or any Schedule hereto.

7.3           Correction.  In the event Supplier fails to deliver the Transition Services in any material respect in accordance with this Agreement, Supplier shall, at its expense,

19

resolve any such discrepancies as promptly as reasonably practicable, given the nature and severity of the matter at issue. Supplier shall keep FairPoint and Buyers informed regarding the status of its actions to resolve such discrepancies and the resolution thereof.

ARTICLE VIII

PERSONNEL AND SYSTEMS
PROVIDING TRANSITION SERVICES

8.1           Personnel.  Supplier and its Affiliates shall have the sole and exclusive responsibility for selecting and managing their personnel who provide Transition Services and shall supervise them in connection with the performance of Transition Services.  Such personnel shall be qualified, in the reasonable opinion of Supplier, for the tasks to which they are assigned.  Supplier or its Affiliates shall pay and be responsible for all wages, salary or other compensation, taxes, insurance and, except as expressly specified herein or in any Schedule or separate agreement, other costs and expenses with respect to such personnel.

8.2           Intellectual Property, Equipment and Systems.  Supplier and its Affiliates shall have the sole and exclusive responsibility and discretion to select and provide the Intellectual Property, equipment and systems necessary to deliver the Transition Services, provided, however, that the foregoing shall not affect the Supplier’s obligation to comply with any specified service level and the other terms and conditions of this Agreement.

ARTICLE IX

INTENTIONALLY OMITTED

ARTICLE X

EMPLOYMENT OF CONTRACTORS OR THIRD PARTIES

10.1         Subcontractors.  To the extent that Supplier or any of its Affiliates determines that it is desirable for any reason in their sole discretion, Supplier may contract with reasonably-qualified third parties to provide any or all Transition Services to the Buyers for the remainder of the term and (ii) further, if in the judgment of counsel for Supplier, any requirement of law precludes Supplier from performing any Transition Service or performing any of its obligations of this Agreement, Supplier may assign the

20

performance of those obligations to a reasonably-qualified third party selected by Supplier in its reasonable discretion.

10.2Subcontractor Payments.  Supplier shall remain fully responsible for its performance of this Agreement in accordance with its terms, including any obligations it performs through third parties, and Supplier shall be solely responsible for all payments due to third parties.  Notwithstanding anything to the contrary, amounts due from Supplier and its Affiliates to their subcontractors shall not be included in the Third-Party Vendor Costs to the extent such amounts are for services that are duplicative of services for which Supplier is charging Buyers or FairPoint any fee.

ARTICLE XI

SINGLE POINT OF CONTACT; DISPUTE RESOLUTION

11.1Single Point of Contact.  FairPoint and Supplier shall each appoint a person who shall be available to receive communications and coordinate responses to questions and concerns on behalf of their respective parties and their Affiliates with respect to this Agreement or the Transition Services, including billing and operational matters (“Single Point of Contact”).  Except in respect of the activities of the Cutover Planning Committee or the Team Leaders described in Section 4.1, or unless otherwise authorized in writing or set forth in the policies and procedures of Supplier or its Affiliates or as specified on any Schedule hereto, FairPoint and Supplier agree that their representatives and employees shall not contact any representatives of the other party, other than the designated Single Point of Contact.  Notwithstanding the provisions of this Article XI, in the event of any network or service outage or other similar emergency relating to any Transition Service, a party shall attempt to contact the Single Point of Contact of the other party, but may also directly contact that person most able to resolve the emergency expeditiously.

11.2Dispute Resolution.  The Single Points of Contact shall meet as often as reasonably necessary in an effort to resolve disputes without the necessity of any formal proceeding relating thereto.  If the Single Points of Contact do not resolve a dispute within 30 calendar days, then either party may escalate the dispute to its Senior Executive Officer.  If such dispute cannot be resolved by the Senior Executive Officers of the parties within 10 days after initiation of discussions, either party may initiate formal proceedings as permitted by this Agreement. The foregoing requirements and limitations shall not, however, prevent a party from: (i) seeking injunctive relief in circumstances permitted by this Agreement, or (ii) terminating this Agreement (in whole or in part) in accordance with Article XIV.

21

ARTICLE XII

POLICIES, PROCEDURES AND TRAINING

12.1Policies and Procedures.  Supplier and its Affiliates agree to follow and abide by all commercially-reasonable written policies and procedures provided by FairPoint or Buyers from time to time in connection with the provision of Transition Services with respect to access to FairPoint’s or its Affiliates’ systems or premises, to the extent that such policies and procedures do not conflict with the requirements of this Agreement or any Schedule hereto.  FairPoint and its Affiliates agree to follow and abide by all commercially-reasonable written policies and procedures provided by Supplier from time to time in connection with the provision of Transition Services with respect to (i) provision of data by FairPoint, Buyers or their Affiliates to Supplier or its Affiliates, (ii) Buyers’ access to or use of any Supplier or Affiliate computer support systems and (iii) plant work and right-of-access rules as further described in Article XX, all to the extent that such policies and procedures do not conflict with the requirements of any schedule hereto, it being understood that the policies applicable to Verizon New England Inc. as of the Closing Date shall be deemed to be commercially reasonable.

12.2Training.  To the extent that a party deems reasonably necessary, the other party shall make its employees or representatives reasonably available for training with respect to its policies and procedures, at times and locations mutually agreed upon by the parties.  The parties may charge a fee for such training consistent with the provisions of Section 2.3 hereof.

12.3No Warranty.  The parties acknowledge and agree that Supplier and its Affiliates are not generally in the business of providing commercial transition services, and accordingly, neither Supplier nor any of its Affiliates makes any representation or warranty that any policies, procedures or training materials shall be complete, accurate or suitable for FairPoint’s or the Buyers’ purposes, nor shall Supplier be required to revise such policies, procedures or training materials for any reason.

ARTICLE XIII

TERM

13.1Term.  This Agreement shall become effective as of the date first written above and shall expire without notice upon the earlier of: (i) the date that a termination pursuant to Section 14.1 becomes effective, or (ii) the date identified in a Cutover Date

22

Notice delivered by Supplier pursuant to Section 13.6 hereof, after receipt of a Notice of Readiness for Cutover described in Section 13.2 hereof, which date shall be in the month of January, March, May, July, September or November immediately following the 15-month anniversary of the Closing Date, or (iii) in respect of early termination of the Schedule A Services, Schedule C and Schedule D Services, (terminating at the same time) the date identified in a Cutover Date Notice delivered by Supplier pursuant to Section 13.6 hereof after receipt of a Notice of Readiness for Cutover described in Section 13.3 hereof, which date shall be in the month of January, March, May, July, September or November, or (iv) in respect of early termination of the Schedule A Services and Schedule D Services only (without termination of Schedule C Services), the date identified in a Cutover Notice delivered by Supplier pursuant to Section 13.6 hereof after receipt of a Notice of Readiness for Cutover described in Section 13.4, which date shall be in the month of January, March, May, July, September or November, or (v) in respect of early termination of the Schedule C services only (without termination of Schedule A Services or Schedule D Services) the date identified in a Cutover Notice delivered by Supplier pursuant to Section 13.6 hereof after receipt of a Notice of Readiness for Cutover described in Section 13.5, which date shall be in the month of January, March, May, July, September or November.  Supplier and its Affiliates shall commence providing Transition Services described on Schedules A, C and D on the Closing Date of the Merger and, upon receipt of the Initial Payment.  Subject to the terms and conditions hereof and of the Cutover Plan shall provide each Transition Service for the remainder of the term hereof.

13.2Full Term Cutover Notice.  Unless this agreement is earlier terminated pursuant to the provisions of Article XIV or pursuant to the provisions of Sections 13.3, 13.4 or 13.5, at least 60 calendar days prior to the 15-month anniversary of the Closing Date, Surviving Corporation shall deliver to Supplier either (i) an irrevocable “Notice of Readiness for Cutover”, which shall include a representation to the effect that Surviving Corporation or Buyers have made arrangements to operate the Spinco Business without any Transition Services from Supplier or have engaged a third party to provide such services, or (ii) an irrevocable “Notice of Intention to Holdover” which shall include a representation to the effect that either the Surviving Corporation and the Buyers have not made arrangements to operate the Spinco Business without any Transition Services from Supplier and have not engaged a third party to provide such services.  Surviving Corporation shall also deliver to Supplier a Notice of Readiness for Cutover, at such time as Surviving Corporation is prepared to end a Holdover Period as described in Section 14.2.

13.3Notice of Readiness for Early Cutover  in Respect of Schedule A, Schedule C and Schedule D Services. Surviving Corporation may at any time after the later of the 13 month anniversary of the date hereof and the 1 month anniversary of the Closing Date, deliver to Supplier an irrevocable “Notice of Readiness for Cutover” in

23

respect of Schedule A, Schedule C and Schedule D Services (to be terminated on the same date), which notice shall include a representation to the effect that Surviving Corporation or Buyers have made arrangements to operate the Spinco Business without any Schedule A, Schedule C and Schedule D Services from Supplier or have engaged a third party to provide such services. The effective date for any such Notice of Readiness for Cutover shall be deemed to be the last calendar day of the month in which such notice is received by Supplier (the “Notice Effective Date”)

13.4Notice of Readiness for Early Cutover in Respect of Schedule A Services and Schedule D Services Only.  Surviving Corporation may at any time after  the later of the 13 month anniversary of the date hereof and the 1 month anniversary of the Closing Date, deliver to Supplier an irrevocable “Notice of Readiness for Cutover” in respect of Schedule A Services and Schedule D Services only (it being understood that in such case, Schedule C Services shall continue after termination of Schedule A Services and Schedule D Services), which notice shall include a representation to the effect that Surviving Corporation or Buyers have made arrangements to operate the Spinco Business without any Schedule A Services and Schedule D Services from Supplier or have engaged a third party to provide such services.  The effective date for any such Notice of Readiness for Cutover shall be deemed to be the last calendar day of the month in which such notice is received by Supplier (the “Notice Effective Date”)

13.5Notice of Readiness for Early Cutover in Respect of Schedule C Services Only.  Surviving Corporation may at any time after  the later of the 13 month anniversary of the date hereof and the 1 month anniversary of the Closing Date, deliver to Supplier an irrevocable “Notice of Readiness for Cutover” in respect of Schedule C Services only (it being understood that in such case, Schedule A Services and Schedule D Services shall continue after termination of Schedule C Services), which notice shall include a representation to the effect that Surviving Corporation or Buyers have made arrangements to operate the Spinco Business without any Schedule C Services from Supplier or have engaged a third party to provide such services. . The effective date for any such Notice of Readiness for Cutover shall be deemed to be the last calendar day of the month in which such notice is received by Supplier (the “Notice Effective Date”)

13.6Cutover Date Notice.  Within 10 calendar days of Supplier’s receipt of a Notice of Readiness for Cutover described in Section 13.2, Supplier shall deliver to Surviving Corporation a “Cutover Date Notice” identifying the specific date for Cutover and termination of all Transition Services.  Supplier shall also deliver a Cutover Date Notice to Surviving Corporation in connection with any termination pursuant to the provisions of Section 14.1(b),(c) or 14.2.  In respect of any Cutover Date Notice delivered after receipt of a Notice of Readiness for Cutover pursuant to Section 13.3, 13.4 or 13.5 above, the Cutover Date shall be a date which is not earlier than 50 days nor later

24

than 90 days after the Notice Effective Date if such date is in the month or January, March, May, July, September or November.  If the date required by the immediately preceding sentence is not in one of the named months, then Cutover Date shall be within the next calendar month.  In determining in its reasonable discretion the specific cutover date to include in a Cutover Date Notice, in addition to other factors, Supplier shall consider Supplier’s Affiliates month-end financial data processing and the last regular monthly bill cycle.  The date on which the Cutover and termination of all remaining Transition Services to any part of the Spinco Business occurs shall be referred to as the “Final Cutover Date.”

ARTICLE XIV

TERMINATION

14.1Termination of Agreement.

(a)This Agreement shall automatically terminate upon the termination of the Merger Agreement.

(b)Supplier may terminate this Agreement at: (i) for non-payment of any fee or amount due under this Agreement which is not disputed or was disputed in bad faith after providing at least 30 days prior written notice to FairPoint to cure or (ii) after a Change of Control (other than pursuant to the transactions contemplated by the Distribution Agreement or the Merger Agreement).  A termination pursuant to this section shall be effective on the date identified in a Cutover Date Notice delivered by Supplier, which date shall be in the month of January, March, May, July, September or November immediately following the expiration of the 30-day cure period or Change of Control described above.

(c)FairPoint may terminate this Agreement for a material breach after providing the Supplier at least 60 days prior written notice and a reasonable opportunity to cure.  A termination pursuant to this section shall be effective on the date identified in a Cutover Date Notice delivered by Supplier, which date shall be in the month of January, March, May, July, September or November immediately following the expiration of the 60-day cure period described above.

(d)This Agreement shall terminate automatically upon the Final Cutover Date.

25

14.2Post Expiration Continuation of Services.  Buyers and FairPoint acknowledge and agree that Buyers must be prepared to perform, or have other third parties perform on their behalf, all of the remaining Transition Services without interruption upon the Cutover.  Supplier agrees to reasonably cooperate in such planning and preparation and to reasonably cooperate in the transition of the remaining Transition Services to the Buyers, Surviving Corporation or their designee, including by performing the tasks assigned to it in the Cutover Plan.  If at the time for termination, the Buyers have not made arrangements to operate the Spinco Business without any remaining Transition Services from Supplier or have not engaged a third party to provide such services, and after the time for termination, the Buyers continue to receive any of the remaining Transition Services for any reason, then the parties agree that Supplier and its Affiliates shall continue to provide all such Transition Services, until (i) such time as Buyers can transition off all of Transition Services and (ii) the effective date of termination as described hereafter (“Holdover Period”).  The Holdover Period shall end and the effective date of termination shall be on the date identified in a Cutover Date Notice delivered by Supplier, which date shall be in  the month of January, March, May, July, September or November which is at least 30 calendar days following receipt by Supplier of Buyers’ Notice of Readiness for Cutover.

14.3Survival.  The following provisions will survive any expiration or termination of this Agreement with respect to any or all of the Transition Services: Article II (“Transition Services”), Article V (“Third-Party Intellectual Property”), Article VI (“Payment For Transition Services”), Article IX (“Non-Solicitation of Employees”), Article XV (“Limitation on Liabilities”), Article XVI (“Indemnification”), Article XVIII (“Records; Access”), Article XIX (“Dispute Resolution”), Article XXII (“Miscellaneous”) and this Article XIV (“Termination”).

ARTICLE XV

LIMITATION ON LIABILITIES

15.1Limitation on Liabilities.  Except as otherwise provided in this Article XV, the liability of Supplier and its Affiliates on the one hand, and of FairPoint, Surviving Corporation, the Buyers or their Affiliates on the other hand, arising out of or relating to this Agreement, including without limitation on account of performance or nonperformance of obligations hereunder, regardless of the form of the cause of action, whether in contract, tort (including without limitation gross negligence), statute or otherwise, shall in no event exceed:  (i) with respect to Supplier’s liability, the sum of the amounts paid to Supplier during the term contemplated hereby (excluding Schedule C and Schedule D Third-Party Vendor Costs and Taxes) under this Agreement during the term at the time the liability arises under this Agreement and (ii) with respect to Buyers’

26

liability, FairPoint’s or Surviving Corporation’s liability, the sum of the amounts payable to Supplier were this Agreement to continue in effect for the entire 15-month term contemplated hereby.

15.2No Warranties; No Special Damages.  SUPPLIER AND ITS AFFILIATES MAKE NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE TRANSITION SERVICES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE XV, IN NO EVENT SHALL ANY PARTY OR ANY OF THEIR AFFILIATES BE LIABLE HEREUNDER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF ANY KIND ARISING FROM THE BREACH OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS INTERRUPTION.

15.3Exceptions to Limitations.  Notwithstanding Sections 15.1 and 15.2 above, the caps on the amount of liability and the limitations on type of liability described therein shall not apply to: (i) the willful misconduct of a party, (ii) any violation by Supplier of Section 2.9, (iii) third party indemnity obligations pursuant to Article XVI below, or (iv) any violation of Section 22.15.

ARTICLE XVI

INDEMNIFICATION

16.1Indemnification by Surviving Corporation.  FairPoint and, after the Closing Date, the Surviving Corporation and Buyers shall, jointly and severally, indemnify and hold harmless Supplier and its Affiliates and their respective officers, directors, employees, successors and assigns (collectively, “Supplier Indemnitees”) from and against any expense, claim, loss or damage (including court costs and reasonable attorney’s fees) (“Losses”) suffered or incurred by any of the Supplier Indemnitees in connection with any third-party claims against any of the Supplier Indemnitees arising from or relating to:

(a)all claims for bodily injury to persons or physical damage to tangible personal or real property for which FairPoint (and after the Closing Date Surviving Corporation and Buyers) are legally liable to that third party, except to the extent caused by the negligence or intentional misconduct of Supplier Indemnitees;

27

(b)all claims arising from a violation of any federal, state, local or foreign law, rule, regulation or order applicable to FairPoint by FairPoint;

(c)all claims for any Tax owed by Surviving Corporation and Buyers under Article XVII (including any Tax that is the subject of an exemption certificate which exemption is determined to have been inapplicable in whole or in part);

16.2Indemnification by Supplier.  Supplier shall indemnify and hold harmless FairPoint and after the Closing Date Surviving Corporation and Buyers and their respective officers, directors, employees, successors and assigns (collectively, “FairPoint Indemnitees”) from and against any Losses suffered or incurred by any of the FairPoint Indemnitees in connection with any third-party claims against any of the FairPoint Indemnitees, arising from or relating to:

(a)all claims for bodily injury to persons or physical damage to tangible personal property or real property for which Supplier (and prior to the Closing Date Buyers) are legally liable to that third party, except to the extent caused by the negligence or intentional misconduct of FairPoint Indemnitees;

(b)all claims arising from a violation of any federal, state, local or foreign law, rule, regulation or order applicable to Supplier by Supplier; and

(c)all claims for any Tax owed by Supplier under Article XVII.

16.3Tax Indemnification.  FairPoint and after the Closing Date Buyers shall also jointly and severally indemnify and hold harmless Supplier and its Affiliates from and against any Tax owed to any of them under Article XVII (including any Tax that is the subject of an exemption certificate which exemption is determined to have been inapplicable in whole or in part), plus any costs or expenses (including reasonable attorneys’ fees) suffered or incurred by Supplier or any Affiliate in defending itself against a claim for such Taxes.

16.4Indemnification Procedure- Defense of Claims.

(a)(a)  Third Party Claims.  If any Indemnitee receives notice of the assertion of any claim or of the commencement of any action or proceeding by any entity that is not either a FairPoint Indemnitee or a Supplier Indemnitee (each, a “Third Party

28

Claim”) against such Indemnitee, with respect to which an Indemnitor is obligated to provide indemnification under this Agreement, the Indemnitee will give such Indemnitor prompt written notice thereof, but in any event not later than ten calendar days after receipt of notice of such Third Party Claim, provided, however, that the failure of an Indemnitee to notify the Indemnitor within the time period set forth herein shall only relieve the Indemnitor from its obligation to indemnify to the extent that the Indemnitor is materially prejudiced by such failure or delay (whether as a result of the forfeiture of substantive rights or defenses or otherwise).  Upon receipt of notification of a Third Party Claim, the Indemnitor shall be entitled, upon written notice to the Indemnitee, to assume the investigation and defense thereof at such Indemnitor’s expense with counsel reasonably satisfactory to the Indemnitee, provided that the Indemnitor shall not have the right to assume the defense of any Third Party Claim in the event such Third Party Claim is primarily for injunctive relief or criminal penalty of the Indemnitee, and in any such case, the reasonable fees and expenses of counsel to the Indemnitee in connection with such Third Party Claim shall be considered “Losses” for purposes of this Agreement.  Whether or not the Indemnitor elects to assume the investigation and defense of any Third Party Claim, the Indemnitee shall have the right to employ separate counsel and to participate in the investigation and defense thereof; provided, however, that the Indemnitee shall pay the fees and disbursements of such separate counsel unless (1) the employment of such separate counsel has been specifically authorized in writing by the Indemnitor; (2) the Indemnitor has failed to assume the defense of such Third Party Claim within 20 calendar days after receipt of notice thereof with counsel reasonably satisfactory to such Indemnitee; or (3) the named parties to the proceeding in which such claim, demand, action or cause of action has been asserted include both the Indemnitor and such Indemnitee and, in the reasonable judgment of counsel to such Indemnitee, there exists one or more good faith defenses that may be available to the Indemnitee that are in conflict with those available to the Indemnitor or that the Indemnitor and Indemnitee have actual material conflicting interests with respect to such claim, demand, action or cause of action.  Notwithstanding the foregoing, the Indemnitor shall not be liable for the fees and disbursements of more than one counsel for all Indemnitees in connection with any one proceeding or any similar or related proceedings arising from the same general allegations or circumstances.  Without the prior written consent of an Indemnitee, which shall not be unreasonably withheld or delayed, the Indemnitor will not enter into any settlement of or consent to the entry of judgment in connection with any Third Party Claim that (i) would lead to liability or create any financial or other obligation on the part of the Indemnitee, (ii) does not contain, as an unconditional term thereof, the release of the Indemnitee from all liability in respect of such Third Party Claim or such Third Party Claim is not dismissed against the Indemnitee with prejudice and without the imposition of any financial or other obligation on the Indemnitee or (iii) admits the liability or fault of the Indemnitee (the “Settlement Requirements”).  If a settlement offer solely for money damages (and otherwise satisfying the Settlement Requirements) is made to resolve a Third Party Claim and the

29

Indemnitor notifies the Indemnitee in writing of the Indemnitor’s willingness to accept the settlement offer and pay the amount called for by such offer without reservation of any rights or defenses against the Indemnitee and if the Indemnitee fails to consent to such settlement offer within ten calendar days after its receipt of such notice, Indemnitee may continue to contest such claim, free of any participation by the Indemnitor, and the amount of any ultimate liability with respect to such Third Party Claim that the Indemnitor has an obligation to pay hereunder shall be limited to the lesser of (x) the amount of the settlement offer that the Indemnitee declined to accept plus the Losses of the Indemnitee relating to such Third Party Claim through the date of its rejection of the settlement offer or (y) the aggregate Losses of the Indemnitee with respect to such claim.  The party controlling any defense shall keep the other party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider in good faith all reasonable recommendations made by the other party with respect thereto.

(b)Direct Claims. Any claim by an Indemnitee for Losses that do not result from a Third Party Claim (each, a “Direct Claim”) shall be asserted by giving the Indemnitor prompt written notice thereof, but in any event not later than 60 calendar days after the incurrence thereof or such Indemnitee’s actual knowledge of such event (whichever is later), provided, however, that the failure of an Indemnitee to notify the Indemnitor within the time period set forth herein shall only relieve the Indemnitor from its obligation to indemnify to the extent that the Indemnitor is materially prejudiced by such failure or delay (whether as a result of the forfeiture of substantive rights or defenses or otherwise), and the Indemnitor will have a period of 30 calendar days within which to respond in writing to such Direct Claim.  If the Indemnitor does not so respond within such 30 calendar day period, the Indemnitor will be deemed to have accepted such claim.  If the Indemnitor rejects such claim, the Indemnitee will be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Article XVI.

16.5Surviving Liability.

(a)As of the date hereof and until the Closing, FairPoint shall be liable for any amounts owed to Supplier and its Affiliates pursuant to this Agreement.

(b)As of the Closing and thereafter, Surviving Corporation and Buyers shall be jointly and severally liable for any amounts owed to Supplier and its Affiliates pursuant to this Agreement.

30

ARTICLE XVII

TAXES

17.1Taxes.  The Buyers shall pay Supplier or its Affiliates for any Tax (except income taxes) levied upon any Transition Service or Schedule B Service or on Supplier or an Affiliate with respect to any Transition Service or Schedule B Service; provided, however, to the extent Tax is not collected and remitted by Supplier or its Affiliates, Buyers may remit such Tax directly to the appropriate Governmental Authority.  If the Buyers determine that any Transition Service or Schedule B Service is exempt from a Tax, the Buyers shall provide Supplier with a properly completed and timely exemption certificate for each jurisdiction for which the Buyers are claiming an exemption before Supplier may exclude the respective Tax from the amounts charged the Buyers.  Supplier will invoice the Buyers for applicable Taxes with respect to the Transition Services in the manner provided in Article VI.  If the Buyers dispute any invoice for Taxes owing in good faith, it shall immediately notify Supplier in writing, giving the reasons for the dispute.  The Buyers shall be responsible for and will reimburse Supplier for any costs and expenses incurred by Supplier in contesting those Taxes disputed by the Buyers before the appropriate Governmental Authority.  Any amount due under this paragraph, which is not paid within 30 calendar days that is not subject to a good faith dispute, shall bear interest at the Applicable Rate until paid.  Notwithstanding the foregoing, the Buyers shall not be obligated for, and Supplier shall pay, all Taxes on the income of Supplier (and, prior to the Closing, Buyers), and each party shall bear sole responsibility for all real or personal property-related Taxes on its owned or leased real or personal property (including sales and use taxes on such property acquired in order to provide the Transition Services), for franchise or similar Taxes on its business, for employment Taxes on its employees, and for intangible Taxes on property it owns or licenses.

ARTICLE XVIII

RECORDS; ACCESS

18.1Records.  Supplier and its Affiliates shall maintain records with respect to the Transition Services that are in a form and contain a level of detail similar to records, if any, that are maintained in providing similar services for Verizon New England Inc. and the Contributing Companies (and in any event consistent with applicable law), for a period of 1 year after the termination of this Agreement or such longer period as required by applicable law.  Supplier shall also maintain records in accordance with applicable law and generally accepted accounting principles to substantiate charges for Third-Party Intellectual Property and Taxes for a period of 18 months from the date of termination or expiration of this Agreement.  During the period in which Supplier is required to

31

maintain such records, upon prior written request to Supplier, Buyers shall have access to such records during normal business hours of Supplier or its applicable Affiliate at the place where such records are normally maintained.

18.2Access to Books, Records, Personnel.  During the term of this Agreement and for a period of 18 months thereafter, Supplier and its Affiliates shall permit Buyers and their employees, auditors and other representatives to have reasonable access, during normal business hours and upon reasonable advance notice, to books and records and appropriate personnel of Supplier and its Affiliates, to the extent such access is reasonably requested by Buyers in order to permit the evaluation of, and any required reporting, certifications and attestations with respect to, internal controls, processes and systems in connection with the provision of the Transition Services for purposes of compliance with the Sarbanes-Oxley Act of 2002.

ARTICLE XIX

DISPUTE RESOLUTION

19.1General.  Except with respect to injunctive relief described below, any controversy or claim arising out of or relating to this Agreement, or the breach thereof, which shall not include any challenge or dispute as to the rate for any Transition Service payable under Article II or Section 14.2(b), shall attempt to be settled first, by good faith efforts of the parties to reach mutual agreement, and second, if mutual agreement is not reached to resolve the dispute, by final, binding arbitration as set out below.

19.2Initiation.  A party that wishes to initiate the dispute resolution process shall send written notice to the other party with a summary of the controversy and a request to initiate these dispute resolution procedures.  Each party shall appoint a knowledgeable, responsible representative who has the authority to settle the dispute, to meet and to negotiate in good faith to resolve the dispute.  The discussions shall be left to the discretion of the representatives who may utilize other alternative dispute resolution procedures such as mediation to assist in the negotiations.  Discussions and correspondence among the representatives for purposes of these negotiations (i) shall be treated as confidential information under the Confidentiality Agreement developed for purposes of settlement, (ii) shall be exempt from discovery and production and (iii) shall not be admissible in the arbitration described above or in any lawsuit pursuant to Rule 408 of the Federal Rules of Evidence.  Documents identified in or provided with such communications, which are not prepared for purposes of the negotiations, are not so exempted and may, if otherwise admissible, be admitted in evidence in the arbitration or

32

lawsuit.  The parties agree to pursue resolution under this subsection for a minimum of 30 calendar days before requesting arbitration.

19.3Arbitration Request.  If the dispute is not resolved under the preceding subsection within 30 days of the initial written notice, either party may demand arbitration by sending written notice to the other party.  The parties shall promptly submit the dispute to the American Arbitration Association for resolution by a single neutral arbitrator acceptable to both parties, as selected under the rules of the American Arbitration Association.  The dispute shall then be administered according to the American Arbitration Association’s Commercial Arbitration Rules, with the following modifications:  (i) the arbitration shall be held in a location mutually acceptable to the parties, and, if the parties do not agree, the location shall be New York City, New York; (ii) the arbitrator shall be licensed to practice law; (iii) the arbitrator shall conduct the arbitration as if it were a bench trial and shall use, apply and enforce the Federal Rules of Evidence and Federal Rules of Civil Procedure; (iv) except for breaches related to Confidential Information, the arbitrator shall have no power or authority to make any award that provides for consequential, punitive or exemplary damages or extend the term hereof; (v) the arbitrator shall control the scheduling so that the hearing is completed no later than 30 days after the date of the demand for arbitration; and (vi) the arbitrator’s decision shall be given within 5 days thereafter in summary form that states the award, without written decision, which decision shall follow the plain meaning of this Agreement, and in the event of any ambiguity, the intent of the parties.  Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction over the parties.  Each party to the dispute shall bear its own expenses arising out of the arbitration, except that the parties shall share the expenses of the facilities to conduct the arbitration and the fees of the arbitrator equally.

19.4Injunctive Relief and Specific Performance.

(a) The foregoing and Section 22.8 below notwithstanding, each party shall have the right to seek injunctive relief in any permitted court of law or equity to preserve the status quo pending resolution of the dispute and enforce any decision relating to the resolution of the dispute.

(b) If Supplier materially breaches its obligations with respect to planning for Cutover set forth in Article IV, Supplier agrees that FairPoint would be irreparably harmed, and, without any additional findings of irreparable injury or harm or other considerations of public policy, FairPoint shall be entitled to apply to a court of competent jurisdiction for and, provided FairPoint follows the appropriate procedural requirements (including notice and an affidavit that  FairPoint has not failed to perform

33

its material obligations set forth in Article IV).  Supplier shall not oppose the granting of an injunction compelling specific performance by the Supplier of its obligations under Article IV of this Agreement without the necessity of posting any bond or other security.

ARTICLE XX

PLANT WORK RULES AND RIGHT OF ACCESS

20.1Compliance.  Subject to any policies and procedures provided as set forth in Article XII above, the employees, subcontractors and agents of the parties, while on the premises of the other, shall comply with all reasonable and customary plant rules, regulations and standards for security which are not in violation of the terms and conditions of this Agreement.

20.2Access to Facilities.  Each party shall permit reasonable access commensurate with the requirements of the tasks to be performed during normal working hours to its facilities that are used in connection with the performance of Transition Services.  No charge shall be made for such visits.  Reasonable prior notice shall be given when access is required.

20.3Computer Matters.  Subject to any policies and procedures provided as set forth in Article XII above, to the extent that the Transition Services include a party’s access to computer support systems or electronic data storage systems of the other party or its Affiliates, whether on-site or through remote facilities, the accessing party shall use such computer support systems solely for the purpose of providing or receiving Transition Services.  An accessing party or its Affiliates shall not access or attempt to access any computer system, electronic file, software or other electronic services other than those specifically required to accomplish or receive the Transition Services required under this Agreement.  Under no circumstances shall either party’s personnel access any networks or facilities of the other party for the purpose of accessing other external networks, nor shall any such capabilities for such access be published or made known via any medium, as for example and not by way of limitation, posting on bulletin boards or E-mail.  Any such use or publication shall be a material breach of this Agreement.  Neither party shall use back doors, data capture routines, games, viruses, worms or Trojan horses, and any intentional introduction of such into the other party’s data networks shall be deemed a material breach of this Agreement.  The party receiving access shall limit such access to those of its employees whom the other party has authorized in writing to have such access in connection with this Agreement or the applicable Transition Service, and shall strictly follow all security rules and procedures

34

for use of the providing party’s electronic resources.  All user identification numbers and passwords and any information obtained as a result of access to and use of a party’s computer and electronic data storage systems shall be deemed to be, and shall be treated as, Confidential Information under applicable provisions of the Confidentiality Agreement.  Each party agrees to cooperate with the other in the investigation of any apparent unauthorized access to a party’s computer or electronic data storage systems.

ARTICLE XXI

INSURANCE

21.1Coverage.  During the term of this Agreement, each party shall obtain and maintain the following insurance:  (i) Commercial General Liability, including coverage for (a) premises/operations, (b) independent contractors, (c) products/completed operations, (d) personal and advertising injury, (e) contractual liability and (f) explosion, collapse and underground hazards, with combined single limit of not less than $5,000,000.00 each occurrence or its equivalent; (ii) Worker’s Compensation in amounts required by applicable law and Employer’s Liability with a limit of at least $1,000,000.00 each accident; and (iii) Automobile Liability including coverage for owned/leased, non-owned or hired automobiles with combined single limit of not less than $1,000,000.00 each accident.

21.2Self-insurance.  Without limiting the required coverage amounts set forth in Section 21.1, all parties expressly acknowledge that a party shall be deemed to be in compliance with the provisions of this Section 21.2 if it maintains an approved self-insurance program providing for retention of up to $1,000,000.00.  If either party provides any of the foregoing coverage on a claims-made basis, such policy or policies shall be for at least a 3 year extended reporting or discovery period.

21.3Rating.  Unless otherwise agreed, all insurance policies shall be obtained and maintained with companies rated A or better by Best’s Key Rating Guide, and each party shall, upon request, provide the other party with an insurance certificate confirming compliance with the requirements of this Section 21.3.

21.4Subrogation.  The parties shall each obtain from the insurance companies providing the coverage required by this Agreement, the permission of such insurers to allow such party to waive all rights of subrogation and such party does hereby waive all rights of said insurance companies to subrogation against the other party, its affiliates, subsidiaries, assignees, officers, directors and employees.

35

21.5Indemnification.  In the event any party fails to maintain the required insurance coverage and a claim is made or suffered, such party shall indemnify and hold harmless the other parties from any and all claims for which the required insurance would have provided coverage.

ARTICLE XXII

MISCELLANEOUS

22.1Notices.  All notices and other communications required or permitted hereunder shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been given when delivered in person or dispatched by electronic facsimile transfer (confirmed in writing by certified mail, concurrently dispatched) or one business day after having been dispatched for next-day delivery by a nationally-recognized overnight courier service to the appropriate party at the address specified below:

(a)If to the Buyers, to:

Northern New England Telephone Operations Inc.
c/o Verizon Communications Inc.
One Verizon Way, VC22E202
Basking Ridge, NJ 07920
Facsimile: (908) 696-2172
Attn: Stephen E. Smith
Vice President

With a copy (which shall not constitute notice) to:

Dale R. Chamberlain
Assistant General Counsel
Verizon Communications Inc.
One Verizon Way, VC 54S403
Basking Ridge, NJ 07920
Facsimile: (908) 696-2068

and

Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Facsimile:  (212) 909-6836
Attn:  Kevin M. Schmidt

36

(b)If to the FairPoint or Surviving Corporation, to:

FairPoint Communications, Inc.
521 E. Morehead St., Ste. 250
Charlotte, NC 28202
Facsimile:  704.344.1594
Attn:  Peter G. Nixon
Chief Operating Officer

and

FairPoint Communications, Inc.
521 E. Morehead St., Ste. 250
Charlotte, NC 28202
Facsimilie: 704.344.1594
Attn:Shirley J. Linn
Executive Vice President and General Counsel

With a copy to (which shall not constitute notice):

Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, NY  10022
Facsimile No.:  (212) 230-7700
Attn:Thomas E. Kruger

(c)If to Supplier, to:

Verizon Information Technologies LLC
c/o Verizon Communications Inc.
One Verizon Way, VC22E202
Basking Ridge, NJ 07920
Facsimile: (908) 696-2172
Attn: Stephen E. Smith
Vice President

With a copy (which shall not constitute notice) to:

Dale R. Chamberlain
Assistant General Counsel
Verizon Communications Inc.
One Verizon Way, VC 54S403
Basking Ridge, NJ 07920
Facsimile: (908) 696-2068

37

and

Debevoise & Plimpton LLP
919 Third Avenue
New York, NY 10022
Facsimile:  (212) 909-6836
Attn:  Kevin M. Schmidt

or to such other address or addresses as such party may, from time to time, designate by like notice.

22.2Assignment; Exclusivity.  The Buyers, FairPoint, Surviving Corporation and their Affiliates shall not assign any of their rights or obligations under this Agreement (by assignment, operation of law, merger or otherwise) without the prior written consent of Supplier, which may be withheld in its sole discretion, and any such prohibited assignment shall be null and void; provided, however, that (i) Buyers and FairPoint may, without the consent of Supplier, (A) assign any of their rights and obligations, in whole or in part, hereunder to any Affiliate of Buyers controlled, directly or indirectly, by FairPoint (it being agreed that any such assignment shall not relieve Buyers or FairPoint from their respective obligations hereunder) and (B) collaterally assign, in whole or in part, any of their rights hereunder as security to one or more lenders; provided that such lenders agree to the terms and conditions of this Agreement.  The Supplier may assign any of its rights and obligations to an Affiliate or Affiliates of Supplier without the consent of Buyers, FairPoint or Surviving Corporation (it being agreed that, any such assignment shall not relieve Supplier of its obligations hereunder).  This Agreement shall be binding on, and inure to the benefit of, the parties hereto and their respective permitted successors and assigns.

22.3Amendments.  This Agreement may be amended or modified only by a subsequent writing signed by authorized representatives of all parties.

22.4Headings/Captions.  The headings and captions set forth in this Agreement are for convenience only and shall not be considered as part of this Agreement nor as in any way limiting or amplifying the terms and provisions hereof.

22.5Entire Agreement.  This Agreement (together with its Schedules), the Distribution Agreement and the Merger Agreement supersede and revoke any prior

38

discussions and representations, other agreements, term sheets, commitments, arrangements or understandings of any sort whatsoever, whether written or oral, that may have been made or entered into by the parties relating to the matters contemplated hereby; provided, that if there is a conflict between the provisions of the Distribution Agreement, the Merger Agreement and this Agreement, the provisions of this Agreement shall govern and control.

22.6Waiver.  Except as otherwise expressly provided in this Agreement, neither the failure nor any delay on the part of any party to exercise any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise or waiver of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege available to each party at law or in equity.

22.7Counterparts.  This Agreement may be executed in one or more counterparts, any or all of which shall constitute one and the same instrument.

22.8Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York (except that no effect shall be given to any conflicts of law principles of the State of New York that would require the application of the laws of any other jurisdiction).  The parties irrevocably submit to the exclusive jurisdiction of any New York State Court or any Federal Court located in the borough of Manhattan in the City of New York for purposes of any suit, action or other proceeding to enforce the provisions of Article XIX or any arbitration award under Article XIX.  The parties agree that service of process, summons or notice or document by U.S. registered mail to such party’s respective address set forth in Section 21.1 shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence.  THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER AGREEMENT ENTERED INTO IN CONNECTION THEREWITH AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.  In the event of any breach of the provisions of this Agreement, the non-breaching party shall be entitled to seek equitable relief, including in the form of injunctions and orders for specific performance, where the applicable legal standards for such relief in such courts are met, in addition to all other remedies available to the non-breaching party with respect thereto at law or in equity.

39

22.9Further Assurances.  From time to time after the Closing Date, as and when requested by one of the parties, the other parties will use their commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, all such documents and instruments as may be reasonably necessary or appropriate, in the reasonable opinion of counsel for Supplier and the Buyers, to provide or receive the services or perform the obligations contemplated by this Agreement.

22.10Severability.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable by any Governmental Authority, the remaining provisions of this Agreement to the extent permitted by law shall remain in full force and effect provided that the essential terms and conditions of this Agreement for both parties remain valid, binding and enforceable and provided that the economic and legal substance of the transactions contemplated is not affected in any manner materially adverse to any party.  In the event of any such determination, the parties agree to negotiate in good faith to modify this Agreement to fulfill, as closely as possible, the original intents and purposes hereof.  To the extent permitted by law, the parties hereby to the same extent waive any provision of law that renders any provision hereof prohibited or unenforceable in any respect.

22.11No Third-Party Beneficiary.  Nothing herein expressed or implied is intended to confer upon any Person, other than the parties and their respective permitted assignees, any right, obligations or liabilities under or by reason of this Agreement; provided however, that notwithstanding the foregoing, each subsidiary of the Surviving Corporation which engages in the Spinco Business as conducted on the Closing Date as a successor to one or more of the Contributing Companies in whole or in part is an intended third-party beneficiary.

22.12Independent Contractor.  The parties hereto understand and agree that this Agreement does not make any of them an agent or legal representative of any other for any purpose whatever.  No party is granted, by this Agreement or otherwise, any right or authority to assume or create any obligation or responsibility, express or implied, on behalf of or in the name of any other party or to bind any other party in any manner whatsoever.  The parties expressly acknowledge (i) that Supplier and its Affiliates are independent contractors with respect to the Buyers and their Affiliates in all respects, including, without limitation, the provision of Transition Services and (ii) the parties are not partners, joint venturers, employees or agents of or with each other.

22.13Governing Provisions.  To the extent that any of the provisions, terms or conditions set forth in this Agreement are inconsistent or conflict with any specific provisions or descriptions set forth in any Schedule to this Agreement, the provisions of

40

the Schedule shall govern and control, provided, that if the provisions of any Schedule are inconsistent with the provisions of Section 3.1 or 3.2 of this Agreement, then Section 3.1 or 3.2 shall control.  If the provisions of the “General Provisions and Select Definitions” of the Schedule A, Schedule C and Schedule D, are inconsistent with or conflict with any specific Transition Service description subsection of Schedule A, Schedule C or Schedule D, then such “General Provisions and Select Definitions” shall control.

22.14Force Majeure.  If performance of any Transition Service or other obligation under this Agreement is prevented, restricted, interrupted or interfered with by reason of acts of God, wars, revolution, civil commotion, acts of public enemy, embargo, acts of government in its sovereign capacity, labor difficulties, including, without limitation, strikes, slowdowns, picketing or boycotts, communication line failures, power failures, or any other circumstances beyond the reasonable control and not involving any willful misconduct or gross negligence of the party seeking relief under this Section 21.14 or its Affiliates (each, a “Force Majeure Event”), such party upon giving prompt notice to the other, shall be excused from such performance on a day-to-day basis during the continuance of such prevention, restriction or interference, provided, however, that such party shall use its commercially reasonable efforts to avoid or remove such causes of nonperformance and shall proceed immediately with the performance of its obligations under this Agreement whenever such causes are removed or cease; provided further, however, that, except as provided in Article XIV, in no event shall any of the foregoing result in an extension of the term of this Agreement.  Without limiting the generality of the foregoing, Supplier shall make available to FairPoint and Buyers any business continuity and disaster recovery services that Supplier has in place for its own operations on an equal basis as Supplier makes such business continuity and disaster recovery services available to its own operations similarly affected by such Force Majeure Event.  Notwithstanding the foregoing, if Supplier’s performance is excused by a Force Majeure Event, and Supplier fails to resume full performance of all its obligations hereunder within 10 business days of the onset of the Force Majeure Event, the Buyers or FairPoint may terminate this Agreement without penalty or other liability whatsoever (other than for Transition Services previously rendered), in whole or in part, immediately upon written notice to Supplier.  Furthermore, if either party does not perform any of its obligations hereunder as a result of a Force Majeure Event, and the other party’s performance of its obligations hereunder are conditioned upon the first party’s performance, then notwithstanding anything in this Agreement to the contrary, the party’s performance will be excused until such time as the first party has performed those obligations prevented by the Force Majeure Event.

22.15Confidentiality.  For all purposes of this Section 22.15, Confidential Information of Buyers shall be deemed Confidential Information of FairPoint, and Confidential Information of FairPoint shall be deemed Confidential Information of

41

Buyers. For purposes of this Agreement, Confidential Information of Buyers/FairPoint shall mean (i) the Customer Data (as that term is defined in the Intellectual Property Agreement) and any updates thereto provided by Buyers or FairPoint to Supplier or any of its Affiliates pursuant to this Agreement, (ii) non-public, non-technical information based on Customer Data created by Supplier in the performance of Transition Services pursuant to this Agreement, and (iii) non-public, non-technical business information related to Cutover as disclosed by Buyer or FairPoint pursuant to Section 4.1.  For purposes of this Agreement, Confidential Information of Supplier shall mean (i) Licensed Intellectual Property, (ii) any technical information provided to Buyer or FairPoint or any of their Affiliates by Supplier or any of its Affiliates pursuant to this Agreement, and (iii) any information provided to Buyer, FairPoint or any of their Affiliates or contractors by Supplier or any of its Affiliates pursuant to Section 4.1, including, but not limited to, technical information, data formats, software, documentation, and software scripts.

(a)Obligations

FairPoint and Supplier will each refrain from disclosure of Confidential Information of the other party to any Person not authorized by the other party and will use the Confidential Information of the other party solely for the performance of or use of Transition Services; it being understood and agreed that each party will use the same level of care (including both facility physical security and electronic security) to prevent unauthorized disclosure and/or use by third parties of the Confidential Information of the other party as it employs to avoid unauthorized disclosure or use of its own information of a similar nature, but in no event less than a reasonable standard of care.  Notwithstanding the foregoing obligations (but subject to compliance with law) the parties may disclose to and permit use of the Confidential Information of the other party by their respective legal counsel, auditors, contractors and subcontractors where: (i) such disclosure and use is reasonably necessary; and (ii) such auditors, contractors and subcontractors are bound by obligations of confidentiality, non-disclosure and other terms as restrictive in scope as those set forth in this Section 22.15.

(b)Exclusions

Notwithstanding the foregoing, this Section 22.15 shall not apply to any information which Supplier or FairPoint can demonstrate was or is:  (a) at the time of disclosure to it, in the public domain; (b) after disclosure to it, published or otherwise becomes part of the public domain through no fault of the receiving party; (c) received after disclosure to it from a third party, who had a lawful right to and, without a breach of duty owed to the disclosing party, without any restriction on use or disclosure; or (d) independently developed by or for the receiving party without reference to or use of the Confidential

42

Information of the disclosing party.  Further, either party may disclose the other party’s Confidential Information to the extent required by law or order of a court or governmental agency.  However, in the event of disclosure pursuant to an order of a court or governmental agency, and subject to compliance with law or such order of a court or governmental agency, the recipient of such Confidential Information shall give the disclosing party prompt notice to permit the disclosing party an opportunity, if available, to obtain a protective order or otherwise protect the confidentiality of such information, all at the disclosing party’s cost and expense.

(c)Ownership

All Confidential Information of a party or a designated group shall remain the exclusive property of the disclosing party and the disclosure shall not grant any express or implied interest in the other party or its subcontractors to such Confidential Information.  Upon written request by a party at any time and without regard to the default status of the parties under this Agreement, the other party shall promptly return to the disclosing party the Confidential Information in the format as it exists on the date of the request.

(d)Loss of or Unauthorized Access to Confidential Information

Each of Supplier and FairPoint shall promptly notify the other party in writing if it becomes aware of any disclosure or use in violation of this Agreement of the other party’s Confidential Information that is in such party’s or an Affiliate’s or subcontractor’s possession.

(e)Data Privacy

FairPoint shall be and remain the controller of Confidential Information of the Buyer for purposes of all applicable laws relating to data privacy, personal data, transborder data flow and data protection (collectively, the “Privacy Laws”), with rights to determine the purposes for which Confidential Information of Buyer is processed, and nothing in this Agreement will restrict or limit in any way FairPoint’s rights or obligations as owner and/or controller of Confidential Information of Buyer for such purposes.

