1
EXHIBIT 10(r)(ii)

Execution Copy

RECEIVABLES PURCHASE AGREEMENT

Dated as of August 29, 1996

among

LCI INTERNATIONAL TELECOM CORP.,

as a Seller

and

LCI SPC I, INC.,

as the Purchaser
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TABLE OF CONTENTS

SECTION PAGE

ARTICLE I

DEFINITIONS

1.01. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.03. Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.04. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE II

AMOUNTS AND TERMS OF THE PURCHASES

2.01. (a) Purchases of Receivables; Agreement
to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.02. Payment for the Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.03. Settlement Procedures on each Report Date . . . . . . . . . . . . . . . . . . . . . . . 14
2.04. Payments and Computations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.05. Transfer of Records to the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE III

CONDITIONS PRECEDENT

3.01. Conditions Precedent to Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.02. Conditions Precedent to Ongoing Purchases. . . . . . . . . . . . . . . . . . . . . . . 19
3.03. Effect of Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.01. Representations and Warranties of the Sellers. . . . . . . . . . . . . . . . . . . . . 19
4.02. Representations and Warranties of the Purchaser. . . . . . . . . . . . . . . . . . . . 26

ARTICLE V

GENERAL COVENANTS OF THE SELLERS

5.01. Affirmative Covenants of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.02. Negative Covenants of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE VI

ADMINISTRATION AND COLLECTION

6.01. Collection of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.02. Designation of Collection Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.03. Duties of the Collection Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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TABLE OF CONTENTS

SECTION PAGE

6.04. Responsibilities of the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.05. Further Action Evidencing Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.06. Application of Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.07. Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.08. Collection Agent Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE VII

INDEMNIFICATION

7.01. Indemnities by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE VIII

MISCELLANEOUS

8.01. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.03. Effectiveness; Binding Effect; Assignability . . . . . . . . . . . . . . . . . . . . . . 50
8.04. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.05. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.06. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.07. Execution in Counterparts; Severability . . . . . . . . . . . . . . . . . . . . . . . . 53
8.08. Purchase Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.09. No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

EXHIBITS AND SCHEDULES

Exhibit A - Form of Subordinated Note
Exhibit B - Form of Daily Report
Exhibit C - Form of Computer Software and Equipment Attornment Agreement
Exhibit D - Form of Billing Agent Agreement Attornment Agreement

Schedule 4.01(g) - Actions, Suits
Schedule 4.01(h) - Addresses and Locations of Books and Records of the Sellers
Schedule 4.01(j) - Tradenames, Subsidiaries, Etc.
Schedule 4.01(n) - ERISA Matters
Schedule 4.01(o) - Lock-Box Banks; Lock-Box Accounts; Lock-
Box Numbers; Permitted Unblocked
Accounts; Maximum Transmission Times for
Funds on Deposit in Permitted Unblocked
Accounts

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Schedule 4.01(u)(1) - Computer Software and Equipment License Agreements
Schedule 4.01(u)(2) - Billing Agent Agreements
Schedule 4.01(v) - Qualified LEC Agreements
Schedule 5.02(l) - Tariff Restrictions

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RECEIVABLES PURCHASE AGREEMENT
Dated as of August 29, 1996

This RECEIVABLES PURCHASE AGREEMENT (the "Agreement"), dated
as of August 29, 1996, is made by and among LCI SPC I, INC., a Delaware
corporation (the "Purchaser"), and LCI INTERNATIONAL TELECOM CORP., a Delaware
corporation ("LCI") individually and as the initial "Collection Agent" (as
hereinafter defined) (LCI, together with any other Subsidiary of the Parent
that hereafter becomes a party hereto as a seller of Receivables to the
Purchaser, being collectively, the "Sellers" and individually a "Seller").