43

(f)Limitation

The obligations of this Section 22.15 (a) will apply after the Effective Date to any Confidential Information disclosed to the receiving party after the Effective Date and (b) will continue and must be maintained with respect to Confidential Information for a period: (i) in the case of Personally Identifiable Information or software (including software scripts and data formats), in perpetuity, and (ii) in the case of all other Confidential Information, except as otherwise set forth in the Merger Agreement, the Distribution Agreement or Intellectual Property Agreement, for a period of [ten] years from receipt.

Personally Identifiable Information means personally identifiable information included in Customer Data.  Personally Identifiable Information may include social security numbers, personal credit histories, personal financial information and employment records.

44

IN WITNESS WHEREOF, the parties, acting through their duly authorized representatives, have caused this Agreement to be duly executed and delivered as of the date first above written.

VERIZON INFORMATION TECHNOLOGIES LLC.
By:	/s/ Jack M. Farris
	Name: Jack M. Farris
	Title: Vice President
FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ Eugene B. Johnson
	Name: Eugene B. Johnson
	Title: Chief Executive Officer
NORTHERN NEW ENGLAND TELEPHONE OPERATIONS INC.
By:	/s/ Stephen E. Smith
	Name: Stephen E. Smith
	Title: Vice President
ENHANCED COMMUNICATIONS OF NORTHERN NEW ENGLAND INC.
By:	/s/ Stephen E. Smith
	Name: Stephen E. Smith
	Title: Vice President

45

EX-10.2

Exhibit 10.2

DISTRIBUTION AGREEMENT

BY AND BETWEEN

VERIZON COMMUNICATIONS INC.

AND

NORTHERN NEW ENGLAND SPINCO INC.

DATED AS OF JANUARY 15, 2007

ARTICLE I	Definitions	3
Section 1.1	General	3
Section 1.2	References to Time	20
ARTICLE II	The Contribution	20
Section 2.1	Transfers of Spinco Assets and Spinco Liabilities	20
Section 2.2	Conveyancing and Assumption Agreements	21
Section 2.3	Certain Resignations	21
Section 2.4	Special Dividend; New Financing; Debt Exchange	22
ARTICLE III	Conditions	24
Section 3.1	Conditions to the Distribution	24
Section 3.2	Waiver of Conditions	24
ARTICLE IV	The Distribution	24
Section 4.1	Record Date and Distribution Date	24
Section 4.2	Spinco Reclassification	24
Section 4.3	The Agent	25
Section 4.4	Delivery of Shares to the Agent	25
Section 4.5	The Distribution	25
ARTICLE V	Post Closing Adjustments	26
Section 5.1	Post-Closing Adjustments	26
ARTICLE VI	Transaction Agreements	28
Section 6.1	Transaction Agreements	28
ARTICLE VII	Additional Covenants	28
Section 7.1	Survival; Exclusive Remedy	28
Section 7.2	Mutual Release	28
Section 7.3	Intercompany Agreements; Intercompany Accounts	29
Section 7.4	Guarantee Obligations and Liens	30
Section 7.5	Insurance	31
Section 7.6	Subsequent Transfers	32
Section 7.7	Further Assurances	33
ARTICLE VIII	Access to Information	33
Section 8.1	Provision of Information	33
Section 8.2	Privileged Information	34
Section 8.3	Production of Witnesses	35
Section 8.4	Retention of Information	36
Section 8.5	Confidentiality	36
Section 8.6	Cooperation with Respect to Government Reports and Filings	37
ARTICLE IX	No Representations or Warranties	37
Section 9.1	No Representations or Warranties	37

ARTICLE X	Miscellaneous	37
Section 10.1	Complete Agreement	37
Section 10.2	Expenses	38
Section 10.3	Governing Law	38
Section 10.4	Notices	38
Section 10.5	Amendment and Modification	38
Section 10.6	Successors and Assigns; No Third-Party Beneficiaries	38
Section 10.7	Counterparts	39
Section 10.8	Interpretation	39
Section 10.9	Severability	39
Section 10.10	References; Construction	39
Section 10.11	Termination	39
Section 10.12	Consent to Jurisdiction and Service of Process	39
Section 10.13	Waivers	40
Section 10.14	Waiver of Jury Trial	40
Exhibit A	Form of Idearc Agreements
Exhibit B	Form of Intellectual Property Agreement
Exhibit C	Terms of Spinco Securities

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (this “Agreement”), dated as of January 15, 2007, by and between Verizon Communications Inc., a Delaware corporation (“Verizon”), and Northern New England Spinco Inc., a Delaware corporation (“Spinco”).

RECITALS

WHEREAS, Spinco is a newly-formed, wholly-owned, direct Subsidiary of Verizon;

WHEREAS, Verizon, Spinco and FairPoint Communications, Inc., a Delaware corporation (the “Company”), have entered into an Agreement and Plan of Merger, of even date herewith (as such agreement may be amended from time to time the “Merger Agreement”), pursuant to which, at the Effective Time (as defined in the Merger Agreement), Spinco will merge with and into the Company, with the Company continuing as the surviving corporation (the “Merger”);

WHEREAS, this Agreement and the other Transaction Agreements (as defined herein) set forth certain transactions that are conditions to consummation of the Merger;

WHEREAS, prior to the Distribution (as defined herein) upon the terms and subject to the conditions set forth in this Agreement, Verizon will, pursuant to a series of restructuring transactions that will occur prior to the Distribution, (a)  transfer or cause to be transferred by one or more of its Subsidiaries to the Non-ILEC Spinco Subsidiary (as defined herein) all of the ILEC Spinco Assets (as defined herein), such transfer to be subject to the assumption by such entity of the Non-ILEC Spinco Liabilities (as defined herein) and (b)  transfer or cause to be transferred by Verizon New England Inc., a New York corporation (“Verizon New England”) to the ILEC Spinco Subsidiary (as defined herein) all of the ILEC Spinco Assets (as defined herein), subject to the assumption by such entity of the ILEC Spinco Liabilities (as defined herein), and shall transfer the ILEC Spinco Subsidiary (after receiving its stock from its Subsidiaries in a series of internal distributions) to Spinco;

WHEREAS, in exchange for the transfers to the Spinco Subsidiaries contemplated by the immediately preceding recital, Spinco will upon the terms and subject to the conditions set forth in this Agreement (a) distribute to Verizon the Spinco

Securities (as defined herein) and (b) pay to Verizon the Special Dividend (as defined herein), all upon the terms and subject to the conditions set forth herein (the transactions described in this recital and in the immediately preceding recital, collectively, the “Contribution”);

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Verizon will distribute (the “Distribution”) all of the issued and outstanding shares of common stock, par value $.10 per share, of Spinco (“Spinco Common Stock”) to the holders as of the Record Date (as defined herein) of the outstanding shares of common stock, par value $.10 per share, of Verizon (“Verizon Common Stock”) and, to the extent applicable, to such persons who received Verizon Common Stock pursuant to the exercise of Record Date Options (as defined below);

WHEREAS, the parties to this Agreement intend that (i) the First Internal Spinoff (as defined in the Merger Agreement) qualify as a reorganization under Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”) and a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (ii) the Second Internal Spinoff (as defined in the Merger Agreement) qualify as a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (iii) the Contribution, together with the Distribution, qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code; (iv) the Distribution qualify as a distribution of Spinco stock to Verizon stockholders eligible for nonrecognition under Sections 355(a) and 361(c) of the Code, (v) no gain or loss be recognized by Verizon for federal income tax purposes in connection with the receipt of the Spinco Securities (as defined herein) or the consummation of the Debt Exchange (as defined herein); (vi) the Special Dividend qualify as money transferred to creditors or distributed to shareholders in connection with the reorganization within the meaning of Section 361(b)(1) of the Code, to the extent that Verizon distributes the Special Dividend to its creditors and/or shareholders in connection with the Contribution, (vii) the Merger qualify as a tax-free reorganization pursuant to Section 368 of the Code; and (viii) no gain or loss be recognized as a result of such transactions for federal income tax purposes by any of Verizon, Spinco, and their respective stockholders and Subsidiaries (except to the extent of cash received in lieu of fractional shares); and

WHEREAS, the parties to this Agreement intend that throughout the internal restructurings taken in contemplation of this Agreement, including the Internal Spinoffs (as defined in the Merger Agreement), Internal Restructurings (as defined in the Merger Agreement), the Contribution, and the Distribution, the Spinco Employees shall maintain uninterrupted continuity of employment, compensation and benefits, and also for union represented employees, uninterrupted continuity of representation for purposes of collective bargaining and uninterrupted continuity of coverage under their collective bargaining agreements, as described in the Employee Matters Agreement.

2

NOW, THEREFORE, in consideration of these premises, and of the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1             General.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Affiliate” means a Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, a specified Person.  The term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise; provided, however, that for purposes of this Agreement, (i) from and after the Distribution Date, no member of either Group shall be deemed an Affiliate of any member of the other Group and (ii) none of Cellco Partnership or any of its Subsidiaries shall be deemed Affiliates or Subsidiaries of Verizon.

“Agent” means the distribution agent agreed upon by Verizon and the Company, to be appointed by Verizon to distribute the shares of Spinco Common Stock pursuant to the Distribution.

“Agreement” has the meaning set forth in the preamble.

“Alternative Financing” has the meaning set forth in the Merger Agreement.

“Applicable Rate” means the three-month LIBOR rate published on Telerate Page 3750 as of 11:00 a.m. London time, on the date which is two days prior to the date such rate is determined, less 10 basis points, such rate to be reset every 90 days.

3

“Asset” means any and all assets, properties and rights, wherever located, whether real, personal or mixed, tangible or intangible, including the following (in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person):  (i) notes and accounts and notes receivable (whether current or non-current); (ii) Cash and Cash Equivalents, debentures, bonds, notes, evidences of indebtedness, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, preorganization certificates or subscriptions, transferable shares, investment contracts, letters of credit and performance and surety bonds, voting-trust certificates, puts, calls, straddles, options and other securities of any kind, and all loans, advances or other extensions of credit or capital contributions to any other Person; (iii)  rights under leases (including real property leases), contracts, licenses, permits, distribution arrangements, sales and purchase agreements, joint operating agreements, other agreements and business arrangements; (iv) owned real property; (v) leased real property, fixtures, trade fixtures, machinery, equipment (including oil and gas, transportation and office equipment), tools, dies and furniture; (vi) office supplies, production supplies, spare parts, other miscellaneous supplies and other tangible property of any kind, including all antennas, apparatus, cables, electrical devices, fixtures, equipment, furniture, office equipment, broadcast towers, motor vehicles and other transportation equipment, special and general tools, test devices, transmitters and other tangible personal property; (vii) computers and other data processing equipment and software; (viii) raw materials, work-in-process, finished goods, consigned goods and other inventories; (ix) prepayments or prepaid expenses; (x) claims, causes of action, rights under express or implied warranties, rights of recovery and rights of setoff of any kind; (xi) Information; (xii) advertising materials and other printed or written materials; (xiii) goodwill as a going concern and other intangible properties; (xiv) employee contracts, including any rights thereunder to restrict an employee from competing in certain respects; (xv) licenses and authorizations issued by any governmental authority; and (xvi) Real Property Interests.

“Backstop Facility Commitment” has the meaning set forth in the Merger Agreement.

“Blended Customer Contracts” means billing and collection Contracts, operator service Contracts, directory assistance Contracts and Contracts with end user customers, in each case to which one of the Contributing Companies or another Subsidiary of Verizon is a party, and in each case which provide for such customers to receive one or more products and/or services that are offered by the Spinco Business as well as one or more products and/or services that are offered by the Verizon Business, other than those Contracts listed on Section 1.1(a) of the Disclosure Letter.

“Business” means the Spinco Business or the Verizon Business, as the case may be.

4

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in the City of Charlotte, North Carolina or the City of New York, New York are authorized or obligated by law or executive order to close.

“Cash and Cash Equivalents” means all cash, cash equivalents, including certificates of deposit or bankers’ acceptances maturing within one year from the date of acquisition thereof, marketable direct obligations issued by, or unconditionally guaranteed by, the United States government or an agency thereof, and investments in money market funds and other liquid investments, including all deposited but uncleared bank deposits.

“Claims Made Policies” has the meaning set forth in Section 7.5(a).

“Closing Date” has the meaning set forth in the Merger Agreement.

“Closing Statement” has the meaning set forth in Section 5.1(a).

“Code” has the meaning set forth in the Recitals.

“Commitment Letter” has the meaning set forth in the Merger Agreement.

“Company” has the meaning set forth in the Recitals.

“Company Consent” means the written consent of the Company, which consent shall not be unreasonably withheld, conditioned or delayed.

“Contract” means any contract, agreement or binding arrangement or understanding, whether written or oral and whether express or implied.

“Contributing Companies” means Verizon New England, NYNEX Long Distance Company, Bell Atlantic Communications Inc., Verizon Select Services Inc., Verizon Internet Services Inc., and, any Subsidiary of Verizon that employs Continuing Employees (as defined in the Merger Agreement) as of the Closing Date.

“Contribution” has the meaning set forth in the Recitals.

5

“Current Assets” means total current assets of Spinco and the Spinco Subsidiaries, determined in accordance with the last sentence of Section 5.1(a), as of the opening of business on the Distribution Date.

“Current Liabilities” means the total current liabilities of Spinco and the Spinco Subsidiaries, determined in accordance with the last sentence of Section 5.1(a), as of the opening of business on the Distribution Date, but excluding (i) the current portion of any Indebtedness and excluding all Spinco Debt Expenses and (ii) for the avoidance of doubt, any amounts that are the responsibility of the Surviving Corporation pursuant to Section 11.1 of the Merger Agreement.

“Debt Exchange” has the meaning set forth in Section 2.4(d)

“Disclosure Letter” means the schedule prepared and delivered by Verizon to Spinco as of the date of this Agreement.

“Dispute Resolution Request” has the meaning set forth in Section 5.1(c).

“Distribution” has the meaning set forth in the Recitals.

“Distribution Date” means the date that the Distribution shall become effective.

“Distribution Date Spinco Indebtedness” means the aggregate amount of Indebtedness of Spinco and its Subsidiaries as of the opening of business on the Distribution Date, calculated pro forma for the Contribution.

“Distribution Date Working Capital” means the amount, if any, by which Current Assets exceeds Current Liabilities (or, if Current Liabilities exceeds Current Assets, the amount of such excess expressed as a negative number) as of the opening of business on the Distribution Date prior to the application of purchase accounting entries to the Company’s opening balance sheet.

“Effective Time” has the meaning set forth in the Merger Agreement.

“Election” has the meaning set forth in Section 2.4(e).

6

“Employee Matters Agreement” means the Employee Matters Agreement entered into among Verizon, Spinco and the Company on the date hereof, as such agreement may be hereafter amended from time to time.

“Excluded Contract” means (i) any Contract entered into by Verizon or any Subsidiary of Verizon (other than Spinco or a Spinco Subsidiary), on the one hand, with a non-Affiliate of Verizon, on the other hand, which is used or offered in the conduct of the Spinco Business as well as the Verizon Business, other than any Blended Customer Contract and (ii) any Contract entered into solely between or among Verizon and/or Affiliates of Verizon, other than the Transferred Affiliate Arrangements, including, in each case, those Contracts listed in Section 1.1(b) of the Disclosure Letter.

“Final Closing Statement” has the meaning set forth in Section 5.1(c).

“Final Distribution Date Working Capital” has the meaning set forth in Section 5.1(d).

“GAAP” means United States generally accepted accounting principles.

“Governmental Authority” has the meaning set forth in the Merger Agreement.

“Group” means the Verizon Group or the Spinco Group, as the case may be.

“Idearc Agreements” means the Publishing Agreement, the Non-competition Agreement and the Branding Agreement, each to be entered into between Idearc Media Inc., a Delaware corporation, and Spinco and such Subsidiaries of Spinco as are designated by Verizon prior to the Distribution (in consultation with the Company), each in the form attached hereto as Exhibits A-1, A-2 and A-3.

“Indebtedness” means, with respect to Spinco and the Spinco Subsidiaries, all indebtedness for borrowed money, including the aggregate principal amount thereof, and any accrued interest thereon.

“Identified Persons” has the meaning set forth in the Merger Agreement.

“ILEC” means an incumbent local exchange carrier.

7

“ILEC Spinco Assets” means Spinco Assets which are subject to regulations applicable to ILECs promulgated by one or more of the State of Vermont Public Service Board, the State of Maine Public Utilities Commission or the New Hampshire Public Utilities Commission.

“ILEC Spinco Liabilities” means Spinco Liabilities that arise from or relate to ILEC Spinco Assets.

“ILEC Spinco Subsidiary” means Northern New England Telephone Operations Inc., a newly formed Delaware corporation.

“Information” means all lists of customers, records pertaining to customers and accounts, copies of Contracts, personnel records, lists and records pertaining to customers, suppliers and agents, and all accounting and other books, records, ledgers, files and business records, data and other information of every kind (whether in paper, microfilm, computer tape or disc, magnetic tape or any other form).

“Intellectual Property Agreement” means the Intellectual Property Agreement to be entered into among Verizon and its Affiliates and Spinco and its Affiliates, in the form of Exhibit B hereto.

“Intellectual Property Assets” means all “Statutory Intellectual Property” and “Non-Statutory Intellectual Property”, as each such term is defined in the Intellectual Property Agreement.

“Leased Real Property” means all leasehold or subleasehold estates and other rights of Verizon or one of its Affiliates to use or occupy any land, buildings or structures located in the Territory and used primarily in the conduct of the Spinco Business, including those listed in Section 1.1(c) of the Disclosure Letter.

“Liability” or “Liabilities” means all debts, liabilities and obligations (including those arising under contracts) whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and whether or not the same would properly be reflected on a balance sheet.  “Liabilities” shall not include (a) any liabilities in respect of any Intellectual Property, (b) any liabilities for or in respect of Taxes, which shall be governed solely by the Tax Sharing Agreement and, to the extent applicable, the Merger Agreement or (c) any liabilities for or in respect of any benefit plans, programs, agreements, and arrangements, which shall

8

be governed exclusively by the Employee Matters Agreement and, to the extent applicable, the Merger Agreement.

“Litigation Matters” means all pending or threatened litigation, investigations, claims or other legal matters that have been or may be asserted against, or otherwise adversely affect, Verizon and/or Spinco (or members of either Group).

“Merger” has the meaning set forth in the Recitals.

“Merger Agreement” has the meaning set forth in the Recitals.

“New Financing” has the meaning set forth in the Merger Agreement.

“Non-ILEC Spinco Assets” means Spinco Assets other than ILEC Spinco Assets.

“Non-ILEC Spinco Liabilities” means Spinco Liabilities other than ILEC Spinco Liabilities.

“Non-ILEC Spinco Subsidiary” means Enhanced Communications of Northern New England Inc., a newly-formed Delaware corporation.

“Occurrence Basis Policies” has the meaning set forth in Section 7.5(a).

“Owned Real Property” means all land in the Territory that is owned by Verizon or one of its Affiliates and used primarily in the conduct of the Spinco Business, together with all buildings, structures, improvements and fixtures located thereon, subject to all easements and other rights and interests appurtenant thereto, including those listed in Section 1.1(d) of the Disclosure Letter.

“Person” or “person” means a natural person, corporation, company, partnership, limited partnership, limited liability company, or any other entity, including a Governmental Authority.

9

“Policies” means all insurance policies, insurance contracts and claim administration contracts of any kind of Verizon and its Subsidiaries (including members of the Spinco Group) and their predecessors which were or are in effect at any time at or prior to the Distribution Date, including but not limited to commercial general liability,  automobile, workers’ compensation, excess and umbrella, aircraft, crime, property and business interruption, directors’ and officers’ liability, fiduciary liability, employment practices liability, errors and omissions, special accident, environmental, inland and marine, and captive insurance company arrangements, together with all rights, benefits and privileges thereunder.

“Privileged Information” means with respect to either Group, Information regarding a member of such Group, or any of its operations, Assets or Liabilities (whether in documents or stored in any other form or known to its employees or agents) that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or another applicable privilege, that a member of the other Group may come into possession of or obtain access to pursuant to this Agreement or otherwise.

“Real Property Interests” means all easements, rights of way, and licenses (whether as licensee or licensor) in the real property that is used primarily in the conduct of the Spinco Business, and excluding all Owned Real Property and property and interests subject to Real Property Leases.

“Real Property Leases” means all leases, subleases, concessions and other agreements (written or oral) pursuant to which any Leased Real Property is held, including the right to all security deposits and other amounts and instruments deposited thereunder.

“Reclassification” has the meaning set forth in Section 4.2.

“Record Date” means the close of business on the date to be determined by the Board of Directors of Verizon as the record date for determining stockholders of Verizon entitled to participate in the Distribution, which date shall be a Business Day preceding the day of the Effective Time.

“Record Date Options” has the meaning set forth in the Employee Matters Agreement.

10

“Representative” means with respect to any Person, any of such Person’s directors, managers or persons acting in a similar capacity, officers, employees, agents, consultants, financial and other advisors, accountants, attorneys and other representatives.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations of the SEC promulgated thereunder.

“Special Dividend” means a dividend in an amount to be set forth in a certificate delivered by Verizon to Spinco, with a copy to the Company, no later than 30 days prior to the Distribution Date, which amount shall not exceed Verizon’s estimate of its tax basis in Spinco.

“Spinco” has the meaning set forth in the preamble; provided, that with respect to any period following the Effective Time, all references to Spinco herein shall be deemed to be references to the Surviving Corporation.

“Spinco Assets” means, subject to Section 2.1(c), collectively:

(i) all of the right, title and interest of Verizon and its Subsidiaries in all Assets that are primarily used or held for use in, or that primarily arise from, the conduct of the Spinco Business, including:

(A) those set forth on the Spinco Interim Balance Sheet (after giving effect for this purpose to any exclusion of Assets resulting from application of the principles, methodologies and policies set forth in Section 5.1 of the Disclosure Letter) to the extent held on the Distribution Date;

(B) all Owned Real Property and all Leased Real Property, together with all buildings, towers, facilities and other structures and improvements located thereon;

(C) all Real Property Interests;

(D) Telephone Plant; and

11

(E) Contracts, including the Contracts listed in Section 1.1(g) of the Disclosure Letter;

(ii) all other Assets of Spinco and the Spinco Subsidiaries to the extent specifically assigned to any member of the Spinco Group pursuant to this Agreement or any other Transaction Agreement;

(iii) the capital stock of each Spinco Subsidiary (it being agreed that the physical certificates representing such capital stock shall be delivered to Spinco at the closing of the Merger by Verizon no later than the Distribution Date);

(iv)  all rights of the Contributing Companies in respect of the Transferred Affiliate Arrangements;

(v) those rights in the Blended Customer Contracts as are allocated to Spinco as contemplated by Section 7.8(e) of the Merger Agreement; and

(vi) any additional Assets set forth on Section 1.1(e) of the Disclosure Letter;

provided, that in no event will Spinco Assets include:

(A) any Intellectual Property Asset (except to the extent specified in a Transaction Agreement);

(B) any Verizon Assets;

(C) any Assets of Verizon Business Global LLC, f/k/a MCI, LLC, which is the successor to the business of MCI, Inc., and direct and indirect subsidiaries of Verizon Business Global LLC;

(D) any Assets of Verizon Network Integration Corp.;

(E) any Assets of Verizon Federal Inc.;

(F) any Assets of Federal Network Systems LLC;

(G) any Assets of Verizon Global Networks Inc.;

12

(H) any Assets of Verizon Select Services Inc., other than Assets that constitute customer relationships or Contracts that relate solely to the Spinco Business or are referred to in clause (v) above, including, for the avoidance of doubt, the Verizon Select Services Inc. customer relationships managed by Verizon Business Global LLC or its subsidiaries;

(I) any Assets of Cellco Partnership (d/b/a Verizon Wireless); or

(J) any Cash or Cash Equivalents or short term investments except as may be elected by Verizon.

“Spinco Audited Balance Sheet” means the audited Combined Statements of Selected Assets, Selected Liabilities and Parent Funding as of December 31, 2005 for the local exchange businesses and related landline activities of Verizon in the states of Maine, New Hampshire and Vermont (including Internet access, long distance and customer premises equipment services provided to customers in those states).

“Spinco Business” means:

(i) all of the incumbent local exchange carrier business activities and operations of Verizon and its Affiliates in the Territory (consisting of local exchange service, intraLATA toll service, network access service, enhanced voice and data services, DSL services and wholesale services); and

(ii) all of the following activities of Verizon and its Affiliates in the Territory:

(A) consumer and small business switched and dedicated long distance service to customers located in the Territory;

(B) large business switched and dedicated long distance service to customers of Verizon Select Services Inc. located in the Territory;

(C) the delivery by Verizon Internet Services Inc. of dial-up, DSL and fiber to the premises (a/k/a FiOS) data and dedicated internet access services to customers located in the Territory;

13

(D) customer premise equipment sales, and installation and maintenance services currently offered by Verizon Select Services, Inc. to customers located in the Territory; and

(E) private line service to customers of Verizon Select Services Inc. where the line originates and terminates in the Territory;

provided that, for the avoidance of doubt, “Spinco Business” shall not include any other business activities or operations of Verizon or its Affiliates that may be conducted in the Territory, including, without limitation,

(A) the offering of wireless voice, data and other services by Cellco Partnership (d/b/a Verizon Wireless) and the offering of air-to-ground or rail-to-ground services by Verizon Airfone;

(B) publishing and printing telephone directories and publishing electronic directories;

(C) monitoring, installation, maintenance and repair of data customer premises equipment and software, structured cabling, call center solutions and professional services as provided generally by Verizon Network Integration Corp.;

(D) multi-dwelling unit voice, data and video services as provided generally by Verizon Avenue Corp.;

(E) wireless telecommunications services, customer premises equipment, inside wiring and cabling, and consulting services to or for federal government agencies offered by Federal Network Systems LLC, and customer premises inside wiring and cabling, and consulting services to or for federal government agencies offered by Verizon Federal Inc.;

(F) interstate, intrastate and local exchange services offered by Verizon or its Affiliates (other than the Contributing Companies) consisting primarily of those conducted by them as successors to the business of MCI, Inc.;

(G) monitoring, provision, maintenance and repair of intrastate, interstate and international telecommunications and information services, managed services, internet protocol services, data center services, professional services, hosting services,

14

web infrastructure and application management and other products, services and software provided to government and large business customers as provided generally by Verizon Business Global LLC, f/k/a MCI, LLC, which is the successor to the business of MCI, Inc., or direct and indirect subsidiaries of Verizon Business Global LLC;

(H) consumer and small business CPE services (including DSL modem and router fulfillment) as provided generally by Verizon TeleProducts;

(I) long haul switching, routing, and transmission and other carrier services as provided generally by Verizon Global Networks Inc.;

(J) prepaid card products, payphone dial around services (VSSI-CARD) and dedicated Internet access services as provided generally by Verizon Select Services Inc;

(K) Verizon Voice Over Internet Protocol service as provided generally by Verizon d/b/a Verizon Long Distance and NYNEX Long Distance; or

(L) activities relating to the foregoing or in substitution for the foregoing by the named entities or any successor thereto.

“Spinco Common Stock” has the meaning set forth in the Recitals.

“Spinco Debt Expenses” means (i) the aggregate amount of all fees and expenses payable to lenders or lenders’ advisors by Spinco or the Surviving Corporation pursuant to the terms of the New Financing (or Alternative Financing) in connection with the consummation of the New Financing (or Alternative Financing) multiplied by (ii) a fraction, the numerator of which is (A) the amount drawn by Spinco under the terms of the New Financing (or Alternative Financing) immediately prior to the Effective Time and the denominator is (B) the sum of the aggregate amount of indebtedness contemplated by the New Financing (or Alternative Financing).

“Spinco Group” means Spinco and the Spinco Subsidiaries.

“Spinco Guarantees” has the meaning set forth in Section 7.4(b).

15

“Spinco Interim Balance Sheet” means the balance sheet that is part of the Interim Financial Statements (as defined in the Merger Agreement).

“Spinco Liabilities” means, subject to Section 2.1(c), collectively:

(i) all Liabilities of Verizon or any of its Subsidiaries (including Spinco and the Spinco Subsidiaries) to the extent relating to or arising from the Spinco Business, including the Liabilities set forth on the Spinco Interim Balance Sheet (after giving effect for this purpose to any exclusion of Liabilities resulting from application of the principles, methodologies and policies set forth in Section 5.1 of the Disclosure Letter) or arising after the date thereof and the Liabilities of Spinco under the Transaction Agreements;

(ii) all Liabilities to the extent relating to or arising from any Spinco Assets;

(iii) all Liabilities of the Spinco Business in respect of the Transferred Affiliate Arrangements;

(iv) those Liabilities in the Blended Customer Contracts that are assigned to and assumed by the Company pursuant to Section 7.7(e) of the Merger Agreement;

(v) all Liabilities relating to or arising from any Verizon Guarantee; and

(vi) all Liabilities set forth on Section 1.1(f) of the Disclosure Letter.  Notwithstanding the foregoing, Spinco Liabilities shall not include any Liabilities specifically agreed not to be assumed by Spinco under any other Transaction Agreement.  For the avoidance of doubt, Spinco Liabilities do not include Verizon Liabilities.

“Spinco Securities” means the notes to be issued by Spinco to Verizon, as contemplated in Section 2.4 hereof and having the principal terms set forth on Exhibit C hereto and other terms determined in accordance with Section 7.20 of the Merger Agreement.

“Spinco Subsidiaries” means, collectively, the Non-ILEC Spinco Subsidiary and the ILEC Spinco Subsidiary.

16

“Subsidiary” has the meaning set forth in the Merger Agreement.

“Surviving Corporation” has the meaning set forth in the Merger Agreement.

“Target Working Capital” means $50,500,000, provided that such amount will be reduced by the amount, if any, equal to (x) the sum of (i) any amount the Company pays or becomes obligated to pay to a Commitment Party (as defined in the Commitment Letter) pursuant to the fifth paragraph of the fee letter that is part of the Commitment Letter, and (ii) any amount the Company pays or becomes obligated to pay pursuant to the fee letter that is part of the Backstop Commitment, divided by (y) 0.39579.

“Taxes” has the meaning set forth in the Merger Agreement.

“Tax Sharing Agreement” means the Tax Sharing Agreement entered into on the date hereof, between Verizon, the Company and Spinco, as such agreement may be amended from time to time.

“Telephone Plant” means the plant, systems, structures, regulated construction work in progress, telephone cable (whether in service or under construction), microwave facilities (including frequency spectrum assignment), telephone line facilities, machinery, furniture, fixtures, tools, implements, conduits, stations, substations, equipment (including central office equipment, subscriber station equipment and other equipment in general), instruments and house wiring connections located in the Territory used in the Spinco Business.

“Territory” means the local franchise area of Verizon New England in the states of Maine, Vermont and New Hampshire.

“Total Verizon Shares” means (i) the total number of shares of Verizon Common Stock as of the Record Date plus (ii) the total number of shares of Verizon Common Stock issued to all persons who acquired such Verizon Common Stock pursuant to the exercise of Record Date Options.

“Transaction Agreements” means this Agreement, the Employee Matters Agreement, the Intellectual Property Agreement, the Merger Agreement, the Tax Sharing Agreement, the Idearc Agreements and the Transition Services Agreement.

17

“Transferred Affiliate Arrangements” means (i) any intercompany trade accounts payable or receivable of the Spinco Business as of the date of the Contribution, including amounts payable by or to Verizon or any Verizon Subsidiaries under Contracts for the provision of billing and collection, network access and other services, (ii) any reimbursements due as of the date of the Contribution in respect of the Spinco Business for corporate services under the pro-rate agreement or other arrangements with Verizon or any Verizon Subsidiary consistent with past practice, (iii) any Transaction Agreement and any arrangement expressly contemplated by a Transaction Agreement, (iv) any Affiliate interconnection Contract or (v) any Contract listed on Section 1.1(g) of the Disclosure Letter.

“Transition Services Agreement” means that Transition Services Agreement entered into on the date hereof, between Verizon and Spinco, as such agreement may be amended from time to time.

“Verizon” has the meaning set forth in the preamble.

“Verizon Assets” means, subject to Section 2.1(c), collectively,

(i) all of the right, title and interest of Verizon and its Subsidiaries in all Assets held by them other than those identified in clauses (i) through (vi) of the definition of Spinco Assets, it being acknowledged that Verizon Assets include (a) all Excluded Contracts (it being agreed that Spinco and the Spinco Subsidiaries shall be permitted to (x) retain any product or license under an Excluded Contract delivered and paid for prior to the Closing in the conduct of the Spinco Business and (y) receive any product or license under an Excluded Contract that was ordered and paid for prior to the Closing in the conduct of the Spinco Business but which shall be delivered after the Closing), (b) all Contracts between Verizon and the Verizon Subsidiaries on one hand and Spinco and the Spinco Subsidiaries on the other hand (other than to the extent they constitute Transferred Affiliate Arrangements), (c) any Asset, other than any customer relationships, of the dial-up and ISP and the consumer or small business long distance portions of the Spinco Business and (d) tangible Assets used exclusively by personnel who are retained by Verizon but who work in one of the work centers or other locations located in the Territory which serve both the Spinco Business and the Verizon Business, all of which are set forth in Section 1.1(h) of the Disclosure Letter.

(ii) all other Assets of Verizon and Verizon Subsidiaries to the extent specifically assigned to or retained by any member of the Verizon Group pursuant to this Agreement or any other Transaction Agreement,

18

(iii) the capital stock of each Verizon Subsidiary,

(iv) all rights of Verizon under the Transaction Agreements,

(v) all defenses and counterclaims relating to any Liability retained by Verizon or its Affiliates, and

(vi) any additional Assets set forth on Section 1.1(i) of the Disclosure Letter.

“Verizon Business” means all of the businesses and operations conducted by Verizon and the Verizon Subsidiaries (other than the Spinco Business) at any time, whether prior to, on or after the Distribution Date.

“Verizon Common Stock” has the meaning set forth in the Recitals.

“Verizon Group” means Verizon and the Verizon Subsidiaries.

“Verizon Guarantees” has the meaning set forth in Section 7.4(a).

“Verizon Liabilities” means, subject to Section 2.1(c), collectively, (i) all Liabilities of Verizon or any of its Subsidiaries relating to or arising out of the Verizon Business, including the Liabilities of Verizon under the Transaction Agreements, in each case other than the Spinco Liabilities, (ii) all Liabilities in respect of the Transferred Affiliate Arrangements other than the Spinco Liabilities related thereto, (iii) those Liabilities under the Blended Customer Contracts except to the extent assumed by the Company pursuant to Section 7.8(e) of the Merger Agreement, (iv) all Liabilities in respect of Excluded Contracts, (v) all Liabilities set forth on Section 1.1(j) of the Disclosure Letter, (vi) all Liabilities relating to or arising from any Spinco Guarantee, and (vii) all expenses allocated to Verizon pursuant to Section 11.1 of the Merger Agreement, (viii) all obligations in respect of guarantees issued by any member of the Spinco Group prior to the Closing Date in respect of the Verizon Business, (ix) Spinco Debt Expenses, (x) the amount, if any, by which Distribution Date Spinco Indebtedness exceeds $1.7 billion and (xi) Liabilities in respect of claims asserted against any Identified Person as a result of acts or omissions occurring prior to the Distribution.  For the avoidance of doubt, Verizon Liabilities do not include Spinco Liabilities.

19

“Verizon New England” has the meaning set forth in the Recitals.

“Verizon Subsidiaries” means all direct and indirect Subsidiaries of Verizon immediately after the Distribution Date, assuming that the Distribution has occurred in accordance with the terms hereof.

Section 1.2References to Time.  All references in this Agreement to times of the day shall be to New York City time.

ARTICLE II

The Contribution

Section 2.1Transfers of Spinco Assets and Spinco Liabilities.

(a)Subject to Section 2.1(b) and, in the case of Information, Article VIII, on or prior to the Distribution Date, Verizon shall take or cause to be taken all actions necessary to cause the transfer, assignment, delivery and conveyance (i) of the Non-ILEC Spinco Assets and the Non-ILEC Spinco Liabilities to the Non-ILEC Spinco Subsidiary and (ii) of the ILEC Spinco Assets and the ILEC Spinco Liabilities to the ILEC Spinco Subsidiary.  Spinco shall assume or cause the applicable Spinco Subsidiaries to assume, and thereafter timely pay, perform and discharge, when and as due, or cause the applicable Spinco Subsidiaries to thereafter timely pay, perform and discharge, when and as due, all of the Spinco Liabilities.

(b)Nothing in this Agreement (including, for the avoidance of doubt, Section 7.6) shall be deemed to require the transfer of any Assets or the assumption of any Liabilities which by their terms or operation of law cannot be transferred or assumed until such time as all legal impediments to such transfer or assumption have been removed.  The rights and obligations of the parties in respect of removing such impediments, (including pursuing and obtaining all applicable consents, waivers and approvals in connection with the Contribution) and in respect of such Assets and Liabilities to the extent not transferred on the Distribution Date are set forth in the Merger Agreement and no additional rights or obligations shall be deemed to arise under this Agreement in connection therewith.

(c)The rights and obligations of the parties with respect to Taxes shall be governed exclusively by the Tax Sharing Agreement (and, to the extent applicable, the

20

Merger Agreement).  Accordingly, items relating to Taxes shall not be treated as Assets or Liabilities for purposes of, or otherwise be governed by, this Agreement.  In the event of any inconsistency between this Agreement and the Tax Sharing Agreement, the terms of the Tax Sharing Agreement shall control.  In addition, the rights and obligations of the parties with respect to benefit plans, programs, agreements and arrangements shall be governed exclusively by the Employee Matters Agreement.  Accordingly, assets and liabilities relating to any benefit plans, programs, agreements and arrangements shall not be treated as Assets or Liabilities for purposes of, or otherwise be governed by, this Section 2.1.  The rights and obligations of the parties with respect to collective bargaining agreements and practices, including Spinco collective bargaining agreements, memoranda of agreement and memoranda of understanding, and the rights and obligations arising under those contracts and practices on benefit plans, programs, agreements and arrangements shall be treated as Assets or Liabilities for purposes of this Section 2.1, and are described in the Employee Matters Agreement.  In the event of any conflict between this Section 2.1, or any other Section of this Agreement, and the Employee Matters Agreement, the Employment Matters Agreement shall control.

Section 2.2Conveyancing and Assumption Agreements.  In connection with the transfer of the Spinco Assets and the assumption of the Spinco Liabilities contemplated by this Article II, Verizon and Spinco shall execute, or cause to be executed by the appropriate entities, customary conveyancing and assumption instruments (provided that such instruments shall not impose obligations on any party or grant rights, through representations or otherwise, beyond those set forth in this Agreement).

Section 2.3Certain Resignations.  At or prior to the Distribution Date, Verizon shall cause each employee and director of Verizon and its Subsidiaries who will not be employed by Spinco or a Spinco Subsidiary after the Distribution Date to resign, effective not later than the Distribution Date, from all boards of directors or similar governing bodies of Spinco or any Spinco Subsidiary on which they serve, and from all positions as officers of Spinco or any Spinco Subsidiary in which they serve.  Spinco will cause each employee and director of Spinco and its Subsidiaries who will not be employed by Verizon or any Verizon Subsidiary after the Distribution Date to resign, effective not later than the Distribution Date, from all boards of directors or similar governing bodies of Verizon or any Verizon Subsidiary on which they serve, and from all positions as officers of Verizon or any Verizon Subsidiary in which they serve.

21

Section 2.4Special Dividend; New Financing; Debt Exchange.

(a)The Spinco Board will establish a Special Dividend record date and will authorize Spinco to pay out of funds legally available therefor the Special Dividend on the Distribution Date to Verizon, as the holder of record of Spinco Common Stock as of the specified record date.  The Special Dividend will be paid to Verizon on the Distribution Date immediately prior to the Distribution.

(b)At or prior to the Distribution Date, Spinco will (i) enter into the agreements associated with the New Financing and use a portion of the proceeds thereof to pay the Special Dividend and (ii) distribute Spinco Securities to Verizon.  The principal amount of the Spinco Securities will be an amount equal to (x) $1.7 billion less (y) the amount of the Special Dividend, with the precise aggregate principal amount of the Spinco Securities to be set forth on a certificate to be delivered by Verizon to Spinco, with a copy to the Company, no later than 30 days prior to the Distribution Date.

(c)The rights and obligations of the parties in respect of pursuing and obtaining the New Financing are set forth in the Merger Agreement and no additional rights or obligations shall be deemed to arise under this Agreement in connection therewith.

(d)The parties acknowledge that Verizon intends to enter into arrangements prior to or following the Distribution Date providing for the exchange of outstanding Spinco Securities for debt obligations of Verizon or its Affiliates or the transfer of Spinco Securities to other Verizon creditors or stockholders (the “Debt Exchange”), provided that the parties further acknowledge that (i) if Verizon desires to consummate the Debt Exchange concurrently with the Distribution, Verizon shall not be obligated to consummate the Distribution unless Verizon shall have entered into such arrangements and the Debt Exchange shall be consummated concurrently with the Distribution and (ii) if Verizon elects not to pursue the Debt Exchange at the time of the Distribution or thereafter, Verizon may dispose of the Spinco Securities in another manner, but will in any event dispose of all of its interest in the Spinco Securities within 360 days following the Distribution Date.

(e)At Verizon’s election, to be exercised by Verizon no later than 15 days prior to the Distribution Date (the “Election”), notwithstanding any other provision of the Transaction Agreements, the following alternative transaction structure may be adopted in lieu of the transaction steps currently described in the Transaction Documents:

22

(i) the entity referred to as Spinco shall be formed by Verizon New England, instead of by Verizon;

(ii) the Special Dividend shall be a dividend paid by Spinco to Verizon New England, instead of being paid by Spinco to Verizon;

(iii) Spinco Securities shall be notes issued by Spinco to Verizon New England, instead of being issued by Spinco to Verizon,

(iv) the Debt Exchange shall be undertaken by Verizon New England with its creditors or stockholders, instead of being undertaken by Verizon with Verizon’s creditors or stockholders,

(v) Verizon and Verizon New England shall transfer or cause to be transferred to Spinco (or to Subsidiaries thereof) all of the Spinco Assets and Liabilities in such a manner that, immediately prior to the Merger, no assets or liabilities (other than stock or other equity interests in Subsidiaries) shall be held directly by Spinco; and

(vi) Spinco shall be distributed in the Internal Spinoffs and in the Distribution and shall participate in the Merger.

If Verizon makes the Election, all applicable provisions of this Agreement and the other Transaction Agreements shall be amended by the parties thereto as appropriate to reflect the Election.  For example, the definition of the Special Dividend shall be revised to refer to Verizon New England’s estimate of its tax basis in Spinco, instead of Verizon’s estimate of its tax basis in Spinco.

(f)The parties recognize that Spinco and the Company desire that as of the time of the distribution the amount of Current Assets exceeds the amount of Current Liabilities and therefore Verizon agrees to use commercially reasonable efforts to conduct the Spinco Business in a manner that would cause Current Assets to exceed Current Liabilities as of the time of the Distribution.

(g)Verizon shall pay all Spinco Debt Expenses (i) on the Closing Date or (ii) on such subsequent date when the fees and expenses payable to lenders or the lenders’ advisors pursuant to the terms of the New Financing (or Alternative Financing) in

23

connection with the consummation of the New Financing (or Alternative Financing), other than the Spinco Debt Expenses, are paid by the Surviving Corporation.

ARTICLE III

Conditions

Section 3.1Conditions to the Distribution.  The obligations of Verizon pursuant to this Agreement to effect the Distribution shall be subject to the fulfillment (or waiver by Verizon) on or prior to the Distribution Date (provided that certain of such conditions will occur substantially contemporaneous with the Distribution) of each of the conditions set forth in Section 8.1 and Section 8.2 of the Merger Agreement, except the consummation of the Contribution and the Distribution and the other transactions contemplated hereby.

Section 3.2Waiver of Conditions.  To the extent permitted by applicable Law, the condition set forth in Section 3.1 hereof may be waived in the sole discretion of Verizon.  The condition set forth in Section 3.1 is for the sole benefit of Verizon and shall not give rise to or create any duty on the part of Verizon to waive or not waive any such conditions.

ARTICLE IV

The Distribution

Section 4.1Record Date and Distribution Date.  Subject to the satisfaction, or to the extent permitted by applicable Law, waiver, of the conditions set forth in Section 3.1, the Board of Directors of Verizon, consistent with the Merger Agreement and Delaware law, shall establish the Record Date and the Distribution Date and any necessary or appropriate procedures in connection with the Distribution.

Section 4.2Spinco Reclassification.  Immediately prior to the Distribution Date, Verizon and Spinco shall take all actions necessary to issue to Verizon such number of shares of Spinco Common Stock, including, if applicable, by reclassifying the outstanding shares of Spinco Common Stock or by declaring a dividend payable to Verizon in shares of Spinco Common Stock (the “Reclassification”), for the purpose of increasing the outstanding shares of Spinco Common Stock such that, immediately prior to the Distribution Date, Spinco will have an aggregate number of shares of Spinco

24

Common Stock to be determined by Verizon and Spinco prior to the Distribution Date, all of which will be held by Verizon.

Section 4.3The Agent.  Prior to the Distribution Date, Verizon shall enter into an agreement with the Agent on terms reasonably satisfactory to Spinco and the Company providing for, among other things, the distribution to the holders of Verizon Common Stock in accordance with this Article IV of the shares of Company Common Stock into which the shares of Spinco Common Stock that would otherwise be distributed in the Distribution will be converted pursuant to the Merger.

Section 4.4Delivery of Shares to the Agent.  At or prior to the Distribution Date, Verizon shall authorize the book-entry transfer by the Agent of all of the outstanding shares of Spinco Common Stock to be distributed in connection with the Distribution.  After the Distribution Date, upon the request of the Agent, Spinco shall provide all book-entry transfer authorizations that the Agent shall require in order to effect the distribution of the shares of Company Common Stock into which the shares of Spinco Common Stock that would otherwise be distributed in the Distribution will be converted pursuant to the Merger.

Section 4.5The Distribution.  Upon the terms and subject to the conditions of this Agreement, following consummation of the Reclassification, Verizon shall declare and pay the Distribution consisting of:

(i) to the holders of shares of Verizon Common Stock as of the Record Date, such percentage of the total number of shares of Spinco Common Stock held by Verizon as of the time of the Distribution as is equal to a fraction, the numerator of which is the number of Total Verizon Shares held by such holders as of the Record Date and the denominator of which is the number of Total Verizon Shares; and

(ii) to the holders of shares of Verizon Common Stock who acquired such Verizon Common Stock pursuant to the exercise of Record Date Options, such percentage of the total number of shares of Spinco Common Stock held by Verizon as of the time of the Distribution as is equal to a fraction, the numerator of which is the number of Total Verizon Shares held by such holders that were acquired pursuant to the exercise of Record Date Options and the denominator of which is the number of Total Verizon Shares.

At the Effective Time (as defined in the Merger Agreement), all such shares of Spinco Common Stock shall be converted into the right to receive shares of Company

25

Common Stock pursuant to, and in accordance with the terms of, the Merger Agreement, immediately following which the Agent shall distribute by book-entry transfer in respect of the outstanding shares of Verizon Common Stock held by (x) holders of record of Verizon Common Stock on the Record Date and (y) persons who acquired Verizon Common Stock pursuant to the exercise of Record Date Options, all of the shares of Company Common Stock into which the shares of Spinco Common Stock that would otherwise be distributed in the Distribution have been converted pursuant to the Merger.  The Agent shall make cash payments in lieu of any fractional shares resulting from the conversion of Spinco Common Stock into Company Common Stock in the Merger pursuant to the terms of the Merger Agreement.

ARTICLE V

Post Closing Adjustments

Section 5.1Post-Closing Adjustments.

(a)Within 90 days after the Closing Date, Verizon shall cause to be prepared and delivered to the Surviving Corporation a statement derived from the books and records of Verizon and its Affiliates (the “Closing Statement”), setting forth Distribution Date Working Capital, including reasonable detail regarding the calculation thereof.  The Distribution Date Working Capital shall be calculated in accordance with GAAP, consistently applied, using the same accounting principles, methodologies and policies used in the preparation of the Spinco Audited Balance Sheet, pro forma for the completion of the Contribution, as modified by the principles, methodologies and policies set forth in Section 5.1 of the Disclosure Letter.

(b)Verizon shall give the Surviving Corporation and each of its Representatives access at all reasonable times and on reasonable advance notice to Verizon’s books and records to the extent reasonably required to permit the Surviving Corporation to review the Closing Statement.  Within 60 days after receipt of the Closing Statement, Surviving Corporation shall, in a written notice to Verizon, describe in reasonable detail any proposed adjustments to the items set forth on the Closing Statement and the reasons therefor (it being agreed that the only permitted reasons for such adjustments shall be mathematical error or the failure to compute items set forth therein in accordance with this Article V).  Surviving Corporation shall have the right to discuss the Closing Statement with Verizon’s accountants, it being understood that in connection with such discussion, Surviving Corporation will not have access to the work papers of such accountants.  If Verizon shall not have received a notice of proposed adjustments (provided that any and all proposed adjustments to the calculation of

26

Distribution Date Working Capital must in the aggregate exceed One Hundred Thousand Dollars ($100,000) or more) within such 60 day period, Surviving Corporation will be deemed to have accepted irrevocably such Closing Statement.

(c)Verizon and Surviving Corporation shall negotiate in good faith to resolve any disputes over any proposed adjustments to the Closing Statement, during the 30 days following Verizon’s receipt of the proposed adjustments.  If the parties are unable to resolve such dispute within such 30 day period, then, at the written request of either party (the “Dispute Resolution Request”), each party shall appoint a knowledgeable, responsible representative to meet in person and negotiate in good faith to resolve the disputed matters.  The parties intend that these negotiations be conducted by experienced business representatives empowered to decide the issues.  Such negotiations shall take place during the 15 day period following the date of the Dispute Resolution Request.  If the business representatives resolve the dispute, such resolution shall be memorialized in a written agreement (the “Final Closing Statement”), executed within five days thereafter.  If the business representatives do not resolve the dispute, within five days Surviving Corporation and Verizon shall jointly select a nationally recognized independent public accounting firm (which is not the regular independent public accounting firm of either Verizon or Surviving Corporation) to arbitrate and resolve such disputes, which resolution shall be final, binding and enforceable in accordance with Section 10.12.  If Surviving Corporation and Verizon do not jointly select such firm within five days, a nationally recognized accounting firm shall be selected by lot from among those nationally recognized firms which are not the regular firm of either Verizon or Surviving Corporation.  Such accounting firm shall arbitrate and resolve such dispute based solely on the written submission forwarded by Verizon and Surviving Corporation and shall only consider whether the Closing Statement was prepared in accordance with the standards set forth herein and (only with respect to disputed matters submitted to the accounting firm) whether and to what extent the Closing Statement requires adjustment.  The fees and expenses of such accounting firm shall be shared by Surviving Corporation and Verizon in inverse proportion to the relative amounts of the disputed amount determined to be for the account of Surviving Corporation and Verizon, respectively.

(d)If the amount of the Distribution Date Working Capital, as set forth in the Final Closing Statement (the “Final Distribution Date Working Capital”) exceeds the Target Working Capital, the Surviving Corporation shall pay to Verizon an amount equal to such excess and if the amount of the Final Distribution Date Working Capital is less than the Target Working Capital, Verizon shall pay to the Surviving Corporation an amount equal to such deficit.

(e)Any amounts payable pursuant to Section 5.1(d) above shall be made via wire transfer of immediately available funds within five Business Days after the date

27

upon which the Closing Statement becomes a Final Closing Statement.  All such amounts shall bear interest from the Distribution Date through but excluding the date of payment, at the Applicable Rate.  Such interest shall accrue daily on the basis of a 365 day year calculated for the actual number of days for which payment is due and such payment shall be payable together with the amount payable pursuant to this Section 5.1.

ARTICLE VI

Transaction Agreements

Section 6.1Transaction Agreements.  Subject to the terms and conditions set forth herein no later than the Distribution Date, Verizon and Spinco (and/or other Subsidiaries of Verizon, as applicable) shall each execute and deliver each of the Transaction Agreements to which it is a party.

ARTICLE VII

Additional Covenants

Section 7.1Survival; Exclusive Remedy.  The covenants and agreements contained herein to be performed following the Closing shall survive the Effective Time in accordance with their respective terms and all other terms shall expire as of the Effective Time (other than the obligation to convey the Spinco Assets and the Spinco Liabilities in accordance with Section 2.1).  The parties hereby agree that the sole and exclusive remedy for any claim (whether such claim is framed in tort, contract or otherwise), arising out of a breach of this Agreement shall be asserted pursuant to Section 10.2 of the Merger Agreement (or if this Agreement and the Merger Agreement are terminated, Section 9.2 of the Merger Agreement) and only to the extent expressly contemplated therein.  For the avoidance of doubt, Section 10.2 of the Merger Agreement is acknowledged to provide for equitable relief to the extent the requisite showing is made under applicable law of the inadequacy of the payment of money damages thereunder.

Section 7.2Mutual Release.  Effective as of the Distribution Date and except as otherwise specifically set forth in the Transaction Agreements, each of Verizon, on behalf of itself and each of the Verizon Subsidiaries, on the one hand, and Spinco, on behalf of itself and each of the Spinco Subsidiaries, on the other hand, hereby releases and forever discharges the other party and its Subsidiaries, and its and their respective officers, directors, managers or other persons acting in a similar capacity, agents, record

28

and beneficial security holders (including trustees and beneficiaries of trusts holding such securities), advisors and Representatives (in each case, in their respective capacities as such) and their respective heirs, executors, administrators, successors and assigns, of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, claims and other Liabilities whatsoever of every name and nature, both in law and in equity, which the releasing party has or ever had or ever will have, which exist or arise out of or relate to events, circumstances or actions taken by such other party occurring or failing to occur or any conditions existing at or prior to the Distribution Date whether or not known on the Distribution Date, including in connection with the transactions and all other activities to implement the Contribution and the Distribution; provided, however, that the foregoing general release shall not apply to (i) any Liabilities or other obligations (including Liabilities with respect to payment, reimbursement, indemnification or contribution) under the Merger Agreement, this Agreement or the other Transaction Agreements or any Contracts (as defined therein) contemplated thereby, or assumed, transferred, assigned, allocated or arising under any of the Merger Agreement, this Agreement or the other Transaction Agreements or any Contract contemplated thereby in each case subject to the terms thereof (including any Liability that the parties may have with respect to payment, performance, reimbursement, indemnification or contribution pursuant to the Merger Agreement, this Agreement or any other Transaction Agreement or any Contract contemplated thereby), and the foregoing release will not affect any party’s right to enforce the Merger Agreement, this Agreement or the other Transaction Agreements or the Contracts contemplated thereby in accordance with their terms or (ii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 7.2 (provided, that the parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any such Person with respect to any Liability to the extent such Person would be released with respect to such Liability by this Section 7.2 but for this clause (ii)).  Each party to this Agreement agrees, for itself and each member of its Group, not to make any claim or demand or commence any action or assert any claim against any member of the other Party’s Group with respect to the Liabilities released pursuant to this Section 7.2.

Section 7.3Intercompany Agreements; Intercompany Accounts.

(a)Except for the Transaction Agreements, any agreements entered into pursuant to the Merger Agreement including without limitation pursuant to Section 7.8 thereof, and the Transferred Affiliate Arrangements, all contracts, licenses, agreements, commitments and other arrangements, formal and informal, between any member of the Verizon Group, on the one hand, and any member of the Spinco Group, on the other hand, in existence as of the Distribution Date, shall terminate as of the close of business on the day prior to the Distribution Date.  No such terminated agreement (including any provision thereof that purports to survive termination) shall be of any further force or effect after the Distribution Date and all parties shall be released from all obligations

29

thereunder.  From and after the Distribution Date, no member of either Group shall have any rights under any such terminated agreement with any member of the other Group, except as specifically provided herein or in the other Transaction Agreements.

(b)Effective immediately prior to the Distribution Date, all intercompany cash management loan balances between Verizon and the Verizon Subsidiaries, on one hand, and Spinco and the Spinco Subsidiaries, on the other hand, shall be canceled.

Section 7.4Guarantee Obligations and Liens.

(a)Verizon and Spinco shall, upon Verizon’s request, cooperate, and shall cause their respective Groups to cooperate and use their respective reasonable best efforts to:  (x) terminate, or to cause Spinco, as the appropriate member of the Spinco Group, to be substituted in all respects for Verizon or the applicable member of the Verizon Group in respect of, all obligations of any member of the Verizon Group under any Spinco Liabilities identified by Verizon for which such member of the Verizon Group may be liable, as guarantor, original tenant, primary obligor or otherwise (including any Spinco financial instrument) (“Verizon Guarantees”), and (y) terminate, or to cause Spinco Assets to be substituted in all respects for any Verizon Assets in respect of, any liens or encumbrances identified by Verizon on Verizon Assets which are securing any Spinco Liabilities.  If such a termination or substitution is not effected by the Distribution Date, without the prior written consent of Verizon, from and after the Distribution Date, Spinco shall not, and shall not permit any member of the Spinco Group to, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, contract or other obligation for which a member of the Verizon Group is or may be liable or for which any Verizon Asset is or may be encumbered unless all obligations of the Verizon Group and all liens and encumbrances on any Verizon Asset with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to Verizon.

(b)Verizon and Spinco shall, upon Spinco’s request, cooperate, and shall cause their respective Groups to cooperate and use their respective reasonable best efforts to:  (x) terminate, or to cause a member of the Verizon Group to be substituted in all respects for any member of Spinco Group in respect of, all obligations of any member of the Spinco Group under any Verizon Liabilities for which such member of the Spinco Group may be liable, as guarantor, original tenant, primary obligor or otherwise (including any Verizon financial instrument) (“Spinco Guarantees”), and (y) terminate, or to cause Verizon Assets to be substituted in all respects for any Spinco Assets in respect of, any liens or encumbrances on Spinco Assets which are securing any Verizon Liabilities.  If such a termination or substitution is not effected by the Distribution Date,

30

without the prior written consent of Spinco, from and after the Distribution Date, Verizon shall not, and shall not permit any member of the Verizon Group to, renew or extend the term of, increase its obligations under, or transfer to a third party, any loan, lease, contract or other obligation for which a member of the Spinco Group is or may be liable or for which any Spinco Asset is or may be encumbered unless all obligations of the Spinco Group and all liens and encumbrances on any Spinco Asset with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to Spinco.

Section 7.5Insurance.

(a)Notwithstanding any other provision of this Agreement, from and after the Distribution Date, Spinco and the Spinco Subsidiaries will have no rights with respect to any Policies, except that (i)  Verizon will use its reasonable best efforts, at Spinco’s request, to assert claims on behalf of Spinco and the Spinco Subsidiaries for any loss, liability or damage identified by Spinco with respect to the Spinco Assets or Spinco Liabilities under Policies with third-party insurers which are “occurrence basis” insurance policies (“Occurrence Basis Policies”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Distribution Date to the extent that the terms and conditions of any such Occurrence Basis Policies and agreements relating thereto so allow and (ii)  Verizon will use its reasonable best efforts to obtain from the relevant third-party insurer an assignment to Spinco of any rights to prosecute claims identified by Spinco properly asserted with respect to Spinco Assets or Spinco Liabilities with an insurer prior to the Distribution Date under Policies with third-party insurers which are insurance policies written on a “claims made” basis (“Claims Made Policies”) arising out of insured incidents occurring from the date coverage thereunder first commenced until the Distribution Date to the extent that the terms and conditions of any such Claims Made Policies and agreements relating thereto so allow; provided, that in the case of both clauses (i) and (ii) above, (A) all of Verizon’s and each Verizon Subsidiary’s reasonable out-of-pocket costs and expenses incurred in connection with the foregoing are promptly paid by Spinco (it being agreed that Verizon will not incur material expenditures above reasonable amounts specified by Spinco unless authorized by Spinco), (B) Verizon and the Verizon Subsidiaries may, at any time, without liability or obligation to Spinco or any Spinco Subsidiary (other than as set forth in Section 7.5(c)), amend, commute, terminate, buy-out, extinguish liability under or otherwise modify any Occurrence Basis Policies or Claims Made Policies (and such claims shall be subject to any such amendments, commutations, terminations, buy-outs, extinguishments and modifications), and (C) any such claim will be subject to all of the terms and conditions of the applicable Policy.

31

(b)Verizon will use its reasonable best efforts to recover damages or to assist Spinco in connection with any efforts by Spinco to recover damages, as the case may be, under any Policy with respect to the Spinco Business for incidents occurring prior to the Distribution Date; provided, that all of Verizon’s reasonable out-of-pocket costs and expenses incurred in connection with the foregoing are promptly paid by Spinco (it being agreed that Verizon will not incur material expenditures above reasonable amounts specified by Spinco unless authorized by Spinco).

(c)If an extended reporting period for Claims Made Policies is available for Verizon to purchase, if the Surviving Corporation requests following the Closing Date, Verizon shall cause to be purchased at the Surviving Corporation’s expense an extended reporting period with respect to such insurance for the benefit of Spinco and the Spinco Subsidiaries as insureds.

(d)In the event that a Policy provides coverage for both Verizon and/or a Verizon Subsidiary, on the one hand, and the Spinco Business, Spinco Assets and Spinco Liabilities, on the other hand, relating to the same occurrence: (i) Verizon agrees to jointly defend Spinco and/or any applicable Spinco Subsidiaries where no conflicts exist between the parties; and (ii) Spinco shall pay that portion of all out-of-pocket fees and expenses, in excess of any insurance and/or insurance reimbursement, attributable to the Spinco Assets and Spinco Liabilities.

(e)The obligations of Verizon and its Subsidiaries under this Section 7.5 shall terminate on the seventh anniversary of the Effective Time.

Section 7.6Subsequent Transfers.  In the event that at any time during the 18-month period following the Distribution Date, a member of the Verizon Group becomes aware that it possesses any Spinco Assets (except (i) for assets, rights and properties provided by members of the Verizon Group pursuant to the Transition Services Agreement or (ii) as otherwise contemplated by the Transaction Agreements), Verizon shall cause the prompt transfer of such assets, rights or properties to Spinco.  Prior to any such transfer, Verizon shall hold such Spinco Asset in trust for Spinco.  In the event that at any time during the 18-month period following the Distribution Date, a member of the Spinco Group becomes aware that it possesses any Verizon Assets (except as otherwise contemplated by the Transaction Agreements), the Spinco Group shall cause the prompt transfer of such assets, rights or properties to Verizon or a member of the Verizon Group.  Prior to any such transfer, the Spinco Group shall hold such Verizon Asset in trust for Verizon.

32

Section 7.7Further Assurances.  From time to time after the Distribution Date, and for no further consideration, each of the parties shall execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such other actions as may be necessary to consummate and make effective the transactions contemplated by this Agreement; provided, that no such documents or instruments shall impose obligations on any party broader than or additive to those in any Transaction Agreement.

ARTICLE VIII

Access to Information

Section 8.1Provision of Information.  Notwithstanding anything herein to the contrary, the parties agree that the obligation of Verizon to deliver Information that is part of the Spinco Assets to Spinco from and after the Distribution will be governed by this Article VIII.  Subject to the terms of this Article VIII,

(a)No later than five Business Days following the Closing Date, Verizon shall deliver to Spinco at the address specified for notices to the Company in the Merger Agreement (or to such other address in the continental United States as may be designated by the Company to Verizon no less than 10 days prior to the Distribution Date), (i) copies of the Information constituting Spinco Assets that are continuing property records, (ii) copies of the Information constituting Spinco Assets that is contained in the data room located in Irving, Texas on the date hereof, and such additional Information constituting Spinco Assets that is in the same general categories as the existing Information in such data room and is added to the data room by Verizon (using reasonable commercial efforts to do so) immediately prior to the Closing Date and (iii) minute books and organizational documents of Spinco and the Spinco Subsidiaries.

(b)Following the Closing Date, Verizon shall deliver or make available to Spinco from time to time upon the request of Spinco following the Distribution Date Information not provided pursuant to Section 8.1(a) relating directly to the Spinco Assets, the Spinco Business, or the Spinco Liabilities that consist of: (i) active Contracts, (ii) active litigation files and (iii) all other Information that constitutes Spinco Assets or relates directly to any Spinco Liability, in each case to the extent they are material to the conduct of the Spinco Business following the Distribution Date.  Verizon in good faith will also consider providing upon the request of Spinco from time to time following the Distribution Date other Information relating directly to the Spinco Assets, the Spinco Business or the Spinco Liabilities, but it shall be under no obligation to do so.  Subject to Section 8.5, Verizon may retain complete and accurate copies of such Information.  The

33

costs and expenses incurred in the identification, isolation and provision of Information to the Spinco Group shall be paid for by the Spinco Group, provided that to the extent any Information exists in paper form, other than pre-Distribution billing Information, Verizon shall provide copies of same without charge.  Information shall be provided as promptly as practicable upon request, with due regard for other commitments of Verizon personnel and the materiality of the information to Spinco (including the need to comply with any “Order” or any “Law” (each as defined in the Merger Agreement)).

(c)Notwithstanding anything in this Agreement to the contrary, (x) the provision of returns and other Information relating to Tax matters shall be governed by the Tax Sharing Agreement and the Transition Services Agreement and not this Agreement, (y) the provision of Information relating to personnel and personnel maters will be governed by the Transition Services Agreement and the Employee Matters Agreement and not this Agreement and (z) the ownership and use of any Information that constitutes an Intellectual Property Asset shall be governed by the Intellectual Property Agreement.

Section 8.2Privileged Information.

(a)Each party hereto acknowledges that:  (i) each of Verizon and Spinco (and the members of the Verizon Group and the Spinco Group, respectively) has or may obtain Privileged Information; (ii) there are and/or may be a number of Litigation Matters affecting each or both of Verizon and Spinco; (iii) both Verizon and Spinco have a common legal interest in Litigation Matters, in the Privileged Information and in the preservation of the confidential status of the Privileged Information, in each case relating to the pre-Distribution Spinco Business or Verizon Business or, in the case of the Spinco Group, relating to or arising in connection with the relationship among Verizon and its Subsidiaries on or prior to the Distribution Date; and (iv) both Verizon and Spinco intend that the transactions contemplated hereby and by the Merger Agreement and the other Transaction Agreements and any transfer of Privileged Information in connection therewith shall not operate as a waiver of any potentially applicable privilege.

(b)Each of Verizon and Spinco agrees, on behalf of itself and each member of the Group of which it is a member, not to disclose or otherwise waive any privilege attaching to any Privileged Information relating to the pre-Distribution Spinco Business or Verizon Business, as applicable, or, in the case of the Spinco Group, relating to or arising in connection with the relationship among Verizon and its Subsidiaries on or prior to the Distribution Date, without providing prompt written notice to and obtaining the prior written consent of the other, which consent shall not be unreasonably withheld, conditioned or delayed and shall not be withheld, conditioned or delayed if the other

34

party certifies that such disclosure is to be made in response to a likely threat of suspension or debarment or similar action; provided, however, that Verizon and Spinco shall not be required to give any such notice or obtain any such consent and may make such disclosure or waiver with respect to Privileged Information if such Privileged Information relates solely to the pre-Distribution Spinco Business or Verizon Business, as applicable.  In the event of a disagreement between any member of the Verizon Group and any member of the Spinco Group concerning the reasonableness of withholding such consent, no disclosure shall be made prior to a resolution of such disagreement by a court of competent jurisdiction, provided that the limitations in this sentence shall not apply in the case of disclosure required by law and so certified as provided in the first sentence of this paragraph.

(c)Upon any member of the Verizon Group or any member of the Spinco Group receiving any subpoena or other compulsory disclosure notice from a court, other governmental agency or otherwise which requests disclosure of Privileged Information, in each case relating to pre-Distribution Spinco Business or Verizon Business, as applicable, or, in the case of the Spinco Group, relating to or arising in connection with the relationship among Verizon and its Subsidiaries on or prior to the Distribution Date, the recipient of the notice shall as promptly as practicable provide to the other Group (following the notice provisions set forth herein) a copy of such notice, the intended response, and all materials or information relating to the other Group that might be disclosed and the proposed date of disclosure.  In the event of a disagreement as to the intended response or disclosure, unless and until the disagreement is resolved as provided in paragraph (b) of this Section, the parties shall cooperate to assert all defenses to disclosure claimed by either party’s Group, and shall not disclose any disputed documents or information until all legal defenses and claims of privilege have been finally determined, except as otherwise required by a court order requiring such disclosure.

Section 8.3Production of Witnesses.  Subject to Section 8.2, after the Distribution Date, each of Verizon and Spinco shall, and shall cause each member of its respective Group to make available to Spinco or Verizon or any member of the Spinco Group or of the Verizon Group, as the case may be, upon reasonable prior written request, such Group’s directors, managers or other persons acting in a similar capacity, officers, employees and agents as witnesses to the extent that any such Person may reasonably be required in connection with any Litigation Matters, administrative or other proceedings in which the requesting party may from time to time be involved and relating to the pre-Distribution Spinco Business or Verizon Business, as applicable, or, in the case of the Spinco Group, relating to or in connection with the relationship among Verizon and its Subsidiaries on or prior to the Distribution Date.  The costs and expenses incurred in the provision of such witnesses shall be paid by the party requesting the availability of such persons.

35

Section 8.4Retention of Information.  Except as otherwise agreed in writing, or as otherwise provided in the other Transaction Agreements, each of Verizon and Spinco shall, and shall cause the members of the Group of which it is a member to, retain all Information in such party’s Group’s possession or under its control, relating directly and primarily to the pre-Distribution business, Assets or Liabilities of the other party’s Group for so long as such Information is retained pursuant to such party’s general document retention policies as of such time or such later date as may be required by law, except that if, prior to the expiration of such period, any member of either party’s Group wishes to destroy or dispose of any such Information that is at least three years old, prior to destroying or disposing of any of such Information, (a) the party whose Group is proposing to dispose of or destroy any such Information shall provide no less than 30 days’ prior written notice to the other party, specifying the Information proposed to be destroyed or disposed of, and (b) if, prior to the scheduled date for such destruction or disposal, the other party requests in writing that any of the Information proposed to be destroyed or disposed of be delivered to such other party, the party whose Group is proposing to dispose of or destroy such Information promptly shall arrange for the delivery of the requested Information to a location specified by, and at the expense of, the requesting party.  This Section 8.4 shall not apply to Information referred to in clauses (x) and (y) of Section 8.1(c).

Section 8.5Confidentiality.  Subject to Section 8.2, which shall govern Privileged Information, from and after the Distribution Date, each of Verizon and Spinco shall hold, and shall use commercially reasonable efforts to cause its Affiliates and Representatives to hold, in strict confidence all Information concerning the other party’s Group obtained by it or furnished to it by such other party’s Group pursuant to this Agreement or the other Transaction Agreements and shall not release or disclose such Information to any other Person, except its Affiliates and Representatives, who shall be advised of the provisions of this Section 8.5, and each party shall be responsible for a breach by any of its Affiliates or Representatives; provided, however, that any member of the Verizon Group or the Spinco Group may disclose such Information to the extent that (a) disclosure is compelled by judicial or administrative process or, based on advice of such Person’s counsel, by other requirements of law or regulation including without limitation filing requirements with the U.S. Securities and Exchange Commission, or (b) such party can show that such Information was (i) in the public domain through no fault of such Person or (ii) lawfully acquired by such Person from another source after the time that it was furnished to such Person by the other party’s Group, and not acquired from such source subject to any confidentiality obligation on the part of such source known to the acquiror.  Notwithstanding the foregoing, each of Verizon and Spinco shall be deemed to have satisfied its obligations under this Section 8.5 with respect to any Information (other than Privileged Information) if it exercises the same care with regard to such Information as it takes to preserve confidentiality for its own similar Information.

36

Section 8.6Cooperation with Respect to Government Reports and Filings.  Verizon, on behalf of itself and each member of the Verizon Group, agrees to provide any member of the Spinco Group, and Spinco, on behalf of itself and each member of the Spinco Group, agrees to provide any member of the Verizon Group, with such cooperation and Information (with regard to Verizon and the Verizon Group, with respect to the Spinco Business only) as may be reasonably requested by the other in connection with the preparation or filing of any government report or other government filing contemplated by this Agreement or in conducting any other government proceeding relating to the pre-Distribution business of the Verizon Group or the Spinco Group, Assets or Liabilities of either Group or relating to or in connection with the relationship between the Groups on or prior to the Distribution Date.  Such cooperation and Information shall include promptly forwarding copies of appropriate notices, forms and other communications received from or sent to any government authority which relate to the Verizon Group, in the case of the Spinco Group, or the Spinco Group, in the case of the Verizon Group.  All cooperation provided under this section shall be provided at the expense of the party requesting such cooperation.  Each party shall make its employees and facilities available during normal business hours and on reasonable prior notice to provide explanation of any documents or Information provided hereunder.

ARTICLE IX

No Representations or Warranties

Section 9.1No Representations or Warranties.  Except as expressly set forth in any Transaction Agreement, Spinco and Verizon understand and agree that no member of the Verizon Group is representing or warranting to Spinco or any member of the Spinco Group in any way as to the Spinco Assets, the Spinco Business or the Spinco Liabilities.  Except as expressly set forth in the Merger Agreement, Verizon and Spinco understand and agree that no member of the Spinco Group is representing or warranting to Verizon or any member of the Verizon Group in any way as to the Verizon Assets, the Verizon Business or the Verizon Liabilities.

ARTICLE X

Miscellaneous

Section 10.1Complete Agreement.  This Agreement, the Exhibits and the Disclosure Letter hereto, the other Transaction Agreements and other documents referred to herein shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede all previous negotiations, commitments and

37

writings with respect to such subject matter.  The Disclosure Letter delivered pursuant hereto is expressly made a part of, and incorporated by reference into, this Agreement.  In the case of any conflict between the terms of this Agreement and the terms of any other Transaction Agreement, the terms of such other Transaction Agreement shall be applicable.

Section 10.2Expenses.  All fees and expenses and any other costs incurred by the parties in connection with the transactions contemplated hereby and by the Transaction Agreements shall be paid as set forth in Section 11.1 of the Merger Agreement.

Section 10.3Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its conflicts of laws principles.

Section 10.4Notices.  Prior to the Closing under the Merger Agreement, all notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed given upon (a) a transmitter’s confirmation of a receipt of a facsimile transmission (but only if followed by confirmed delivery of a standard overnight courier the following Business Day or if delivered by hand the following Business Day), (b) confirmed delivery of a standard overnight courier or when delivered by hand or (c) the expiration of five Business Days after the date mailed by certified or registered mail (return receipt requested), postage prepaid, to the parties at such addresses as may be specified by the parties from time to time.  Following the Closing notices shall be sent to Verizon and the Company (as successor by merger to Spinco) in accordance with Section 11.2 of the Merger Agreement, or to such other address as any party hereto may have furnished to the other parties by a notice in writing in accordance with this Section.

Section 10.5Amendment and Modification.  This Agreement may be amended, modified or supplemented, and any provision hereunder may be waived, prior to the Effective Time, only by a written agreement signed by the parties hereto.

Section 10.6Successors and Assigns; No Third-Party Beneficiaries.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns, but neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties and a Company Consent.  This Agreement is solely for the benefit of Verizon, Spinco and the Company

38

and their respective Subsidiaries and Affiliates and is not intended to confer upon any other Persons any rights or remedies hereunder.

Section 10.7Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 10.8Interpretation.  The Article and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties hereto and shall not in any way affect the meaning or interpretation of this Agreement.

Section 10.9Severability.  If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party.

Section 10.10References; Construction.  References to any “Article,” “Exhibit,” or “Section,” without more, are to Articles, Exhibits and Sections to or of this Agreement.  Unless otherwise expressly stated, clauses beginning with the term “including” or similar words set forth examples only and in no way limit the generality of the matters thus exemplified.

Section 10.11Termination.  Notwithstanding any provision hereof, in the event of termination of the Merger Agreement, this Agreement may be terminated and the Distribution abandoned at any time prior to the Distribution by and in the sole discretion of Verizon.  In the event of such termination, no party hereto or to any other Transaction Agreement (other than the Merger Agreement to the extent provided therein) shall have any Liability to any Person by reason of this Agreement or any other Transaction Agreement (other than the Merger Agreement to the extent provided therein).

Section 10.12Consent to Jurisdiction and Service of Process.  THE PARTIES AGREE THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED.  IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE

39

ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES LOCATED IN THE STATE OF NEW YORK, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.  IN ADDITION, EACH OF THE PARTIES HERETO (A) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATE OF NEW YORK IN THE EVENT ANY DISPUTE ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (B) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT AND (C) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A FEDERAL COURT SITTING IN THE STATE OF NEW YORK.  NOTWITHSTANDING THIS SECTION 10.12, ANY DISPUTE REGARDING THE CLOSING STATEMENT SHALL BE RESOLVED IN ACCORDANCE WITH ARTICLE V HEREOF; PROVIDED THAT SUCH ARTICLE V MAY BE ENFORCED BY EITHER PARTY IN ACCORDANCE WITH TERMS OF THIS SECTION 10.12.

Section 10.13Waivers.  Except as provided in this Agreement, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained in this Agreement.  The waiver by any party hereto of a breach of any provision hereunder shall not operate or be construed as a waiver of any prior or subsequent breach of the same or any other provision hereunder.

Section 10.14Waiver of Jury Trial.  Each of the parties hereto irrevocably and unconditionally waives all right to trial by jury in any litigation, claim, action, suit, arbitration, inquiry, proceeding, investigation or counterclaim (whether based in contract, tort or otherwise) arising out of or relating to this Agreement or the actions of the parties hereto in the negotiation, administration, performance and enforcement thereof.

[SIGNATURE PAGE FOLLOWS]

40

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

VERIZON COMMUNICATIONS INC.
By:	/s/ John W. Diercksen
	Name:		John W. Diercksen
	Title:		Executive Vice President—Strategy,
			Development and Planning
NORTHERN NEW ENGLAND
SPINCO INC.
By:		/s/ Stephen E. Smith
		Name:		Stephen E. Smith
		Title:		Vice President

41

EX-10.3

Exhibit 10.3

Master Services Agreement

Capgemini Confidential

MASTER SERVICES AGREEMENT

This Master Services Agreement (this “Agreement”) is entered into as of January __, 2007 between Capgemini U.S. LLC, a Delaware limited liability company with offices located at 750 Seventh Avenue, New York, NY 10019 (“Capgemini”), and FairPoint Communications, Inc., a Delaware corporation, with its principal office located at 521 East Morehead Street, Suite 250, Charlotte, NC 28202 (“Client” or “FairPoint”).

WHEREAS, Client desires to engage Capgemini  to perform professional services for Client as may be requested from time to time by Client and hereafter agreed upon in writing by Capgemini (the “Services”), including Services in connection with the transition by Client of certain business operations pursuant to a Transition Services Agreement, of even date herewith (the “TSA”), by and among Client, Verizon Information Technologies LLC, Enhanced Communications of Northern New England, Inc. and Northern New England Telephone Operations Inc. (the “Transition Services Agreement”), and any other Services mutually agreed to by the parties; and

WHEREAS, Capgemini agrees to provide the Services to Client in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants hereinafter expressed, the parties hereby mutually agree as follows:

1.             TERM

This Agreement shall be effective as of the date hereof and, unless sooner terminated in accordance with its terms, shall continue in effect for an initial term ending December 31, 2009, and shall thereafter continue in effect for successive one-year terms, unless not later than thirty (30) days prior to the end of the then-current term, either party shall notify the other that this Agreement will expire, in which event this Agreement shall expire on the last day of the then-current term (except with respect to any Work Order (as defined herein) for which the Services have not been completed on such date, as to which this Agreement will terminate on completion thereof).  The term of any Work Order shall be as set forth in the Work Order.

2.             SCOPE

(a)           Services.  The Services provided will be authorized on a project-by-project basis pursuant to a Work Order.

(b)           Work Orders.  Client shall, from time to time, identify any Services which Client desires to be performed by Capgemini.  Following consultation between Client and Capgemini and the decision by  Capgemini to provide the identified Services,  Capgemini shall prepare a proposed work order which shall include, to the extent applicable:

(i)            Project identification, approach and objectives, the agreed upon scope of the Services and the location where the Services will be performed;

(ii)           The Deliverables (as defined herein) to be provided under such Work Order, if any;

(iii)          The fees for the Services under such Work Order;

(iv)          The period of performance for the Services under such Work Order;

(v)           Any assumptions upon which such Work Order is based;

(vi)          Staffing by the parties and any Client resource commitments and responsibilities in addition to those set forth in this Agreement; and

(vii)         Any other information or agreements deemed relevant by the parties.

Each proposed work order shall be approved by Client and, when acceptable to both parties, shall be executed by both parties (upon such execution, and as may be modified from time to time in accordance herewith, a “Work Order”).  Each Work Order is incorporated by reference into, and shall be deemed a part of, this Agreement.   Capgemini will perform the Services specified in each Work Order.  Except as may be expressly provided in this Agreement, nothing in this Agreement shall constitute a commitment of either party to enter any particular Work Order.  To the extent set forth in an applicable Work Order,  Capgemini shall be compensated in preparing any proposed Work Order, or any proposed addendum or change order to a Work Order, which is prepared at the request of Client.

(c)           Capgemini shall not voluntarily withhold the provision of any significant or material aspect of the Services for any reason during the term of this Agreement.  If Capgemini breaches or threatens to breach the provisions of this Section, Client shall promptly provide written notice to Capgemini. Capgemini agrees that Client will be irreparably harmed, and, without any additional findings of irreparable injury or harm or other considerations of public policy, Client shall be entitled to apply to a court of competent jurisdiction for and, provided Client follows the appropriate procedural requirements (e.g. notice), Capgemini shall not oppose the granting of an injunction compelling specific performance by Capgemini of its obligations under this Agreement without the necessity of posting any bond or other security; provided, however, in the event a dispute arises in connection with the scope of a particular Work Order, Capgemini shall be limited in opposing the granting of an injunction compelling specific performance by Capgemini of its obligations under this Agreement only for a period of one hundred twenty (120) days from notice by Client of Capgemini’s alleged breach of this subsection 2(c).  This Section 2(c) is subject, in its entirety, to the termination rights of Capgemini pursuant to Section 11(b) hereunder.

3.             CHANGES AND DELAYS

(a)           Changes. Except as specifically provided in an applicable Work Order:

(i)            The parties acknowledge and agree that the occurrence of the following events (each, an “Adjustment Event”) may require an extension in the schedule and/or an increase in the fees and expenses and/or an increase in the work Capgemini is to perform: (A) a material change to or deficiency in the information which Client has supplied to Capgemini; (B) a material failure by Client to perform any of its responsibilities under this Agreement in a timely manner; (C) an unanticipated event that materially changes the service needs or requirements of Client; (D) material and adverse circumstances beyond the reasonable control of either of the parties, including  acts of God or other Force Majeure Events (as defined herein); (E) a material change in law which substantially increases or modifies the responsibilities of Capgemini under this Agreement; or (F) any assumption in a Work Order not being realized.

(ii)           The parties also agree that from time to time during the term of this Agreement, Client may request, or Capgemini may propose, that Capgemini implement a change to the

2

Services which, if material, may require an extension in the schedule and/or an increase or decrease in the fees and expenses and/or an increase or decrease in the work  Capgemini is to perform (each, a “Change”), including: (A) a change to the scope or functionality of the Deliverables; (B) a change in the prioritization or manner in which Capgemini is performing the Services; or (C) a change to the scope of the Services.

(iii)          In the event an Adjustment Event occurs or the parties agree on a Change, Capgemini may prepare and provide to Client a proposed change order identifying the impact and setting forth any proposed adjustments in the schedule and/or payments to Capgemini.

(iv)          An authorized representative of each party shall promptly sign each agreed upon proposed change order to acknowledge the impact and to indicate that party’s agreement to the adjustments.  In the event the parties’ respective authorized representatives reach agreement, the agreed upon adjustments shall constitute Services.  In the event that the parties’ respective authorized representatives disagree in this regard, they shall promptly negotiate the same in good faith.  If they are unable to reach an agreement, they shall refer that matter to the parties’ respective executive management representatives, who will meet or confer by telephone conference as promptly as practical and in any event within two business days to negotiate the same in good faith in an attempt to reach an agreement.  Until such time as the parties agree on the scope and pricing for any Change to the Services, Capgemini shall continue to provide existing Services related to the functional scope set forth in Section 1 of Work Order number 1 attached hereto.  If the parties dispute that the proposed change is within the scope set forth in Work Order number 1 attached hereto, Capgemini shall nonetheless work in good faith for a period of at least 30calendar days in an attempt to incorporate the proposed Change, pending the parties’ agreement upon pricing and any other unresolved matters associated with the proposed Change.  Subject to Client’s rights under Section 2(c) above, Capgemini shall not thereafter be obligated to continue such Services, unless and until the parties reach agreement upon any unresolved matters related thereto.

(b)           Delays.  Notwithstanding Paragraph (a) of this Section 3, if any delays or deficiencies in the Services or Deliverables occur as a direct, proximate result of Adjustment Events or Changes, the scheduled completion date for the affected Services and/or Deliverables for the applicable Work Order shall be extended to the extent of any such delays, and Capgemini shall not incur any liability to Client as a result of such delays or deficiencies.

4.             COMPENSATION

(a)           General.  Compensation for Capgemini’s Services and/or Deliverables shall be outlined in each Work Order.  Such fees shall be payable to Capgemini’s account within thirty (30) days after the receipt of an invoice covering Services rendered hereunder not previously invoiced; provided, that Services shall not be invoiced prior to performance thereof.  The invoice shall include a detailed description of the Services which were performed or Deliverables provided during the covered period.   Except as specifically set forth in a Work Order, compensation for Services and Deliverables shall be the complete and total compensation payable to Capgemini pursuant to such Work Order and shall include all programming fees, taxes, maintenance fees, initiation and set-up costs and license fees and costs associated with any obtaining licenses, approvals, waivers or rights relating to any third party intellectual property to the extent any such items are applicable to the scope of a Work Order.  Capgemini may change the address to which payments are to be sent by Client at any time by giving Client written notice of such change.  If any amount is not paid within thirty (30) days after it becomes due, Client shall also pay Capgemini interest on that amount for the period from its due date until it is paid in full.  That

3

interest shall be calculated at a rate equal to twelve percent (12%) per annum (or the maximum rate permitted by applicable law, if lower), and shall be payable on demand.

(b)           Taxes.  Except as specifically set forth in a Work Order, applicable taxes incurred in connection with the Services and Deliverables are included in the fees and expenses payable pursuant to Section 4. In addition, under no circumstances shall the Client be obligated for, and Capgemini shall in all circumstances pay, any and all taxes on the income of Capgemini, and each party shall bear sole responsibility for all real or personal property-related taxes on its owned or leased real or personal property (including sales and use taxes on such property acquired in order to provide the Services), for franchise or similar taxes on its business, for employment taxes on its employees, and for intangible taxes on property it owns or licenses.

5.             CONFIDENTIALITY

Neither party shall disclose to a third party Confidential Information (as defined below) of the other party.  The receiving party shall use the same degree of care as it uses to protect the confidentiality of its own confidential information of like nature, but no less than a reasonable degree of care, to maintain in confidence the Confidential Information of the disclosing party.  The foregoing obligations shall not apply to any information that (a) is required to be disclosed by law, subpoena or other process, (b) is disclosed to a Capgemini Entity or any subcontractor of a Capgemini Entity (as defined below) in connection with its performance of the Services; provided, that, such entity or subcontractor has agreed to be bound by confidentiality provisions at least as restrictive as those set forth herein, or (c) is required to be disclosed in connection with any dispute, claim or action between the parties.  “Confidential Information” means information related to the subject matter of a Work Order and any of the projects thereunder (including any third party information), and the business of the disclosing party, which (i) derives economic value, actual or potential, from not being generally known to or readily ascertainable by other persons who can obtain economic value from the disclosure or use of the information, (ii) is the subject of efforts by the disclosing party or owner of the third party Confidential Information that are reasonable under the circumstances to maintain the secrecy of the information, (iii) is identified by either party as “Confidential” and/or “Proprietary”, or (iv) which, under all circumstances, ought reasonably to be treated as confidential and/or proprietary, including this Agreement.  Confidential Information shall not include any information that (1) is at the time of disclosure, or thereafter becomes, through a source other than the receiving party, publicly known, (2) is subsequently learned from a third party that does not impose an obligation of confidentiality on the receiving party, (3) was known to the receiving party at the time of disclosure, or (4) is developed independently by the receiving party.  The obligations of confidentiality hereunder with respect to any Confidential Information shall continue for a period of four years from the date of the last disclosure of Confidential Information under the Work Order under which such Confidential Information was disclosed; provided, that, any personally identifiable information (e.g. customer data) shall be held in confidence by the receiving party in perpetuity

6.             DELIVERABLES

Upon full payment of any amount attributable to a Deliverable as set forth in a Work Order,  Capgemini hereby assigns to Client any and all rights, title and interest, including, without limitation, copyrights, trade secrets and proprietary rights, to the materials created by  Capgemini specifically for Client hereunder and required to be delivered to Client by virtue of their description or specification as a deliverable in an applicable Work Order (the “Deliverables”).  The Deliverables exclude all third party works and products whether or not included or embedded in the Deliverables.  The Deliverables shall be deemed to be “works made for hire” under the federal copyright laws.   Capgemini agrees to give Client reasonable assistance, at Client’s expense, to perfect such assignment of such rights, title and interest.  However, the Deliverables may include data, modules, components, designs, processes, utilities, subsets,

4

objects, program listings, tools, models, methodologies, programs, systems, analysis frameworks, leading practices, and specifications (collectively, “Technical Elements”) owned or developed by Capgemini prior to, or independently from, its engagement hereunder (and any modifications or enhancements to  Capgemini’s Technical Elements developed in the course of performing the Services) (collectively, “Capgemini Technical Elements”) and  Capgemini retains exclusive ownership rights to all Capgemini Technical Elements.  Accordingly, to the extent that any such Capgemini Technical Elements are integrated into any Deliverables, Capgemini hereby grants to Client a perpetual, worldwide, non-exclusive, paid-up, limited license to use, copy and modify such  Capgemini Technical Elements as integrated into such Deliverables for the operation of its business in the ordinary course as a provider of communications services to its customers.  Notwithstanding anything to the contrary in this Section, where Capgemini utilizes as a subcontractor a third party software vendor to provide Services with respect to software under license to Client from such subcontractor, Client’s rights to any materials developed by such subcontractor, to the extent they would constitute a Deliverable if developed by Capgemini, shall be subject to the terms of the software license agreement between Client and such subcontractor.  Notwithstanding anything to the contrary contained herein, Capgemini retains all rights to its general ideas, concepts, methodologies, processes, techniques, knowledge, experience and know-how acquired in the course of performing the Services, including to the extent such items may constitute Technical Elements hereunder.

7.             ACCEPTANCE

If Client reasonably determines that a Deliverable fails: (i) in any material respect to meet the specifications and/or other acceptance criteria mutually agreed upon by the parties, or (ii) in any respect to achieve the full features, functionality, scalability and performance set forth in a Work Order, then, Client shall (a) promptly, after the delivery by Capgemini of such Deliverable, notify Capgemini in writing of such failure, and (b) specify in reasonable detail the nature and extent of such failure.  Upon receipt of such notice, Capgemini shall, through the performance of additional Services, make such adjustments, modifications or revisions as are necessary to cause such Deliverable to so meet the specifications and/or other acceptance criteria, and achieve the full features, functionality, scalability and performance mutually agreed upon by the parties (a “Conforming Deliverable”), and either: (i) in the case of a non-software Deliverable, re-submit such Deliverable to Client for Client’s review; or (ii) in the case of a Deliverable that comprises software, notify Client that such Deliverable is ready for re-testing.  Capgemini shall continue the process of adjusting and modifying such Deliverable and resubmitting such Deliverable to Client for review in accordance with the preceding sentence until such time as the Deliverable is a Conforming Deliverable.  Acceptance criteria will be agreed to by the parties in each applicable Work Order.  At such time as a Deliverable is a Conforming Deliverable, Client shall issue a writing indicating its acceptance of such Deliverable.  In any case, each such Deliverable shall be deemed accepted unless rejected in writing within ten (10) calendar days of the delivery by Capgemini of such Deliverable.  Notwithstanding the rejection of any Deliverable by Client, operational use of such Deliverable in a production environment shall be deemed to constitute acceptance thereof.  Once accepted, Client may not thereafter reject any interim Deliverable, provided that acceptance of a composite Deliverable may be conditioned upon the appropriate integration and operation of such previously accepted interim Deliverable into such composite Deliverable, to the extent required by the applicable specifications or acceptance criteria. Accepted Deliverables shall remain subject to the warranty provided in Section 10 for the duration of the Warranty Period (as defined below).

5

8.             RELATIONSHIP OF PARTIES

(a)           No Special Relationship.  Nothing contained herein or relating to the subject matter hereof shall be construed to create an employment, principal-agent, or fiduciary relationship, or a partnership or joint venture, or any relationship other than a contractual relationship, between Client and Capgemini, and neither party shall have the right, power or authority to obligate or bind the other in any manner whatsoever absent written consent. Capgemini will provide Services as an independent contractor. Capgemini does not undertake by this Agreement or otherwise to perform any obligation of Client, whether regulatory or contractual, or to assume any responsibility for Client’s business or operations.

(b)           Concerning Employees of Client and Capgemini.  Personnel supplied by either party will be deemed employees of such party and will not for any purpose be considered employees or agents of the other party.  Except as may otherwise be provided in this Agreement, each party shall be solely responsible for the supervision, daily direction and control of its employees and payment of their salaries (including withholding of appropriate payroll taxes), workers’ compensation, disability and other benefits.

(c)           Client-specific Responsibilities.  Client shall: (i) make all necessary decisions and determinations in a reasonably timely manner; (ii) provide Capgemini, in a reasonably timely fashion, with all information reasonably required for the performance of the Services to extent practicable in light of Client’s dependence on performance by Verizon Information Technologies LLC; (iii) provide Capgemini with reasonable access to Client premises necessary for the performance of the Services and Client will use commercially reasonable efforts to obtain for Capgemini the right to access Verizon Information Technologies’ premises; (iv) cooperate with Capgemini in the providing of Services; (v) retain personnel in accordance with the applicable Work Order to participate in or facilitate the performance of the Services; (vi) participate in the conduct of training sessions; (vii) timely participate in meetings and make its personnel readily available for such meetings; and (viii) assign Client personnel with relevant training and experience to work as part of a project team with Capgemini or in consultation with Capgemini’s personnel.

9.             CONTRACT PERFORMANCE

(a)           Client Sponsor.  A management official designated by Client (the “Client Sponsor”) shall have overall responsibility for the performance of each Work Order by Client, for coordinating the performance of the Services with  Capgemini, for acting as a day-to-day contact with the Capgemini Executive (as defined below) and for making available to  Capgemini the data, facilities, resources and other support services from Client required for Capgemini to be able to perform the Services in a timely and accurate manner, except to the extent such responsibilities are allocated to Capgemini under a particular Work Order

(b)           Capgemini Executive.  Dee Burger, or such other person as may be designated by  Capgemini (the “Capgemini Executive”) shall have primary operational responsibility for Capgemini’s performance of each Work Order, including all Capgemini personnel and other technical resources used in performing the Services, and will serve as day-to-day contact with the Client Sponsor.