WITNESSETH:

WHEREAS, the Sellers desire to sell, and the Purchaser has
agreed to purchase, all of such Sellers' respective right, title and interest
in certain of their accounts receivable on the terms and conditions provided
herein; and

WHEREAS, The Purchaser, as "Transferor", LCI, as the initial
"Collection Agent", Enterprise Funding Corporation (the "Company"), those
financial institutions from time to time party thereto as "Bank Investors", and
NationsBank, N.A., as "Agent" have entered into that certain Transfer and
Administration Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the "TAA"), pursuant to
which the Purchaser may from time to time convey, transfer and assign undivided
percentage interests in accounts receivable purchased from the Sellers, and the
Company may, and the Bank Investors, if requested, shall, accept such
conveyance, transfer and assignment of such undivided percentage interests;

NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Definitions. For all purposes of this
Agreement, except as otherwise specifically provided herein, capitalized terms
used in this Agreement without definition shall have the meanings ascribed to
such terms in the TAA, the terms of which are incorporated by reference herein
and made a part hereof. In addition, as used in this Agreement, the following
terms shall have the following meanings:
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"Actual Outstanding Balance" means the actual Outstanding
Balance of all Direct Billed Receivables sold by each of the Sellers to the
Purchaser hereunder during any month, as such amount shall be set forth on the
Investor Report covering such month.

"Adjustments" has the meaning specified in Section 2.03(a).

"Applicable Purchase Price Percentage" has the meaning
specified in Section 2.02(b) hereof.

"Available Funds" has the meaning specified in Section
2.03(c).

"Collection Date" means the date occurring after the
Termination Date upon which the Aggregate Unpaids shall have been paid in full,
in cash.

"Cut-Off Date" means the last day of each calendar month.

"Daily Report" has the meaning specified in Section 2.02(b).

"Dilution Adjustment" means, with respect to all Receivables
sold by any Seller to the Purchaser hereunder as of any Report Date, an amount
calculated on each Investor Report for the immediately preceding calendar month
equal to the aggregate reductions in the Outstanding Balances of all such
Receivables during the calendar month covered by such Investor Report as a
result of Dilution.

"Direct Billed Loss Discount" has the meaning specified in
Section 2.02(b) hereof.

"Direct Billed Purchase Discount Reserve Ratio" has the
meaning specified in Section 2.02(b) hereof.

"Direct Billed Receivable Adjustment" means an amount
determined on each Report Date equal to the difference between the Actual
Outstanding Balance and the aggregate Estimated Outstanding Balance of all of
the Direct Billed Receivables Purchased by the Purchaser from a Seller
hereunder during the month preceding such Report Date, which amount, if
positive, shall then be owing by the Purchaser to the applicable Sellers and,
if negative, shall be then owing by the applicable Seller to the Purchaser, in
each case, in accordance with Section 2.03(b) or (c), as applicable.

"Discount Rate" has the meaning specified in Section 2.02(b)
hereof.

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"Estimated Initial LEC True-Up" has the meaning specified in
Section 2.02(b).

"Estimated Outstanding Balance" means, with respect to any
Purchase of any Direct Billed Receivables, the product of (a) the number of
minutes of phone service provided to the Obligors giving rise to any such
Direct Receivables to be Purchased on such date and (b) the Estimated Rating
Factor at such time.

"Estimated Rating Factor" means, at any time, an amount set
forth in the most recent Investor Report equal to the weighted average of the
ratings factors used in determining the Actual Outstanding Balances of the
Direct Billed Receivables during the month covered by such Investor Report, as
such amount shall be determined by the Collection Agent, provided, that if the
Purchaser or the Agent disagrees with such calculation, such Person may
recalculate such amount and such recalculated amount shall be the Estimated
Rating Factor for such period.