(c)           Authority To Make Changes.  The Client Sponsor and the  Capgemini Executive may propose, accept and implement changes to technical aspects of any Work Order by signing amendments thereto setting forth such changes, provided such changes do not affect the fees or reimbursements agreed upon under any Work Order or materially change the Services.  Any material change to the Services

6

under any Work Order must be agreed to by the parties and set forth in writing in an addendum or change order to the relevant Work Order executed by the parties.

10.          WARRANTY AND LIABILITY

(a)           Capgemini warrants (the “Warranty”) that: (i) it will exercise due professional care and competence in the performance of the Services (ii) it shall meet any and all material specifications (including Deliverable specifications), and any and all functionality and operability requirements, set forth in any Work Order and applicable to the Services, and (iii) it will comply with applicable laws, ordinances, rules and regulations pertaining to the Services or this Agreement which apply to Capgemini’s performance of Services hereunder; provided, that, the parties acknowledge that Client remains solely responsible for compliance with laws, ordinances, rules, regulations or orders issued by any public authority as such relate specifically to Client’s industry or operation of its business.

(b)           Capgemini shall, for 120 calendar days following acceptance and utilization of each Deliverable into a production environment (the “Warranty Period”), fix any defects in the Services or Deliverables that are identified to Capgemini in writing during the Warranty Period and which are not Out of Scope Defects (“In-Scope Defects”).  Notwithstanding the foregoing, to the extent that the features, functionality, scalability and performance of a Deliverable are adversely impacted by any subsequent Deliverable, correction of the original Deliverable and interoperability with the subsequent Deliverable shall be subject to the Warranty for the Warranty Period applicable to the subsequent Deliverable, irrespective of whether the Warranty Period as to the original Deliverable has otherwise expired.  The following defects shall be considered out of scope defects and will not be covered by the Warranty (“Out of Scope Defects”):

(i)  The issue relates to enhancements or any other changes that require the system to operate in a manner not specified in the applicable Work Order and not agreed upon by the parties pursuant to a Change Order; or,

(ii)  The issue is an environmental issue, data issue, operational issue, user issue, or any other issues in which the system works as specified in the applicable Work Order when operated correctly with correct data; or,

(iii)  The issue results in any module that is modified by Client or any third party prior to the end of the warranty period; or,

(iv)  The issue relates to software code that was included in a prior release of the system that was not changed during the most recent release.

In addition, the Warranty does not include support for enhancements, maintenance and technical support, user support, or the cleaning-up of data.

(c)           For any breach of the Warranty, Capgemini shall re-perform and correct such Services.  If Capgemini does not resolve the In-Scope Defects to Client’s reasonable satisfaction consistent with the Work Order requirements, Client shall be entitled, in addition to any other right or remedy at law, to recover the fees paid to Capgemini for such deficient Services.  Any claim for breach of the Warranty with respect to any of the Services shall be made by written notice to Capgemini.  The time period permitted for response and resolution of In-Scope Defects after delivery of written notice to Capgemini shall depend upon the severity level of such defects.  The definitions and applicable response and resolution times for each severity level are as set forth below:

·Severity 1 – System Inoperable – No work can be performed or processing capacity is so limited that the probability of a serious operational backlog is imminent. This also includes instances

7

which stop the business from performing critical detail work and a manual workaround is not feasible.   Typically, Severity 1 Defects require an emergency fix.

·Severity 2 – Module Is Inoperable/Data Corrupted – Either processing capability is limited and the defect has significant adverse impact on end customer or data is being corrupted and work must be stopped to avoid further corruption/loss of data and a manual workaround is not feasible.   Typically, Severity 2 Defects require an emergency fix.

·Severity 3 – Feature inoperable/not working as documented.  This includes program defects that affects system users but do not stop end customers from performing daily business or for which there is a reasonable workaround.  After fixes for higher rated Defects are placed into production, fixes for Severity 3 Defects should be considered for inclusion in the next available release.

·Severity 4 – Operational Question/Cosmetic Issue – Defects/questions with day-to-day operational issues, cosmetic Defects with user interface; problem in or issue with documentation.  These defects should be resolved after more serious Defects have been fixed and scheduled for release accordingly.

Defect response times will be as follows:

·For a Severity Level 1 defect, Capgemini will: 1) respond within one hour acknowledging Client’s report of the defect and provide Client with a tracking number; 2) use diligent efforts to provide a defect analysis within 3 hours of receipt of Client’s report of the defect; 3). provide an interim resolution for the defect as soon as reasonably possible using continuous efforts, 24 hours a day, 7 days a week, 4) use diligent efforts to provide a final resolution within 5 calendar days after receipt of Client’s report of the Defect.

·For a Severity Level 2 defect, Capgemini will: 1) respond within 2 hours acknowledging Client’s report of the defect and provide Client with a tracking number; 2) use diligent efforts to provide a defect analysis within 6 hours of receipt of Client’s report of the defect; 3) use diligent efforts to provide an interim resolution for the defect within 48 hours of receipt of Customer’s report of the Defect; and 4) use diligent efforts to provide a final resolution within 10 days after receipt of Customer’s report of the Defect.

·For a Severity Level 3 defect, Capgemini will: 1) provide a defect analysis within 72 hours of receipt of Client’s report of the defect; 2) use diligent efforts to provide an interim resolution within 20 days of receipt of Client’s report of the defect; and 3) provide a final resolution within 60 days of receipt of Client’s report of the defect.

·For a Severity Level 4 defect, Capgemini shall review with Client the operational implications of the defect and, upon agreement, determine what actions may be reasonable given the circumstances and operational implications that the defect creates.

(d)           The Warranty Period shall begin once a given release is accepted in accordance herewith or the applicable Work Order.  Once all In-Scope Defects identified in writing to Capgemini during the Warranty Period have been resolved and retested, and the Warranty Period itself has elapsed, the warranty will expire. This Warranty Period will only pertain to each code release.  The Warranty Period for a given release will only pertain to In-Scope Defects caused by changes made during that release.  The Warranty Period will not pertain to any areas of the software or configuration that have not changed across the releases and that continue to function as they did in the prior release.

8

(e)           To the fullest extent permitted by applicable law, for each Work Order under which liability principally arises, the total aggregate liability of either party under this Agreement or with respect to the Services, and regardless of the form of action (including, but not limited to, breach of contract, tort, strict liability, breach of warranties, failure of essential services or otherwise, but excluding liability for fees owed by Client for Services rendered), will not exceed an amount equal to: (i) in the first three months after the execution thereof, liability shall be limited to two (2) times total fees paid to date to Capgemini (and not refunded to Client) thereunder, (ii) in months four (4) through six (6) after the execution thereof, liability shall be limited to one and one-half (1.5) times total fees paid to date to Capgemini (and not refunded to Client) thereunder, (iii) in months seven (7) through twelve (12) after the execution thereof, liability shall be limited to total fees paid to date to Capgemini (and not refunded to Client)  thereunder, and (iv) thereafter, an amount equal to total fees paid to Capgemini (and not refunded to Client) under such Work Order during the twelve (12) month period immediately preceding the event giving rise to the claim.

(f)            In no event will Capgemini or Client be liable for consequential, incidental, indirect, punitive or special damages (including loss of profits, data, business or goodwill), regardless of whether such liability is based on breach of contract, tort, strict liability, breach of warranties, failure of essential purpose or otherwise, and even if advised of the likelihood of such damages. Notwithstanding subsection (e) above and the preceding sentence of this subsection (f), the caps on the amount of liability and the limitations on type of liability described herein and therein shall not apply to: (i) the gross negligence or willful misconduct of a party, (ii) any violation by Capgemini of Section 2(c) other than a dispute regarding the scope of the Services provided in a Work Order, (iii) third party indemnity obligations pursuant to Section 12 below, or (iv) any violation of Section 5.

(g)           CLIENT UNDERSTANDS THAT CAPGEMINI IS PERFORMING THE SERVICES HEREUNDER IN PART IN RELATION TO SYSTEMS AND DATA THAT HAVE BEEN PRODUCED BY CLIENT OR THAT HAVE BEEN PROCURED FROM THIRD PARTIES OTHER THAN BY CAPGEMINI (COLLECTIVELY, “NON-CAPGEMINI SYSTEMS AND DATA”).  EXCEPT AS OTHERWISE STATED IN THIS SECTION 10 AND IN ANY WORK ORDER,  CAPGEMINI MAKES NO WARRANTIES OF ANY KIND OR NATURE REGARDING THE NON-CAPGEMINI SYSTEMS AND DATA, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, OR WARRANTIES OF ANY PRODUCTS OR SERVICES, OR THE APPROPRIATENESS OF CLIENT OR THIRD-PARTY SPECIFICATIONS. Client acknowledges that it is a sophisticated party to this Agreement and recognizes and agrees that the terms of this Section 10 are an integral part of Capgemini’s pricing and an important factor in Capgemini’s willingness to enter into this Agreement and to agree to perform Services hereunder. Capgemini expressly disclaims any warranty or liability with respect to laws, ordinances, rules and regulations issued by any public authority as such relate specifically to Client’s industry or operation of it business.

(h)           The Services may include providing assistance to Client with Client’s procurement of third-party hardware, software or other items (“Third Party Materials”).  Unless otherwise expressly stated in the Work Order, Client will license or purchase such Third Party Materials directly from the vendor or reseller (which may be an affiliate of Capgemini).  Except as set forth in an applicable Work Order, Client retains sole responsibility for the selection of such Third Party Materials.  Capgemini shall pay all license or other fees for the right to use Third Party Materials to deliver Services, unless otherwise specifically set forth in a Work Order as a pass-through cost to be borne by Client, or separately agreed between the parties pursuant to a software purchase or procurement agreement. Capgemini will specify in Work Orders any assistance it will provide in relation to Third Party Materials.  Capgemini, its affiliates, and subcontractors, reserve the right to retain ancillary benefits, including

9

credits, rebates or referral fees, they may receive relating to such Third Party Materials, regardless of whether Client pays for such Third Party Materials directly, on a pass-through basis, or otherwise.  The retention of such benefits shall not constitute a conflict of interest.

(i)            Capgemini will perform the Services under this Agreement in a manner that does not, and the Deliverables will not, (i) infringe, or constitute an infringement or misappropriation of, any patent, or patent rights of any third party, or (ii) infringe, or constitute an infringement or misappropriation of, any trade secret, copyright, trademark or other proprietary or intellectual property right of any third party. In the event any Services or Deliverables violate the preceding sentence, Capgemini shall, at its election, (a) procure the continued right to use the infringing Service or Deliverable, at its sole cost and expense, or (b) modify the Service or Deliverable in a manner that makes it non-infringing, which may include procurement of an alternative software product; provided, that, such modification does not diminish the features, functionality, scalability or performance of the infringing Service or Deliverable. Capgemini’s failure to comply with the preceding sentence shall constitute a violation of Section 2(c).

(j)            Capgemini may perform the Services with personnel of Capgemini or any of its affiliates (each, a “Capgemini Entity” and, collectively, “Capgemini Entities”) or with subcontractors of Capgemini Entities.   Capgemini shall be solely responsible for the performance of the Services and all of the other liabilities and obligations of Capgemini under this Agreement, whether or not performed, in whole or part, by Capgemini, any other Capgemini Entity, or any subcontractor of any Capgemini Entity.  Client shall have no recourse against, and shall bring no claim against, any other Capgemini Entity or any subcontractor of any Capgemini Entity or any member, shareholder, director, officer, manager or employee of any Capgemini Entity or any subcontractor of any Capgemini Entity with respect to any liability or obligations herein or in connection with the Services.

11.          TERMINATION

(a)           Breach.  Client may terminate this Agreement or any Work Order, by written notice to Capgemini:

(i) in the event of a material breach of this Agreement or such Work Order by Capgemini, which breach is not cured within 30 days after receipt of written notice by Capgemini;

(ii) upon thirty (30) days written notice to Capgemini in the event the Acquisition (as defined in Work Order 1) is terminated; provided that if the Acquisition is reinstated within one hundred twenty (120) days, this termination shall be considered a termination for convenience pursuant to Section 11(a)(iii) hereunder.  Termination of this Agreement hereunder shall not become effective until the thirtieth (30th) day after Capgemini receives the termination notice and Client will pay Capgemini’s fees for: (A) previously invoiced and past due amounts (B) previously invoiced and not yet past due amounts, (C) work in progress to date which has not yet been invoiced, and (D) in progress deliverables for the next 30 days.

In calculating the aforementioned monthly fees, Capgemini has placed $15,000,000 of fees at risk during the first twelve (12) months of this Agreement (spreading the $15,000,000 across 12 months at $1,250,000 per month), which is reflected in the fees set forth in Work Order 1.  Client may deduct the First Credit Amount (as defined below) from the amount otherwise owed to Capgemini pursuant to Section 11(a)(ii)(B) .  For purposes hereof, the “First Credit Amount” means an amount equal to $1,250,000, multiplied by the number of remaining full months through the end of the twelfth month following the execution of this Agreement, less the applicable Infrastructure Amount.  Client may deduct the Second Credit Amount from the amounts otherwise owed to Capgemini pursuant to Sections 11(a)(ii)(C) and (D).  The “Second Credit Amount” means an amount equal to $1,250,000, multiplied by

10

the number of remaining full months through the end of the twelfth month following the execution of this Agreement, less any First Credit Amount actually realized as an offset to amounts owed to Capgemini.  The “Infrastructure Amount” shall be an amount set forth in the table attached hereto as Attachment A, as applicable to the month in which such termination notice is provided. Under no circumstances shall Capgemini be obligated to pay Client any amount under this Section as a result of any credit hereunder exceeding the amount owed to Capgemini; or

(iii) for convenience, at any time upon 30 days prior written notice.

(b)           (i)  Capgemini may terminate this Agreement for any failure by Client to make timely payment of any undisputed fees or reimbursement of undisputed expenses due under this Agreement, which breach is not cured within thirty (30) days after receipt of written notice by Client. (ii) If a dispute or disputes related to fees and expenses equals an aggregate of $15,000,000 and continues for longer than 90 days, Capgemini shall have the right to terminate the Agreement or applicable Work Order without penalty or liability to Client.

(c)           Client shall pay Capgemini for all undisputed fees and expenses incurred through the effective date of termination (except in the case of Section 11(a)(ii) above which shall be governed by the terms of such subsection), provided that such payment shall not affect any other rights and remedies a party may have under this Agreement.  In the event that Capgemini terminates this Agreement or a Work Order pursuant to Section 11(b) above, or Client terminates this Agreement pursuant to Section 11(a)(iii) above, then Capgemini shall also be entitled to be paid the fees specified in Attachment B, which Attachment is incorporated herein by this reference; provided, however, that if Capgemini’s termination is for disputed fees pursuant to Section 11(b)(ii), Client shall only be obligated to pay the applicable amount set forth on Attachment B if Capgemini subsequently prevails on the merits in any dispute over whether such fees are actually owed.    Any such payments shall not affect any other rights or remedies Capgemini may have under this Agreement.  The provisions of this Agreement which give the parties rights beyond termination of this Agreement will survive any termination of this Agreement, including, without limitation, Section 4 (Compensation), Section 5 (Confidentiality), Section 6 (Deliverables), Section 10 (Warranty and Liability), Section 11 (Termination), Section 12 (Indemnity) and Section 13 (Further Understandings).

(d)           Bankruptcy.  Either party may terminate this Agreement and all Work Orders hereunder effective immediately upon giving notification thereof in the event the other party is adjudged insolvent or bankrupt, or upon the institution of any proceeding against the other party seeking relief, reorganization or arrangement under any laws relating to insolvency, or for the making of any assignment for the benefit of creditors, or upon the appointment of a receiver, liquidator or trustee of any of the other party’s property or assets, or upon liquidation, dissolution or winding up of the other party’s business.

(e)           Additional Termination Rights.  The parties may agree to additional termination rights and provisions in each Work Order.

12.          INDEMNITY

(a)  Indemnification by Client. Client shall indemnify and hold harmless Capgemini, its officers, directors, employees, successors and assigns (collectively, the “Capgemini Indemnitees”) from and against any expense, claim, loss or damage (including court costs and reasonable attorney’s fees) (“Losses”) suffered or incurred by any Capgemini Indemnitees in connection with any third-party claims against Capgemini Indemnitees arising from or relating to:

11

(i)            all claims for bodily injury to persons or physical damage to tangible personal or real property (excluding software, hardware and data) for which Client is legally liable to that third party, except to the extent caused by the negligence or intentional misconduct of Capgemini Indemnitees;

(ii)           all claims arising from Client’s violation of any law, ordinance, rule, regulation or order applicable to Client;

(iii)          all claims arising from fraud committed by, or the intentional misconduct of Client; and

(iv)          all claims for any taxes owed by Client pursuant to this Agreement.

(b)  Indemnification by Capgemini.  Capgemini shall indemnify and hold harmless Client, and its Subsidiaries (as defined below)officers, directors, employees, successors and assigns (collectively, the “Client Indemnitees”)  from and against any Losses suffered or incurred by the Client Indemnitees in connection with any third-party claims against Client Indemnitees, arising from or relating to:

(i)            all claims that a Service (including any Deliverable) violates Section 10(i) of this Agreement;

(ii)           all claims for bodily injury to persons or physical damage to tangible personal property or real property (excluding hardware, software and data) for which Capgemini is legally liable to that third party, except to the extent caused by the negligence or intentional misconduct of Client Indemnitees;

(iii)          all claims arising from a violation of any applicable laws, ordinances, rules and regulations pertaining to the Services or this Agreement which apply to Capgemini’s performance of Services hereunder, excluding laws, ordinances, rules, regulations or orders issued by any public authority as such relate specifically to Client’s industry or operation of its business;

(iv)          all claims arising out of Capgemini’s use in performing and/or providing the Services of products, services or license rights from third parties, to the extent due to Capgemini’s breach of its agreement with such third parties for such products, services or license rights;

(v)           all claims arising from fraud committed by, or the intentional misconduct of Capgemini;

(vi)          all claims arising out of the failure of Capgemini to obtain, or cause to be obtained, any consent or approval required for Client to receive and use the Services, or any component thereof, to the extent specified in this Agreement;

(vii)         all claims for any tax owed by Capgemini pursuant to this Agreement; and

(viii)        all claims arising from a breach by Capgemini of Section 5 of this Agreement.

Capgemini shall not be required to indemnify Client Indemnitees in accordance with (b)(i) in the event the alleged infringement is caused by (i) Client or third party modification of any Deliverable, where such modification causes the infringement, (ii) use of a Deliverable in connection with a product or service (the combination of which causes the infringement) if Capgemini did not approve of such use; provided, that, Capgemini shall be deemed to have approved any use contemplated in  Work Order 1 or the TSA, or (iii) Capgemini’s actions outside the scope of any Work Order or the TSA or at the specific direction of Client.

(c)           Indemnification Procedure.  An indemnified party under this Section 12 shall promptly notify the indemnifying party of any claim with respect to which it seeks indemnity hereunder.  In the case of Client and its subsidiaries, Client, solely, shall provide to Capgemini any and all notices, and shall be the sole party to bring any and all claims on behalf of its Subsidiaries, with respect to indemnification hereunder. An indemnified party may participate, at its own expense, in the defense of such claim.  An indemnifying party shall, except as provided below, assume the defense of such claim, and shall pay the fees and disbursements of counsel

12

related to such proceeding.  In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expense of such counsel shall be at the expense of such indemnified party unless the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel.  An indemnifying party may, without the prior written consent of the indemnified party, effect a settlement of a pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party only if such settlement does not include a finding or admission of any violation of any law or regulation, and (i) the only form of relief in such settlement is the payment of money which is paid in full by the indemnifying party, (ii) such settlement will not have any adverse effect on any other claims that have been or may be made against the indemnified party, and (iii) such settlement includes an unconditional release of such indemnified party of all liability on claims that are the subject of such proceeding.  An indemnified party may assume control of the defense of any claim: (i) if it irrevocably waives its right to indemnity under this Section 12, or (ii) if the indemnifying party fails or refuses to timely assume the defense of such claim (in which case the indemnifying party shall be liable for all costs and expenses incurred by the indemnified party in the defense of such claim). An indemnifying party required to provide an indemnity to an indemnified party under this Section 12 shall have no obligation for any claim under this Section 12 if the indemnified party fails to notify the indemnifying party of such claim as provided above, but only to the extent that the defense of such claim is actually prejudiced by such failure. For purposes of this Section 12, a “Subsidiary” of Client is an entity in which Client owns at least a 50% voting stake.

13.  FURTHER UNDERSTANDINGS

(a)           Notices.  Except as otherwise specifically provided in this Agreement or in a Work Order, all notices required under this Agreement  will be in writing.  Notices will be deemed given when actually received.  All communications will be sent to the receiving party’s address as set forth below or to such other address that the receiving party may have provided for purposes of receiving notices as provided in this Section 13.

To Capgemini:	Capgemini U.S. LLC
	600 Peachtree Street
	Suite 3600
	Atlanta, GA 30308
	Attention: Dee Burger
With a copy to:	Capgemini U.S. LLC
	750 Seventh Avenue
	New York, NY 10019
	Attention: General Counsel
To Client:	Michael Haga
	PO Box 398
	192 W. Broadway
	Peculiar, MO 64078
With a copy to:	Peter G. Nixon, COO
	FairPoint Communications, Inc.
	521 East Morehead Street
	Suite 250
	Charlotte, NC 28202

13

Shirley J. Linn

Executive Vice President and General Counsel

FairPoint Communications, Inc.

521 East Morehead Street

Suite 250

Charlotte, NC 28202

Susan L. Sowell

Vice President and Assistant General Counsel

FairPoint Communications, Inc.

521 East Morehead Street

Suite 250

Charlotte, NC 28202

(b)           Binding Nature.  This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns.

(c)           Severability.  If any provision of this Agreement, or the application thereof, shall for any reason and to any extent be determined by a court of competent jurisdiction to be invalid or unenforceable, such provision shall be modified or interpreted by the court so as to reasonably effect the intent of the parties and the parties shall replace any such invalid or unenforceable provision with valid and enforceable provision(s) that are consistent with the modification or interpretation made by the court.  All other provisions of this Agreement shall remain in full force and effect.

(d)           Entire Agreement.  This Agreement and any Work Orders hereunder constitute the entire agreement between the parties with respect to the subject matter hereof, and supersede any and all prior or contemporaneous written or oral communications between the parties.  Except as expressly set forth herein, no other prior or contemporaneous covenants, promises, representations or warranties of any kind, whether written or oral, have been made or can be relied on by either party as an inducement to enter into this Agreement, whether relating to the tools, resources, practices or otherwise of any party hereto.

(e)           No Oral Modification.  This Agreement shall not be amended or otherwise modified, except by a later written agreement that expressly states that it is an amendment or modification and that is signed by both parties.  Except as set forth in such amendment or modification, no provision or statement in any document delivered in connection with this Agreement shall impose any additional obligation on Capgemini.

(f)            Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to its choice of law principles.

(g)           No Waiver.  No waiver or failure to exercise any option, right or privilege under the terms of this Agreement by either of the parties hereto on any occasion or occasions shall be construed to be a waiver of the same on any other occasion or of any other option, right or privilege.

(h)           Headings and References.  The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.  All references in this Agreement to Sections shall, unless otherwise provided, refer to Sections hereof.

14

(i)            Assignment.  Neither this Agreement nor any of the rights or duties hereunder may be assigned or otherwise transferred by either party without the other party’s prior written consent; provided, however, that Capgemini may assign or otherwise transfer its rights or duties under this Agreement to another member of the Capgemini S.A. group, and Client may assign or otherwise transfer its rights or duties under this Agreement to any Subsidiary thereof.  Any act which is inconsistent with the terms of this Section shall be null and void ab initio.

(j)            Non-Solicitation.  During the term of a Work Order and for a period of one (1) year following its termination, neither party shall, as a result of becoming aware of any employee of the other party or its subcontractors who is connected with the performance of such Work Order, directly or indirectly solicit or hire (or utilize as an independent contractor) such employee.

(k)           Order of Precedence.  In the event of any inconsistency between or among the documents listed below, the following order of precedence shall govern:

(i)            Work Orders; and

(ii)           this Agreement

(l)            Dispute Resolution; Equitable Relief.

(i)            The parties will attempt in good faith to resolve any controversy or claim arising out of or relating to this Agreement or the Services through discussions between the Capgemini Vice President and the Client executive responsible for providing and accepting the Services.  If these discussions are unsuccessful, the parties agree that any action asserting a claim by one party against the other party hereto arising out of or relating to this Agreement or the Services must be brought in the state or federal court for the county or district wherein the party against which the claim is brought has its principal place of business.  Notwithstanding the foregoing, any action asserting a claim for collection of fees, expenses and/or other compensation due or owing to Capgemini under this Agreement may be brought in a state or federal court in New York, New York, which, for purposes of this Agreement, is Capgemini’s principal place of business.  If an action is pending on any claims between the parties, any claim which could be brought as a counterclaim must be brought in the pending action, if at all.

(ii)           The parties acknowledge that the breach of Section 5 (Confidentiality), Section 6 (Deliverables) or Section 12(j) (Non-Solicitation) by one party will give rise to irreparable injury to the other party which is not adequately compensable in damages or at law.  Accordingly, the parties agree that injunctive relief will be an appropriate remedy to prevent violation of either party’s respective rights and/or obligations thereunder.  However, subject to Section 10 (Warranty and Liability), nothing in this Section 12(l) (ii) shall limit a party’s right to any other remedies in equity or at law, including the recovery of damages.

(m)          Trademarks.  This Agreement and any Work Order does not give either party ownership rights or interests in the other party’s trade name or trademarks.

(n)           No Third Party Beneficiaries.  This Agreement is entered into solely by and between, and may be enforced only by, Capgemini and Client.  Except as set forth in Section 10(j), this Agreement shall not be deemed to create any rights in or obligations to any third parties.

(o)           Force Majeure.  Neither party shall be liable for failure to fulfill its obligations under this Agreement (other than a failure to pay money) only to the extent that failure is caused, directly or indirectly, by flood, communications failure, extreme weather, fire, mud slide, earthquake, or other

15

natural calamity or act of God, interruption in water, electricity, acts of terrorism, riots, civil disorders, rebellions or revolutions, acts of governmental agencies, quarantines, embargoes, malicious acts of third parties, labor disputes affecting vendors or subcontractors and for which the party claiming force majeure is not responsible, or any other similar cause beyond the reasonable control of that party; provided, however, that the affected party shall use its commercially reasonable efforts to avoid or remove such causes of nonperformance and shall proceed immediately with the performance of its obligations under this Agreement whenever reasonably possible (each, a “Force Majeure Event”).  If Capgemini’s performance is excused by a Force Majeure Event, and it fails to resume full performance of all its obligations hereunder within 20 business days of the onset of the Force Majeure Event, Client may terminate this Agreement or any affected sub-component of the Services without penalty or other liability whatsoever (other than payment for Services previously rendered), in whole or in part, immediately upon written notice to Capgemini.

(p)           Publicity.  Except with Client’s prior written consent, Capgemini shall not make public reference to Client’s selection of the Capgemini service line(s) and the nature of the Services provided.  Except with Client’s prior written consent, Capgemini may not publicly refer to the solution implemented or to be implemented by Capgemini and may write and publish a high-level profile discussing the reasons supporting Client’s choice of the Capgemini solution and the benefits gained by Client.  Moreover, Capgemini may, from time to time, request Client’s assistance in complying with the process employed by Capgemini to measure client satisfaction, as may be stated in an applicable Work Order.

(q)           Insurance.  During the term of this Agreement, each party shall obtain and maintain the following insurance:

(i) Commercial General Liability, including coverage for (A) premises/operations, (B) independent contractors, (C) products/completed operations, (D) personal and advertising injury, and (E) contractual liability, with  limits of not less than  an Each Occurrence Limit of $5,000,000, Products/Completed Operations Aggregate Limit of $5,000,000, Advertising Injury and Personal Injury aggregate Limit of $5,000,000 and a General aggregate of $5,000,000; the per occurrence and aggregate limits may be met through both primary General Liability and excess umbrella limits.

(ii) Worker’s Compensation in amounts required by applicable law and Employer’s Liability with a limit of at least  bodily injury by accident of $1,000,000 each accident, bodily injury by disease, $1,000,000 policy limit and bodily injury by disease, $1,000,000 each employee; and

(iii) Automobile Liability including coverage for owned/leased, non-owned or hired automobiles with combined single limit of not less than $1,000,000 each accident.

In addition, Capgemini shall maintain during the term of this Agreement:

(i) errors and omissions insurance, with a limit of $5,000,000 per claim and $5,000,000 in the policy term aggregate; and

(ii) commercial crime insurance covering dishonest acts of employees; such insurance shall also include third party liability coverage and be written for limits not less than $10,000,000.

Unless otherwise agreed, all insurance policies shall be obtained and maintained with companies rated A- or better by Best’s Key Rating Guide, and each party shall, upon execution of this Agreement, provide the other party with an insurance certificate confirming compliance with the requirements of this Section. Each party shall name the other as an additional insured on the policies identified in above (excluding Worker’s Compensation and Errors and Omissions) and Client shall be named as loss payee as their

16

interests may appear, on the Commercial Crime insurance identified above. Except with respect to the Commercial General liability, Errors and Omissions and Commercial Crime insurance, the parties shall each further obtain from their insurance companies providing the coverage required by this Agreement the permission of such insurers to allow such party to waive all rights of subrogation, and such party does hereby waive all rights of said insurance companies to subrogation against the other party, its affiliates, subsidiaries, assignees, officers, directors and employees.

[SIGNATURES ON NEXT PAGE]

17

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

CAPGEMINI U.S. LLC		FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ illegible	By:	/s/ Eugene B. Johnson
Title:	Vice President	Title:	Chief Executive Officer

18

EX-10.4

Exhibit 10.4

EXECUTION COPY

EMPLOYEE MATTERS AGREEMENT

by and between

Verizon Communications Inc.,

Northern New England Spinco, Inc.

and

FairPoint Communications, Inc.

dated as of January 15, 2007

TABLE OF CONTENTS

			Page
ARTICLE I.	Definitions		2
Section 1.1.		Definitions	2
Section 1.2.		Capitalized Terms	13
ARTICLE II.	Collective Bargaining Agreements and Obligations		14
Section 2.1.		Assumption and Continuation of Agreements	14
ARTICLE III.	Spinco Plans Generally		21
Section 3.1.		Establishment of Spinco Plans	21
Section 3.2.		Terms of Participation by Spinco Employees	21
ARTICLE IV.	Employees		22
Section 4.1.		Employees	22
Section 4.2.		No Solicitation of Employees	26
Section 4.3.		Unavailable Employees	28
ARTICLE V.	Pension Plans		29
Section 5.1.		Establishment of Pension Plans and Trusts	29
Section 5.2.		Assumption of Pension Plan Liabilities and Allocation of Interests in the Verizon Pension Trusts	30
Section 5.3.		Continuation of Elections and Application to Spinco Dependents	35
ARTICLE VI.	Health and Welfare		36
Section 6.1.		Assumption of Health and Welfare	36
Section 6.2.		Adoption of Health and Welfare Plans	38
Section 6.3.		COBRA and HIPAA	40
Section 6.4.		Workers’ Compensation Claims	40
Section 6.5.		Leave of Absence Programs	41
Section 6.6.		Time-Off Benefits	41
ARTICLE VII.	Savings Plans		42
Section 7.1.		Establishment of the Spinco Savings Plan	42
Section 7.2.		Assumption of Liabilities and Transfer of Assets	42
ARTICLE VIII.	Equity Based Incentive Awards		44
Section 8.1.		General Treatment of Outstanding Awards	44
Section 8.2.		Outstanding Options	44

i

			Page
Section 8.3.		Treatment of Outstanding Verizon RSU and PSU Awards	45
Section 8.4		Treatment of Verizon Options outstanding as of the Record Date but Exercised Prior to the Distribution Date47	47
Section 8.5		Treatment of Outstanding FairPoint Equity Awards47	47
ARTICLE IX.	Short Term Incentives and Sales Commission Programs		48
Section 9.1.		Incentive and Commission Plans	48
ARTICLE X.	Deferred Compensation Plans		49
Section 10.1.		Generally	49
Section 10.2.		Vesting and Payout of Balances	49
ARTICLE XI.	ASSUMPTION OF LIABILITIES		49
Section 11.1.		Assumption of Liabilities	49
Section 11.2.		Reimbursement	52
Section 11.3.		Indemnification	53
Section 11.4.		Procedures for Indemnification for Third-Party Claims	54
Section 11.5.		Reductions for Insurance Proceeds and Other Amounts	54
Section 11.6.		Contribution.	56
Section 11.7.		Consequential Damages	57
Section 11.8.		Joint Defense and Cooperation	57
ARTICLE XII.	General and Administrative		58
Section 12.1.		Cooperation	58
Section 12.2.		Consent of Third Parties	59
Section 12.3.		Survival	59
Section 12.4.		Interpretation	59
Section 12.5.		No Third Party Beneficiary	60
Section 12.6.		Notices	60
Section 12.7.		Governing Law; Jurisdiction	62
Section 12.8.		Waiver of Jury Trial	63
Section 12.9.		Specific Performance	63
Section 12.10.		No Assignment; No Amendment; Counterparts	63

ii

		Page
EXHIBITS
Exhibit A.	Actuarial Assumptions and Methods for Pension Asset Transfer
Exhibit B. Sales Commissions Programs
Exhibit C. Short Term Incentive Programs
Exhibit 2.1. Collective Bargaining Agreements
SCHEDULES
Schedule 4.1(d). Minimum Severance Benefits for Non-Union Employees
Schedule 4.1(e). Performance and Bonus Opportunities

iii

Employee Matters Agreement

This Employee Matters Agreement (this “Agreement”), dated as of January 15, 2007 is by and among Verizon Communications Inc., a Delaware corporation (“Verizon”), Northern New England Spinco, Inc.(“Spinco”), a Delaware corporation, and FairPoint Communications, Inc., a Delaware corporation (“FairPoint”) (each a “Party” and collectively, the “Parties”), and effective as of the Effective Time of the Merger Agreement.

WHEREAS, the Board of Directors of Verizon has determined that it is in the best interests of Verizon and its stockholders to contribute the Spinco Business (as defined below) to a subsidiary of Spinco and to separate Spinco into an independent company that will simultaneously merge with and into FairPoint, an independent public company;

WHEREAS, in furtherance of the foregoing, Verizon and Spinco have entered into a Distribution Agreement, dated as of January 15, 2007 (the “Distribution Agreement”) that will govern the terms and conditions relating to the separation between Verizon and Spinco; and

WHEREAS, in furtherance of the foregoing, Verizon, Spinco and FairPoint have entered into a Merger Agreement, dated as of January 15, 2007 (the “Merger Agreement”) that will govern the terms and conditions relating to the merger of Spinco with and into FairPoint; and

WHEREAS, in connection with the foregoing, Verizon, Spinco and FairPoint have agreed to enter into this Agreement for the purpose of allocating current and former employees and employment related assets, liabilities, and responsibilities with respect to

employee compensation and benefits, collective bargaining and other employment related matters; and

WHEREAS, the parties to this Agreement intend that, in accordance with the terms and conditions set forth herein, the Spinco Employees (as defined below) shall maintain uninterrupted continuity of employment, compensation and benefits and, also, with respect to union represented employees, uninterrupted continuity of representation for purposes of collective bargaining and uninterrupted continuity of coverage under their collective bargaining agreements throughout each of the internal restructurings and the merger as contemplated by the Distribution Agreement and the Merger Agreement, including, but not limited to, the Internal Spinoffs, the Internal Restructurings, the Contribution, Distribution and Merger.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the Parties agree as follows:

ARTICLE I.

DEFINITIONS

Section 1.1.            Definitions

“Agreement” means this Employee Matters Agreement, and all exhibits, schedules, appendices and annexes hereto.

“Benefit Payments” has the meaning ascribed to it in Section 5.3.

“COBRA” has the meaning ascribed to it in Section 6.3.

2

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Contributing Companies” has the meaning ascribed to it in the Distribution Agreement.

“Contribution” has the meaning ascribed to it in the Distribution Agreement.

“Distribution” has the meaning ascribed to it in the Distribution Agreement.

“Distribution Agreement” has the meaning ascribed to it in the second recital to this Agreement.

“Distribution Date” has the meaning ascribed to it in the Distribution Agreement.

“EDP” means the Verizon Executive Deferral Plan.

“Effective Time” has the meaning ascribed thereto in the Merger Agreement.

“Excess Plan” has the meaning ascribed to it in Section 5.1.

“FairPoint” means FairPoint Communications, Inc.

“FairPoint Group” means FairPoint and the FairPoint Subsidiaries.

“FairPoint Indemnitees” means FairPoint and each Affiliate of FairPoint immediately after the Effective Time and each of their respective present and former

3

Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

“FairPoint Liabilities” means the liabilities assumed by FairPoint pursuant to Section 11.1(b) hereof.

“FairPoint Subsidiaries” mean all direct and indirect Subsidiaries of FairPoint immediately after the Effective Time.

“FairPoint Transition Employees and Contractors” has the meaning ascribed to it in Section 4.2(d).

“Final Asset Transfer” has the meaning ascribed to it in Section 5.2.

“Former Spinco Employee” means any individual who had at any time provided services in respect of the Spinco Business, but as of the Effective Time, is neither then actively employed by the Spinco Business, nor then on an approved Leave of Absence or Layoff with Right of Recall from any member of the Verizon or Spinco Groups.

“FRP” means the Verizon Flexible Reimbursement Plan.

“FRP Participants” has the meaning set forth in Section 6.2(c).

“Governmental Authority” has the meaning set forth in the Distribution Agreement.

“IDP” means the Verizon Income Deferral Plan.

4

“Indemnifiable Losses” means all Losses, Liabilities, damages, claims, demands, judgments or settlements of any nature or kind, including all costs and expenses (legal, accounting or otherwise) that are reasonably incurred relating thereto, suffered by an Indemnitee, including any costs or expenses of enforcing any indemnity hereunder that are reasonably incurred and all Taxes resulting from indemnification payments hereunder.

“Indemnifying Party” means a Person that is obligated under this Agreement to provide indemnification.

“Indemnitee” means a Person that may seek indemnification under this Agreement.

“Initial Asset Transfer” has the meaning ascribed to it in Section 5.2.

“Internal Restructurings” has the meaning set forth in Section 2.1(a).

“Internal Spinoffs” has the meaning ascribed to it in the Merger Agreement.

“Layoff with Right of Recall” means any Represented Employee who has been formally laid off by any member of the Verizon Group or the Spinco Group under circumstances that entitle such Represented Employee to a right of recall by his or her employer and whose period of eligibility for recall pursuant to the NNETO CBAs has not expired as of the Effective Time.

“Leave of Absence” means a leave from active employment (i) granted in accordance with the applicable policies and procedures (including, but not limited to, any policy or procedures implemented to comply with the United Services Employment and

5

Reemployment Rights Act, the Family Medical Leave Act or similar state laws) of a member of the Verizon Group or (ii) arising due to an illness or injury that results in the individual being eligible for short term disability benefits, accident benefits or workers’ compensation under the Verizon short-term disability or accident plan or state law, which, in either case, is scheduled or expected to end as of a date after the Effective Time.  For the avoidance of doubt, any employee who is not at work on the day of the Effective Time due to vacation, sickness or accident that is not expected to qualify the individual for short-term disability or accident benefits, workers’ compensation or other temporary absence, such as due to the use of personal days shall be considered to be actively at work on the day of the Effective Time.  Any individual who is receiving long term disability benefits at the Effective Time shall not be considered to be on a “Leave of Absence” for purposes of this definition.

“Liabilities” means any and all obligations, benefit entitlements, losses, claims, charges, debts, demands, actions, costs and expenses (including those arising under any contract, collective bargaining agreement, or Plan, and administrative and related costs and expenses of any plan, program, or arrangement), of any nature whatsoever, whether absolute or contingent, vested or unvested, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising.

“Losses” has the meaning ascribed to it in the Distribution Agreement.

“Merger” has the meaning ascribed to it in the Merger Agreement.

“Merger Agreement” has the meaning ascribed to it in the third recital to this Agreement.

“NNETO” means Northern New England Telephone Operations, Inc.

6

“NNETO CBAs” means any and all collective bargaining agreements governing the wages, hours, terms and conditions of employment of any Spinco Employee, including MOAs and MOUs, each of which is listed on Exhibit 2.1 hereof, and all collective bargaining practices of the Verizon Group with respect to such employees.

“North Accrued Benefits” has the meaning ascribed to it in Section 5.2(b).

“Original Option” has the meaning ascribed to it in Section 8.2.

“Outstanding Awards” has the meaning ascribed to it in Section 8.1.

“Party” has the meaning ascribed to it in the preamble to this Agreement.

“Parties” has the meaning ascribed to it in the preamble to this Agreement.

“Pension Plan Asset Transfer Amount” means, in the case of a transfer of assets and liabilities from a Verizon Pension Plan to a Spinco Pension Plan, the amount required to be transferred pursuant to Section 5.2.

“Person” has the meaning ascribed to it in the Distribution Agreement.

“PSU” has the meaning ascribed to it in Section 8.3.

“Record Date” has the meaning ascribed to it in the Distribution Agreement.

“Record Date Option” has the meaning ascribed to it in Section 8.4.

7

“Remaining Option” has the meaning ascribed to it in Section 8.2.

“Represented Employee” means any Spinco Employee whose wages, hours, terms and conditions of employment are governed by a NNETO CBA.

“Retained Employee” means any individual who, as of the Effective Time, (i) is actively employed by, or on an approved Leave of Absence or Lay-off with Right of Recall from, a member of the Verizon Group or the Spinco Group, (ii) had been primarily employed in the Spinco Business and (iii) whose employment a member of the Verizon Group determines not to transfer to a member of the FairPoint Group.

“Representative” means, with respect to any Person, any of such Person’s directors, managers or persons acting in a similar capacity, officers, employees, agents, consultants, financial and other advisors, accountants, attorneys and other representatives.

“RSU” has the meaning ascribed to it in Section 8.3.

“Sales Commission Program” means the programs listed on Exhibit B of this Agreement.

“Short Term Incentive Plan” means the Plans listed on Exhibit C of this Agreement.

“Spinco Business” has the meaning ascribed to it in the Distribution Agreement.

“Spinco Common Stock” has the meaning ascribed to it in the Distribution Agreement.

8

“Spinco Dependents” means, with respect to any Spinco Employee, any dependent of such person who is eligible to receive benefits under the terms of any applicable Spinco Plan.

“Spinco Employee” means any individual who (i) is either actively employed (whether on a full or part-time basis) by, or is on a Leave of Absence or Layoff with Right of Recall from, a member of the Spinco or Verizon Group, whose primary duties at the Effective Time (or, in respect of an individual on a Leave of Absence or Layoff with Right of Recall, on his or her last date of active employment) were related to the Spinco Business, and (ii) is not a Retained Employee.

“Spinco Excess Pension Plan” has the meaning given to it in Section 5.1.

“Spinco FSA” has the meaning ascribed to it in Section 6.2.

“Spinco Group” means Spinco and each entity that is one of its Subsidiaries immediately prior to the Effective Time.

“Spinco Liabilities” means the liabilities assumed by Spinco pursuant to Section 11.1(a) hereof.

“Spinco Management Pension Plan” has the meaning ascribed to it in Section 5.1.

“Spinco Mirror Plans” means the Spinco Welfare Plans, the Spinco Union Pension Plan, the Spinco Management Pension Plan, the Spinco Excess Pension Plan and, the Spinco Savings Plans.

9

“Spinco Pension Plans” mean the Spinco Management Pension Plan, the Spinco Excess Pension Plan and the Spinco Union Pension Plan.

“Spinco Plan” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle, whether written or unwritten, maintained or sponsored by any member of the Spinco Group for the purpose of providing compensation or benefits to any Spinco Employee or Spinco Dependent.

“Spinco Savings Plan” has the meaning ascribed to it in Section 7.1.

“Spinco Subsidiary” has the meaning set forth in the Distribution Agreement.

“Spinco Trust” has the meaning ascribed to it in Section 5.2.

“Spinco Union Pension Plan” has the meaning ascribed to it in Section 5.2.

“Spinco Welfare Plans” mean the Plans established by FairPoint pursuant to Section 6.2 that correspond to the Verizon Welfare Plans.

“Subsidiary” has the meaning ascribed to it in the Distribution Agreement.

“Taxes” has the meaning ascribed to it in the Distribution Agreement.

“Territory” has the meaning ascribed to it in the Distribution Agreement.

“Third-Party Claim” has the meaning ascribed to it in the Distribution Agreement.

10

“Time-Off Benefits” has the meaning ascribed to it in Section 6.6.

“Transition Services Agreement” has the meaning ascribed to it in the Distribution Agreement.

“Unavailable Employee” has the meaning ascribed to it in Section 4.3.

“Verizon” means Verizon Communications Inc.

“Verizon Common Stock” has the meaning ascribed to it in the Distribution Agreement.

“Verizon Employee” means any individual who, at the relevant time, is actively employed by, or on an approved leave of absence or lay-off with right of recall from, a member of the Verizon Group.

“Verizon Group” means Verizon and the Verizon Subsidiaries.

“Verizon Indemnitees” means Verizon, each Affiliate of Verizon immediately after the Contribution and each of their respective present and former Representatives and each of the heirs, executors, successors and assigns of any of the foregoing.

“Verizon Liabilities” means all Liabilities of Verizon or any of the Verizon Subsidiaries.  In no event shall the term Verizon Liabilities include any Liabilities that are transferred from or otherwise cease to be Liabilities of any Verizon Group pursuant to this Agreement or that are to, or have become, Spinco Liabilities.

11

“Verizon Plan” means any plan, policy, program, payroll practice, on-going arrangement, contract, trust, insurance policy or other agreement or funding vehicle, whether written or unwritten, maintained or sponsored by Verizon or any of its Subsidiaries or Affiliates (or any of their respective predecessors) at any time on or prior to the Distribution Date for the purpose of providing compensation or benefits to any current or former employee of any such person.

 “Verizon Pension Plans” mean the VMPP, the Verizon Excess Pension Plan, the VEMPP, and the Verizon Pension Plan for New York and New England Associates, as each such plan is amended from time to time.

“Verizon Pre-Distribution Stock Value” means the closing price per share of Verizon Common Stock trading on the “regular way” basis (based on the reported value inclusive of the right to participate in the Distribution) on the Distribution Date.

“Verizon Post-Distribution Stock Value” means the opening price per share of Verizon Common Stock on the first trading day following the Distribution Date; provided that, in no event shall such Verizon Post-Distribution Stock Value be less than the Verizon Pre-Distribution Stock Value.

“Verizon Savings Plans” mean the Verizon Savings Plan for Management Employees, and the Verizon Savings and Security Plan for New York and New England Associates, as each such plan is amended from time to time.

‘‘Verizon Share Ratio” means the quotient obtained by dividing the Verizon Pre-Distribution Stock Value by the Verizon Post-Distribution Stock Value.

“Verizon Stock Option” has the meaning ascribed to it in Section 8.2.

12

“Verizon Subsidiaries” mean all direct and indirect Subsidiaries that are, or continue to be, Subsidiaries of Verizon immediately after the Distribution Date.  For the avoidance of doubt, for purposes of this Agreement no member of the Spinco Group or the FairPoint Group shall be a Verizon Subsidiary.

“Verizon Transition Employees and Contractors” has the meaning ascribed to it in Section 4.2(c).

“Verizon Trust” has the meaning ascribed to it in Section 5.2(c).

“Verizon Welfare Plans” has the meaning ascribed to it in Section 6.1.

“VMPP” has the meaning ascribed to it in Section 5.1.

“VNE” means Verizon New England Inc.

Section 1.2.            Capitalized Terms.  Any other capitalized term used, but not defined herein, but defined in the Distribution Agreement or the Merger Agreement, shall have the meaning ascribed thereto in the Distribution Agreement or the Merger Agreement.

13

ARTICLE II.

COLLECTIVE BARGAINING AGREEMENTS AND OBLIGATIONS

Section 2.1.            Assumption and Continuation of Agreements

(a)           Distribution

(i)            Prior to the Distribution Date, in connection with each of the internal restructurings, Internal Spinoffs and the contributions undertaken by Verizon in contemplation of, and in connection with, the Contribution, Distribution and Merger, including the Internal Spinoffs, Internal Restructurings and Contributions to be effected in accordance with the Distribution Agreement (the “Internal Restructurings”), Verizon shall cause one or more members of the Verizon Group to take any and all actions needed to effectuate: (1) the continued uninterrupted employment of the Represented Employees, in accordance with the NNETO CBAs, by the appropriate member of the Verizon Group, and (2) the assumption and uninterrupted continuation of the NNETO CBAs covering the Represented Employees by the appropriate member of the Verizon Group, including but not limited to, (i) the continued uninterrupted representation for purposes of collective bargaining of those Represented Employees by their unions, in accordance with the NNETO CBAs, with the appropriate member of the Verizon Group, (ii) the continued uninterrupted compensation of the Represented Employees in accordance with the NNETO CBAs, and (iii) the continued uninterrupted benefit coverage of the Represented Employees under the appropriate Verizon Plans in accordance with the NNETO CBAs.  Without limiting the generality of the foregoing, Verizon shall cause:

14

(1)   VNE to form NNETO and at and from (x) the time that VNE contributes to NNETO its assets and liabilities associated with the Spinco Business and its Spinco Employees (including, but not limited to, Represented Employees) until (y) the Distribution Date, Verizon shall add and maintain NNETO as a participating company in the Verizon Plans in which the Represented Employees are eligible to participate and shall also cause NNETO to, and NNETO shall, (1) employ the Represented Employees in accordance with the NNETO CBAs, and (2) assume and honor the NNETO CBAs governing the employment of such Represented Employees, including but not limited to, (i) recognize the unions representing those Represented Employees as their collective bargaining representative in accordance with the NNETO CBAs, (ii) continue uninterrupted the compensation of the Represented Employees in accordance with the NNETO CBAs, and (iii) become a participating company in the Verizon Plans in which such Represented Employees are eligible to participate in accordance with the NNETO CBAs; and

(2)   at and from the time that each Contributing Company other than VNE contributes to NNETO its assets and liabilities associated with the Spinco Business and its Spinco Employees (including, but not limited to, Represented Employees) until (y) the Distribution Date, NNETO shall, (1) employ the Represented Employees in accordance with the NNETO CBAs, and (2) assume and honor the NNETO CBAs governing the employment of such Represented Employees, including, but not limited to, (i) recognize the unions representing those Represented Employees as their collective bargaining representative in accordance with the NNETO CBAs, (ii) continue uninterrupted the compensation of such Represented Employees in accordance with NNETO CBAs, and (iii) acknowledge that NNETO is the participating company in the Verizon Plans in which the Represented

15

Employees are eligible to participate in accordance with the NNETO CBAs; and,

(3)   Spinco to be formed, and at and from (x) the time that Verizon contributes to Spinco the stock of NNETO until (y) the Distribution Date, Verizon and Spinco shall cause NNETO to, and NNETO shall, (1) continue to employ the Represented Employees in accordance with the NNETO CBAs, and (2) continue to honor the NNETO CBAs governing the employment of the Represented Employees, including but not limited to, (i) continue to recognize the unions representing those Represented Employees as their collective bargaining representative in accordance with the NNETO CBAs, (ii) continue uninterrupted the compensation of such Represented Employees in accordance with NNETO CBAs, and (iii) acknowledge that NNETO is a participating company in the Verizon Plans in which the Represented Employees are eligible to participate in accordance with the NNETO CBAs.  Verizon shall also cause Spinco to create and become the sponsor of, as of the Distribution Date, mirror benefit plans identical in all material respects to the Verizon Plans covering the Represented Employees prior to the Distribution Date and provide funding, as of the Distribution Date, in accordance with the express provisions of this Agreement, for the Spinco Pension Plan covering Represented Employees.

(ii)           As of and after the Distribution Date, Spinco shall:

(1)   adopt and sponsor, or cause to be adopted or sponsored by the appropriate member of the Spinco Group, the Spinco Mirror Plans which, in respect of the participation therein by the Represented Employees, are to be

16

identical in all material respects to the Verizon Plans covering the Represented Employees prior to the Distribution Date;

(2)   acknowledge that NNETO is the participating company in the Spinco Mirror Plans in which such Represented Employees are eligible to participate;

(3)   provide funding, as of the Distribution Date, in accordance with the express provisions of this Agreement, for the Spinco Pension Plan covering Represented Employees, and,

(4)   cause the trustee of the Spinco Trust to accept and administer the Spinco trust assets funding the Spinco Pension Plan covering the Represented Employees; and,

(5)   cause NNETO and each other appropriate member of the Spinco Group to (1) continue to employ the Represented Employees in accordance with the NNETO CBAs, and (2) continue to honor the NNETO CBAs, including but not limited to, (i) continue to recognize the unions representing those Represented Employees as their collective bargaining representative in accordance with the NNETO CBAs, (ii) continue uninterrupted the compensation of such Represented Employees in accordance with the NNETO CBAs, and (iii) acknowledge that NNETO is the participating company in the Spinco Plans in which the Represented Employees are eligible to participate in accordance with the NNETO CBAs.

As of and after the Distribution Date, any and all obligations of any member of the Verizon Group arising under, relating to or resulting from the

17

NNETO CBAs, and the Spinco Mirror Plans, shall become and be solely the obligations of the Spinco Group and shall be performed by Spinco and its Subsidiaries.  Without limiting the generality of the foregoing, as of the Distribution Date, the appropriate member of the Spinco Group shall have assumed and shall thereafter honor the NNETO CBAs.

(b)           Merger

(i)            As of and after the Effective Time, FairPoint shall:

(1)   assume and become the sponsor of, or cause the appropriate member of the FairPoint Group to assume and become the sponsor of, the Spinco Mirror Plans covering Represented Employees;

(2)   cause the trustee of the Spinco Trust to accept and administer the Spinco trust assets funding the pension plan covering the Represented Employees;

(3)   acknowledge that NNETO is the participating company in the Spinco Mirror Plans in which such Represented Employees are eligible to participate; and

(4)   cause NNETO and each other appropriate member of the FairPoint Group to (1) continue to employ the Represented Employees in accordance with the NNETO CBAs, and (2) continue to honor the NNETO CBAs, including but not limited to, (i) continue to recognize the unions representing those Represented Employees as their collective bargaining representative in accordance with the NNETO CBAs, (ii) continue uninterrupted the

18

compensation of such Represented Employees in accordance with the NNETO CBAs, and (iii) acknowledge that NNETO or such other member of the FairPoint Group is the participating company in the Spinco Plans in which the Represented Employees are eligible to participate in accordance with the NNETO CBAs.

(ii) As of and after the Effective Time, any and all obligations of any member of the Verizon Group arising out of, relating to or resulting from the NNETO CBAs, the Verizon Plans, and the Spinco Plans with respect to such Represented Employees shall become and be solely the obligations of the FairPoint Group and shall be performed by the FairPoint Group; provided that Verizon shall be responsible for (1) all Liabilities attributable to any individual who is a Former Spinco Employee and (2) all Liabilities relating to (A) medical or dental insurance claims in respect of services that were performed or goods provided and with respect to which the claim has been submittedprior to the Effective Time and (B) life insurance and disability claims in respect of deaths or disabilities occurring prior to the Effective Time.  For the avoidance of doubt, with respect to any payments due to any Represented Employee under the terms of the Verizon short term disability plan, the obligations to make payments with respect to any period prior to the Effective Time shall remain with Verizon, and the obligations to make any payments with respect to any period at or after the Effective Time shall be the sole responsibility of FairPoint or a Spinco Plan.  Without limiting the generality of the foregoing, as of the Effective Time, the appropriate member of the FairPoint Group shall have assumed and shall thereafter honor the NNETO CBAs, provided, however, that nothing in this section 2.1(b) or this Agreement shall preclude FairPoint or, as applicable, any member of the FairPoint Group from bargaining in good faith, after the Effective Time, with the unions representing those Represented Employees.

(c)           Compensation and Benefits of Represented Employees.  Without limiting the generality of the foregoing,(i) from the consummation of each of the steps of the

19

Internal Restructurings and prior to the Distribution Date, Verizon, and (ii) as of the Distribution Date, Spinco and (iii) as of the Effective Time, FairPoint shall each be responsible to, and shall, assure that the compensation, benefits, hours, terms and conditions of employment of Represented Employees shall continue to be governed by the NNETO CBAs.

20

ARTICLE III.

SPINCO PLANS GENERALLY

Section 3.1.            Establishment of Spinco Plans

FairPoint shall have adopted, or shall have assumed, the following Spinco Mirror Plans: the Spinco Welfare Plans, the Spinco Savings Plans, the Spinco Union Pension Plan, the Spinco Management Pension Plan and the Spinco Excess Pension Plan.  FairPoint or a member of the Spinco Group shall be or become the plan sponsor of, and from and after the Effective Time shall have sole responsibility for each Spinco Mirror Plan, except to the extent that Verizon is responsible for certain pre-Effective Time liabilities as specified in Section 2(b)(ii) for Represented Employees (and dependents) and Section 6.1(a) for all other Spinco Employees and Spinco Dependents.  Each Spinco Mirror Plan shall be identical in all material respects to the corresponding Verizon Plans as in effect immediately prior to the Distribution Date.

Section 3.2.            Terms of Participation by Spinco Employees

Each of the Spinco Mirror Plans shall be, with respect to Spinco Employees who are participants in such plan, in all respects the successors in interest to and shall recognize all rights and entitlements as of the Effective Time under the corresponding Verizon Plan in which such Spinco Employee participated prior to the Effective Time.  Verizon and FairPoint agree that Spinco Employees are not entitled to receive duplicative benefits from the Verizon Plans, the Spinco Plans, and, if applicable, any collective bargaining agreements.  Notwithstanding the immediately preceding sentence, a member of the Verizon Group or, if applicable, the Verizon Welfare Plans shall assume and remain responsible for payment of the Liabilities specified in Section 2.1(b)(ii) hereof for

21

Represented Employees (and dependents) and Section 6.1(a) for all other Spinco Employees and Spinco Dependents.

With respect to Spinco Employees, each Spinco Mirror Plan shall provide that all service, all compensation, and all other factors affecting benefit determinations that, as of the Distribution Date, were recognized under the corresponding Verizon Plan (for periods immediately before the Distribution Date) shall receive full recognition, credit, and validity and be taken into account under such Spinco Mirror Plan to the same extent as though arising under such Spinco Mirror Plan, except to the extent that duplication of benefits would result.  All beneficiary designations made by Spinco Employees under the corresponding Verizon Plan shall be transferred to and be in full force and effect under the corresponding Spinco Mirror Plans until such beneficiary designations are replaced or revoked by the Spinco Employee who made the beneficiary designation.

Notwithstanding the foregoing provisions of this Section 3.2 and subject to any collective bargaining agreements and obligations, nothing in this Agreement other than those provisions specifically set forth herein to the contrary shall preclude FairPoint (or, as applicable, any member of the FairPoint Group) from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect after the Effective Time any Spinco Plan, any benefit under any Plan or any trust, insurance policy or funding vehicle related to any Spinco Plan.

ARTICLE IV.

EMPLOYEES

Section 4.1.            Employees

(a)           General.  To the extent that any individual defined as a Spinco Employee will not automatically become or continue to be an employee of the FairPoint Group as of

22

the Effective Time as a result of the internal restructuring undertaken by Verizon in contemplation of, and in connection with, the Distribution and Merger, and as a result of the Merger, Verizon agrees to cause the employment of such Spinco Employees to be transferred to the appropriate member of the FairPoint Group, and the appropriate member of the FairPoint Group agrees to accept such transferred employee, as of the Effective Time.  To the extent that any employees of a member of the Verizon Group working in the Territory, as of the date of the execution of this Agreement, who support primarily the local telephone operations of VNE in any New England state do not primarily support the Spinco Business, except for employees performing services to be provided pursuant to the Transition Services Agreement, or otherwise provided by Spinco after the Effective Time, Verizon shall use commercially reasonable best efforts to realign the work of such employees so that their work is primarily in support of the Spinco Business as of the Effective Time.  Verizon shall provide Spinco with a list of all Spinco Employees who are on Leave of Absence or Lay-off with Right of Recall within 5 days of the Effective Time.  Notwithstanding the foregoing, Retained Employees and all other individuals employed by the Verizon Group at the Effective Time who are not Spinco Employees shall remain employees of Verizon or another member of the Verizon Group immediately following such Effective Time.  Verizon shall identify each Retained Employee by written notice delivered to FairPoint promptly following the time at which such person has been identified as a Retained Employee, but in all events not later than six calendar months following the execution of the Merger Agreement.    In addition, not later than six calendar months following the execution of the Merger Agreement, Verizon shall identify by name each individual who is reasonably anticipated to be a Spinco Employee, and shall periodically update this list as reasonably requested by FairPoint during the period through the Effective Time.

(b)           Compensation and Benefits of Represented Employees.  Without limiting the generality of anything in this Agreement, the compensation, benefits, hours, terms

23

and conditions of employment of Represented Employees shall continue to be determined in accordance with the applicable NNETO CBAs.

(c)           Non-Termination of Employment or Benefits.  Except as otherwise expressly and specifically provided herein, (i) no provision of this Agreement, the Distribution Agreement or the Merger Agreement, (ii) no actions or restructurings internal to the Verizon Group or the Spinco Group taken in contemplation of, or in connection with, this Agreement, the Distribution Agreement or the Merger Agreement, (iii) no actions taken by or between the Verizon Group and the Spinco Group at the times of the Internal Restructurings and Distribution, and (iv) no actions taken by or between the Verizon Group, the Spinco Group and the FairPoint Group at the times of the Distribution and Merger, shall be construed to create any right, or accelerate any entitlement, to any compensation or benefit whatsoever on the part of any employee employed by any member of the Verizon Group or the FairPoint Group, or to limit the ability of the FairPoint Group to administer any Spinco Plan in accordance with its terms (subject to any applicable collective bargaining agreement).  Without limiting the generality of the foregoing, nothing described above in 4.1(c) shall cause any employee of any member of the Verizon Group or the Spinco Group, or any Spinco Employee employed by a member of the FairPoint Group to be deemed to have incurred a termination of employment or to have created any entitlement to any severance benefits or the commencement of any other benefits under any Verizon Plan or any collective bargaining agreement.

(d)           No Right to Continued Employment.  Subject to the NNETO CBAs, nothing contained in this Agreement shall confer on any employee of any member of the Verizon Group or any Spinco Employee any right to continued employment.  Except as specifically provided otherwise herein (including, but not limited to, Section 4.1(b) and 4.1(e)), and subject to the NNETO CBAs, this Agreement shall not limit the ability of FairPoint to change, at any time after the Effective Time and in its sole discretion, a

24

Spinco Employee’s position, compensation or benefits for performance-related, business or any other reasons or require any member of the FairPoint Group to continue the employment of a Spinco Employee for any particular period of time after the Effective Time, provided that FairPoint shall bear all liability for any such termination of employment, and, with respect to any such terminations of or modification of the terms and conditions of employment of any Spinco Employee occurring prior to the first anniversary of the Effective Time, shall provide to any terminated Spinco Employee (other than a Represented Employee) severance and termination benefits no less favorable in the aggregate than the severance and termination benefits that are described on Schedule 4.1(d) to this Agreement.

(e)           Continuation of Compensation and Benefits for Spinco Employees who Are Not Represented Employees.  With respect to Spinco Employees who are not Represented Employees, for a period of one year following the Effective Time, FairPoint shall, or shall cause another member of the FairPoint Group, (i) to pay all such non-represented Spinco Employees at least the same rate of base salary as was paid to each such non-represented Spinco Employee by the Verizon Group immediately prior to the Effective Time, (ii) to continue to provide performance and other bonus opportunities to each such non-represented Spinco Employee that are identical in all material respects to the performance and other bonus opportunities described on Schedule 4.1(e) to this Agreement, which were made available to such non-represented Spinco Employee immediately prior to the Effective Time, and (iii) to continue to provide each such non-represented Spinco Employee benefits, under the Spinco Mirror Plans, which are identical in all material respects to those made available to such non-represented Spinco Employees under the Verizon Plans immediately prior to the Effective Time.

(f)            Certain Tax Matters.  Verizon and FairPoint hereby agree that, for purposes of social security, unemployment and other U.S. payroll taxes and to the extent legally permissible, FairPoint, Spinco or NNETO shall be treated as a successor employer

25

with respect to each Spinco Employee in the calendar year that contains the Effective Time.  In connection with the foregoing, the parties agree to follow the “Alternative Procedures” set forth in Section 5 of Revenue Procedure 2004-53.  The parties understand and agree that FairPoint, Spinco or NNETO, as the successor employer, shall assume the entire Form W-2 reporting obligations for such Spinco Employees for the calendar year that contains the Effective Time, provided that Verizon shall provide reasonable assistance to FairPoint in completing such reporting obligations.

Section 4.2.            No Solicitation of Employees

(a)           Except as otherwise mutually agreed upon between the Parties, for the period commencing on the execution of this Agreement and ending twelve months from the Effective Time, in respect of Spinco Employees, neither Verizon nor any member of the Verizon Group shall, directly or indirectly, induce or attempt to induce any Spinco Employee to leave the employ of FairPoint or any member of the FairPoint Group or violate the terms of their contracts or any employment arrangements with FairPoint or any member of the FairPoint Group; provided, however, that neither Verizon nor any member of the Verizon Group shall be deemed to be in violation of this Section 4.2(a) solely by reason of a general job posting internal to members of the Verizon Group or a general solicitation to the public or general advertising.

(b)           Except as otherwise mutually agreed upon between the Parties, for the period commencing on the execution of this Agreement and ending twelve months from the Effective Time, in respect of Verizon Employees, neither FairPoint nor any member of the FairPoint Group shall, directly or indirectly, induce or attempt to induce any Verizon Employee to leave the employ of Verizon or any member of the Verizon Group or violate the terms of their contracts or any employment arrangements with Verizon or any member of the Verizon Group; provided, however, that neither FairPoint nor any

26

member of the FairPoint Group shall be deemed to be in violation of this Section 4.2(b) solely by reason of a general job posting internal to members of the FairPoint Group or a general solicitation to the public or general advertising.

(c)           Except as otherwise mutually agreed upon between the Parties, for the period commencing on the execution of this Agreement and ending twelve months from the termination of the Transition Services Agreement with respect to the services described in Schedule A thereto, in respect of Verizon Employees, contractors or vendors who will be, are or were providing transition services to FairPoint pursuant to the Transition Services Agreement (“Verizon Transition Employees and Contractors”), neither FairPoint nor any member of the FairPoint Group shall, directly or indirectly, induce or attempt to induce any Verizon Transition Employee or Contractor to leave the employ of Verizon or any member of the Verizon Group or violate the terms of their contracts or any employment arrangements with Verizon or any member of the Verizon Group or any of its contractors providing transition services; provided, however, that neither FairPoint nor any member of the FairPoint Group shall be deemed to be in violation of this Section 4.2(c) solely by reason of a general job posting internal to members of the FairPoint Group or a general solicitation to the public or general advertising.

(d)           Except as otherwise mutually agreed upon between the Parties, for the period commencing on the execution of this Agreement and ending twelve months from the termination of the Transition Services Agreement with respect to the services described in Schedule A thereto, in respect of FairPoint Employees, contractors or vendors engaged in, providing or receiving transition services from Verizon pursuant to the Transition Services Agreement (“FairPoint Transition Employees and Contractors”), neither Verizon nor any member of the Verizon Group shall, directly or indirectly, induce or attempt to induce any FairPoint Transition Employee or Contractor to leave the employ of FairPoint or any member of the FairPoint Group or violate the terms of their

27

contracts or any employment arrangements with FairPoint or any member of the FairPoint Group or any of its contractors providing transition services; provided, however, that neither Verizon nor any member of the Verizon Group shall be deemed to be in violation of this Section 4.2(d) solely by reason of a general job posting internal to members of the Verizon Group or a general solicitation to the public or general advertising.

Section 4.3.            Unavailable Employees.

(a)           Notwithstanding anything to the contrary in Section 4.2, except as otherwise mutually agreed upon between the Parties, from the period beginning on the date on which the Merger Agreement is executed and ending on the first anniversary of the Effective Time, or, with respect to any Verizon and any FairPoint Transition Employee (which for this Section 4.3(a) shall not include employees of contractors providing transitions services to FairPoint), ending on the first anniversary of the ending date specified in the Transition Services Agreement with respect to the services described in Schedule A thereto; (i) neither FairPoint nor any member of the FairPoint Group shall employ any Verizon Employee, or Verizon Transition Employee or any employee of the Spinco Group that has voluntarily separated from employment with Verizon or any member of the Verizon Group within the immediately preceding six months; and, (ii) neither Verizon nor any member of the Verizon Group shall employ any FairPoint Employee or FairPoint Transition Employee that has voluntarily separated from employment with FairPoint or any member of the FairPoint Group within the immediately preceding six months, (each, an “Unavailable Employee”).  After the six month anniversary of the voluntary separation of any Unavailable Employee, FairPoint or any member of the FairPoint Group and Verizon or any member of the Verizon Group, as the case may be, may offer employment to such individual in its sole discretion.

28

ARTICLE V.

PENSION PLANS

Section 5.1.            Establishment of Pension Plans and Trusts

(a)           Spinco Management Pension Plan and Excess Plan.  Effective as of the Distribution Date, Spinco or NNETO shall establish two defined benefit pension plans for the benefit of employees who are not Represented Employees.  One such plan will be responsible for benefits of participants and beneficiaries in the Verizon Management Pension Plan (the “VMPP”) who are Spinco Employees or are entitled to receive a benefit in respect of a Spinco Employee (the “Spinco Management Pension Plan”), and the other such plan will be responsible for benefits of participants and beneficiaries in the Verizon Excess Pension Plan (the “Excess Plan”) who are Spinco Employees or are entitled to receive a benefit in respect of a Spinco Employee (the “Spinco Excess Pension Plan”).  Effective as of the Distribution Date, Spinco or NNETO shall establish the Spinco Trust.  Spinco or NNETO shall provide FairPoint with a copy of those plans and such trust at least two months prior to their adoption in order to provide FairPoint an opportunity to comment on their form.  Spinco and NNETO agree to consult with FairPoint and, subject to the obligations of the Parties under this Agreement, to reasonably consider such comments, but FairPoint’s comments shall be advisory only and Spinco and NNETO shall retain full discretion as to the form of the plans and trusts. 

As of and from the Distribution Date until the Merger Date, Spinco, and, as of and from the Effective Time, FairPoint shall be responsible for taking or causing to be taken all necessary, reasonable, and appropriate action to establish, maintain and administer the Spinco Management Pension Plan, so that it qualifies under Section 401(a) of the Code and the related trust thereunder is exempt from Federal income taxation under Section 501(a) of the Code.

29

(b)           Spinco Union Pension Plan and Trust.  Effective as of the Distribution Date, Spinco or NNETO shall establish a defined benefit pension plan (the “Spinco Union Pension Plan”) and related trust to provide retirement benefits to Spinco Employees who are Represented Employees and to persons entitled to receive a benefit in respect of such a Spinco Employee, and who, in either case, are participants in or beneficiaries under the Verizon Pension Plan for New York and New England Associates as of the Distribution Date.  Spinco or NNETO shall provide FairPoint with a copy of the Spinco Union Pension Plan at least two monthsprior to its adoption in order to provide FairPoint an opportunity to comment on its form.  Spinco and NNETO agree to consult with FairPoint and, subject to the obligations of the Parties under this Agreement, to reasonably consider such comments, but FairPoint’s comments shall be advisory only and Spinco and NNETO shall retain full discretion as to the form of the plan.

As of and from the Distribution Date, Spinco, and as of and from the Effective Time, FairPoint shall be responsible for taking or causing to be taken all necessary, reasonable, and appropriate action to establish, maintain and administer the Spinco Union Pension Plan so that it qualifies under Section 401(a) of the Code and the related trust thereunder is exempt from Federal income taxation under Section 501(a) of the Code.

Section 5.2.            Assumption of Pension Plan Liabilities and Allocation of Interests in the Verizon Pension Trusts

(a)           Assumption of Liabilities by Spinco Pension Plan.  Subject to the Pension Plan Asset Allocation specified below, effective as of the Distribution Date, all Liabilities under the Verizon Pension Plans to persons who are Spinco Employees and to persons who are entitled to receive a benefit in respect of such a Spinco Employee shall cease to be Liabilities of the Verizon Pension Plans and shall be assumed in full and in all respects by the corresponding Spinco Pension Plan.  The “corresponding” plan shall be:  (i) the

30

Spinco Management Pension Plan with respect to participants in the VMPP; and (ii) the Spinco Union Pension Plan with respect to participants in the Verizon Pension Plan for New York and New England Associates, with such determination being based on employment status (management or union-represented) as of the Distribution Date.  Effective as of the Distribution Date, all Liabilities under the Excess Plan to persons who are Spinco Employees and to persons who are entitled to receive a benefit in respect of such a Spinco Employee shall cease to be Liabilities of the Excess Plan and shall be assumed in full and in all respects by the Spinco Excess Pension Plan.  FairPoint shall be solely responsible for all ongoing rights of or relating to Spinco Employees for future participation in the Spinco Pension Plans and the Spinco Excess Pension Plan.

(b)           Calculation of Pension Plan Asset Allocation.  As soon as practicable after the Distribution Date,Verizon’s actuary shall calculate and certify the Pension Plan Asset Transfer Amount for each Spinco Pension Plan (other than the Spinco Excess Pension Plan) as of the close of business of the day immediately preceding the Distribution Date.  With respect to each such asset transfer, the asset transfer amount shall be equal to the present value of benefits in respect of Spinco Employees and persons entitled to receive a benefit in respect of such Spinco Employees on a plan termination basis, provided that the particular transfer under consideration satisfies the applicable de minimis rule under the IRS section 414(l) regulations.  Consistent with the desire of the Parties that the de minimis rule be satisfied, Verizon’s actuary shall make its determination regarding satisfaction of the de minimis rule in a manner that comports with all applicable law and is aimed at a result that satisfies the applicable de minimis rule, including the use of a permissible determination date that is in furtherance of such objective.  In the event a particular transfer does not satisfy the de minimis rule, Verizon’s actuary will perform an allocation under section 4044 of ERISA to determine the assets from the Verizon Pension Plan in question that may be transferred to the applicable Spinco Pension Plan.  In the event the amount of assets to be transferred following the ERISA section 4044 analysis is less than the Projected Benefit Obligation (“PBO”) for the Spinco participants under

31

consideration, Verizon will provide a supplemental amount of assets so that the funding in the Spinco Pension Plan under consideration is equal to the PBO funded-level.  The assumptions to be used with respect to the foregoing are set forth in Exhibit A hereto entitled Actuarial Assumptions and Methods for Pension Asset Transfer.  Notwithstanding the foregoing in this Section 5.2(b), in the event the present value of the accrued benefits that are to be transferred from the Verizon Pension Plan for New York and New England Associates (the “North Accrued Benefits”) can not be transferred in reliance on the applicable de minimis rule under the IRS section 414(l) regulations, an additional calculation shall be performed.  Verizon’s actuary shall subtract $11,700,000 from the North Accrued Benefits and re-determine the percentage that such adjusted North Accrued Benefits would be of the assets of such Plan as of the most favorable permissible determination date.  If the resulting percentage is equal to or in excess of three percent (3%), then the provisions above that apply to a transfer that does not satisfy the de minimis rule shall be followed, i.e., the provisions relating to funding to the PBO funded-level shall apply.  If, however, the resulting percentage is less than three percent (3%), then Verizon will provide a supplemental amount of assets so that the funding in the Spinco Union Pension Plan is equal to the accrued present value of benefits in respect of Spinco Employees and persons entitled to receive a benefit in respect of such Spinco Employees as determined on a plan termination basis using the PBGC Plan Termination Assumptions under Exhibit A hereto.

Within ten (10) days after the date Verizon certifies to FairPoint the Pension Plan Asset Transfer Amount for each Spinco Pension Plan, Verizon’s actuary shall provide FairPoint’s actuary with a complete computer file containing the employee data and all other information used by Verizon’s actuary or otherwise reasonably requested by FairPoint’s actuary asneeded to calculate the Pension Plan Asset Transfer Amount (including related data and information related to such calculation and otherwise appropriate for FairPoint’s actuary to consider, and any other data and information reasonably requested by FairPoint’s actuary).  If FairPoint’s actuary disagrees with the

32

determination of a Pension Plan Asset Transfer Amount, FairPoint may, within thirty (30) days after receipt from Verizon of such computer file and all other reasonably requested information, deliver a written notice to Verizon disagreeing with such calculation and setting forth FairPoint’s calculation of the Pension Plan Asset Transfer Amount.  The Parties shall, during the fifteen (15) days following such delivery, negotiate in good faith to reach an agreement on the disputed items or amounts in order to determine, as may be required, the amount of the Pension Plan Asset Transfer Amount, which amount shall not be more than the amount thereof shown in the calculations of FairPoint’s actuary nor less than the amount shown in the calculations of Verizon’s actuary.  If the two actuaries are unable to agree on the amount of the Pension Plan Asset Transfer Amount during such fifteen (15)-day period, the Parties shall jointly select an independent third actuary with whom none of the parties have a material relationship, whose determination shall be binding on the Parties.  The third actuary shall be directed to render a calculation of the Pension Plan Asset Transfer Amount in accordance with the provisions of this Agreement as promptly as practicable.  Each of the Parties shall bear the fees, costs and expenses of their respective actuaries, and the fees, costs and expense of the third actuary shall be borne one-half by Verizon and one-half by FairPoint.

(c)           Transfer of Assets to Spinco Pension Trust

(i)            As soon as practicable after and effective as of the Distribution Date, Verizon shall cause to be transferred from the master trust established under the Verizon Pension Plans (the “Verizon Trust”) to a master trust established in respect of the Spinco Pension Plans (the “Spinco Trust”), an initial amount of assets (the “Initial Asset Transfer”).  The amount of the Initial Asset Transfer shall be equal to 80% of the amount the enrolled actuary for such Verizon Plan determines in good faith to be the approximate Pension Plan Asset Transfer Amount as of the date of the Initial Asset Transfer.

33

(ii)           As soon as practicable after the final calculation of each Spinco Plan’s Pension Plan Asset Transfer Amount pursuant to Section 6.2(b), if such amount exceeds the Initial Asset Transfer, Verizon will cause the applicable Verizon Trust to transfer to the Spinco Trust (the “Final Asset Transfer”) assets in an amount equal to the Pension Plan Asset Transfer Amount with respect to each Spinco Pension Plan less the sum of (A) the Initial Asset Transfer and (B) the aggregate amount of benefit payments (the “Benefit Payments”) made by the Verizon Pension Plan in respect of FairPoint Employees from and after the Distribution Date.  The amount determined under the preceding sentence shall be increased or decreased, as the case may be, by the investment return on the applicable amount determined in accordance with the letter of direction agreed to by the Parties prior to the Effective Time (the “Letter of Direction”).  If the sum of the Initial Asset Transfer plus the Benefit Payments exceeds the Pension Plan Asset Transfer Amount for a Spinco Pension Plan, then the portion of the Spinco Trust relating to such plan shall return such excess, increased or decreased by the investment return determined in accordance with the Letter of Direction from the date of the Initial Asset Transfer (or the date of the Benefit Payment, as the case may be) to the date of return, to the portion of the Verizon Trust relating to the corresponding Verizon Pension Plan.

(iii)          The applicable investment return under subsection (c)(ii) above and the identification of the types of assets (cash and/or in kind assets) to be transferred from the Verizon Trust to the Spinco Trust in either the Initial Asset Transfer or the Final Asset Transfer shall be determined in accordance with the Letter of Direction, as the same may be amended by mutual agreement of Verizon and FairPoint prior to the date of such Final Assets Transfer.  Verizon and FairPoint shall cooperate in determining what assets are transferred in kind as part of the Initial Asset Transfer and the Final Asset Transferand Verizon shall not transfer any asset in kind which FairPoint reasonably determines is not readily

34

tradable or capable of being valued on a substantial and established market (except as otherwise agreed by the Parties).

(iv)          Under no circumstances shall Verizon or any Verizon Pension Plan be liable to transfer any additional amounts to FairPoint or any Spinco Pension Plan or any other Person or Governmental Authority in respect of the Liabilities transferred to the Spinco Pension Plans pursuant to Section 5.2(a), including, but not limited to, any circumstance under which any Person or Governmental Authority states a claim to any portion or all of any Pension Plan Asset Transfer Amount.  To the extent Verizon voluntarily transfers any additional amounts to FairPoint or any Spinco Pension Plan, FairPoint shall not be responsible for reimbursing Verizon for such additional voluntary transfers.

Section 5.3.            Continuation of Elections and Application to Spinco Dependents

Spinco, as of the Distribution Date, and FairPoint, as of the Effective Time, shall cause the Spinco Pension Plans and the Spinco Excess Pension Plan to recognize and maintain all existing elections, including, but not limited to, beneficiary designations, payment forms and other rights of alternate payees under qualified domestic relation orders as were in effect under the corresponding Verizon Pension Plan or Excess Plan, unless and until changed or modified in accordance with the terms of the applicable plan or otherwise in accordance with applicable law.  To the extent applicable, the provisions of this Article V shall also apply to Spinco Dependents.

35

ARTICLE VI.

HEALTH AND WELFARE

Section 6.1.            Assumption of Health and Welfare

(a)           Verizon or one or more of its subsidiaries maintain health and welfare plans, including plans providing active severance and active post-retirement health, dental and life insurance benefits, for the benefit of eligible Verizon Employees and certain former employees, including Former Spinco Employees who have retired as of the date the Merger Agreement is executed (the “Verizon Welfare Plans”).  As of the Distribution Date, each person who is a Spinco Employee or Spinco Dependent on such date shall cease to be covered under the Verizon Welfare Plans, except that Verizon and the Verizon Welfare Plans shall be responsible for medical, dental, disability or life insurance claims of such Spinco Employees and Spinco Dependents as are specified in Section 2.1(b)(ii) for Represented Employees, and also for such claims with respect to all other Spinco Employees and Spinco Dependents on the same basis as described in Section 2.1(b)(ii) with respect to claims incurred or events that have occurred prior to the Effective Time.  For the avoidance of doubt, with respect to any payments due to any Spinco Employee under the terms of the Verizon short term disability plan, the obligations to make payments with respect to any period prior to the Effective Time shall remain with Verizon, and the obligations to make any payments with respect to any period at or after the Effective Time shall be the sole responsibility of FairPoint or a Spinco Plan.

(b)           Prior to the Distribution Date, Verizon and Spinco shall take steps to establish Spinco Welfare Plans, based on the corresponding Verizon Welfare Plans.  Spinco or NNETO shall provide FairPoint with a copy of the Spinco Welfare Plans at least four months prior to their adoption in order to provide FairPoint an opportunity to

36

comment on their form and for use in FairPoint’s preparations for assuming these plan.  Spinco and NNETO agree to consult with FairPoint and, subject to the obligations of the Parties under this Agreement, to reasonably consider such comments, but FairPoint’s comments shall be advisory only and Spinco and NNETO shall retain full discretion as to the form of the plans.  Verizon shall or shall cause the Spinco Group to provide FairPoint with demographic and claims information and other reasonably requested information related to the Spinco Employee and Spinco Dependents that will enable FairPoint and the Spinco Group to effect the operation of such Spinco Welfare Plans following the Effective Time.  As of and immediately after the Distribution Date, all Liabilities in respect of or relating to such Spinco Employees under the Verizon Welfare Plans shall cease to be Liabilities of any member of the Verizon Group or the Verizon Welfare Plans and any and all such Liabilities shall be assumed as of the Distribution Date by Spinco or NNETO, and the Spinco Welfare Plans, and as of the Effective Time, by FairPoint, Spinco, NNETO and the Spinco Welfare Plans.  Notwithstanding the foregoing, all liabilities associated with Former Spinco Employees under the Verizon Welfare Plans, and such liabilities that have been retained by the Verizon plans under Section 6.1(a) above, shall remain with the Verizon Group.

(c)           Except for the FRP account balances described in Section 6.2(c), nothing in this Agreement shall require Verizon, any Verizon Group member or any Verizon Welfare Plan to transfer assets or reserves with respect to the Verizon Welfare Plans, including, but not limited to, any plan providing severance, post-retirement health, dental or life insurance benefits, to FairPoint, any FairPoint Group member or the Spinco Welfare Plans.

37

Section 6.2.            Adoption of Health and Welfare Plans

(a)           Spinco, as of the Distribution Date, and FairPoint, as of the Effective Time, shall maintain or shall cause to be maintained for the benefit of eligible Spinco Employees and Spinco Dependents, health and welfare plans, including plans providing active severance and active post-retirement health, dental and life insurance benefits (the “Spinco Welfare Plans”) that are identical in all material respects to the benefits provided under the corresponding Verizon Welfare Plan in which such individuals participate immediately prior to the Distribution Date, and the terms of which have been provided to FairPoint within four monthsof the execution of the Merger Agreement.

(b)           Terms of Participation in FairPoint Welfare Plans.  FairPoint shall cause the Spinco Welfare Plans to (i) waive all limitations as to preexisting conditions, exclusions, service conditions and waiting period limitations, and any evidence of insurability requirements applicable to any such Spinco Employees and Spinco Dependents other than such limitations, exclusions, and conditions that were in effect with respect to Spinco Employees and Spinco Dependents as of the Effective Time, in each case under the corresponding Verizon Welfare Plan and (ii) honor any deductibles, out-of-pocket maximums and co-payments incurred by Spinco Employees and Spinco Dependents under the corresponding Verizon Welfare Plan in satisfying the applicable deductibles, out-of-pocket expenses or co-payments under such Verizon Welfare Plan for the calendar year in which the Distribution Date occurs.

(c)           Transfer of FRP Assets.  Verizon will make available to FairPoint, not less than forty-five calendar days prior to the Distribution Date, a list of individuals who will become or continue to be Spinco Employees as of the Effective Time and who are participants in the FRP (the “FRP Participants”), together with the elections made prior to the Distribution Date with respect to such accounts through the Distribution Date.

38

(i)            FairPoint shall take all actions necessary and legally permissible to ensure that as of the Effective Time, it includes the FRP Participants in the Spinco Plan that constitutes a Code Section 125 plan and any flexible spending arrangements thereunder (“Spinco’s FSA”).  FairPoint shall further take all actions necessary and legally permissible to amend Spinco’s FSA to provide that as of the Effective Time and for the plan year in which the Effective Time occurs, but not for any specific time thereafter, subject to any collective bargaining obligations, (A) the FRP Participants shall become participants in Spinco’s FSA as of the beginning of the FRP’s plan year and at the level of coverage provided under the FRP, (B) the FRP Participants’ salary reduction elections shall be taken into account for the remainder of Spinco’s FSA plan year as if made under Spinco’s FSA; and (C) Spinco’s FSA shall reimburse medical expenses incurred by the FRP Participants at any time during the FRP’s plan year (including claims incurred prior to the Effective Time but unpaid prior to the Effective Time), up to the amount of the FRP Participants’ election and reduced by amounts previously reimbursed by the FRP.

(ii)           Verizon shall take all actions necessary and legally permissible to amend the FRP to provide that the FRP Participants shall cease to be eligible for reimbursements from the FRP as of the Effective Time.

(iii)          As soon as practicable following the Effective Time, Verizon shall transfer to FairPoint, and FairPoint agrees to accept, those amounts (plus all related individual participant records and accountings) which represent the debit and credit balances under the FRP of the FRP Participants and the transfer of such amounts shall take into account on a net basis participants’ payroll deductions and claims paid through the Effective Time.  Verizon represents and covenants that as of the Effective Time it has or shall have properly withheld from the pay of FRP Participants all amounts in accordance with their FRP elections.

39

Section 6.3.            COBRA and HIPAA

As of the Effective Time, FairPoint shall be responsible for administering compliance with the continuation coverage requirements for “group health plans” under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and the portability requirements under the Health Insurance Portability and Accountability Act of 1996 with respect to Spinco Employees and any Spinco Dependents for the period after the Effective Time.  Verizon will retain any Verizon Liabilities under the Verizon Plans to provide COBRA coverage to any Former Spinco Employee and any of his or her eligible dependents who incurred a qualifying event under COBRA at or prior to the Effective Time and who is still eligible to receive such continuing coverage as of or after the Effective Time.

Section 6.4.            Workers’ Compensation Claims

Effective as of the Effective Time, FairPoint shall assume all Liabilities (other than any liabilities related to medical or other similar services performed, as specified in Section 2.1(b)(ii), or compensation in respect of lost work for periods prior to the Effective Time) for Spinco Employees related to any and all workers’ compensation claims and coverage, whether arising under any law of any state, territory, or possession of the U.S. or the District of Columbia and FairPoint or otherwise, and shall be fully responsible for the administration of all such claims; provided that Verizon shall either (i) transfer to or cause to be transferred or allocated for the benefit of FairPoint, a Subsidiary designated by FairPoint or Spinco Employees an amount equal to the value of any assets set aside by Verizon prior to the Effective Time (including any reserves established under any contract providing coverage against any such claims) for the payment of, or to meet the obligations in respect of, any such workers’ compensation benefits or obligations in respect of such Spinco Employees or (ii) represent in writing to

40

FairPoint that no such assets have been set aside.  If FairPoint is unable to assume any such Liability or the administration of any such claim because of the operation of applicable state law or for any other reason, Verizon shall retain such Liabilities and FairPoint shall reimburse and otherwise fully indemnify Verizon for all such Liabilities, including the costs of administering the plans, programs or arrangements under which any such Liabilities have accrued or otherwise arisen.  All reimbursement amounts shall be paid in accordance with the procedure set forth in Section 11.2.

Section 6.5.            Leave of Absence Programs

FairPoint shall be responsible for the administration and compliance of all leaves of absences and related programs (including compliance with the Family and Medical Leave Act) affecting Spinco Employees for the period at and after the Effective Time.

Section 6.6.            Time-Off Benefits

The FairPoint Group shall credit each Spinco Employee with the amount of accrued but unused vacation time, sick time and other time-off benefits (together the “Time-Off Benefits”) as such individual had with the Verizon Group or the Spinco Group as of the Effective Time and shall provide such individuals with the same rights, benefits, and entitlements in respect to such Time-Off Benefits as they were entitled to from the Verizon Group or the Spinco Group as of the Effective Time.  Verizon shall provide FairPoint with accurate data regarding accrued but unused vacation time, sick time and other time-off benefits for all Spinco Employees as of a current date not less than fifteen (15) days before the date that Verizon reasonably estimates will be the Effective Time.

41

ARTICLE VII.

Savings Plans

Section 7.1.              Establishment of the Spinco Savings Plan

Prior to the Distribution Date, Verizon and Spinco shall take steps to establish two defined contribution plans and trusts to be effective as of the Distribution Date for the benefit of Spinco Employees (the “Spinco Savings Plans”) that are identical in all material respects to the Verizon Savings Plans, such that each Verizon Savings Plan shall have one and only one corresponding Spinco Savings Plan.  Verizon or Spinco shall provide FairPoint with a copy of the Spinco Savings Plans prior to their adoption in order to provide FairPoint an opportunity to comment on their form.  Spinco and Verizon agree to consult with FairPoint and, subject to the obligations of the Parties under this Agreement, to reasonably consider such comments, but FairPoint’s comments shall be advisory only and Verizon and Spinco shall retain full discretion as to the form of the plans.  FairPoint shall be responsible for taking or causing to be taken all necessary, reasonable, and appropriate action to establish, maintain, and administer the Spinco Savings Plans so that each qualifies under Section 401(a) of the Code and the related trusts thereunder are exempted from Federal income taxation under Section 501(a)(1) of the Code.

Section 7.2.            Assumption of Liabilities and Transfer of Assets

(a)           Effective as of the Effective Time, but subject to the asset transfer specified in Section 7.2(b) below, each Spinco Savings Plan shall assume and be solely responsible for all Liabilities for or relating to Spinco Employees under the applicable Verizon Savings Plan.  FairPoint shall be solely responsible for all ongoing rights of or

42

relating to Spinco Employees for future participation (including the right to make contributions through payroll deductions) in the Spinco Savings Plans.

(b)           Effective as of the Distribution Date, Verizon shall cause the account balances (including any outstanding loan balances) in the applicable Verizon Savings Plan attributable to Spinco Employees to be transferred to the corresponding Spinco Savings Plan in cash and in-kind (including, but not limited to, participant loans), provided that, with respect to any in-kind transfers other than participant loans, FairPoint shall receive 60 days notice of such transfers and shall have an opportunity to comment on them.  FairPoint’s comments shall be advisory only and Verizon shall retain full discretion as to the type of transfers to be made but Verizon shall not transfer any asset in kind which FairPoint reasonably determines is not readily tradable or capable of being valued on a substantial and established market (except with respect to any participant loans or any other transfers otherwise agreed to by the Parties).  Subject to the immediately preceding sentence, FairPoint shall cause each Spinco Savings Plan to accept such transfer or accounts and underlying assets and, effective as of the date of such transfer, to assume and to fully perform pay or discharge, all obligations of the Verizon Savings Plans relating to the accounts of Spinco Employees (to the extent those assets related to those accounts are actually transferred from a Verizon Savings Plan).  The transfer shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(l)-1, and Section 208 of ERISA.

43

ARTICLE VIII.

Equity Based Incentive Awards

Section 8.1.            General Treatment of Outstanding Awards

Generally, Verizon shall retain all Liabilities in respect of all stock based incentive compensation awards granted to Spinco Employees and Former Spinco Employees that are not part of any employee pension benefit plan within the meaning of Section 3(3) of ERISA and that are outstanding as of the Effective Time (the “Outstanding Awards”).

Section 8.2.            Outstanding Options

Each Outstanding Award that is an option in respect of Verizon Common Stock granted under a Verizon Plan that is held by a Spinco Employee as of the Effective Time (each, an “Original Option”) shall remain an option in respect of Verizon Common Stock subject to a Verizon Plan (each, a “Remaining Option”).  Subject to any limitation required to comply with the provisions of Section 409A of the Code, each Remaining Option held by any person who is or becomes a Spinco Employee at the Effective Time shall vest and become immediately exercisable at the Effective Time, and will remain exercisable until the earlier of (i) 5 years following the Effective Time or (ii) the expiration of the stated term of the Original Option.  The exercise price and number of shares subject to each Remaining Option shall be adjusted pursuant to the terms of the applicable Verizon Plan but in a manner consistent with the requirements of Section 424 of the Code.  As a result, the Remaining Option shall be adjusted in accordance with clauses (A) and (B) below (to be interpreted and applied in such a way as to minimize any adverse consequences from any possible application of FAS 123R and Section 409A of the Code to such conversions):

44

(A)          the number of shares of Verizon Common Stock subject to such Remaining Option shall be equal to the product of (x) the number of shares of Verizon Common Stock subject to the corresponding Original Option immediately prior to the Effective Time and (y) the Verizon Share Ratio, with fractional shares rounded down to the nearest whole share and

(B)           the per-share exercise price of such Remaining Option shall be equal to the quotient of (x) the per-share exercise price of the corresponding Original Option immediately prior to the Effective Time and (y) the Verizon Share Ratio, rounded up to the nearest whole cent.