"Initial LEC True-Up Adjustment" means with respect to each
LEC Agreement covering any Qualified LEC Receivables, the difference of (i) the
actual aggregate amount of LEC True-Ups applied by the applicable LEC against
amounts owing to the Sellers by such LECs in respect of Qualified LEC
Receivables sold to the Purchaser hereunder but which relate to amounts
under-collected or over-collected (relative to the LEC Withholding applied in
connection with (and at the time of) the transfer, transmission or other
conveyance thereof to the LEC pursuant to the applicable LEC Agreement) of LEC
Receivables which arose prior to the Applicable Initial LEC Receivable Cut-Off
Date, as such amount is determined on the Initial LEC True-Up Adjustment Date
relating to such LEC Agreement and (ii) the Estimated Initial LEC True-Up in
respect of such LEC Agreement, which difference, if positive, would then be
owing by the applicable Seller to the Purchaser and, if negative, would then be
owing by the Purchaser to the applicable Seller, in each case, in accordance
with Section 2.03(b) or (c), as applicable. In determining the amount set
forth in clause (i) above, the amount of any LEC True-Up relating to any period
covered by a PAR Statement in which some but not all transmissions of LEC
Receivables to the LECs during such period were Purchased by the Purchaser
hereunder, such LEC True-Up shall be allocated with respect to those
Receivables Purchased hereunder and those not Purchased hereunder pro rata
based on the relation that the number of minutes of use included in those
transmissions of such Receivables which were Purchased or not Purchased, as
applicable, during such month bears to the total number of minutes of use
included on all such transmissions made to such LEC during the period covered
by such PAR Statement.

"Initial LEC True-Up Adjustment Date" means, with respect to
any Qualified LEC Agreement, the Report Date occurring after the occurrence of
the LEC True-Up Date with respect to

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those Receivables included in the initial Purchase hereunder of LEC Receivables
covered thereunder.

"LEC Discount Amount" has the meaning specified in Section
2.02(b) hereof.

"LEC Loss Discount" has the meaning specified in Section
2.02(b) hereof.

"LEC Purchase Discount Reserve Ratio" has the meaning
specified in Section 2.02(b) hereof.

"LEC True-Up Date" means, with respect to any LEC Agreement,
the date upon which the LEC True-Ups with respect to any LEC Receivables are
effected pursuant to the terms thereof.

"Noncomplying Receivable" means any Receivable which, as of
the date of the Purchase thereof by the Purchaser hereunder, did not meet the
criteria for an "Eligible Receivable" set forth in the definition thereof in
the TAA, except that, for purposes of determining which Receivables are
Noncomplying Receivables, references in clauses (iv) and (v) of such definition
in the TAA to "the time of the initial creation of an interest therein
hereunder" shall instead be deemed to mean and refer to "the time such
Receivable was sold or transferred by such Seller to the Purchaser hereunder."

"Post-Termination Date LEC True-Up Reimbursement Obligations"
means the amount of any LEC True-Up resulting from the under-collection or
over-collection (relative to the LEC Withholding applied in connection with
(and the time of) the transfer, transmission or other conveyance thereof to the
LEC pursuant to the applicable LEC Agreement) of a Qualified LEC Receivable
previously sold to the Purchaser hereunder, which amount is applied by the
applicable LEC against or added to amounts owing by such LEC to any of the
Sellers in respect of LEC Receivables transferred, transmitted or otherwise
conveyed to and accepted by such LEC after the Termination Date. In
determining the amount set forth in the preceding sentence, the amount of any
LEC True-Up relating to any period covered by a PAR Statement in which some but
not all transmissions of LEC Receivables to the LECs during such period were
Purchased by the Purchaser hereunder, such LEC True-Up shall be allocated with
respect to those Receivables Purchased hereunder and those not Purchased
hereunder pro rata based on the relation that the number of minutes of use
included in those transmissions of such Receivables which were Purchased or not
Purchased, as applicable, during such month bears to the total number of
minutes of use included on all such transmissions made to such LEC during the
period covered by such PAR Statement.

"Purchase" means, on any date, the sale, assignment, transfer
and/or other conveyance by the Sellers to the Purchaser

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of all such Seller's Receivables existing on such date and for which the
Purchase Price has not been previously paid (including by increasing the
outstanding balance of the Subordinated Note) and which have not previously
been sold, assigned, transferred or otherwise conveyed to the Purchaser by the
Sellers, in either case, in accordance with the terms of Sections 2.01 and 2.02
hereof; and "Purchased" means the past tense of Purchase; it being understood
and agreed, that no LEC Receivable shall be deemed Purchased hereunder until it
has become a Qualified LEC Receivable.