Section 8.3.            Treatment of Outstanding Verizon RSU and PSU Awards

(a)           Generally.  Each individual who holds an Outstanding Award that is a restricted stock unit (each, an “RSU”) or a Performance Share Unit (each, a “PSU”) that relates to Verizon Common Stock and that was granted under a Verizon Plan, shall continue to hold such RSU or PSU after the Effective Time under such Verizon Plan, provided that with respect to each such outstanding award, there shall be credited on behalf of each holder thereof a dividend equivalent amount equal to the opening cash value on the day following the completion of the Distribution, of the number of shares of Spinco Common Stock that would have been distributed to such holders had each such RSU or PSU award been outstanding shares of Verizon Common Stock.

(b)           Deferral Elections.  Each and every deferral election made by any Spinco Employee with respect to any RSU or PSU shall be cancelled in order to avoid any potential adverse taxation to the recipient thereof under Section 409A of the Code.

45

(c)           Performance Conditions/Board Approval.  Notwithstanding anything else contained herein to the contrary, nothing in this Section 8 shall be construed or interpreted to modify, waive, eliminate or otherwise alter any performance conditions required to be satisfied for a Spinco Employee or employee of any member of the Verizon Group to become vested in any Outstanding Award (including, but not limited to, any PSU).  Moreover, any requirement for approval by the Verizon Board or a duly authorized committee thereof of the level of achievement against any such performance restrictions applicable to such Outstanding Award shall continue to apply on the same basis as they did prior to the Effective Time.

(d)           Vesting of PSUs.  Any PSU or any Restricted Stock Unit granted by Verizon in the 2005, 2006 or 2007 calendar year that is held by a Spinco Employee at the Effective Time shall immediately vest in full on the Distribution Date, subject, if applicable, to the achievement of any applicable performance criteria and the approval thereof by the Verizon Board or a duly authorized committee thereof.  Each such award will be paid in the ordinary course during the first 75 days of the first quarter of the calendar year next following the applicable performance period for which, and subject to the extent to which, it becomes earned.

Any Outstanding Award that is a chairman’s award will be treated in substantially the same manner and subject to substantially the same conditions outlined above with respect to annual RSU grants, that is, each such chairman’s award will be appropriately adjusted to reflect the distribution of Spinco, will be deemed immediately vested on the Distribution Date and will be paid promptly on the regularly scheduled payment date after the end of the applicable award cycle.

46

Section 8.4.            Treatment of Verizon Options Outstanding at the Record Date, but Exercised Prior to the Distribution Date.

At the discretion of, and subject to such terms and conditions as shall be established by the appropriate committee of its Board of Directors, Verizon may provide that any stock option in respect of Verizon Common Stock granted under a Verizon Plan that is (i) held as of the Record Date by either a Spinco Employee or a Verizon Employee or a permitted transferee of any such employee, and (ii) is exercised by such holder following the Record Date and prior to or on the Distribution Date (each, a “Record Date Option”), shall be adjusted pursuant to the terms of the plan document governing such Record Date Option to entitle such holder to participate in the Distribution and to receive, as of the Distribution Date and in addition to the number of shares of Verizon Common Stock deliverable upon the exercise of such Record Date Options, the number of shares of Spinco Common Stock which such person would have received had such person been a Verizon stockholder on the Record Date.  If the appropriate committee of the Verizon Board of Directors does not exercise its discretion to adjust any stock options in respect of Verizon Common Stock in the manner permitted under the immediately preceding sentence, the number of Record Date Options for purposes of this Agreement and the Distribution Agreement shall be zero.

Section 8.5             Treatment of Outstanding FairPoint Equity Awards.

Prior to the Effective Time, the appropriate committee of the Board of Directors of FairPoint shall take any and all actions that it shall deem necessary or appropriate, in accordance with its authority under each of the equity incentive plans of FairPoint (the “FairPoint Equity Plans”) under which there shall be outstanding at the Effective Time any stock options, stock appreciation rights, restricted stock or other forms of compensatory equity-based compensation awards (the “FairPoint Equity Awards”), to

47

prevent (i) the accelerated vesting or exercisability of, or the waiver of any service or other conditions associated with, such FairPoint Equity Awards in connection with, and (ii) the occurrence of any other enhancement (other than any enhancement in the trading value of the FairPoint common stock that is generally available to all shareholders of FairPoint)of the rights of the holders of such FairPoint Equity Awards that would otherwise arise solely by reason of, the consummation of the transactions contemplated in the Merger Agreement.

ARTICLE IX.

Short Term Incentives and Sales Commission Programs

Section 9.1.            Incentive and Commission Plans

All Liabilities relating to Spinco Employees under each Short Term Incentive Plan or Sales Commission Program shall cease to be Liabilities of the Verizon Group and shall be assumed in full and in all respects by FairPoint, as of the Effective Time.  The FairPoint Group shall continue each Short Term Incentive Plan and each Sales Commission Program in effect as of the Effective Time until December 31, 2008.

48

ARTICLE X.

Deferred Compensation Plans

Section 10.1.          Generally

Verizon shall retain all Liabilities for any benefits accrued by Spinco Employees and Former Spinco Employees under the EDP and IDP.

Section 10.2.          Vesting and Payout of Balances

All unvested account balances under the EDP and IDP shall vest at the Effective Time.  For purposes of the EDP and IDP only, the Effective Time shall be considered a separation event and a termination of employment from the Verizon Group.  Any Spinco Employee who elected to receive a payout of an account balance upon a termination of employment, shall be paid out such account in accordance with the terms of the relevant plan.  Notwithstanding the foregoing, any and all distributions from the EDP and IDP shall, to the extent applicable, be administered in a manner consistent with the provisions of Section 409A of the Code and the regulations promulgated thereunder.

ARTICLE XI.

ASSUMPTION OF LIABILITIES

Section 11.1.          Assumption of Liabilities

(a)           By Spinco.  Not later than the Distribution Date, except as otherwise expressly provided for in this Agreement, Spinco shall or shall cause a member of the Spinco Group or a Spinco Plan to assume, perform, and discharge all of the following, regardless of when or where such Liabilities arose or arise or are incurred:

49

(i)            all Liabilities to or relating to Spinco Employees and their dependents and beneficiaries, to the extent relating to, arising out of or resulting from employment with any member of the Verizon Group or the Spinco Group on or prior to the Distribution Date, including all liabilities governed by the NNETO CBAs; and

(ii)           all other Liabilities relating to, or arising out of, or resulting from obligations, liabilities, and responsibilities expressly assumed or retained by Spinco or a member of the Spinco Group pursuant to this Agreement or the NNETO CBAs.

(b)           By FairPoint.  At the Effective Time, FairPoint shall or shall cause a member of the FairPoint Group or a FairPoint or Spinco Plan to assume, perform, and discharge all Spinco Liabilities, regardless of when or where such Liabilities arose or arise or are incurred.  To the extent that any FairPoint Subsidiary is responsible for any of the Spinco Liabilities, FairPoint shall be jointly and severally liable for the payment of such Liabilities by such FairPoint Subsidiary.

(c)           By Verizon.  Verizon shall or shall cause the applicable Verizon Plan or Verizon Group member to retain and discharge all of the following:

(i)            all Liabilities to or relating to Retained Employees and Former Spinco Employees, and any individuals who are not Spinco Employees (and the foregoing’s dependents and beneficiaries), to the extent relating to, arising out of or resulting from former, present, or future employment with the Verizon Group, including all liabilities governed by the collective bargaining agreements that cover Retained Employees, Former Spinco Employees, and any individuals who are not Spinco Employees (and the foregoing’s dependents and beneficiaries);

50

(ii)           all Liabilities with respect to Outstanding Awards; and

(iii)          all Liabilities under the EDP or IDP.

(iv)          all other Liabilities relating to, or arising out of, or resulting from obligations, liabilities, and responsibilities expressly assumed or retained by a member of the Verizon Group or a Verizon Plan pursuant to this Agreement or the collective bargaining agreements that cover Retained Employees, Former Spinco Employees, and any individuals who are not Spinco Employees (and the foregoing’s dependents and beneficiaries);

(d)           Allocation of Liabilities among Verizon, Spinco and FairPoint with respect to grievances and demands for arbitration pending as of the Effective Time shall be as set forth in Sections 11.1(a), (b) and (c).  Verizon shall retain liability for such claims relating solely to Verizon Employees or the Verizon Business and FairPoint shall assume liability for such claims relating solely to Spinco or the Spinco Business.

(e)           With respect to grievances and demands for arbitrations pending as of the Effective Time that relate to both Verizon Employees and Spinco Employees or to both the Spinco Business and the Verizon Business or to both Verizon and FairPoint, Verizon and FairPoint, each acting reasonably, shall negotiate the terms of a joint defense agreement in a manner that is consistent with the terms of the joint defense agreement to be negotiated pursuant to Section 7.27 of the Merger Agreement.  The joint defense agreement will set forth the procedures for defending and resolving such grievances and demands for arbitration on a basis that provides for the active involvement and cooperation of each of Verizon and FairPoint, it being understood that lead counsel defending such litigation shall be mutually agreed to by Verizon and FairPoint (if such counsel was not selected prior to the Effective Time) and that neither Verizon nor

51

FairPoint shall have the authority to bind the other party in any settlement of such matters without the written consent of such other party.  The Parties agree that such agreement shall incorporate an equitable procedure for limiting the liability of an indemnity Party in the event a settlement offer is accepted by such Party and rejected by the counterparty, taking into account the Party that is most likely to suffer the greater amount of Losses (including for such purposes payments hereunder) or infringement of management rights, and a more adverse settlement or resolution results.  In connection with the negotiation of the joint defense agreement, the Parties also agree to establish a reasonable and equitable basis for allocating any detriment imposed by any such settlement or order that relates to both the Verizon Employees and the Spinco Employees or to both the Verizon Business and the Spinco Business or to both the Verizon Group and the FairPoint Group.

To the extent that any Verizon Subsidiary is responsible for any of the Liabilities listed above in Section 11.1(c), Verizon shall be jointly and severally liable for the payment of such Liabilities by such Verizon Subsidiary.  To the extent that any FairPoint Subsidiary is responsible for any Liabilities listed above in Section 11.1(a) or (b), FairPoint shall be jointly and severally liable for the payment of such Liabilities by a FairPoint Subsidiary.

Section 11.2.          Reimbursement

(a)           By FairPoint.  From time to time after the Effective Time, FairPoint shall promptly reimburse Verizon, but in no event more than fifteenbusiness days after delivery by Verizon of an invoice therefor containing reasonable substantiating documentation of such costs and expenses, for the cost of any obligations or Liabilities that Verizon or a Verizon Plan elects to, or is compelled to, pay or otherwise satisfy, that are or that pursuant to this Agreement have become, the responsibility of FairPoint or any FairPoint Subsidiary; provided, however, that if payment in respect of any such Liability

52

is made by a Verizon Plan, FairPoint or the appropriate FairPoint Plan shall reimburse the Verizon Plan directly.

(b)           By Verizon.  From time to time after the Effective Time, Verizon shall promptly reimburse FairPoint, but in no event more than fifteen business days after delivery by FairPoint of an invoice therefor containing reasonable substantiating documentation of such costs and expenses, for the cost of any obligations or Liabilities that FairPoint or a FairPoint Plan elects to, or is compelled to, pay or otherwise satisfy, that are or that pursuant to this Agreement have become, the responsibility of Verizon; provided, however, that if payment in respect of any such Liability is made by a FairPoint Plan, Verizon or the appropriate Verizon Plan shall reimburse such FairPoint Plan directly.

Section 11.3.          Indemnification

(a)           FairPoint and any member of the FairPoint Group responsible for operating the Spinco Business, shall indemnify, defend and hold harmless the Verizon Indemnitees from and against all Indemnifiable Losses arising out of or due to (i) the failure of any member of the FairPoint Group to pay, perform, discharge or satisfy any liabilities assumed in 11.1(a) and (b) of this Agreement (other than any Liabilities which arise due to the failure of Verizon to satisfy its obligations under Article VIII hereof), and (ii) any other breach of the duties or obligations of any member of the FairPoint Group, as set forth in this Agreement.  FairPoint shall take commercially reasonable efforts to procure insurance against any Indemnifiable Losses arising from the obligations set forth in this Agreement.

(b)           Verizon shall indemnify, defend and hold harmless the FairPoint Indemnitees from and against all Indemnifiable Losses arising out of or due to (i) the

53

failure of any member of the Verizon Group to pay, perform, discharge or satisfy any Verizon Liabilities (other than Verizon Liabilities which arise due to the failure of any member of the FairPoint Group or any FairPoint Plan to satisfy any liabilities assumed in 11.1(a) and (b) of this Agreement) and (ii) any other breach of the duties and obligations of any member of the Verizon Group, as set forth in this Agreement.  Verizon shall take commercially reasonable efforts to procure insurance against any Indemnifiable Losses arising from the obligations set forth in this Agreement.

Section 11.4.          Procedures for Indemnification for Third-Party Claims.

Except as specifically set forth in this Agreement, in the event that Verizon or any other Verizon Indemnitee shall seek indemnification in respect of any FairPoint Liabilities, or FairPoint or any FairPoint Indemnitee shall seek indemnification in respect of any Verizon Liabilities, such person shall comply with and follow the procedures regarding indemnification set forth in Article X of the Merger Agreement, which shall apply to claims for indemnification hereunder in the same manner as though such claims were eligible for indemnification under the Merger Agreement, but assuming that such claims were not subject to any limitation on the ability to claim indemnification under such Merger Agreement.

Section 11.5.          Reductions for Insurance Proceeds and Other Amounts.

(a)           The amount that any Indemnifying Party is or may be required to pay to any Indemnitee pursuant to this Article XI shall be reduced (retroactively or prospectively) by (i) any insurance proceeds or other amounts actually recovered from third parties by or on behalf of such Indemnitee in respect of the related Indemnifiable Losses arising from the obligations set forth in this Agreement (net of all costs of recovery, including deductibles, co-payments or other payment obligations) and (ii) any

54

tax benefit actually realized by the Indemnitee in respect of the related Indemnifiable Losses arising under the obligations set forth in this Agreement.  The existence of a claim by an Indemnitee for insurance or against a third party in respect of any Indemnifiable Loss or the availability of potential tax benefits shall not, however, delay or reduce any payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing by an Indemnifying Party.  The Indemnifying Party shall make payment in full of such amount so determined to be due and owing by it and, if, and to the extent that, there exists a claim against any third party (other than an insurer) in respect of such Indemnifiable Loss, the Indemnitee shall assign such claim against such third party to the Indemnifying Party.  Any tax benefit actually received by an Indemnified Party shall be paid over to the Indemnifying Party to the extent such tax benefit relates to an Indemnifiable Loss for which indemnification has already been received.  Notwithstanding any other provisions of this Agreement, it is the intention of the Parties hereto that no insurer or any other third party shall be (i) entitled to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions or (ii) relieved of the responsibility to pay any claims for which it is obligated.  If an Indemnitee shall have received the payment required by this Agreement from an Indemnifying Party in respect of any Indemnifiable Losses and shall subsequently actually receive insurance proceeds, tax benefits or other amounts in respect of such Indemnifiable Losses, then such Indemnitee shall hold such insurance proceeds in trust for the benefit of such Indemnifying Party and shall promptly pay to such Indemnifying Party a sum equal to the amount of such insurance proceeds, tax benefits or other amounts actually received, up to the aggregate amount of any payments received from such Indemnifying Party pursuant to this Agreement in respect of such Indemnifiable Losses.

(b)           In the event that any claim is made by, on behalf of or in respect to a Spinco Employee against any member of the FairPoint Group or the Spinco Group, or in respect of any Spinco Plan for which insurance and/or insurance reimbursement may be

55

available under a Policy in accordance with the provisions of Section 7.5 of the Distribution Agreement, then solely for purposes of Section 7.5 of the Distribution Agreement, such claim shall be treated as a Spinco Liability under the Distribution Agreement.  The purpose of this provision is to make available to FairPoint the benefit of any Policy solely to the extent that benefits under such Policy would be available to FairPoint were Liabilities addressed in this Agreement not excluded from the definition of Spinco Liabilities under the Distribution Agreement, and this provision shall not be construed to expand or otherwise alter the terms of such Section 7.5 of the Distribution Agreement or the definition of Liabilities in this Agreement. For purposes of this Section 11.5(b), the term “Policy” shall have the meaning ascribed to it in the Distribution Agreement.

Section 11.6.          Contribution

(a)           If the indemnification provided for in this Article XI is unavailable to, or insufficient to hold harmless, any Indemnitee in respect of any Losses for which indemnification is provided for herein, then the relevant Indemnifying Party shall contribute to the Losses for which such indemnification is unavailable or insufficient in such proportion as is appropriate to reflect the relative fault of such Indemnifying Party and such Indemnitee in connection with the circumstances which resulted in such Losses as well as any other relevant equitable considerations.

(b)           The relative fault of Verizon and FairPoint shall be determined by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission and whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by Verizon or by FairPoint.

56

(c)           Verizon and FairPoint agree that it would not be just and equitable if contribution pursuant to this Section 11.6 were determined by any method of allocation which does not take account of the equitable considerations referred to in Section 11.6(b).  The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnitee shall be deemed to include any legal or other expenses reasonably incurred by such Indemnitee in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission.

Section 11.7.          Consequential Damages

In no event shall an Indemnifying Party be liable for any Indemnitee’s special, punitive, exemplary, incidental, consequential or indirect damages, or lost profits, whether based on contract, tort, strict liability, other law or otherwise.

Section 11.8.          Joint Defense and Cooperation

With respect to any Third Party Claim, except those specified in Section 11.1(d) and (e), but including, and not limited to, administrative proceedings, governmental investigations, and lawsuits in which both a member of the Verizon Group and a member of the FairPoint Group are, or reasonably may be expected to be, named as parties, or that otherwise implicates both a member of the Verizon Group and a member of the FairPoint Group to a material degree, the Parties shall negotiate a joint defense agreement consistent with the terms of the joint defense agreement to be negotiated between the Parties pursuant to Section 7.27 of the Merger Agreement.

57

ARTICLE XII.

General and Administrative

Section 12.1.          Cooperation

(a)           General.  Each of the Parties hereto will use its commercially reasonable efforts to promptly take, or cause to be taken, any and all actions and to do, or cause to be done, any and all things necessary proper and advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement, including without limitation, adopting plans or plan amendments.  Each of the Parties hereto shall cooperate fully on any issue relating to the transactions contemplated by this Agreement for which the other Party seeks a determination letter or any other filing, consent, or approval with respect to governmental authorities regarding a benefit plan.

(b)           Cooperation in Benefits, Plan, and Other Employee Transition.  Without limitation, the Parties’ cooperation under this Agreement shall include Verizon (and its employees and agents) acting to provide FairPoint (and its employees and agents) with all information (including, without limitation, plan documentation, names of employees anticipated to be assigned to Spinco and their respective work status, demographics and data, and underwriting and risk-assessment information and periodic updates on the foregoing) that is reasonably requested by FairPoint in connection with establishing Spinco’s ongoing benefit plans and assessing appropriate insurances for the period on and after the Distribution Date and that is reasonably available to Verizon after taking commercially reasonable efforts to obtain such information. Such information may be requested by FairPoint at any time following the date which is six months prior to the anticipated Distribution Date, and shall be provided by Verizon or a Verizon agent as soon as reasonably practicable without incurring undue expense and in a de-identified

58

format to the extent necessary to comply with privacy provisions of federal or applicable state law.

Section 12.2.          Consent of Third Parties

If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent is withheld, the Parties shall use their reasonable best efforts to implement the applicable provisions of this Agreement to the full extent practicable.  If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, the Parties shall negotiate in good faith to implement the provision in a mutually satisfactory manner.  The phrase “reasonable best efforts” as used in this Agreement shall not be construed to require the incurrence of any non-routine or commercially unreasonable expense or liability or the waiver of any right.

Section 12.3.          Survival

This Agreement shall survive the Effective Time.

Section 12.4.          Interpretation

Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all Exhibits hereto) and not to any particular provision of this Agreement.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.

59

Section 12.5.          No Third Party Beneficiary

(a)           Nothing in this Agreement shall confer upon any person (nor any beneficiary thereof) any rights under or with respect to any plan, program or arrangement described in or contemplated by this Agreement and each person (and any beneficiary thereof) shall be entitled to look only to the express terms of any such plan, program or arrangement for his, her or its rights thereunder.

(b)           Nothing in this Agreement shall create any right of a Person to object or to refuse to assent to the assumption of or succession to, by any member of the Spinco Group or the FairPoint Group, any benefit plan, collective bargaining agreement or other agreement relating to conditions of employment, termination of employment, severance or employee benefits, nor shall this Agreement be construed as recognizing that any such rights exist.

(c)           Nothing in this Agreement shall amend or shall be construed to amend any Plan, program or arrangement described in or contemplated by this Agreement (other than to change the sponsor of a plan in accordance with the express terms hereof).

Section 12.6.          Notices

Any notice, demand, claim, or other communication under this Agreement shall be in writing and shall be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier services (costs prepaid); (b) sent by facsimile with conformation or transmission; (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses and facsimile numbers and marked to the attention of the person designated

60

below (or to such other address, facsimile number or person as a party may designate by notice to the other Parties:

(a)           If to Spinco (prior to the Effective Time) or Verizon, to:

Verizon Communications Inc.

140 West Street

New York, NY 10007

Facsimile:  (908) 766-3813

Attn:  Marianne Drost, Esq.

Senior Vice President, Deputy General Counsel and

Corporate Secretary

and

Verizon Communications Inc.

One Verizon Way

Basking Ridge, NJ 07920-1097

Facsimile:  (908) 696-2068

Attn:  Dale Chamberlain, Esq.

With copies to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attn:  Kevin M. Schmidt

(b)           If to FairPoint, to:

FairPoint Communications, Inc.

521 E. Morehead St., Ste. 250

Charlotte, NC 28202

Facsimile:  704.344.1594

Attn:  Peter G. Nixon

Chief Operating Officer

and

FairPoint Communications, Inc.

521 E. Morehead St., Ste. 250

Charlotte, NC 28202

Facsimile: 704.344.1594

Attn:  Shirley J. Linn

Executive Vice President and General Counsel

61

With copies to (which shall not constitute notice):

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022

Facsimile No.: (212) 230-7700

Attn:  Thomas E. Kruger

Parker, Poe, Adams & Bernstein L.L.P.

Three Wachovia Center

401 South Tryon Street, Suite 3000

Charlotte, NC 28202

Facsimile No.:

Attn:  Heloise C. Merrill

Section 12.7.          Governing Law; Jurisdiction.  This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws rules thereof to the extent such rules would require the application of the law of another jurisdiction.  The state or federal courts located within the City of New York shall have exclusive jurisdiction over any and all disputes between the parties hereto, whether in law or equity, arising out of or relating to this agreement and the agreements, instruments and documents contemplated hereby and the parties consent to and agree to submit to the exclusive jurisdiction of such courts.  Each of the Parties hereby waives and agrees not to assert in any such dispute, to the fullest extent permitted by applicable law, any claim that (i) such Party is not personally subject to the jurisdiction of such courts, (ii) such party and such Party’s property is immune from any legal process issued by such courts or (iii) any litigation or other proceeding commenced in such courts is brought in an inconvenient forum.

62

Section 12.8.          Waiver of Jury Trial.

EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

Section 12.9.          Specific Performance.

The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that, after the Distribution, the parties shall be entitled to specific performance of the terms hereof to the extent such terms impose obligations that are to be performed after the Distribution, in addition to any other remedy at law or in equity.

Section 12.10.        No Assignment; No Amendment; Counterparts

This Agreement may not be assigned by either Party (except by operation of law) without the written consent of the other, and shall bind and inure to the benefit of the Parties hereto and their respective successors and permitted assignees.  This Agreement may not be amended or supplemented except by an agreement in writing signed by Verizon, Spinco, and FairPoint.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

63

IN WITNESS WHEREOF, each Party has caused its duly authorized officer to execute this Agreement, as of the date first written above.

	VERIZON COMMUNICATIONS INC.
	/s/ John W. Diercksen
	By:			John W. Diercksen
	Its:			Executive Vice President—Strategy,
				Development and Planning
NORTHERN NEW ENGLAND SPINCO,
	INC.
	/s/ Stephen E. Smith
	By:		Stephen E. Smith
	Its:		Vice President
	FAIRPOINT COMMUNICATIONS, INC.
	/s/ Eugene B. Johnson
	By:	Eugene B. Johnson
	Its:	Chief Executive Officer

64

EX-10.5

Exhibit 10.5

EXECUTION COPY

TAX SHARING AGREEMENT

This Tax Sharing Agreement (this “Agreement”) is entered into as of January 15, 2007, by and among Verizon Communications Inc., a Delaware corporation (“Verizon”), Northern New England Spinco Inc., a newly formed Delaware corporation and a wholly owned subsidiary of Verizon (“Spinco”), and FairPoint Communications, Inc., a Delaware corporation (“FairPoint”).  Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement, dated as of the date hereof, by and among Verizon, FairPoint and Spinco (the “Merger Agreement”).

RECITALS

WHEREAS, Verizon is the common parent corporation of an affiliated group of corporations within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as amended (the “Code”), that files a consolidated U.S. federal income tax return;

WHEREAS, pursuant to the Merger Agreement and the Distribution Agreement, among other things, Verizon will transfer or cause to be transferred to Spinco or one or more Subsidiaries of Spinco (pursuant to certain preliminary restructuring transactions, including Internal Spinoffs) all of the Spinco Assets and Spinco and/or one or more Subsidiaries of Spinco will assume or cause to be assumed all of the Spinco Liabilities;

WHEREAS, on the Distribution Date, Verizon will distribute all of the issued and outstanding shares of Spinco Common Stock on a pro rata basis to the holders of Verizon Common Stock;

WHEREAS, pursuant to the Merger Agreement, immediately following the Distribution, Spinco will merge with and into FairPoint pursuant to the Merger;

WHEREAS, the parties to this Agreement intend that (i) the First Internal Spinoff qualify as a reorganization under Section 368(a)(1)(D) of the Code and a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (ii) the Second Internal Spinoff qualify as a distribution eligible for nonrecognition under Sections 355(a) and 361(c) of the Code; (iii) the Contribution, together with the Distribution, qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code; (iv) the Distribution qualify as a distribution of Spinco stock to Verizon stockholders eligible for

nonrecognition under Sections 355(a) and 361(c) of the Code; (v) no gain or loss be recognized by Verizon for U.S. federal income tax purposes in connection with the receipt of the Spinco Securities or the consummation of the Debt Exchange; (vi) the Special Dividend qualify as money transferred to creditors or distributed to shareholders in connection with the reorganization within the meaning of Section 361(b)(1) of the Code, to the extent that Verizon distributes the Special Dividend to its creditors and/or shareholders in connection with the Contribution; (vii) the Merger qualify as a tax-free reorganization pursuant to Section 368(a) of the Code; and (viii) no gain or loss be recognized as a result of such transactions for U.S. federal income tax purposes by any of Verizon, Spinco, and their respective stockholders and Subsidiaries (except to the extent of cash received in lieu of fractional shares); and

WHEREAS, Verizon, Spinco and FairPoint desire to set forth their rights and obligations with respect to Taxes due for periods before and after the Distribution Date and other Tax matters relating to the transactions contemplated by the Merger Agreement and the Distribution Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

“Affiliate” has the meaning set forth in the Merger Agreement.

“Agreement” has the meaning set forth in the preamble.

“Applicable Federal Rate” means the rate computed pursuant to Section 1274(d) of the Code, compounded quarterly, with respect to the applicable period.

“Code” has the meaning set forth in the recitals.

“Contribution” has the meaning set forth in the Merger Agreement.

“Distribution” has the meaning set forth in the Merger Agreement.

2

“Distribution Agreement” has the meaning set forth in the Merger Agreement.

“Distribution Date” has the meaning set forth in the Distribution Agreement.

“Distribution Disqualification” means that (i) either the Contribution, taken together with the Distribution, or the First Internal Spinoff fails to qualify as a tax-free reorganization under Section 368(a)(1)(D) of the Code pursuant to which no gain or loss is recognized for U.S. federal income tax purposes by any of Verizon, Spinco or their Subsidiaries; (ii) any of the Distribution or the Internal Spinoffs fails to qualify as a distribution eligible for nonrecognition under Section 355 of the Code, pursuant to which no gain or loss is recognized for U.S. federal income tax purposes by any of Verizon, Spinco, their Subsidiaries, or the stockholders of Verizon, except to the extent of cash received in lieu of fractional shares; (iii) the Debt Exchange (if consummated) fails to constitute a transfer of qualified property to Verizon’s creditors in connection with the reorganization within the meaning of Section 361(c)(3) of the Code; and/or (iv) the Special Dividend fails to qualify as money transferred to creditors or distributed to shareholders in connection with the reorganization within the meaning of Section 361(b)(1) of the Code, but only to the extent that Verizon distributes the Special Dividend to its creditors or shareholders.  For the avoidance of doubt, a Distribution Disqualification shall occur if Verizon or any of its Subsidiaries recognizes gain pursuant to Section 355(d), 355(e) and/or 355(f) of the Code with respect to the Distribution and/or any Internal Spinoff.

“FairPoint” has the meaning set forth in the recitals.

“FairPoint Group” means FairPoint and all entities that are Subsidiaries of FairPoint immediately following the Merger.

“Final Determination” means a determination within the meaning of Section 1313 of the Code or any similar provision of state or local tax law.

“Income Taxes” means any and all Taxes based upon or measured by net or gross income (including alternative minimum tax under Section 55 of the Code and including any liability described in clauses (ii) or (iii) of the definition of “Taxes” that relates to any Income Tax).

“Merger Agreement” has the meaning set forth in the preamble.

3

“Non-Preparer Party” has the meaning set forth in Section 2.02.

“Other Taxes” means any and all Taxes other than Income Taxes, including any liability described in clauses (ii) or (iii) of the definition of “Taxes” that relates to any Other Tax.

“Person” means any individual, partnership, joint venture, corporation, limited liability company, trust, unincorporated organization, government or department or agency of a government.

“Post-Distribution Period” means any taxable year or other taxable period beginning after the Distribution Date and, in the case of any taxable year or other taxable period that begins before and ends after the Distribution Date, that part of the taxable year or other taxable period that begins at the beginning of the day after the Distribution Date.

“Potential Disqualifying Action” has the meaning set forth in Section 10.02(b).

“Pre-Distribution Period” means any taxable year or other taxable period that ends on or before the Distribution Date and, in the case of any taxable year or other taxable period that begins before and ends after the Distribution Date, that part of the taxable year or other taxable period through the close of the Distribution Date.

“Spinco” has the meaning set forth in the preamble.

“Spinco Group” means Spinco and all entities that are Subsidiaries of Spinco immediately following the Contribution.

“Spinco Return” has the meaning set forth in Section 2.01(b).

“Spinco Securities” has the meaning set forth in the Distribution Agreement.

“Subsidiary” has the meaning set forth in the Merger Agreement.

“Tax” or “Taxes” has the meaning set forth in the Merger Agreement.

4

“Tax Attribute” means any net operating loss carryover or carryback, net capital loss carryover or carryback, investment tax credit carryover or carryback, foreign tax credit carryover or carryback, charitable deduction carryover or carryback or other similar item that could reduce Income Tax for a past or future taxable period.

“Tax Benefit” means, in the case of a separate state, local or other Tax Return, the sum of the amount by which the Tax liability (after giving effect to any alternative minimum or similar Tax) of a corporation to the appropriate Taxing Authority is reduced (including by deduction, entitlement to refund, credit or otherwise, whether available in the current taxable year, as an adjustment to taxable income in any other taxable year or as a carryforward or carryback, as applicable) plus any interest from such government or jurisdiction relating to such Tax liability, and in the case of a consolidated federal Tax Return or combined, unitary or other similar state, local or other Tax Return, the sum of the amount by which the Tax liability of the affiliated group (within the meaning of Section 1504(a) of the Code) or other relevant group of corporations to the appropriate government or jurisdiction is reduced (including by deduction, entitlement to refund, credit or otherwise, whether available in the current taxable year, as an adjustment to taxable income in any other taxable year or as a carryforward or carryback, as applicable) plus any interest from such government or jurisdiction relating to such Tax liability.

“Tax Contest” has the meaning set forth in Section 5.01.

“Tax Dispute” has the meaning set forth in Article IX.

“Tax Dispute Arbitrator” has the meaning set forth in Article IX.

“Tax Materials” has the meaning set forth in Section 10.01(a).

“Tax Return” has the meaning set forth in the Merger Agreement.

“Taxing Authority” has the meaning set forth in the Merger Agreement.

“Transactions” has the meaning set forth in Section 2.04(a).

“Transfer Taxes” means any Merger Transfer Taxes and Distribution Transfer Taxes (in each case, having the meaning set forth in the Merger Agreement).

5

“Transition Services Agreement” has the meaning set forth in the Merger Agreement.

“Verizon” has the meaning set forth in the preamble.

“Verizon Group” means Verizon and all Subsidiaries of Verizon at any time preceding, at or following the Contribution, but shall not include any member of the Spinco Group.

“Verizon Consolidated Group” means any consolidated, combined or unitary group of which any member of the Verizon Group is the common parent corporation at any time.

“Verizon Return” has the meaning set forth in Section 2.01(a).

ARTICLE II

TAX RETURNS AND TAX PAYMENTS

Section 2.01Obligations to File Tax Returns.

(a)Verizon shall file or cause to be filed any Tax Return that is required to be filed after the Distribution Date that includes both (i) one or more members of the Verizon Group and (ii) one or more members of the Spinco Group or any item of income, loss, gain, deduction or credit relating to the Spinco Business (a “Verizon Return”).  Each member of the Spinco Group hereby irrevocably authorizes and designates Verizon as its agent, coordinator and administrator for the purpose of taking any and all actions necessary or incidental to the filing of any such Verizon Return and, except as otherwise provided herein, for the purpose of making payments to, or collecting refunds from, any Taxing Authority in respect of a Verizon Return.  FairPoint shall cause members of the Spinco Group to promptly prepare and deliver to Verizon in a manner consistent with past practices pro forma Tax Returns and tax information packages with respect to any Verizon Return.  In the case of any Verizon Return that includes any member of the Spinco Group or any item relating to the Spinco Business only for the portion of the relevant taxable period that ends on the Distribution Date, Taxes shall be allocated to the portion of such taxable period that ends on the Distribution Date based on an actual or hypothetical closing of the books at the close of the Distribution Date.  Except as otherwise provided herein, Verizon shall have the exclusive right to file, prosecute,

6

compromise or settle any claim for refund for Taxes in respect of a Verizon Return for which Verizon bears responsibility hereunder and to determine whether any refunds of such Taxes to which the Verizon Consolidated Group may be entitled shall be received by way of refund or credit against the Tax liability of the Verizon Consolidated Group.

(b)FairPoint shall file or cause to be filed any other Tax Return required to be filed after the Distribution Date by or with respect to one or more members of the Spinco Group (a “Spinco Return”).   All Spinco Returns shall be prepared (i) on a basis that is consistent with the Distribution Tax Opinion, the Merger Tax Opinions and the IRS Ruling and (ii) in a manner consistent with Verizon’s determination of the adjusted Tax basis of any asset and the amount of any Tax Attribute or any similar item held by the Spinco Group at the time of the Distribution.  In the case of any Spinco Return that includes any member of the Spinco Group or any item relating to the Spinco Business only for the portion of the relevant taxable period that begins after the Distribution Date, Taxes shall be allocated to the portion of such taxable period that begins after the Distribution Date based on an actual or hypothetical closing of the books at the close of the Distribution Date.

Section 2.02Review of Tax Returns.  No later than thirty (30) days prior to the date on which any Verizon Return or Spinco Return is required to be filed (taking into account any valid extensions), if the party that is not responsible for preparing such Tax Return under Section 2.01 (the “Non-Preparer Party”) is responsible for any portion of the Taxes reported on such Tax Return, the party responsible for preparing such Tax Return under Section 2.01 shall (a) submit or cause to be submitted to the Non-Preparer Party such Tax Return for review and comment and (b) shall consider in good faithany changes to such Tax Return reasonably requested by the Non-Preparer Party, to the extent that such changes relate to items for which the Non-Preparer Party has responsibility hereunder.

Section 2.03Obligation to Remit Taxes.  Verizon and FairPoint shall each timely remit or cause to be timely remitted to the applicable Taxing Authority any Taxes due in respect of any Tax Return that such party is required to file or cause to be filed (or, in the case of a Tax for which no Tax Return is required to be filed, which is otherwise payable by such party or a member of such party’s affiliated group to any Taxing Authority) and shall be entitled to reimbursement for such payments to the extent provided herein; provided, however, that in the case of any Tax Return, the Non-Preparer Party shall remit to the Party required to file such Tax Return in immediately available funds the amount of any Taxes reflected on such Tax Return for which the Non-Preparer Party is responsible hereunder at least two (2) Business Days before payment of the relevant amount is due to a Taxing Authority.

7

Section 2.04Tax Sharing and Indemnification Obligations.

(a)Spinco and, from and after the Merger, FairPoint shall be liable for and shall indemnify and hold the Verizon Group harmless against any Taxes (i) resulting from (A) the Internal Spinoffs, the Contribution, the Distribution, the Debt Exchange or any transaction associated therewith (the “Transactions”), including Taxes arising from any Distribution Disqualification, to the extent that such Taxes arise as a result of any action (or failure to take any reasonably required action to avoid a Distribution Disqualification) by Spinco or any of its Affiliates following the Effective Time or any action (or failure to take any reasonably required action to avoid a Distribution Disqualification) by FairPoint or any of its Affiliates (excluding the Spinco Group), or (B) any breach of any representation, covenant or obligation of Spinco or FairPoint under this Agreement or any other Transaction Agreement to the extent that Taxes resulting from such breach are attributable to (x) a Distribution Disqualification or (y) a breach of Section 6.02 hereof, (ii) arising in the Pre-Distribution Period and attributable to a member of the Spinco Group or to the income, employees, assets or transactions of the Spinco Business, except for Taxes resulting from the Transactions (including Taxes resulting from the triggering into income of any items from intercompany transactions under Section 1.1502-13 of the Treasury Regulations or excess loss accounts under Section 1.1502-19 of the Treasury Regulations) for which either FairPoint or Spinco is not otherwise responsible pursuant to any other provision of this Section 2.04(a) or this Agreement or (iii) arising in the Post-Distribution Period and attributable to a member of the Spinco Group or to the assets, employees, or transactions of the Spinco Business.  Taxes for which Spinco and FairPoint are responsible pursuant to clause (ii) of the preceding sentence shall be computed (A) as if Spinco and its Subsidiaries had always conducted the Spinco Business as a separate affiliated group of companies whose items of income, gain, loss, deduction, and credit for U.S. federal income tax purposes included solely such items attributable to the Spinco Business and none of such items attributable to the Verizon Business and (B) by taking into account (x) elections and accounting methods actually used in computing such items by the Verizon Consolidated Group in filing its Tax Returns and (y) solely items of income, gain, loss, deduction, and credit arising during the taxable periods for which the applicable Tax claim is being brought under Section 2.04(a)(ii).

(b)Except for Taxes for which either Spinco or FairPoint is responsible under Section 2.04(a) or any other provision of this Agreement, Verizon shall be liable for and shall indemnify and hold FairPoint and its Subsidiaries and the Spinco Group harmless against, any Taxes (i) of the Verizon Group or any Verizon Consolidated Group or any member thereof or attributable to the employees, assets or transactions of the Verizon Business or (ii) of the Spinco Group or any member thereof arising in the period ending on the Effective Time and resulting from the Transactions, including Taxes arising from any Distribution Disqualification.

8

(c)The parties’ responsibilities for Transfer Taxes shall be governed by Section 11.1 of the Merger Agreement.

(d)Except as set forth in this Agreement and in consideration of the mutual indemnities and other obligations of this Agreement, any and all prior Tax sharing or allocation agreements, arrangements or practices between any member of the Verizon Group and any member of the Spinco Group shall be terminated with respect to the Spinco Group as of the Distribution Date, and no member of the Spinco Group shall have any continuing rights or obligations thereunder.

(e)FairPoint shall be entitled to any refund of or credit for Taxes for which FairPoint is responsible under this Agreement, and Verizon shall be entitled to any refund of or credit for Taxes for which Verizon is responsible under this Agreement.  A party receiving a refund to which another party is entitled pursuant to this Agreement shall pay the amount to which such other party is entitled within five days after the receipt of the refund.  Each party shall be entitled to offset any amount which it is owed under the Transaction Agreements by any amounts owed to it by the other party under this Section 2.04(e) or any other provision of this Agreement.

(f)All indemnification obligations in respect of Taxes pursuant to this Agreement shall be increased to include (i) all reasonable accounting, legal and other professional fees and court costs incurred in connection with such Taxes, (ii) with respect to Taxes related to the Transactions, all costs, damages or settlement payments associated with any stockholders litigation in respect of adverse Tax consequences of the Transactions, provided, in the case of settlement payments, that any settlement of such litigation for an amount equal to or in excess of $15 million shall not be made without the prior written consent of the indemnifying party, which consent shall not be unreasonably withheld, delayed or conditioned, and (iii) Taxes resulting from indemnification payments hereunder, and shall be reduced by any Tax Benefit realized by the indemnified party in respect of Taxes or other losses subject to indemnification under this Agreement.

(g)The parties agree that any payments made among the parties pursuant to this Agreement or any other Transaction Agreement shall be treated, to the extent permitted by law, for all Tax purposes as nontaxable payments made immediately prior to the Distribution.

9

ARTICLE III

CARRYBACKS; AMENDED RETURNS; COMPENSATION DEDUCTIONS

Section 3.01Carrybacks.  Without the consent of Verizon, no member of the Spinco Group shall carry back any Tax Attribute (unless required to carry back such Tax Attribute by law) from a Post-Distribution Period to a Pre-Distribution Period, provided that if the carryback is required by law, Verizon (or any other member of the Verizon Group receiving such refund) shall promptly remit to FairPoint any Tax Benefit it realizes with respect to any such carryback.

Section 3.02Amended Returns.  FairPoint shall not, and shall not permit any member of the Spinco Group to, file any amended Tax Return of a member of the Spinco Group with respect to Income Taxes or a Tax Return with respect to Other Taxes of a member of the Spinco Group that is filed on a combined basis with a member of the Verizon Group, in each case with respect to a Pre-Distribution Period without the prior written consent of Verizon, which consent may be withheld in Verizon’s sole discretion.

Section 3.03Tax Benefit Realized.  For purposes of this Agreement, a Tax Benefit shall be deemed to have been realized at the time any refund of Taxes is received or applied against other Taxes due, or at the time of filing of a Tax Return (including any relating to estimated Taxes) on which a loss, deduction or credit is applied in reduction of Taxes which would otherwise be payable; provided, however, that where a party has other losses, deductions, credits or similar items available to it, deductions, credits or items for which the other party would be entitled to a payment under this Agreement shall be treated as the first items utilized to produce a Tax Benefit.   If any Tax Benefit is subsequently reduced or disallowed as a result of an audit, the party that had previously received a payment (or was entitled to reduce a payment that such party was otherwise required to make) on account of such Tax Benefit shall promptly pay an amount equal to the amount so reduced or disallowed to the other party.

Section 3.04Deductions with Respect to Debt Exchange, Compensation, Etc.

(a)Verizon and the other members of the Verizon Group shall be entitled to all Tax Benefits resulting from any loss, deduction, credit or other item which decreases Taxes paid or payable, or increases Tax basis, associated with the Debt Exchange including, without limitation, any Tax Benefits resulting from any issuance costs or issuance expenses associated with any Spinco Securities other than out-of-pocket costs and out-of-pocket expenses borne by Spinco.

10

(b)All deductions for United States federal, state and local Income Tax purposes resulting from the exercise of compensatory options issued prior to the Distribution Date with respect to stock of Verizon shall be taken by Verizon or a member of the Verizon Group, and no party to this Agreement shall take any position on any Tax Return which is inconsistent with such treatment, unless required to do so pursuant to a Final Determination to such effect.

(c)If, by reason of a subsequent Final Determination as to the treatment of any tax deductions related to the compensatory options referred to in Section 3.04(b) above, a Taxing Authority determines that a member of the FairPoint Group is entitled to such deduction, then FairPoint shall, and shall cause the Spinco Group to, pay to Verizon the amount of any Tax Benefits that result therefrom within ten (10) days of the date on which such Tax Benefits are realized.

(d)The principles of paragraphs (b) and (c) shall apply, mutatis mutandis, to other items of compensation expense or transaction expense that are economically borne by members of the Verizon Group or Verizon shareholders, including, for the avoidance of doubt, severance bonuses or other similar compensatory payments made by Verizon to employees who are transferred to Spinco or its Subsidiaries in connection with the Contribution and any Spinco transaction expenses paid by Verizon pursuant to Section 11.1 of the Merger Agreement.

ARTICLE IV

PAYMENTS

Section 4.01Payments.  Except as otherwise provided in Section 2.03 or Section 3.04, payments due under this Agreement shall be made no later than thirty (30) days after the receipt or crediting of a refund, the realization of a Tax Benefit for which the other party is entitled to reimbursement, the delivery of notice of payment of a Tax for which the other party is responsible under this Agreement, or the delivery of notice of a Final Determination which results in such other party becoming obligated to make a payment hereunder to the other party hereto.  Payments due hereunder, but not made within such 30-day period, shall be accompanied with interest at a rate equal to the Applicable Federal Rate from the due date of such payment.

Section 4.02Notice.  Verizon and FairPoint shall give each other prompt written notice of any payment that may be due to the provider of such notice under this Agreement.

11

ARTICLE V

TAX CONTESTS

Section 5.01Notice.  FairPoint shall promptly notify Verizon in writing upon receipt by FairPoint or any member of the FairPoint Group of a written communication from any Taxing Authority with respect to any pending or threatened audit, dispute, suit, action, proposed assessment or other proceeding (a “Tax Contest”) concerning any Taxes for which Verizon may be liable under this Agreement.  Verizon shall promptly notify FairPoint in writing upon receipt by Verizon or any member of the Verizon Group of a written communication from any Taxing Authority with respect to any Tax Contest concerning any Taxes for which FairPoint may be liable under this Agreement.

Section 5.02Control of Contests by Verizon. Verizon shall have sole control of any Tax Contest related to (a) any Verizon Return or (b) the Tax-Free Status of the Transactions, including the exclusive right to communicate with agents of the Taxing Authority and to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest, provided, however, that in the case of any such Tax Contest that may affect Taxes for which FairPoint has responsibility hereunder, FairPoint may participate fully in the Tax Contest at its own expense.  In the case of any such Tax Contest relating to Taxes for which the potential liability of FairPoint or Spinco for any Post-Distribution Period under this Agreement equals or exceeds $15,000,000, (A) Verizon shall not settle or concede any such Tax Contest without the prior written consent of FairPoint, which consent shall not be unreasonably withheld, delayed or conditioned and (B) absent a settlement of such Tax Contest pursuant to subclause (A) above, Verizon shall be required to pursue, at FairPoint’s expense, such Tax Contest through one level of appellate judicial review (it being understood that Verizon shall have no obligation to pursue such Tax Contest beyond one level of appellate judicial review).

Section 5.03Control of Contests by FairPoint.  Except as provided in Section 5.02, FairPoint shall have sole control of any Tax Contest related to any Spinco Return, including the exclusive right to control, resolve, settle or agree to any deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Contest, provided, however, that in the case of any such Tax Contest that may affect Taxes for which Verizon has responsibility hereunder, Verizon may participate fully in the Tax Contest at its own expense.

12

ARTICLE VI

COOPERATION

Section 6.01   General.

(a)           Verizon and FairPoint shall cooperate with each other in the filing of any Tax Returns and the conduct of any audit or other proceeding and each shall execute and deliver such powers of attorney and make available such other documents as are reasonably necessary to carry out the intent of this Agreement.  Each party agrees to notify the other party in writing of any audit adjustments which do not result in Tax liability but can be reasonably expected to affect Tax Returns of the other party, or any of its Subsidiaries, for a Post-Distribution Period.

(b)           Verizon shall, and shall cause the Verizon Subsidiaries to, make information in the possession of the Verizon Group available to the Company for purposes of preparation and compilation by the Company and the Company’s advisors of those reports and studies necessary for the Company in order for it to comply with its tax reporting and filing obligations in Post-Distribution Periods, including but not limited to studies related to the earnings and profits of Spinco and the Company as of the Effective Time and the tax basis in assets and the stock of corporate subsidiaries.

Section 6.02   Consistent Treatment.

(a)           Unless and until there has been a Final Determination to the contrary, each party agrees to treat (i) each of (A) the Contribution, together with the Distribution and (B) the first Internal Spinoff, as a tax–free reorganization qualifying under Section 368(a)(1)(D) of the Code, (ii) each of the Internal Spinoffs and the Distribution as a transaction qualifying under Sections 355 and 361 of the Code, (iii) the Debt Exchange (if consummated) as a transfer of qualified property to Verizon’s creditors in connection with the reorganization within the meaning of Section 361(c)(3) of the Code; and (iv) the Merger as a reorganization qualifying for nonrecognition under Section 368(a) of the Code, pursuant to each of which no gain or loss is recognized by any of Verizon, Spinco, FairPoint and their respective shareholders and Subsidiaries (except to the extent of cash received in lieu of fractional shares).

(b)           Unless and until there has been a Final Determination to the contrary, FairPoint shall file or cause to be filed all Tax Returns of a member of the Spinco Group or relating to the Spinco Business and shall conduct any Tax Contests in respect of a

13

member of the Spinco Group or the Spinco Business in a manner consistent with Verizon’s determination of the adjusted Tax basis of any asset and the amount of any Tax Attribute or any similar item held by the Spinco Group at the time of the Distribition.

ARTICLE VII

RETENTION OF RECORDS; ACCESS

The Verizon Group and the FairPoint Group shall (a) subject to the provisions of the Transition Services Agreement, in accordance with their respective then current record retention policies or for the period required by applicable law, if longer, retain records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns in respect of Taxes of any member of either the Verizon Group or the Spinco Group for any Pre-Distribution Period or any Post-Distribution Period or for any Tax Contests relating to such Tax Returns; and (b) give to the other party reasonable access to such records, documents, accounting data and other information (including computer data) and to its personnel (insuring their cooperation) and premises, for the purpose of the review or audit of such Tax Returns to the extent relevant to an obligation or liability of a party under this Agreement or for purposes of the preparation or filing of any such Tax Return, the conduct of any Tax Contest or any other matter reasonably and in good faith related to the Tax affairs of the requesting party.  Subject to the provisions of the Transition Services Agreement, at any time after the Distribution Date that the FairPoint Group proposes to destroy such material or information, it shall first notify the Verizon Group in writing and the Verizon Group shall be entitled to receive at Verizon’s cost and expense such materials or information proposed to be destroyed.  Subject to the provisions of the Transition Services Agreement, at any time after the Distribution Date that the Verizon Group proposes to destroy such material or information, it shall first notify the FairPoint Group in writing and the FairPoint Group shall be entitled to receive at FairPoint’s cost and expense such materials or information proposed to be destroyed.

ARTICLE VIII

SURVIVAL

Notwithstanding any other provision in this Agreement, all representations under this Agreement shall survive until 180 days after the expiration of the statute of limitations period (giving effect to any written waiver, mitigation or extension thereof) applicable to the matters covered thereby and the resolution of all disputes under this

14

Agreement with respect to any such matter that arose during such period.  All covenants and agreements contained in this Agreement shall survive indefinitely.

ARTICLE IX

DISPUTE RESOLUTION

Verizon and FairPoint shall attempt in good faith to resolve any disagreement arising with respect to this Agreement, including, but not limited to, any dispute in connection with a claim by a third party (a “Tax Dispute”).  Either party may give the other party written notice of any Tax Dispute not resolved in the normal course of business.  If the parties cannot agree by the tenth Business Day following the date on which one party gives such notice, then the parties shall promptly retain the services of a nationally recognized law or accounting firm reasonably acceptable to the parties (the “Tax Dispute Arbitrator”).  The Tax Dispute Arbitrator shall be instructed to resolve the Tax Dispute and such resolution shall be (a) set forth in writing and signed by the Tax Dispute Arbitrator, (b) delivered to each party involved in the Tax Dispute as soon as practicable after the Tax Dispute is submitted to the Tax Dispute Arbitrator but no later than the 15th day after the Tax Dispute Arbitrator is instructed to resolve the Tax Dispute, (c) made in accordance with this Agreement, and (d) final, binding and conclusive on the parties involved in the Tax Dispute on the date of delivery of such resolution.  The Tax Dispute Arbitrator shall only be authorized on any one issue to decide in favor of and choose the position of either of the parties involved in the Tax Dispute or to decide upon a compromise position between the ranges presented by the parties to the Tax Dispute Arbitrator.  The Tax Dispute Arbitrator shall base its decision solely upon the presentations of the parties to the Tax Dispute Arbitrator at a hearing held before the Tax Dispute Arbitrator and upon any materials made available by either party and not upon independent review.  The fees and expenses of the Tax Dispute Arbitrator shall be borne 50% by Verizon and 50% by FairPoint.

ARTICLE X

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 10.01         Representations and Warranties.

(a)           Spinco hereby represents and warrants that (i) it has examined (or upon receipt will examine) (A) the IRS Ruling and any other rulings issued by the IRS in connection with the Distribution, (B) the Distribution Tax Opinion, (C) each IRS

15

Submission, (D) the Distribution Tax Representations and (E) any other materials delivered or deliverable by Spinco and others in connection with the rendering by Verizon Tax Counsel of the Distribution Tax Opinion and the issuance by the IRS of the IRS Ruling and such other rulings (all of the foregoing, collectively, the “Tax Materials”) and (ii) the facts presented and the representations made therein, to the extent descriptive of or otherwise relating to Spinco, are or will be true, correct and complete in all material respects from the time presented or made through and including the Distribution Date.

(b)           Verizon hereby represents and warrants that (i) it has examined (or upon receipt will examine) the Tax Materials and (ii) the facts presented and the representations made therein, to the extent descriptive of or otherwise relating to Verizon, are or will be true, correct and complete in all material respects from the time presented or made through and including the Distribution Date.

(c)           FairPoint hereby agrees, represents and warrants that (i) upon receipt, it shall promptly examine the Tax Materials, (ii) within (A) ten (10) Business Days following such receipt, in the case of the initial draft of the Ruling Request, (B) five (5) Business Days following such receipt, in the case of any other Tax Materials, or (C) such other time period following such receipt as may be necessary to comply with deadlines imposed by any Taxing Authority, to the extent that FairPoint does not believe that the facts presented and the representations made therein which are descriptive of or otherwise relating to FairPoint are accurate, FairPoint shall inform Verizon of any items that it believes are inaccurate and shall propose specific changes to the Tax Materials with respect to such items so as to make them true, correct and complete in all material respects, and (iii) all other such facts and representations with respect to which FairPoint proposes no specific changes will be true, correct and complete in all material respects.  FairPoint further represents and warrants that neither FairPoint nor any Subsidiary of FairPoint owns any shares of Verizon Common Stock or any rights, warrants or options to acquire, or securities convertible into or exchangeable for, Verizon Common Stock.  The representations and warranties set forth in this Section 1.02(c) shall be true and correct as of the date of this Agreement or, with respect to the Tax Materials, as of the date immediately following the deadline specified in clause (ii) above, and at all times through and including the Distribution Date.

Section 1.02           Covenants Relating to the Distribution.

(a)           FairPoint shall not, nor shall it permit any of its Subsidiaries to, take any action, including entering into any agreement, understanding or arrangement or any substantial negotiations with respect to any transaction or series of transactions that could

16

reasonably be expected to cause a Distribution Disqualification to occur; provided, however, that the foregoing shall not prohibit the Merger.

(b)           Until the first day after the second anniversary of the Distribution Date, FairPoint shall not, nor shall it permit any of its Subsidiaries to, take any action (including entering into any agreement, understanding or arrangement or any substantial negotiations with respect to any transaction or series of transactions) that might cause a Distribution Disqualification to occur (any such action or failure to act, a “Potential Disqualifying Action”), including any action or failure to act that might be inconsistent with any representation made in the Tax Materials.

(c)           Until the first day after the second anniversary of the Distribution Date, FairPoint shall not enter into any agreement, understanding or arrangement or any substantial negotiations with respect to any transaction (including a merger to which FairPoint is a party) involving the acquisition (including by FairPoint or any of its Subsidiaries) of stock of FairPoint or a shift of ownership (by vote or value) of FairPoint, and shall not issue any additional shares of capital stock, modify its certificate of incorporation (or other organizational documents), or transfer or modify any option, warrant, convertible obligation or other instrument that provides for the right or possibility to issue, redeem or transfer any equity interest in FairPoint (or enter into any agreement, understanding, arrangement or any substantial negotiations with respect to any such issuance, transfer or modification).  Notwithstanding the foregoing,

(i)            FairPoint may issue additional equity interests in FairPoint to a person in a transaction to which Section 83 or Section 421(a) or (b) of the Code applies in connection with the person’s performance of services as an employee, director or independent contractor of (A) FairPoint or its Subsidiaries, (B) any other person that is related to FairPoint under Section 355(d)(7)(A) of the Code or (C) a corporation the assets of which the FairPoint acquires in a reorganization under Section 368 of the Code (including Spinco or any of its Subsidiaries), provided that such stock is not excessive by reference to the services performed by such person and such person or a coordinating group of which the person is a member will not be a controlling shareholder or a ten-percent shareholder of FairPoint (within the meaning of Treasury Regulations Section 1.355-7(h)(3) and (14)) immediately after the issuance of such common stock; and

(ii)           FairPoint may issue additional shares of common stock of FairPoint to a retirement plan of FairPoint or any other person that is treated as the same employer as FairPoint under Section 414(b), (c), (m), or (o) of the Code that qualifies under Section 401(a) or 403(a) of the Code, provided that the stock

17

acquired by all of the qualified plans of FairPoint and such other persons during the four-year period beginning two years before the Distribution Date does not, in the aggregate, represent more than ten percent of the total combined voting power of all classes of stock of FairPoint entitled to vote or more than ten percent of the total value of shares of all classes of stock of FairPoint.

The intent of the foregoing clauses (i) and (ii) is to permit certain equity issuances by FairPoint, but solely to the extent such issuances would comply with Safe Harbor 8 or 9 set forth in Treasury Regulations Section 1.355-7(d)(8) or (9) and would not cause Verizon or any of its Subsidiaries to recognize gain pursuant to Section 355(d), 355(e) and/or 355(f) of the Code with respect to the Distribution and/or any Internal Spinoff.  To the extent the Treasury Regulations (or the Code) are amended and such amendments could affect the Tax-Free Status of the Transactions, such amendments shall automatically be incorporated by reference into the requirements of the foregoing clauses (i) and (ii) and/or the other relevant parts of this Section 10.02, if applicable.

(d)           Until the first day after the second anniversary of the Distribution Date, FairPoint shall not, and shall not permit any of its Subsidiaries to, repurchase any shares of stock of FairPoint except to the extent consistent with the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30, 1996-1 C.B. 696, as the same may be modified or supplemented from time to time, and only to the extent not revoked.

(e)           Until the first day after the second anniversary of the Distribution Date, FairPoint shall (i) cause its wholly owned Subsidiaries that were wholly owned Subsidiaries of Spinco at the time of the Distribution to continue the active conduct of the Spinco Business (determined in accordance with Section 355(b) of the Code) to the extent so conducted by those Subsidiaries immediately prior to the Distribution and (ii) continue such active conduct of the Spinco Business to the extent FairPoint directly holds any portion of the Spinco Business immediately after the Merger.  FairPoint shall neither cause nor permit any such Subsidiary of Spinco to dissolve, liquidate, merge or consolidate with any other Person or to become a disregarded entity for U.S. federal income tax purposes.

(f)            Until the first day after the second anniversary of the Distribution Date, FairPoint shall not voluntarily dissolve, liquidate, merge or consolidate with any other person, unless, in the case of a merger or consolidation, FairPoint is the survivor of the merger or consolidation and the transaction otherwise complies with the other provisions of this Section 10.02.

18

(g)           Notwithstanding the foregoing, the provisions of this Section 1.03 shall not prohibit FairPoint from implementing any Potential Disqualifying Action, subject to, and without limiting or modifying, FairPoint’s indemnification obligations under Section 2.04(a), if (i) FairPoint obtains the written consent of Verizon (which consent may be given or withheld in Verizon’s sole discretion) or (ii) FairPoint obtains a supplemental ruling from the IRS or an opinion of a nationally recognized law firm, in form and substance reasonably satisfactory to Verizon, that the taking of such action will not adversely affect, directly or indirectly, the Tax-Free Status of the Transactions or result in a Distribution Disqualification.

(h)           Notwithstanding anything else to contrary contained in this Agreement or any other Transaction Agreement, FairPoint hereby agrees that (i) it will not, and will not permit any of its Subsidiaries to, directly or indirectly, (A) pre-pay, pay down, redeem, retire or otherwise acquire, however effected, any of the Spinco Securities prior to their maturity, (B) take any action that might result in any Person other than FairPoint being treated after the Merger as the obligor for U.S. federal income tax purposes under the Spinco Securities or any other debt obligations of Spinco incurred pursuant to the New Financing, or (C) take any action that might result in any “significant modification” of the Spinco Securities within the meaning of Treasury Regulations Section 1.1001-3(e), (ii) it will not take or permit to be taken any action at any time that could jeopardize, directly or indirectly, the qualification, in whole or in part, of any of the Spinco Securities as “securities” within the meaning of Section 361(a) of the Code, (iii) no issuance of stock by FairPoint or any of its Affiliates and no change in the ownership (by vote or value, including as a result of any shift in voting power) of any such entities will occur that could cause Section 355(d), Section 355(e) and/or Section 355(f) of the Code to apply to the Distribution and/or any Internal Spinoff, and (iv) it will not take or permit to be taken any action at any time that could jeopardize, directly or indirectly, any ruling received from the IRS, or opinion of counsel received from Company Tax Counsel or Verizon Tax Counsel, in connection with the Transactions; provided that, the foregoing shall not prohibit FairPoint from implementing any of the above actions, subject to, and without limiting or modifying, FairPoint’s indemnification obligations under Section 2.04(a), if (x) FairPoint complies with the requirements of Section 10.02(g) or (y) failure to take such action would violate the credit agreements entered into in connection with the New Financing (each as executed as of the Distribution Date).

ARTICLE XI

MISCELLANEOUS PROVISIONS

To the extent not inconsistent with any specific term of this Agreement, the following sections of the Distribution Agreement shall apply in relevant part to this

19

Agreement: 10.1 (Complete Agreement), 10.3 (Governing Law), 10.4 (Notices), 10.5 (Amendment and Modification), 10.7 (Counterparts), 10.8 (Interpretation), 10.9 (Severability), 10.10 (References; Construction), 10.11 (Termination), 10.12 (Consent to Jurisdiction and Service of Process), 10.13 (Waivers), and 10.14 (Waiver of Jury Trial).  Except as provided in the preceding sentence, and except as specifically provided in the Merger Agreement and the Transition Services Agreement, this Agreement shall be the exclusive agreement among the parties with respect to all Tax matters, including indemnification in respect of Tax matters.  In the event of any conflict between this Agreement and any other Transaction Agreement, this Agreement shall control.

ARTICLE XII

SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES

This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns, but neither this Agreement nor any of the rights, interests and obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties.  This Agreement is solely for the benefit of Verizon, Spinco and FairPoint and their respective Subsidiaries and Affiliates and is not intended to confer upon any other Persons any rights or remedies hereunder.  The obligations of Spinco and FairPoint under this Agreement shall be binding upon any Person that acquires all or substantially all the assets or stock of FairPoint, whether by merger, amalgamation or consolidation, asset purchase, stock purchase or subscription or otherwise, and FairPoint shall not enter into any agreement for any such transaction that does not so expressly provide in writing.  The obligations of Verizon under this Agreement shall be binding upon any Person that acquires all or substantially all the assets or stock of Verizon, whether by merger, amalgamation or consolidation, asset purchase, stock purchase or subscription or otherwise, and Verizon shall not enter into any agreement for any such transaction that does not so expressly provide in writing.  This Agreement is being entered into by Verizon, FairPoint and Spinco on behalf of themselves and the members of their respective affiliated groups.  This Agreement shall constitute a direct obligation of each member of the Verizon Group and each member of the FairPoint Group and shall be deemed to have been readopted and affirmed on behalf of any entity that becomes a Subsidiary of Verizon or FairPoint in the future.

20

ARTICLE XIII

EFFECTIVENESS

All covenants and agreements of the parties contained in this Agreement (except for the covenants and agreements contained in Article X, which shall be effective immediately) shall be subject to and conditioned upon the Merger becoming effective.

21

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

VERIZON COMMUNICATIONS INC.
By:	/s/ John W. Diercksen
	Name:		John W. Diercksen
	Title:		Executive Vice President—Strategy,
			Development and Planning
NORTHERN NEW ENGLAND SPINCO INC.
By:	/s/ Stephen E. Smith
	Name:	Stephen E. Smith
	Title:	Vice President
FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ Eugene B. Johnson
	Name:	Eugene B. Johnson
	Title:	Chief Executive Officer

22

EX-10.6

Exhibit 10.6

TERMINATION AGREEMENT

TERMINATION AGREEMENT (this “Agreement”), dated as of January 15, 2007, among FairPoint Communications, Inc., a Delaware corporation (the “Company”), Kelso Investment Associates V, L.P., a Delaware limited partnership (“KIA V”), Kelso Equity Partners, L.P., a Delaware limited partnership (together with KIA V, “Kelso”) and Thomas H. Lee Equity Fund IV, L.P., a Delaware limited partnership (“THL”, and together with Kelso, the “Stockholders”).

W I T N E S S E T H

WHEREAS, the Company and each of the Stockholders are parties to the Nominating Agreement (the “Nominating Agreement”), dated as of February 8, 2005;

WHEREAS, the Company is entering into an Agreement and Plan of Merger, dated as of the date hereof, with Verizon Communications, Inc., a Delaware corporation (“Verizon”), and Northern New England Spinco Inc., a Delaware corporation (the “Merger Agreement”);

WHEREAS, each of the Stockholders wishes to effect the resignation of each of their respective designees to the board of directors of the Company; and

WHEREAS, the Stockholders and the Company wish to terminate the Nominating Agreement effective immediately prior to the Effective Time if it has not previously been terminated (as defined in the Merger Agreement).

NOW THEREFORE, in consideration of the mutual covenants and premises set forth herein, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and agreeing to be legally bound, the parties hereby agree as follows:

1.             Resignation of Directors.  The Stockholders agree to take all necessary action to effect the resignation of their respective designees to the board of directors of the Company, effective at such time as the Company may request by no less than 10 days prior notice to the Stockholders and, in any event, no later than immediately prior to the Effective Time (as defined in the Merger Agreement).  Notwithstanding the foregoing, each of their respective designees may resign their positions at any time prior to the Effective Time.  Sections 3 to 5 of the Nominating Agreement shall have no force and effect, and the Stockholders shall have no rights thereunder, from and after the date upon which their respective designees to the board of

directors of the Company resign in accordance with this Section 1; provided, that Sections 3 to 5 of the Nominating Agreement shall once again have full force and effect if this Agreement is terminated in accordance with Section 3 hereof.

2.             Termination.  Effective immediately prior to the Effective Time (as defined in the Merger Agreement), the Nominating Agreement shall be deemed terminated in all respects without further action by any party and the parties thereto shall have no further obligations to each other thereunder.

3.             Term.  This Agreement shall terminate automatically in the event of any termination of the Merger Agreement pursuant to Article IX thereof.

4.             Notices. Any notice or other communication in connection with this Agreement shall be deemed to be delivered and received if in writing (or in the form of a telex or telecopy) addressed as provided below (a) when actually delivered, in person, (b) if telexed or telecopied to said address, when electronically confirmed, (c) when delivered if delivered by overnight courier or (d) in the case of delivery by mail, five business days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified:

If to the Company, to:

FairPoint Communications, Inc.
521 East Morehead Street
Suite 250
Charlotte, North Carolina 28202
Attention: Shirley J. Linn, Esq.
Facsimile: (704) 344-1594

with a copy to:

Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
Attention: Thomas E. Kruger, Esq.

If to Kelso, to:

Kelso & Company
320 Park Avenue, 24th Floor
New York, New York 10022

2

Attention: James J. Connors, II, Esq.
Facsimile: (212) 223-2379

If to THL, to:

Thomas H. Lee Partners, L.P.
100 Federal Street
35th Floor
Boston, Massachusetts 02110
Attention: Anthony J. DiNovi
Kent R. Weldon
Facsimile: (617) 227-3514

5.             Governing Law; Submission to Jurisdiction. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal laws of the State of Delaware, without giving effect to principles of conflicts of law. The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts of the State of Delaware or the United States of America located in the State of Delaware for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby (and the parties agree not to commence any action, suit or proceeding relating hereto except in such courts), and further agree that service of any process, summons, notice or documents by United States registered mail to a party in accordance with Section 4 hereof shall be effective service of process for any action, suit or proceeding brought against such party in any such court and, absent any statute, rule or order to the contrary, that each party shall have 30 days from actual receipt of any complaint to answer or otherwise plead with respect thereto. The parties hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement in the courts of the State of Delaware or the United States of America located in the State of Delaware, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

6.             Miscellaneous.  Verizon shall be a third party beneficiary to this Agreement.  This Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto, Verizon as third party beneficiary and each of their respective successors, heirs, and assigns.  No party hereto shall assign its rights, or delegate its duties, under this Agreement without the prior written consent of all of the other parties hereto and Verizon.  No modification, amendment or waiver of any provision of this Agreement shall be effective unless approved in writing by all parties hereto and Verizon.  This Agreement constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such

3

matters.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original, and all of which, taken together, shall be deemed to constitute one and the same agreement.  Any counterpart of this Agreement may be delivered via facsimile or electronic transmission (such as a document in PDF format) and shall be binding on the party executing such counterpart to the same extent as an original thereof.

[Signatures follow on next page]

4

IN WITNESS WHEREOF, the undersigned have executed and delivered this Termination Agreement as of the day and year first above written.

FAIRPOINT COMMUNICATIONS, INC.
By:	/s/ Shirley J. Linn
	Name:			Shirley J. Linn
	Title:			Executive Vice President
KELSO INVESTMENT ASSOCIATES V, L.P.
By:		Kelso GP V, LLC,
		its general partner
By:		/s/ Frank K. Bynum, Jr.
		Name:			Frank K. Bynum, Jr.
		Title:			General Partner
KELSO EQUITY PARTNERS V, L.P.
			/s/ Frank K. Bynum, Jr.
By:			Name:		Frank K. Bynum, Jr.
			Title:		General Partner

5

THOMAS H. LEE EQUITY FUND IV, L.P.
By:	THL Equity Advisors IV, LLC,
	its general partner
By:	/s/ Kent R. Weldon
	Name:	Kent R. Weldon
	Title:

6

EX-10.7

Exhibit 10.7

EXECUTION COPY

PARTNERSHIP INTEREST PURCHASE AGREEMENT

among

CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS,

VERIZON WIRELESS OF THE EAST LP

and

TACONIC TELEPHONE CORP.

Dated as of January 15, 2007

PARTNERSHIP INTEREST PURCHASE AGREEMENT

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

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

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

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

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

ARTICLE 1
PURCHASE AND SALE OF INTEREST

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

ARTICLE 2
PURCHASE PRICE AND ASSUMPTION OF LIABILITIES

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

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

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

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

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

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF GENERAL PARTNER

General Partner hereby represents and warrants to Seller as follows:

2

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

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

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

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

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

3

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

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

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

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller as follows:

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

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

4

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

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

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

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

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

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

5

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

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

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

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

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

6

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

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

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

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

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

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

7

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

ARTICLE 6
COVENANTS

6.1Further Actions; Release.

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

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

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

8

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

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

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

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

9

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

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

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

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

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

10

ARTICLE 7
BUYER’S CONDITIONS TO CLOSING

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

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

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

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

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

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

ARTICLE 8
SELLER’S CONDITIONS TO CLOSING

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

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

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

11

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

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

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

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

ARTICLE 9
CLOSING; CLOSING DOCUMENTS

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

12

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

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

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

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

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

ARTICLE 10
SURVIVAL; INDEMNIFICATION

10.1Survival.

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

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

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

13

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

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

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

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

14

ARTICLE 11
MISCELLANEOUS PROVISIONS

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

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

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

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

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

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

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

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

15

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

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

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

16

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

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

If to Seller to:

Taconic Telephone Corp.
c/o FairPoint Communications, Inc.
521 East Morehead Street, Suite 250
Charlotte, North Carolina  28202
Attn:  Shirley J. Linn

Executive Vice President and General Counsel

Telephone:  (704) 344-8150
Facsimile:  (704) 344-1594

If to Buyer or General Partner, to:

Cellco Partnership d/b/a Verizon Wireless
One Verizon Way
Basking Ridge, New Jersey  07920
Attn:  Vice President – Business Development
Telephone:  908-559-5400
Facsimile:  908-696-2197

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

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

17

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

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

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

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

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

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

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

18

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

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

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

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

19

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

TACONIC TELEPHONE CORP.				CELLCO PARTNERSHIP
				D/B/A VERIZON WIRELESS
By:	/s/ Eugene B. Johnson
				By:	/s/ Lowell McAdam
				Lowell McAdam
				President and CEO
VERIZON WIRELESS OF THE EAST LP
D/B/A VERIZON WIRELESS
By:			Verizon Wireless of Georgia LLC, Its
			General Partner
By:			Cellco Partnership d/b/a Verizon Wireless,
			Its Sole Member
By:		/s/ Lowell McAdam
		President and CEO

EX-99.1

Exhibit 99.1

FairPoint Investment Communication
Moderator: Tom Rozycki
January 16, 2007
8:30 a.m. ET

OPERATOR:  Good morning.  My name is Tiara , and I will be your conference operator today.  At this time, I would like to welcome everyone to the FairPoint Investment Community conference call.  All lines have been placed on mute to omit any background noise.  After the speaker’s remarks, there will be a question-and-answer period.  If you’d like to pose a question during this time, please press star than the number one on your telephone keypad.  If you would like to withdraw your question, press the pound key.  Thank you.

It is now my pleasure to turn the floor over to your host, Mr. Brett Ellis.  Sir, you may begin your conference.

BRETT ELLIS, FAIRPOINT COMMUNICATIONS:  Good morning, and thank you for joining us on this morning’s investment community conference call.

By now you should have received a copy of this morning’s press release.  If you have not, please contact Laura Kowalcyk at CJP 212-279-6895, and she will be happy to e-mail you a copy.

As a reminder, this conference call is also being Webcast with a supplemental slide presentation.  To access the Webcast, please refer to this morning’s press release, which contains the Web address that will take you to the registration page.

Please note that the supplemental slide presentation is also available for download on our Web site at fairpoint.com in the Investor Relations section under the heading, “Featured Report.”  Today’s speakers will be referencing that presentation throughout this morning’s call.

Also members of the financial team, including John Crowley our CFO, will be on the road this week and will be available for meetings in New York tomorrow, which is Wednesday, and Boston on Thursday.  If you would like to book a one-on-one meeting, or participate in the group lunches scheduled for each city, please call 866-377-3747, and ask to speak to Laura, , who will be handling the scheduling.  We will do our best to accommodate all requests.

Before I introduce the speakers, I would like to read the Safe Harbor statement.  This presentation may contain forward-looking statements that are not based on historical facts including, without limitation, statements containing the words, “expect,” “anticipate,” “intend,” “plan,” “believe,” “seeks,” “estimate” and similar expressions and statements relating to potential cost savings and synergies expected to be realized in the proposed merger with the wireline operations of Verizon Communications, Inc. in Maine, New Hampshire and Vermont.  Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements.  Such factors include those risks described from time to time in FairPoint Communication, Inc.’s filings with the Securities and Exchange Commission, including without limitation, the risks described in FairPoint’s most recent annual report on Form 10-K on file with the Securities and Exchange Commission.  These factors should be considered carefully and your call should not place undue reliance on such forward-looking statements.  All information is current as of the date of this presentation, and FairPoint Communications, Inc. undertakes no duty to update this information.  Thank you.

Joining us on today’s call are Gene Johnson, our Chairman and CEO, John Crowley, our CFO and Walt Leach, Executive Vice President of Corporate Development.

First off today, Gene will provide an overview of the transaction.  Next, John will discuss operational synergies that will result and also provide select financial data related to the transaction and the proposed merged entity.  After their remarks, all three will be available to answer your questions.

At this time, I would like to turn the call over to Gene Johnson, Chairman and CEO of FairPoint Communications.  Gene?

GENE JOHNSON, CHAIRMAN, CEO, FAIRPOINT COMMUNICATIONS, INC.:  Thanks a lot, Brett, and good morning to all of you.  And thanks for joining us on today’s call.

For all of you that know me well, you know that I get pretty excited about good news.  And you can only imagine how I feel today after we announced what we believe is one of the most important telecommunications transactions in recent memory.

Before I get started though, I wanted to thank all of the FairPoint team members that literally canceled vacations, skipped the holidays and burned the midnight oil to make this day a reality.  It is with a great sense of pride and personal gratitude that I say to all of them, “Thank you.”  There should be no doubt that with this team in place, this merger and transition is going to be a very, very resounding success.

Specifically however, I want to thank Walt Leach, Shirley Linn and Peter Nixon.  As you know, Shirley’s our General Counsel.  Walt handles Corporate Development, and Peter is our Chief Operating Officer.  Their stewardship of this transaction really is, in a large part, why we’re speaking to you today.  So again, thanks Walt, Shirley and Peter, you did a terrific job here.  Everybody at FairPoint recognizes the tremendous effort that they all put forth.  And the good news is that we have 12 months of transition work for Walter and Peter to start on this afternoon, literally this afternoon.

So let’s get to it.  Let’s talk about the transaction.  Today we announced that we’ve entered into a definitive agreement whereby Verizon’s local telephone and related operations in Maine, New Hampshire and Vermont will be spun off and merged with and into FairPoint.  And I believe this transaction marks an historic date for our industry.

Obviously it’s an historic date for our Company as well, as this is clearly the single largest transaction we’ve ever undertaken.  I’ll get to some of the raw numbers in a minute, and then John’s going to provide the financial view during his remarks.

But first let me give you an overview of the transaction.  Let me be very clear on something from the very outset.  What we announced today dramatically accelerates our existing growth plan.  It’s not a change in direction,  it’s not a different business model, it’s exactly where the FairPoint train was headed.  We’re just arriving at the station well ahead of our schedule.

What we’ll accomplish with this merger might have taken us five years or longer by acquiring smaller operating companies and integrating them into FairPoint.  What it means to our shareholders is, concurrent with the closing of this transaction, we will have eliminated many of the questions that you had about the future of our Company.  Quite simply, this larger growth platform will allow us to be more aggressive and more nimble in acquiring and improving local telecom operations throughout the Country.  It means new opportunities to grow, build value and appreciation in our share price.

But first we must work towards closing the transaction.  So let me give you some of the specifics.  The merged company will demonstrate an attractive valuation of approximately 6.3 times 2005 EBITDA in line with past transactions that we’ve completed, and certainly attractive when compared to other recent telecommunications transactions.

Further after considering the approximately 60 to 75 million in recurring annual synergies and cost savings that we expect to achieve here, the multiple drops to below six.  The transaction will improve our dividend sustainability and our financial flexibility, and quite obviously, dramatically increase our scale.

Transactionally, this will be done through a tax-free spin off of specific Verizon Communications, Inc. operations in Maine, New Hampshire and Vermont, followed by a tax-free merger with and into FairPoint.  Consideration for the deal is $2.715 billion, which is made up of $1.7 billion in assumed debt, and $1.015 billion in FairPoint stock.

2

In aggregate, and based on outstanding shares, FairPoint shareholders will own about 40 percent of the combined company.  And Verizon shareholders will own about 60 percent.  The combined company will be run by FairPoint’s management team, and continue to trade under FairPoint’s existing ticker symbol, FRP, on the New York Stock Exchange.

Verizon will nominate six independent directors to our Board.  And we will nominate three of our existing Directors. Kent Weldon and Frank Bynum resigned their Board positions after seven and nine years of service, effective as of today.  Their resignations assist us in fulfilling the merger agreement requirement to elect six directors to be nominated by Verizon.  And I would be absolutely remiss if I didn’t stop for a second and thank them for their service to our Company.  It’s been tremendous over the years.  They’ve had great, great advice and insight, and will be sorely missed as Directors.

Finally, we have committed financing in place to make this transaction a reality.  John will talk about that more.

You know, with all that said, I’d like to think that even more important than what we announce today, is why we’re doing it.  So let me take a few minutes to discuss the rationale for the merger.  It has real and tangible benefits for shareholders, for customers and for employees.

Perhaps most pleasing for many of our shareholders, the transaction improves our dividend sustainability.  And we intend to keep our dividend unchanged at $1.59 per share annually, subject to the declaration by the Board of Directors, in compliance with Delaware law, and covenants in agreement to governing indebtedness.

Our leverage improves to approximately 4.1 times EBITDA, with manageable pro forma net debt of about $2.3 billion.  Our cost to capital will be significantly lower than today, and we’re going to gain marked flexibility on our balance sheet.  Also compelling, our dividend payout ratio is expected to improve to 60 to 70 percent after the integration of the acquired operation is completed and after we’ve factored in the various cost savings.

This merger is aimed quite simply at strengthening communities through communications.  And that means good news for customers, and its’ good news for employees.  We’re confident that we can provide stronger more competitive operations, bringing our customer-centric focus to Maine, Vermont and New Hampshire.  And we expect to implement significant DSL and broadband expansion in the region.

So services expansion, we expect that our new, larger and stronger employee base will enhance our core capabilities.  As we mentioned in the Press Release earlier today, we already have state-of-the-art service centers in the region, and we intend on enhancing that presence.  Our plans include opening three new in-region service centers, a network operations center, an information systems center and an administrative center in addition to the ongoing improvements, FairPoint’s South China Maine, East Coast call center.

FairPoint is not made up of access lines though; it’s made up of people.  They’re the most compelling part of this transaction, because without them we can’t execute on any of the facets we’ve discussed so far.  FairPoint has always been focused on the success of our employees.  We will look to cultivate and maintain constructive relationships with employees, unions and with policy makers.

If I may, I’d like to focus for a second on our investors, and talk about how we feel this transaction creates numerous opportunities for value creation.  We think it’s a unique, unprecedented opportunity for our shareholders to participate in the accelerated growth of FairPoint.  We’ll look to drive revenue by offering new product bundles and increasing broadband availability.

Our shareholders have often heard me speak about ‘importance of scale’ in our business.  You’ve heard me say it over and over again.  This new, larger platform will offer tremendous economies of scale, and opportunities for increased automation, all of which we’ll look to exploit.

The operational efficiencies are apparent, and we’re going to capitalize on them.  The economies of scale and our investment in state-of-the-art systems, which will begin even before we close, will afford us greater operating flexibility.

3

And financially, there’s no question that this deal will put us on firmer footing.  We’ll be delivering the balance sheet.  The lower leverage and reduced dividend pay-out ratio should provide us with more operating and strategic flexibility, improved access to and a lower counted capital, increased liquidity for our legacy shareholders and the new shareholders we’ll be adding at closing, and less reliance on regulated revenues.  In fact, our reliance on regulated revenues are expected to be cut in half, from 50 percent of total revenues pre-merger to 25 percent of total revenues post merger.

All of these factors should allow for more cash available for discretionary capital expenditures as we upgrade our new lines in New England and continue to service our legacy properties across the Country.  Overall, this transformation will create a scaleable platform for acquisitions, which as you know, has been the very foundation of our growth.

This next slide John wanted to take, but I took it back from him because I think this slide tells the whole story quite well.

Our shareholders will own 40 percent of the combined company at closing.  And if you need to know if this is a good deal, you can look at the following.  To gain a 40-percent stake in this expanded FairPoint, FairPoint as it exists today will contribute 14 percent of the access lines, 18 percent of the revenue and 25 percent of the total EBITDA.  Again, 14 percent of the lines, 18 percent of the revenues, 25 percent of EBITDA and 40 percent of the combined entity.  By any measure, I think our shareholders can clearly see how this transaction is going to be good for them and good for the future of FairPoint.

Now we’ve got to get the deal closed.  And that’s where a large part of our time and talent is going to be spent over the next 12 months.  So before I turn the presentation over to John to discuss the operational synergies and the financials, on the next slide, slide eight, we can see that this transaction is a win/win for everyone concerned.

Our management team is ready, willing and able to make this transaction smooth and without interruption to customers.  In fact, the transition has already begun.  We’ve put in place a comprehensive transition plan to service customers and to develop a robust, scalable network platform.  And Verizon has made sure that we will live up to our promise to service this region to the best of our ability by insisting on specific transition agreements and allowing for incentives during the process for FairPoint.

We plan to spend approximately $95 million to approximately $110 million prior to closing to ensure an efficient and successful transition.  That number includes Verizon’s up to $40 million contribution of this process.  We both have a vested interest in the success of this transaction, and we’re both putting our money where our mouths are.

Let me just take a minute to talk about the team at Verizon that negotiated the deal with us.  I’ve been in this business a pretty long time, and I’ve done a lot of deals.  I tell you; you’d be very hard pressed to find a better team.  They’re firm but they’re fair.  And they recognize that the customer must always come first.  In fact that’s a value that we and Verizon share, is the importance of the customer.

So what I’d like to say is to Ivan Seidenberg, to Virginia Ruesterholz, to John Diercksen, I offer my thanks.  It’s been truly a pleasure to do business with you and we look forward to a great transition.

So all the negotiations went smoothly.  And as talented as our FairPoint team is, we’re not going to be able to do this all on our own.  To that end, we’ve retained the best consultants in the business in the areas of regulation and public policy, network operations and system development integration, so that no stone is left unturned, and no part of the transaction is overlooked.  And let me stress again that we will be working hand in hand with Verizon throughout this process to meet all of our transition goals.

Finally, we recognize New England, and our legacy systems for that matter, will benefit from an investment in systems.  To that end we plan to invest $200 million in systems development and integration to maximize and accelerate efficiencies.

4

Again I hope that my enthusiasm and excitement for this transaction is coming through loud and clear.  Make no bones about it; we are now on an accelerated growth path.  I truly believe that we are destined for even more success in the near future.

I’m going to be traveling throughout the region over the next several weeks, meeting with our many constituents.  And I hope to bring our contagious enthusiasm to our customers, to our employees, to our new employees and to the regulators.

Now I’d like to turn the call over to John to discuss the details of the transaction and the financials.  John?

JOHN CROWLEY, EXECUTIVE VICE PRESIDENT AND CFO, FAIRPOINT COMMUNICATIONS, INC.:  Thanks, Gene, and good morning everyone.

If I could just repeat, this merger is great for everyone involved.  Under the agreement, we will issue approximately 53.8 million shares to the shareholders of Verizon at the time of closing.  Those shareholders will be getting a share with the current annual dividend of $1.59, and a recent trading history of $18.88.  At the current number of their shares outstanding, that would represent approximately one FairPoint share for every 54 Verizon shares.  Counting the debt, we will assume from the spun-off operations, this implies a valuation of $2.715 billion and a multiple of 2005 EBITDA of 6.3.

In the box on the lower right, you will see a snapshot of Verizon Maine, New Hampshire and Vermont based on the 2005 audit.  In a minute, I will describe some of the trends of the business, and the EBITDA adjustments that result from the specific transaction structure we’ve negotiated.

First let me tell you what assets are included in the merger.  We are acquiring all of the incumbent local exchange assets of Verizon in Maine, New Hampshire and Vermont, including plant, central offices, switches and customer lists, all of the Internet infrastructure from the consumer up to, but not including the Internet point of presence or POP, and those customer lists as well.

We will assume the existing union contracts.  And approximately 3,000 employees will become FairPoint employees upon closing.  We’re not acquiring any wireless assets and we’re not taking the legacy MCI business.  At September 30, 2006 this business comprised just over 1.7 million access line equivalents.

We intend to operate the business on a lower cost base, with $60 million to $75 million in expected synergies and cost savings or approximately eight to ten percent of current operating expense of Verizon Maine, New Hampshire and Vermont.

This can be accomplished without any reduction in employment.  And in fact, we expect to hire approximately 600 people in the three-state area.  Currently Verizon Northern New England, or Verizon Maine, New Hampshire and Vermont essentially out sources nearly all of its support and back-office operations to Verizon-affiliated companies.  Included in the $775 million of operating expense, on Page 10 in that box, is an annual allocation charge for support services of approximately $240 million per year.  We will be performing most of those functions in the region at our cost structure.  And this will require both investment and hiring.

Many of our existing systems are scaleable at cost levels that are known to us by our own experience.  Other functions such as online payments and wholesale provisioning will require some development work.  Our budget for these systems, as Gene said, these system upgrades, and enhancements and data conversion, is approximately $200 million.  In the interest of a successful transaction, a good chunk of that work will be done before closing.  And I’ll talk about that in a moment.

First, let me walk through what FairPoint will look like on a pro forma basis after the merger.  These numbers are based on the respective 2005 audits of FairPoint and Verizon Maine, New Hampshire and Vermont.  As I will discuss in a minute, FairPoint EBITDA is nearly flat or declining at a slower rate than access lines and Verizon Northern New England is losing access lines at approximately six percent a year.

5

In preparing the pro forma on Page 12 for the Verizon component, we have adjusted out $13 million in one-time expenses and $23 million in expense for certain pension and other retiree benefits as we will not be assuming those benefits for anyone that retires before closing of the merger.  That pro forma EBITDA is consistent with the number on Page 10 of the slides.

You can see right away the attractiveness of the merger for our existing shareholders.  EBITDA per share increases from about $3.80 to $6.40.  Our leverage improves to 4.1 times EBITDA and it will continue to improve over time from internally generated funds.  As Gene said, we intend to maintain our dividend at $1.59.  And after we complete the transition, the payout ratio improves to the 60 and 70-percent range, making the dividend even more sustainable.

Let me briefly touch on capital structure.  Just prior to the merger Verizon will collect a dividend from the Northern New England Company, up to its tax bases in the assets, approximately $900 million.  We have financing commitments in place to fund that dividend, make the one-time capital expenditures related to the state-of-the-art systems and DSL that I just mentioned.

Also prior to the merger, the Northern New England Company will issue a bond to Verizon, which Verizon may utilize to complete a debt-for-debt exchange, the part of its existing debt.  That bond will be approximately $800 million.  The final mix of bond and bank debt will depend on the tax basis at close.  But net-net, immediately after closing, FairPoint will have approximately $2.3 billion in debt of which just over 50 percent will be at fixed rate or hedged through interest rate swaps.  During the course of the next year, as we lead up to closing, we will likely enter into contingent interest-rate swaps to ensure a predictable free cash flow beyond closing.

Our depreciation will be high due to the recent capital expenditures by Verizon on the Fiber-to-the-Home project, and pending conversion-related cap ex that we’re doing.  Those, combined with our net offering losses, suggest that our cash tax rate is likely to be modest for five to six years after the merger.

After the initial ‘07 and ‘08 capital expenditures related to the system enhancement, recurring cap ex is likely to be in the $160 to $170 million range.  So it becomes clear from those various components that the merger is substantially accretive to free cash flow after completion of the transition.

Let me just fill in some of the additional transaction detail.  We will enter into a wholesale long-distance contract with Verizon intended to improve our long-distance margins.  FairPoint will, upon closing, assume the pension and other retirement obligations of those employees that continue.  At the time of the merger, Verizon will transfer liquid assets equal to the then net present value of the pension obligations based on an agreed actuarial process.  The OPEB obligation will be assumed on a pay-as-you-go basis.  During the early years after closing, we expect the actual cash expense related to the OPEB obligation to be modest.  Benefits of employees that retire prior to the merger will continue to be the responsibility of Verizon.

There are approximately 3,000 direct employees at the Maine, New Hampshire and Vermont business, of which about 85 percent are covered by collective bargaining agreements.  As we said, they will be supplemented by approximately 600 new hires in the region.

Now let me walk you though the transition plan.  That is the period from now until we transfer all operations to our systems.  Some of these numbers get a bit confusing, so I want to start by laying out the guiding principles of the structure we put in place.

First, we’re committed to a smooth conversion for our customers as they transfer from Verizon Northern New England to FairPoint.  Second, we have a structure in place that allows us to achieve that and pay our $1.59 dividend through and after closing.  And three, we want the merger to result in an efficient state-of-the-art telecommunications company as soon as possible after the merger.

To do that, we will invest approximately $200 million in new support systems and enhancements to our existing systems.  And you’ll hear me speak of the $200 million at a couple points.  The $200 million essentially broaches the period of the closing.  Up to approximately $110 million may be invested prior to the closing of the merger.  And the remainder will be completed after closing.

6

We will finance the pre-closing costs by selling our Orange County-Poughkeepsie partnership stake, for $55 million, to Verizon Wireless before the merger.  Second, Verizon will contribute $40 million dollars.  And certain suppliers will defer receipt of $15 million in payments until closing.  And of course we have our own internal resources as well.

Because some of these systems will not be completed by closing, we will initially operate under a transition services agreement, a TSA, under which Verizon will provide support and services to us.  This agreement is designed to provide seamless customer service, and has a sliding scale fee structure to encourage Verizon to work closely with us to convert our systems.

We of course have the inherent incentive to convert as quickly as is prudent in order to obtain our own cost structure.  Our current view is that we believe we will convert to our systems in mid 2008 and pay fees under the transaction services agreement for six months after closing.

The effect post closing is that we will have certain non-recurring costs in the first year.  But we believe our financing agreements will allow us expense carve-outs of those non-recurring expenses.  And we have commitments in place to indicate that.

Now let me describe the effect on our results in 2007, and even affecting Q4 2006.  On this subject a quick word about accounting — because for GAAP purposes we will be treated as the target in this merger, we will be expensing transaction costs as incurred.  But we will capitalize the majority of the systems investments.  Approximately 75 percent of the costs will be capitalized as systems, and the remainder will be expense.

Each quarter we will provide you with those costs in our earnings report so that we can detail that allocation.  Our preliminary results for fourth-quarter 2006 would have resulted in adjusted EBITDA of $33.4 million had we not gone into due diligence on this transaction.  And that would have been right in line with what we suggested in our November earnings call.

After deducting due diligence and transation costs of $2 million in the quarter, our preliminary result is adjusted EBITDA of $31.4 million for the quarter.  And nearly all of the fourth-quarter costs were transaction related rather than systems related, and therefore expensed.

With interest in the quarter of $9.8 million, and cap ex of $6.6 million, we still generated free cash flow sufficient to add to our basket of cumulative cash available for dividends after paying the dividend.  We expect to report final audited numbers for 2006 in mid to late February.  And our estimate is $131.3 million for adjusted EBITDA after all those charges.

For 2007, we would have expected adjusted EBITDA in the range of 129 million to 131 million.  However without Orange-Poughkeepsie, and because of expensing these non-operational transaction costs, we expect adjusted EBITDA to be in the range of $95 million to $97 million.

Capital expenditures will be approximately $73 million to $75 million for the year, of which 44 million are in support of the merger rather than ordinary core capital expenditures.  The 44 million represents the net of the contribution of the deferral I mentioned a moment ago.  We expect to have agreements in place to exclude the merger-related costs from any dividend restriction, so that the dividend is secure through and beyond the merger closing.