"Purchase Price" has the meaning specified in Section 2.02(b)
hereof.

"Purchased Assets" has the meaning specified in Section
2.01(a) hereof.

"receivable" means the indebtedness owed to any of the Sellers
(including, in the case of a LEC Receivable, any such indebtedness payable to a
LEC on behalf of such Seller) by any Obligor or by any credit card company on
behalf of such Obligor (if such indebtedness was charged by such Obligor on its
credit card) (in each case, prior to giving effect to any Purchase hereunder),
whether constituting an account, chattel paper, instrument, investment property
or general intangible, arising in connection with the sale or lease of goods,
merchandise or inventory or the rendering of services by such Seller and
includes the right to payment of any Finance Charges and other obligations of
such Obligor with respect thereto.

"Receivable" means any Private Line Receivable, Switched
Services Receivable or Qualified LEC Receivable of any of the Sellers, and
"Receivables" means all such Private Line Receivables, Switched Services
Receivables, and Qualified LEC Receivables of the Sellers; it being understood
and agreed, that the terms "Receivable" or "Receivables" (x) shall not include
(i) any Non-Qualified LEC Receivables, (ii) any Operator Services Receivables,
or (iii) any Intermediate Biller Receivables and (y) shall include Unbilled
Toll. In addition, once a Receivable has been deemed collected pursuant to
Section 2.9 of the TAA and the applicable Seller shall have satisfied its
obligations with respect to Section 2.03(b) with respect thereto, such
receivable shall no longer constitute a Receivable hereunder.

"Related Assets" has the meaning specified in Section 2.01(a)
hereof.

"Related Security" means, with respect to any Receivable of
any Seller, all of such Seller's rights, title and interest in, to and under:

(i) all rights and claims of such Seller under
the applicable LEC Agreements to and for the

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Associated LEC Payments owed by the applicable LEC party thereto and
all such payments so made, in each case, whether such rights, claims
or payments constitute accounts, chattel paper, general intangibles,
instruments, cash, investment property, securities or otherwise;

(ii) all rights and claims of such Seller to
or for payments from any credit card companies for any Receivables,
and all such payments so made, in each case, whether such rights,
claims or payments constitute accounts, chattel paper, general
intangibles, instruments, cash, investment property, securities or
otherwise;

(iii) each of the Permitted Unblocked
Accounts, Lock-Boxes and Lock-Box Accounts of such Seller, and all
items of payment, monies and other property from time to time on
deposit therein;

(iv) the goods, merchandise or inventory
(including returned or repossessed goods, merchandise or inventory),
if any, the sale or lease of which by such Seller gave rise to such
Receivable;

(v) all other security interests or
liens and property subject thereto from time to time, if any,
purporting to secure payment of such Receivable, whether pursuant to
the Contract related to such Receivable or otherwise, together with
all financing statements signed by an Obligor describing any
collateral securing such Receivable;

(vi) all guarantees, letters of credit,
indemnities, warranties, insurance policies (and proceeds and premium
refunds thereof) or other agreements or arrangements of any kind from
time to time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise;

(vii) all Records related to such Receivable;
and

(viii) all Proceeds of any of the foregoing.

"Report Date" means the 20th day of each calendar month.

"Seller Loans" has the meaning specified in Section 2.02(c)
hereof.

"Subordinated Note" has the meaning specified in Section
2.02(d) hereof.

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SECTION 1.02. Accounting Terms. Under this Agreement, all
accounting terms not specifically defined herein shall be interpreted, all
accounting determinations made, and all financial statements prepared, in
accordance with GAAP.