Now back to the post closing pro forma FairPoint.  Our access line density increases from 13 to 36 lines per square mile.  The markets are still substantially rural, with about 90 percent of the wire centers smaller than our biggest city, which is Ellensburg, Washington.  We estimate that about 56 percent of the access lines are in rural markets.  And we define that as in wire centers of under 10,000 access lines, not near a major city such as Burlington, Vermont, Nashua, New Hampshire and Portland, Maine, and having modest CLEC encroachment.

Based on September 30 data, we will have over 2 million access-line equivalents, over 1.6 million voice-access lines, nearly a quarter-of-a-million high-speed data accounts, over 600,000 long-distance customers, and 160,000 wholesale lines.

7

Finally, although these are competitive markets with Comcast, Time Warner and CLECs, they are the kind of markets we know.  These two charts indicate the relative access line and high-speed data performance of FairPoint and Verizon Maine, New Hampshire and Vermont.

The September 30 year-on-year access line losses for FairPoint were 3.5 percent, while Verizon Maine, New Hampshire and Vermont lost six percent over the same period.  We aim to improve on those results, and note that we will be among the largest employers in the region with a strong local presence and commitment to economic growth.  We believe that loyalty to our customers will be returned in improved sales metrics.  We intend to get the results in these dates to converge more with our own results.  And in the case of DSL penetration, we are going to expand the addressable footprint and offer a quality product and service the businesses and consumers want.

And now Gene wants to make some summary points before we take your questions.

GENE JOHNSON:  Thanks so much, John.

This is a great day for FairPoint. It’s also a great day for the consumers of New England, for employees, for our shareholders, and indeed for the entire industry.  In one transaction we provided the basis for a very bright future at FairPoint.

I can tell you this much — we’re determined to further establish FairPoint as one of the preeminent communication providers in the United States.  As I told you before, this transaction is the culmination of a lot of hard work, but a new beginning for our company.  And really, the hard work is just beginning.

To our shareholders, I remind you of the attractive valuation, the extremely accretive nature of the transaction, the strong support for the dividend policy and the prospect of an accelerated growth strategy based on enhanced financial strength.  To our customers and employees, both new and old, I pledge our time and resources to ensure that you get the maximum benefit from this transaction.  And to everyone, I state clearly that these new revenue opportunities and enhanced operating efficiencies will improve our financial base and further enhance our acquisition platform.  It doesn’t get any more exciting than that in this business, and we are really grateful that you’re supporting us in our efforts.

Thanks for you attention.  And we’re going to take your questions.  We’ll try to answer as many as we can.  John and I are here in Basking Ridge.  Walt is in Charlotte.  He’s available to answer questions as well.

OPERATOR:  At this time, I would like to remind everyone, if you would like to pose a question, press star then the number one on your telephone keypad.  We’ll pause for a moment to compile the Q&A roster.

Your first question is coming from David Barden from Bank of America.

DAVID BARDEN, BANK OF AMERICA:  Hi, guys.  Good morning, congratulations.  Thanks for the call.

The first question I have is — and I apologize, I got on about five minutes after the beginning.  But what conversations, assurances have you gotten from the unions, from the regulators with respect to the progress that will be made in getting this deal closed?

And then second, with respect to the Company not having had an infrastructure of its own in the past, and you guys are investing and trying to merge this infrastructure in the past, what are the chief hurdles that need to be cleared in order to get to a point where you could manage this business back to, say, a three-percent rate of line loss as opposed to a six-percent rate of line loss?  Thanks.

GENE JOHNON:  David, without being too specific, let me just say that the first question, the union and regulator question — we are literally — while this call is going on, Peter Nixon is talking to the governors of the States, the regulators and union officials.  We will meet with those later this week.  I actually will leave here later this afternoon and spend the rest of this weekend, and most of the next two weeks in the service territory meeting with various groups of people.  So we expect that there is going to be a tremendous amount of cooperation.  Simply because of

8

the unions and the employees, I think the fact that we have said that we don’t plan to terminate any employees.  That we’ve said that we’re going to honor the existing union agreements, that we’re not going to change pay scales.  Benefits will remain the same.  Those kind of things — and we’re going to add 600 new jobs — ought to be received very, very well.  So we are very excited about that.

And …

DAVID BARDEN:  Gene, if I could just follow up — do you think like the presence or absence of Verizon’s Fios investments in fiber and such would be a sticking point?  Obviously you’re talking about investing more in broadband in general.  But do you think that there will be some, you know, leeriness on the part of the regulators to you know, let Verizon sell these lines with no kind of fiber investment at the margin?

GENE JOHNSON:  I can’t speak to the regulators.  I will tell you this however, that if you remember, our DSL availability and broadband availability now for our customer base is about 88 percent.  And in some of our States, these States specifically, it’s even higher than that, significantly higher than the existing availability for the lines we’re acquiring.  So we think that will be very well received in the States.

We’ve not had specific discussions in detail with the commissions yet.  So I’d rather have that behind closed doors for now.

DAVID BARDEN:  OK.  And then just generally on the kind of, you know, big issues that need to be addressed in terms of getting these — you know, getting this very large business integrated into FairPoint and kind of ramping it back to the point where it could be out-performing Verizon’s core business?

GENE JOHNSON:  Yes.  We believe that the infrastructure investment is critical to that.  And that’s one reason that Verizon’s worked very closely in a partnership fashion, quite frankly, in structuring the way we’re going to do this.  They’re going to be good partners for us as we move off of their platforms and onto our own platforms.  We will be building state-of-the-art platforms.  As you know, we’ve got some experience in this kind of thing.  We’ve done it well in the past.  And we will be building state-of-the-art scaleable platforms, which will be critical to us in our sales and marketing efforts.  It’s very, very important that we have the current information we need — you’ve heard me talk about that in the past — to be able to go out and sell these customers.

I won’t talk about specifically what our expectations are about what is going to happen with line losses going forward, except to tell you that we think that the platform that we’re building is going to be very important in achieving that.

DAVID BARDEN:  All right.  Thanks a lot, Gene.

OPERATOR:  Thank you.

Your next question is coming from Raina Smyth from Morgan Stanley.

RAINA SMYTH, MORGAN STANLEY:  Hi.  Thanks for taking the question.  I was hoping you could talk a little bit more about how the line loss has trended.  You said it was six percent most recently.  But is that up from lower levels, or has it been steady there for a while?

And then, you’re increasing the broadband availability — where is it currently, and what kind of cable overlap does Verizon have in the Northeastern states?

GENE JOHNSON:  I’ll let — John will take those questions.

JOHN CROWLEY:  Hi, Raina, it’s John Crowley.

RAINA SMYTH:  Hello.

9

JOHN CROWLEY:  The access line losses have been drifting up a little bit.  They were running about five percent in the ‘03 to ‘05 period.  And they’re drifting up a little bit closer to six percent now.  In part, that reflects some price increases that have been put into place.  And so when you blend in the effect of the ARPU, the revenue effect has actually been somewhat modest.

On the cable competition — the two big cable operators in that region that of course we know well are Comcast.  We estimate Comcast passes about 35 percent of these access lines with some form of cable plant.  We don’t yet know how that breaks down between simple one-way video and how much of that is upgraded for broadband.  And Adelphia — or not Adelphia — Time Warner, in counting the recently acquired Adelphia properties, passes about 23 percent of the access lines.  Again, that’s with some form of cable plant.  We don’t yet know how much of that is upgraded.

But it’s not particularly far off the numbers that we have.  We’ve got a number of the cable competition as a percentage of access lines.  It’s very, very close to ours.  You know that ours is about 69 percent.

RAINA SMYTH:  OK.  And how many of the lines are enabled, or what percentages are enabled currently?

JOHN CROWLEY:  The Verizon lines are about 62-percent enabled for high-speed data right now.  And as Gene said, we plan to take that up to, you know, more market levels so that we can enhance the sales of high-speed data.  And we would certainly aim — and I think Gene would probably insist — that we reach a point where Verizon’s HSD penetration is comparable to ours.

RAINA SMYTH:  OK.  Do you think that transition is going to take just the next year, or is it longer term?

JOHN CROWLEY:  We think, worst case, the transition takes 18 months.

RAINA SMYTH:  OK, great.  Thank you so much.

JOHN CROWLEY:  The target is to close it down to this year.  But the transition itself will go slightly beyond the closing itself.

RAINA SMYTH:  OK, great.  Thank you.

JOHN CROWLEY:  Thanks, Raina.

OPERATOR:  Thank you.

Your next question is coming from Frank Louthan from Raymond James.

FRANK LOUTHAN, RAYMOND JAMES:  Hey, good morning.  A couple quick questions — at what point — all the numbers you have are for ‘05 EBITDA, and revenue and so forth.  Do we have anything on what the third quarter of ‘06 was maybe, or the current run rate?  That would be helpful.

And you said that you’re not buying the MCI access?  What is that?  What exactly does that mean?  In years past when Verizon has sold lines, they’ve generally kept the long-distance relationship with the customer.  Is that the case?  Or are you getting the full bundle from customers?

And can you give us any idea on the Time Warner’s impact in Portland, Maine, and what’s sort of there the share loss has been in that market?  Thanks.

GENE JOHNSON:  I’m going to let Walt answer the first question first.  And then John will — or the second question first, and then John will answer the first question.

Walt, you there?

10

WALTER LEACH, EXECUTIVE VICE PRESIDENT OF CORPORATE DEVELOPMENT, FAIRPOINT COMMUNICATIONS, INC.:  Yes.  Can you hear me OK?

GENE JOHNSON:  Yes.

WALTER LEACH:  OK.

Yes, the — there’s a lot of things happening with the set of assets that we’re acquiring here.  So I think the best way to talk about trends through ‘06 is to just deal in terms of the core EBITDA from the core business.  And the reason this is a little tricky is because we are not acquiring the retiree obligations related to these assets.  We will only have the obligations for all active employees when we close.  But the audit information that we received in the past has included the retiree information.  And we’ve had to figure out, with Verizon’s help, how to parcel that out.

But in general what I can tell you is the core business, through the first nine months of 2006, has drifted down slightly, but something in the, you know, the four — any where from the three-to-five-percent kind of range based upon carving out what we think are the appropriate expenses that won’t come with the transaction, so not a material decline in the core business that we will be getting as a result of the merger.

FRANK LOUTHAN:  I mean which has drifted down three to five percent, the level of EBITDA, or …

WALTER LEACH:  Yes.  No, the level of combined EBITDA.  And the revenue has drifted down a little less than that.

FRANK LOUTHAN OK, great.

JOHN CROWLEY:  I thought that was the second question.  On the MCI question, we are getting the long-distance relationship for the accounts, for the customers that are transferring in the ILEC business.  So if the ILEC customers pick the Verizon long distance, then we will get those relationships.  It’s the resale relationships that we will not be taking.

FRANK LOUTHAN:  OK, great.  And on the Portland market?

JOHN CROWLEY:  The Portland market is one where Time Warner is quite active.  We don’t have the direct cable competition broken out by city.  We only have it by State.  I mean if we want to look at Maine itself, Maine is at about — comparable to the others.  Maine as a whole is at about 65 percent cable competition.

FRANK LOUTHAN:  Is the rate of line loss in Maine any different from the other areas?

JOHN CROWLEY:  I don’t think appreciably different.  Let me look it up.  It is not really appreciably different in Maine.

FRANK LOUTHAN:  OK, great.  Thank you very much.

JOHN CROWLEY:  I mean keep in mind, let’s be honest, that State as a whole.

GENE JOHNSON:  Right.  Thanks, Frank.

OPERATOR:  Thank you.

Your next question is coming from Tom Egan from JP Morgan.

TOM EGAN, JP MORGAN:  Hello guys.  Thanks for taking my call.  Just want to make sure I’ve got the numbers straight that you’ve given to us.  You’ve got a bout $200 million for the integration plan.  Is that net of the $55 million you’re receiving for Poughkeepsie?

11

JOHN CROWLEY:  What we’ve done for that, Tom, is we’ve just — we’ve broken it out.  There’s about $200 million and a combination of cap ex and op ex to stand up the system, to do training, and to convert data is obviously a big factor in there.  The $200 million will be, in round terms, spans about $110 million before closing, and therefore about $90 million after closing.  The $110 million that we’ll be spending before closing will be financed with the sale of Orange-Poughkeepsie, the contribution from Verizon and the deferral of payments by certain suppliers.

TOM EGAN:  OK.  So if I want to think about it another way, for the $55 million that you’re receiving for Poughkeepsie, then net — if I take the integration plan and net that out, it’s more like $145 or something like that, right?  Just doing the math …

JOHN CROWLEY:  Yes I suppose if you applied the $55 million in cash on Orange-Poughkeepsie to the overall plan.  But keep in mind; the Orange-Poughkeepsie sale will have been before the merger.  We don’t know exactly when.  It’s subject to regulatory approval.

TOM EGAN:  Got it.

JOHN CROWLEY:  And the totality of the 200 will be spent roughly half before closing and half after closing.

TOM EGAN:  All right.  And I’m just kind of — I’m just kind of trying to like think of what the bottom line here is.  If I take 200 and subtract out 55, and I subtract out Verizon’s 40, it looks more like it’s about a hundred, right?

JOHN CROWLEY:  In terms of the need for us to come up with cash, that’s right.  But keep in mind, that the two components of finance that you mentioned, the Verizon contribution and the asset sale occurred before closing.  So the cash affect before closing is pretty modest.

In terms of the cash outlay by us, that will be principally after closing, utilizing the resources of the merged company.

TOM EGAN:  And just one other math clarification.  When I look at the before and after EBITDA for the merger, in 2005 you have $135 for FairPoint, and then $566 after the merger.  That’s a delta  of about $431.  Is that inclusive of the $60 million to $75 million of synergies, or is that before the synergies?

JOHN CROWLEY:  No, that is based on historic audited results.  The synergies are not applied.

TOM EGAN:  OK.  All right, so you have — OK, great.

JOHN CROWLEY:  We obviously hope to improve eventually on that.

GENE JOHNSON:  Thank you.

JOHN CROWLEY:  Thanks, Tom.

TOM EGAN:  Thank you very much.

OPERATOR:  Thank you.

As a reminder, Ladies and Gentlemen, if you do have a question you may press star one at this time.

Your next question is coming from Andrew Hamerling from J Goldman.

ANDREW HAMERLING, J GOLDMAN:  Yes congratulations.

I do have a few questions, one on the size of this transaction.  I mean objectively it seems like a puppy dog trying to buy a three-legged elephant. There have been a lot of rumors out in the marketplace that the quality of the lines is a little bit lower.  And I guess the 60 percent penetration of the DSL would say that.

12

But that not withstanding, you guys have done a great job so far with all your acquisitions.  Proportionately speaking, have you done any acquisitions that are, I guess, this magnanimous i.e.  when you were a much smaller company?  Did you buy any companies that were substantially larger?

GENE JOHNSON:  No.  Andrew, you have — you’ve usually said things in an eloquent manner.  Talk about buying a three-legged elephant.

ANDREW HAMERLING:  Sorry.  I mean it squishes the issue, obviously.

GENE JOHNSON:  Yes.  The answer to your question is yes we have.  When we began the Company, we made our first acquisition in 1993; it was a 4,500 access line company in Kansas, a very, very small business spread out over 4,500 square miles.  We subsequently, about five months later or so — yes about five months later — entered into an agreement to acquire some 30,000 plus access lines from GTE in which there was no infrastructure at all.  We were getting raw lines and employees with not infrastructure.  And we had to do this kind of a transition back then with you know the very small number of employees we had at Sunflower Telephone Company and me.

So yes we have done this kind of a thing before in the early days.  So we think we know what we’re doing here.

ANDREW HAMERLING:  OK.  Terrific.  And the last question — with respect to the people who left the Board, I notice one is coming from Thomas Lee Partners.  Should we read into this?  And should we think they’re a seller now, or should we think they’re going to hold their stock?  I guess that’s the thought process there since they are a meaningful shareholder.

GENE JOHNSON:  All I’ll say about that — I can’t speak for any shareholder about what they might buy or sell.  I will tell you they’re private equity firms, and they’ve held the stock now for some six years, and Kelso for longer than that.  But I wouldn’t read — you know, I wouldn’t presume to speak for our shareholders.

ANDREW HAMERLING:  OK.  Thanks guys.  Congratulations.

GENE JOHNSON:  Thank you very much.

JOHN CROWLEY:  Thanks, Andrew.

OPERATOR:  Thank you.

Your next question is coming from Barry Sine from Oppenheimer.

BARRY SINE, OFFENHEIMER:  Good morning.  I wanted to ask a question first in terms of the regulatory approval process.  What regulatory approvals do you need?  And what is the timeline expected on these approvals?

And then also on Verizon’s fibers, is there any build out that’s been done in region in this region for fibers?

GENE JOHNSON:  Yes.  On the regulatory approvals — we’ll need approvals from the three-state commissions.  We’ll need approvals — there’s some FCC approvals required.  We’ll need Hart-Scott-Radio waivers or approvals or whatever the legal term is — Shirley is sitting down here and she nodded her head, so I guess I said it right.  And we have slotted this transaction.  We believe we’d like to have those regulatory approvals in the October time fame.  We slotted the transaction to close it within 12 months of the day.  So we’d like to get those things done.  So those are the requirements.

And John will answer the other question.

JOHN CROWLEY:  Yes, Barry, hey how are you?  Verizon has built out somewhere between 70, 000 and 80,000 fiber-to-the-home passing, mostly in the Nashua, New Hampshire area.  And so obviously those are included in the transaction.  So we’re looking forward to figuring out interesting things that we can do with that.

13

At the moment, they’re not actually turned on for video, so we’ll be exploring that.  At this point, we don’t want to imply, you know, that there’s a whole bunch of exciting synergies that we’re about to grab.  I mean we see this initially as basically a matter of capital structure and operating efficiency.  We’re very confident on the synergies in terms of cost saving.  And if we find that we can sell video to people in Nashua, New Hampshire and elsewhere, all the better.

BARRY SINE:  OK.  Also on the $40 million Verizon pre-closing contribution — what form will that take?  Will that be a loan, or how will that be structured?

JOHN CROWLEY:  No.  They will actually pay two-thirds of the transition costs up to the first $60 million, so $40 million.  And that will not be — that will not be repayable at closing.

BARRY SINE:  OK.  Thank you.

OPERATOR:  Thank you.

There are no further questions at this time.

BRETT ELLIS:  This is Brett Ellis again.  I wanted to reiterate to everybody that the slides that we used for the call this morning are available on our Web site at fairpoint.com under the Investor Relations section.

GENE JOHNSON:  Good.  And if there are no other questions, let me just conclude by again thanking you all for tuning in this morning, for listening to us, for reading the press release.  We are extremely excited about this transaction.  We think it’s a fantastic transaction for our shareholders, for Verizon and quite frankly for the industry at large.  And we look forward to providing service to those additional customers in New England where we already have a number of tremendous customers that we’re proud to serve.

Thanks very much for calling in.  And we look forward to updating you on the progress of this in our future calls.  Have a great day, everyone.

JOHN CROWLEY:  Thanks, everyone.

OPERATOR:  Thank you.  This concludes today’s FairPoint Investment Community conference call.  You may now disconnect your lines at this time, and have a wonderful day.

END

14

EX-99.2

Exhibit 99.2

Verizon
Moderator: Eric Rabe
January 16, 2007
10:00 a.m. ET

OPERATOR:  Good morning.  My name is Jackie (ph), and I will be your conference operator today.

At this time, I would like to welcome everyone to the Verizon FairPoint conference call.  All lines have been placed on mute to prevent any background noise.  After the speaker’s remarks, there will be a question-and-answer period.  If you would like to pose a question at this time, please press star then the number one on your telephone keypad.  If you would like to withdraw your question, press the pound key.  Thank you.

It is now my pleasure to turn the floor over to your host Eric Rabe, Senior Vice President of Media Relations.  Sir, you may begin your conference.

ERIC RABE, SENIOR VICE PRESIDENT OF MEDIA RELATIONS:  Thank you Jackie (ph) and good morning everyone.  We’re very excited to be here this morning.

I trust that by now you have seen our press release issued just two hours ago jointly with FairPoint Communications to announce our agreement to merge Verizon’s wireline business from Maine, New Hampshire and Vermont into the current operations at FairPoint.

And we have the two principal executives who have been involved in this agreement here with me to talk to you and answer your questions to describe this transaction so that you can get a full picture for how good this is.

First we have Gene Johnson.  That’s j-o-h-n-s-o-n.  He is Chairman and CEO of FairPoint Communications, and from Verizon, Virginia Ruesterholz is President of the Verizon Telecom unit.  Ruesterholz is spelled r-u-e-s-t-e-r-h-o-l-z.  And we will, of course, take questions after Gene and Virginia give you an overview of the arrangement that we’re come to.

So let me turn it to Virginia to begin, and we’ll take your questions in a few minutes.

VIRGINIA RUESTERHOLZ, PRESIDENT, VERIZON TELECOM UNIT:  Thank you Eric, and good morning.  Thanks to all of you for joining us this morning.

I know that you have the press release that we issued at 8:00 this morning, but I wanted to take this opportunity to emphasize that this is a great deal for consumers, shareholders and employees.

First this is a great deal for consumers because they can count on continued, top-quality service from the new company, a company that will have a focus on northern New England.  In fact, as I’ll explain, in a moment, FairPoint plans to deliver services that will be even better than ever.

The transaction is also good for our shareholders.  Verizon is continually looking for ways to add value, with the strategy focused on bringing broadband services to customers.  This unique transaction does that.  At the same time, Verizon received a fair value for these properties and can now sharpen its focus on our other operations.

Thirdly, this deal is good for employees who will continue to have great jobs with FairPoint, a financially strong company.  Indeed, FairPoint plans to add employees and new facilities in northern New England.

Gene will provide more detail about FairPoint’s plans in a moment, but it’s worth pointing out that although Verizon is a leader in broadband deployment and has deployed broadband extensively in the region, FairPoint plans to increase the availability of broadband even further.

1

FairPoint’s business model is squarely focused on rural areas.  It has plans to significantly increase broadband penetration in the three states and strengthen the local operational presence.  FairPoint has plans to create new local service centers and add approximately 600 new jobs across the region.

We believe that this transaction will be a good fit for the 3,000 employees currently providing service across the three states.  Their rock solid dedication and the quality of their work have been critical to the success of Verizon Telecom over the years.  And as always, I thank them for the great work they do, and I believe that they will continue to make great contributions to FairPoint after the merger.

This morning, we informed the Verizon employees in the three states of the transaction, and both companies will be meeting with groups of employees to explain the details of the deal, review transition plans and discuss any individual or HR related questions they may have.

We also informed the unions representing our employees in Maine, New Hampshire and Vermont.  FairPoint has agreed to honor all current labor agreements and will work constructively with union leaders.  We plan to meet with representatives of those unions soon to discuss the transaction and answer their questions.

As you know, we do need regulatory approvals for this transaction.  As soon as we announced the deal this morning, we were on the phone with the regulatory agencies who will be involved with the transaction and other government officials to inform them personally about the news.  And we, Verizon and FairPoint together, will be scheduling in person meetings with all these key stakeholders over the next few days.

We also want to assure our customers that their service will be as dependable as always.  They should not encounter any changes to their service tomorrow or at any point throughout the transition period.  They do not need to take any actions to continue receiving the products and services that they have today.

Verizon will be working closely with FairPoint over the transition period to ensure that our retail and wholesale customers enjoy the great communications service they’ve come to rely on from Verizon.

Let me turn to why Verizon entered into this transaction with FairPoint.  As we’ve said many times, including last spring when we confirmed talk that we were looking into a potential transaction, we continually look at our portfolio of assets and determine if we are comfortable with the current structure and composition and decide whether changes are advisable.  We believe that this type of analysis is part of our fiduciary responsibility, and we feel that our portfolio management approach is making us a stronger company.

Verizon’s strategy is focused on creating value for our shareholders while we bring wile broadband service to our customers.  In this case, Verizon and FairPoint were able to enter into a unique transaction that accomplishes both objectives.

As we aggressively transition the majority of Verizon’s traditional wireline customer base to broadband, this transaction enables another company, FairPoint, to deploy broadband in these markets on an even broader scale.

We have been fortunate to work with FairPoint, an experienced telecom provider that has the capabilities to further enhance telecom services in this region and do it in a quality manner that builds on the Verizon heritage.  And FairPoint has a clear strategic focus on serving the local exchange business and relatively smaller and rural market.

I personally have been working with Gene Johnson, and I really want to thank him for all the work that’s gone into this.  And now I want to pass it over to Gene, the Chairman and CEO of FairPoint.  Gene?

GENE JOHNSON:  Thanks Virginia, and thanks to all of you who have joined us on the call this morning.  And I guess, let me just say right from the start that this has been a very, very constructive kind of a project that we’ve been in, involved in, in a long time, and the folks at Verizon have really gone a long way to make it, to make it work out the way it ought to.  So Virginia the same thanks to you.

2

Let me first of all echo everything that Virginia has just said.  I can’t really tell you in words how exciting people at FairPoint are as we announce this transaction.  I’m very energized personally by the possibilities of it, and I’m really looking forward to beginning the transition as soon as possible.

I’m not going to waste any time rehashing the press release either, but would like to spend a few minutes explaining why we believe this is a great deal for FairPoint.

By announcing that Verizon’s local telephone and related operations in Maine and New Hampshire and Vermont will be spun off and merged with and into FairPoint, what we’re really doing is dramatically accelerating our existing growth plan.  Effectively we’ve provided a foundation for growth that really would have taken us years to build through the acquisition and integration of much smaller companies.  We have effectively created a company that is better positioned for growth than ever before.  And that means that new opportunities to grow, and it means opportunities to build value and to build appreciation in our share price.  And we’re all very excited about that.

Our board management believes that we are paying a fair price for these businesses and also that the value will be enhanced through the synergies and cost saving initiatives that we’ve already identified.

The deal is historic on many levels, but at its core, it’s really aimed, quite simply, at strengthening communities through communications.  From every angle, we also believe that customers, that shareholders, local economies and employees are all going to benefit from this transaction.

Our well known commitment to broadband throughout the 31 systems we currently serve in 18 states will carry over into the New England properties.  And we’re already making plans to significantly increase broadband availability during the first year of our ownership.

Now that the deal has been announced, I can tell you that we have already begun investing in New England even prior to closing.  We plan to spend 95 to $110 million on systems development and other costs before we close the transaction to ensure that this transaction is successful.

In addition, and as Virginia mentioned earlier, we also have concrete plans already in motion to increase and strengthen FairPoint’s operational presence throughout the region by creating new local service centers after the deal closes.  And to further strengthen the local economies and establish a stronger presence in the region, we will add approximately 600 new positions across Maine, New Hampshire and Vermont.

FairPoint has always been focused on providing a rewarding employment experience.  To the 3,000 Verizon employees across the three states who will be joining our family, we say “Welcome.”  We look forward to working with you, and know that your reputation for quality work and exceptional customer service will make your transition an easy one as we at FairPoint share those same values.

As Virginia alluded to, this morning I also informed our employees across the country about this exciting news, and I personally will be on the road beginning tonight to meet with employees, regulators and government officials to discuss this deal and its impact on the region.

Let me be very clear, we left no stone unturned in pursuing this deal.  We know the stakes and we know how many people it affects.  I think that all concerned will find that we are well prepared for this transition and more than up to the task to execute in this region.  Both Verizon and FairPoint senior managers were on the phone with union leadership this morning.  As I understand it, we already have some meetings scheduled for this week.  We’re excited to work collaboratively with the unions to ensure that all collective bargaining agreements are honored and that the union workforce understands that we value their contributions to our enterprise in New England and indeed across the country.

Our calls to government officials began early this morning also and will continue throughout the day and the week, and we look forward to meeting with them as well.

To our many new customers, I want to reiterate what Virginia said earlier, but take it a step further.  Your service will be as dependable as always.  Verizon has been and will continue to be, until the transition is

3

complete, a solid provider with an excellent legacy.  But what we bring to the table is a heightened focus on rural and semi-urban communities that is among the best in the business.  Our expertise in these markets will translate directly into advantages for our customers, and we look forward to bringing these efficiencies and improvements to you.

As an example, as I previously said, we plan to significantly increase the broadband availability throughout the entire three state region.

And we look forward to working closely with Verizon over the transaction period to ensure that our new customers, retail, enterprise and wholesale, do not experience any degradation of service or any service issues.

Again, I cannot tell you how excited we all are about this deal, and while it took a lot of hard work to get us to announcement day, the real heavy lifting is really just starting.  We’ll be focusing our time and talent on this transaction with an eye on closing as soon as is realistic so that we can begin providing the products, services and customer service that FairPoint is known for to our new customers in New England.

And with that, I think we can open the call for questions.

ERIC RABE:  Jackie (ph), can we have the first question please?

OPERATOR:  Thank you.  At this time, I would like to remind everyone, if you would like to pose a question, press star then the number one on your telephone keypad.

Your first question is from Gary Rayno, Union Leader.

GARY RAYNO, MANCHESTER UNION LEADER NEWSPAPER:  Yes, I was wondering, you talked about some efficiencies and cost efficiencies that you’ve identified.  I wondered if you’d be willing to share some of those.

GENE JOHNSON:  Without understanding the business, it’s difficult to do that.  They are not related to the existing workforce.  We said that there will be no cuts in the existing workforce.  That’s the first place people look when they start talking about efficiencies.  But rather it will be improved back office operations that will ultimately end up giving greater service to the customers.

GARY RAYNO:  Will that include expanding into the areas now that are very weak in broadband?

GENE JOHNSON:  Yes, we’re going to, we will dramatically increase the broadband penetration across all three states in the region, and will have more details to share on that at a later date.

GARY RAYNO:  Thank you.

GENE JOHNSON:  You’re welcome.

ERIC RABE:  Next question please.

OPERATOR:  Thank you.  Once again, if you would like to ask a question, please press star then the number one on your telephone keypad.  We’ll pause for just a moment to compile the Q&A roster.

Again, ladies and gentlemen, if you would like to pose a question, press star then the number one on your telephone keypad.

Your next question is from Louis Porter of Rutland Herald.

LOUIS PORTER, RUTLAND HERALD:  Hi.  I was wondering what impact this sale will have on the agreement between the state of Vermont and Verizon that Verizon will expand its broadband penetration to 80 percent by 2010.

4

VIRGINIA RUESTERHOLZ:  Yes, this is Virginia.  FairPoint is going to take on the agreements that we have with the state of Vermont, so we see this as a very even transition.  And Gene I know you feel the same way about that …

GENE JOHNSON:  Yes …

VIRGINIA RUESTERHOLZ:  … commitments will be kept.

GENE JOHNSON:  Yes Virginia we do.  We believe very strongly in broadband, and believe that broadband is really the future of this business.  And so we’re very much committed to it.  We expect a very smooth handoff on this transaction, including those regulatory issues like that.

LOUIS PORTER:  Thank you.

ERIC RABE:  Other questions operator?

OPERATOR:  Thank you.  Your next question is from Brian Cap of Hanauer & Company.

BRIAN CAP, HANAUER & COMPANY:  Yes, good morning.  Could you tell me which Verizon subsidiaries specifically are, is the debt being assumed of?  Is it, you know, Verizon New England?  And you know, while, you know, the transaction seems to be beneficial from the consumer, shareholder and employees’ point of view, the existing bond holders at Verizon certainly seem to be suffering from a credit deterioration.

GENE JOHNSON:  Virginia, I don’t want to speak for Verizon …

VIRGINIA RUESTERHOLZ:  No …

GENE JOHNSON:  … but I would point you to the press release, and then suggest you talk to Verizon Treasury about that.

BRIAN CAP:  Well, do you, does Virginia know which specifically Verizon subsidiaries are being, that is being assumed of?

ERIC RABE:  Let me just interrupt this line of questioning.  We held an analyst call earlier, or FairPoint did, certainly Verizon’s Investor Relations people are available to you for this kind of detail, and we want to restrict this to members of the press, which is the purpose of this call.  So we will happily have somebody give you a call, and we can take you through that.  But let’s move on here on this call.

OPERATOR:  Thank you.  Your next question is from Gordon Fraser of the Eagle Tribune newspaper.

ERIC RABE:  Good morning.

GORDON FRASER, EAGLE TRIBUNE NEWSPAPER:  Hey there.  Basically I’m wondering if there, if the broadband expansion that FairPoint is planning is going to be technically the same.  I mean is it going to be the same equipment and things like that?  And also, if you guys have any statistics that it will let us know how quickly we can expect broadband expansion, that would be great.

GENE JOHNSON:  The first question, is it going to be, it’ll be the same — I don’t know what you mean the same as, but it will certainly be equivalent to broadband availability we have around the country.  I would like to point out that FairPoint, across its very, very rural footprint across the country, has something like 88 percent availability of broadband to our customers, so we are very, very committed to this.  It is very important, as I said earlier.

GORDON FRASER:  Right.  Verizon was talking some time ago about how its broadband plan with its fiber optic network was superior to its competitors and things like that.  I’m basically wondering if the actual equipment is really going to be the same, or if you guys are approaching it from a different angle or anything like that.

5

VIRGINIA RUESTERHOLZ:  Our DSL network is very similar to the network that FairPoint uses today in those states.  And as we mentioned, they’ve been operating in those three New England states.  We have some fiber optics in the New Hampshire area that would also be taken on.  It’s a very small amount, but that would also move over to FairPoint and they would be managing that.

GORDON FRASER:  OK.

ERIC RABE:  Next question operator.

OPERATOR:  Thank you.  Your next question is from Daniel McLean of the Burlington Free Press.

DANIEL MCLEAN, BURLINGTON FREE PRESS:  Yes hi, I jumped on the call a few minutes late, so if you’ve already answered this question I apologize.  But the DSL expansion in Vermont, it sounded like, so they’re going to, you’re going to remain with the same commitments that Verizon had up to 80 percent in 2010.  There’s yardsticks for the end of 2007 and 2008 and 2009 as well.  My assumption is that those will all remain, in place.  And the other question I have is just on union positions.  I think you said that they will remain as they are now, is that correct?

GENE JOHNSON:  That is correct.  We will assume Verizon’s obligations.  We don’t expect to make any changes to those.  We think those are appropriate obligations in respect to broadband.  As far as the unions are concerned, absolutely, we don’t expect any reduction of jobs.

DANIEL MCLEAN:  OK.  In any of the three states?

GENE JOHNSON:  Correct.  In any of the three states, across the entire region.

VIRGINIA RUESTERHOLZ:  And during this transition period we’ll, Verizon will continue to operate in those three states just as we are today.  We’ll be managing our DSL.  We’ll be managing all the customer service to ensure that we have a smooth transition to FairPoint.

ERIC RABE:  OK.  Does that answer your question?

DANIEL MCLEAN:  Yes, and also, this is, I guess, for FairPoint.  How long have you been looking at this deal?

GENE JOHNSON:  For some time now.  Let’s just stop it at there.

DANIEL MCLEAN:  OK.

OPERATOR:  Thank you.  Your next question is from Crayton Harrison of Bloomberg News.

CRAYTON HARRISON, BLOOMBERG NEWS:  Hi, thanks.  How does this transaction further Verizon’s (INAUDIBLE)?  It seems like you’re getting rid of some assets that you, you know, invested so much into playing, even just a little bit in New Hampshire.  And secondly, does this agreement preclude Verizon at all from competing in these three states in the future?

VIRGINIA RUESTERHOLZ:  Yes, I think this fits in very well with our strategy that we have, and that strategy has been, you know, creating value for our shareholders while we bring broadband to our customers.  So it’s a unique transaction.  We think it makes a lot of sense.  It’s win/win for our customers.

As I mentioned earlier, we have a small amount of FiOS in New Hampshire that will be moving over to FairPoint.  We think this fits in very well with our strategy of increasing our availability of broadband across all of our markets.

CRAYTON HARRISON:  And with, the second part of the question, is there anything that precludes Verizon from competing in these spaces in the future?

6

VIRGINIA RUESTERHOLZ:  We will still have our Verizon business and Verizon wireless operations in those areas, so, you know, that’s, the telecom piece of it will move over to FairPoint, but we will still be operating in those three regions.

CRAYTON HARRISON:  OK.

OPERATOR:  Thank you.  Your next question is from Anne Ravana of the Bangor Daily News.

ANNE RAVANA, BANGOR DAILY NEWS:  Hi there.  I’m wondering how many jobs there are expected to be created in Maine and when and where.

GENE JOHNSON:  We don’t have that detail at this time.  We will be adding about 600 positions throughout the three state region, and later on this year we’ll be talking about where they’re going to be and what they’re going to be.  But they will be a variety of kind of jobs, information technology, accounting people, customer service people, all kinds of positions.

ANNE RAVANA:  OK.  And you said 300 positions?

GENE JOHNSON:  Six hundred across all three states.

ANNE RAVANA:  Right, but no specific information about each state.

GENE JOHNSON:  That is correct.

ANNE RAVANA:  OK, thank you.

GENE JOHNSON:  You’re welcome.

OPERATOR:  Thank you.  Your next question is from Lisa Arsenault of the Concord Monitor.

LISA ARSENAULT, CONCORD MONITOR:  Hi.  I just wanted to find out kind of if, kind of circling back to the question about FiOS.  Verizon had halted work last spring on the two year project that would have connected a bunch of southern New Hampshire communities with cable television and higher speed Internet.  I’m wondering if FairPoint plans to continue that project, pick up where they left off or keep it on this kind of hiatus that it’s on right now.

VIRGINIA RUESTERHOLZ:  Right now we have about, over 80,000 homes passed in the southern New Hampshire area …

LISA ARSENAULT:  Yes.

VIRGINIA RUESTERHOLZ:  … and that would be moving over to FairPoint for them to make that decision.

LISA ARSENAULT:  OK.

VIRGINIA RUESTERHOLZ:  Right now they serve data to those customers, high speed data …

LISA ARSENAULT:  Yes.

VIRGINIA RUESTERHOLZ:  … so there is an opportunity there for FairPoint to pick that up, and I would think to look at video.

GENE JOHNSON:  Absolutely.  Video is an important part of our product mix.  We’re looking everywhere we can as to how we can do video.  We currently provide the video in, I think, six different FairPoint markets, some of it over the traditional DSL network using Internet protocol TV.

7

LISA ARSENAULT:  Yes.

GENE JOHNSON:  So we will definitely look to protect these assets and maximize the value of them.

LISA ARSENAULT:  OK.  So then do you, you haven’t really made the decision yet whether that project is going to continue or whether it’s going to remain on hold?

GENE JOHNSON:  We don’t have any timeframes for any build outs right now.

LISA ARSENAULT:  OK.  And then you had said that there’s going to be a $95 to $100 million investment, what was that money going to be invested in?  That was unclear to me.

GENE JOHNSON:  Yes.  About $95 to $110 million prior to close, but a total of about — excuse me — a total of about $200 million by the time we get the investment completed, and that includes mostly information technology infrastructure to allow us to better serve all of these customers in the three states.

LISA ARSENAULT:  What type of infrastructure?  Like better service stations or upgraded lines?  I’m just unclear about what type of infrastructure you’re talking about.

GENE JOHNSON:  Primarily back office infrastructure.

LISA ARSENAULT:  OK, great, thank you.

GENE JOHNSON:  You’re welcome.

ERIC RABE:  And operator, do we have any further questions?

OPERATOR:  We do have another question from Irwin Gratz of Main Public.

ERIC RABE:  Sir, what’s your organization sir?

IRWIN GRATZ, MAIN PUBLIC:  Good morning.  It’s Maine Public Broadcasting Network.  I work out of Portland.  My question concerns the consumers who are currently receiving their telephone service from Verizon.  Explain what changes they will see and if you have any idea when they will see them.

VIRGINIA RUESTERHOLZ:  Sure.  We don’t expect to have any changes in our products or services.  We’re going to continue to operate in those three states just as we have been, excellent customer service, focus on the customer, marketing our products and services over this transition period.  And my commitment to Gene and FairPoint is that we make sure that this is a very smooth transition for customers as they, we close the deal and as they take control of the business.

GENE JOHNSON:  And I would add to that, we don’t expect to see changes post-closing unless we — we will be adding new products and services, but certainly not taking anything away.  I also want to remind the people in that region that the same people providing service to them today will be providing service to them tomorrow.  The Verizon employees who have been doing this for many, many years, very talented, dedicated employees will continue to provide those services to those customers as we go forward.

IRWIN GRATZ:  OK, but eventually people will be seeing changes in names on their bills, perhaps a new form to their bill, that sort of thing.

GENE JOHNSON:  Yes, yes …

IRWIN GRATZ:  At some point, yes.

GENE JOHNSON:  Yes, that’s correct.

8

IRWIN GRATZ:  All right, thank you sir.

GENE JOHNSON:  You’re very welcome, thank you.

OPERATOR:  Thank you.  Your next question is from Louis Porter of the Rutland Herald.

LOUIS PORTER:  Hi.  I was wondering if you anticipated any difficulties or challenges dealing with the regulatory structure in Vermont, if you had meetings set up to talk to regulators here and if you’ve looked at that at all.

VIRGINIA RUESTERHOLZ:  We’ve already scheduled meetings with each of the commissions, and the process, our goal is to get our regulatory approval of this deal by the October timeframe so that we can close by the end of the year.  I think we need to have those meetings and sit with each of the regulators and work this through.  Gene, do you want to add anything?

GENE JOHNSON:  I would only say that FairPoint already does business in all three of these states and know these regulatory groups very well and expect to work very constructively with them towards this, completing this transaction.

LOUIS PORTER:  Thank you.

GENE JOHNSON:  Thank you.

OPERATOR:  Thank you.  Your next question is from Ed Murehy of Portland.

ED MURPHY, PORTLAND PRESS HERALD:  Hi.  I have a couple of questions actually.  First of all, Virginia, I think you mentioned Verizon will be retaining its Verizon business unit.  How does that differ from what’s being spun off here?

VIRGINIA RUESTERHOLZ:  Yes, that is particularly the former MCI customers and assets.  They will remain with Verizon, so that’s what I was, you know, referring to.

ED MURPHY:  OK, my second question deals with overlaps.  Are there any overlaps right now in terms of service areas?  And secondly, are there going to be any job — I know you are adding 600 jobs, but is there going to be any kind of a job shift?  Do you have a lot of people who hold the same jobs that you won’t need in the combined companies, so there would be some shifting of those, that workforce?

GENE JOHNSON:  Well let me just say that there is no overlapping service area now.  As to, as to job shifting, I don’t know of any right now, but you know, that’s a thing that often happens is our people want new opportunities to try new things, so they ask, actually ask to be shifted to new jobs.  But I certainly wouldn’t want to comment about any shifting that, right now, I don’t know of any planned.

ED MURPHY:  Thank you.

GENE JOHNSON:  You’re welcome.

OPERATOR:  Thank you.  Your next question is from Bruce Meyerson of AP.

BRUCE MEYERSON, AP:  Hi guys.  How are you?  I wanted to just clarify on the FiOS thing, Verizon hasn’t deployed FiOS anywhere other than those 80,000 lines in New Hampshire you referred to?  And will FiOS be re-branded then under FairPoint?  I would imagine it is, but just to be clear.  And does FairPoint have any other fiber in its existing operations?  And this is to Verizon, are you guys more or less done with local line divestitures or are you still looking at other regions?  If yes, could you, could you talk about that?  And are there any other Verizon consumer operations in these three states that are not being sold?

9

VIRGINIA RUESTERHOLZ:  OK, well let me start with the FiOS question.  The, a little over 80,000 lines that we have passed with fiber, that’s the total amount in those three states.  And I’ll let Gene discuss, if he’s going to (INAUDIBLE) would move over, as I mentioned before, transaction over to FairPoint.

Regarding the questions of other lines, you know, we’re always approached by people regarding opportunities to …

BRUCE MEYERSON:  You’re breaking up on your answer here.

VIRGINIA RUESTERHOLZ:  Oh I’m sorry.  We’re always being approached by different organizations and companies to look at transactions.  I don’t have anything in particular that’s imminent at this point.  This was a very unique transaction for us.  We really feel that it’s great for our shareholders, our customers and employees.  FairPoint brings a lot to the table, as Gene said, they operate in these three states.  They have a good track record as far as operating the telephone company in rural areas.  We really think this is great for our customers, our employees, and we think it’s bringing value to our shareholder.

There are no other consumer operations in those three — I think that was one of your other questions …

BRUCE MEYERSON:  Yes it was.

VIRGINIA RUESTERHOLZ:  There are no other consumer operations that we would be retaining.  They would be moving over to FairPoint.

GENE JOHNSON:  But you had two questions for me.  The first one was we will re-brand everything to the FairPoint brand.  And then secondly there was a question about do we have fiber in other states, and the answer to that question is yes.  We have a significant amount of fiber around the country although we don’t have that much fiber to the home, although we do have one location where we have fiber to the home.  We’ll do more of it as time goes on.

ERIC RABE:  Bruce, one point just to be crystal clear here.  We are not selling the wireless business, so in terms of …

BRUCE MEYERSON:  I understand that.

ERIC RABE:  … that will …

BRUCE MEYERSON:  Where is the, where is the one fiber to the home you have?

GENE JOHNSON:  It’s in the state of Washington.

ERIC RABE:  OK?

BRUCE MEYERSON:  OK, yes.  Thank you.

ERIC RABE:  Operator, let’s take one more question and then we’ll wrap up.

OPERATOR:  Thank you.  Your final question is from Susan Bush of www.iberkshires.com.

SUSAN BUSH, WWW.IBERKSHIRES.COM:  Good morning, and thank you all for listening to us ask you questions.  I have — going back to the employment side.  I have heard that there will be no job cuts and that there will be jobs added.  I am interested in knowing if there is any consideration — I know that Verizon currently operates out of a number of garages that are stationed in various points of these three states, if there is any consideration being given to merging any of these garages, and if there is any consideration being given to the salaries of the current Verizon workers?

VIRGINIA RUESTERHOLZ:  Yes, but through the transition, we will be operating from the same locations.  Our employees will continue to do the same work that they’ve been doing.  FairPoint has agreed to honor

10

all of our labor agreements, so that includes all the salaries and all of the work rules involved with our associates, and they’ve also made the same commitment to our management employees.  Gene?

GENE JOHNSON:  That’s correct.  We don’t know, have no plans at all to close garages and the like.  And secondly, I would just reiterate what Virginia said, and that is that we will assume the labor agreements and the pay scales at Verizon, we have no plans at all to change those at any time.  And from a standpoint of benefits, we have no plans to change the benefits either.  Essentially we want this to be a very seamless transaction for not only the customers but the employees as well.  And we want those employees to know that they’re valued because they are.

SUSAN BUSH:  Thank you very much.

GENE JOHNSON:  Thank you.

ERIC RABE:  With that, we’ll wrap up this conference call.  Of course, both Verizon and FairPoint media relations people as well as executives are available to you.  If you need more, please call us.  The contact information is on the press release, which I hope each of you has in front of you at this point, but if you don’t, you can find it on the Verizon News Center Web site.  And certainly happy to provide it to you just by calling us.  It’s also on the FairPoint Web site as well.

This conference call, in case you were late getting in, will be replayed starting at about noon time.  The number for that is 877-519-744 and then there’s a PIN number that you need, and that is 8326253.  So if you need to catch up on the beginning of the call or something.  I know we did this on fairly short notice, but we thought it was important to make the executives available to you very quickly this morning, and I hope that’s been helpful to you.

So with that, we’ll bid you a good day.  Thank you very much for your participation.

OPERATOR:  Thank you.  Again, if you would like to listen to a replay of this teleconference, please dial 877-519-4471 with the PIN code of 8326253.  This concludes today’s Verizon FairPoint conference call.  You may now disconnect.

END

11