SECTION 1.03. Other Terms. All other undefined terms
contained in this Agreement shall, unless the context indicates otherwise, have
the meanings provided for by the UCC to the extent the same are used or defined
therein. The words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the exhibits and
schedules hereto, as the same may from time to time be amended or supplemented
and not to any particular section, subsection, or clause contained in this
Agreement, and all references to Sections, Exhibits and Schedules shall mean,
unless the context clearly indicates otherwise, the Sections hereof and the
Exhibits and Schedules attached hereto, the terms of which Exhibits and
Schedules are hereby incorporated into this Agreement. Whenever appropriate,
in the context, terms used herein in the singular also include the plural, and
vice versa.

SECTION 1.04. Computation of Time Periods. In this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding", and the word "within" means
"from and excluding a specified date and to and including a later specified
date".

ARTICLE II

AMOUNTS AND TERMS OF THE PURCHASES

SECTION 2.01. (a) Purchases of Receivables; Agreement to
Purchase. Subject to the terms and conditions hereinafter set forth (including
the conditions set forth in Article III), the Purchaser hereby purchases from
each Seller, and each Seller hereby severally sells, transfers, assigns and
otherwise conveys to the Purchaser all of such Seller's right, title and
interest in all of such Seller's Receivables existing as of the Business Day
immediately preceding the Closing Date or thereafter arising until the Business
Day, immediately preceding the Termination Date, in each case together with all
of the Related Security relating to, and all Collections and other Proceeds of,
such Receivables and Related Security (such Related Security, Collections and
Proceeds being, collectively, the "Related Assets"). On each Business Day
until the Termination Date, the Purchaser shall pay for the Purchases described
in the preceding sentence no later than 5:00 p.m. (New York time) on the
applicable date of Purchase of such Receivables by making available to the
Sellers the payment of the Purchase Price required under Section 2.02. Prior
to paying the Purchase Price hereunder, the Purchaser may request of any
Seller, and such Seller shall deliver, such approvals, opinions, information,

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reports or documents as the Purchaser may reasonably request. As used in this
Agreement, the term "Purchased Assets" shall mean all Receivables which are
paid for through cash and/or Seller Loans under this Agreement and all Related
Assets relating thereto.

(b) It is the intention of the parties hereto that each
Purchase of Receivables and Related Security hereunder shall constitute a
"sale" from each applicable Seller to the Purchaser under applicable state law
and Federal bankruptcy law and, more particularly with respect to the sale of
Receivables, but without limitation, a "sale of accounts," as such term is used
in Article 9 of the UCC, which sales are, in each case, absolute and
irrevocable and provide the Purchaser with all rights of ownership of the
Receivables and the Related Security associated therewith. Neither any Seller
nor the Purchaser intends the transactions contemplated hereunder to be, or for
any purpose to be characterized as, loans from the Purchaser to the Sellers
secured by such assets. Except for the Dilution Adjustments and Direct Billed
Receivable Adjustments made on each Report Date, the Initial LEC True-Up
Adjustments made on any Initial LEC True-Up Adjustment Date, payments made in
respect of any Post-Termination Date LEC True-Up Reimbursement Obligations and
certain indemnities pursuant to Section 7.01 (none of which true-ups,
adjustments or obligations relate to the creditworthiness of the Receivables or
Related Security Purchased by the Purchaser hereunder), each sale of
Receivables and the Related Security relating thereto by a Seller to the
Purchaser is made without recourse to such Seller; provided, however, that (i)
each Seller shall be liable to the Purchaser for all representations,
warranties and covenants made by such Seller pursuant to the terms of this
Agreement, and (ii) such sale does not constitute and is not intended to result
in an assumption by the Purchaser or any assignee thereof of any obligation of
any Seller or any other person to any Obligor or otherwise arising in
connection with the related Contracts or any other obligations of the Sellers
thereunder or in connection therewith. In view of the intention of the parties
hereto that the Purchases of Receivables and the Related Security made
hereunder shall constitute sales of such Receivables and Related Security
rather than a loan secured thereby, each Seller agrees to note on its financial
statements and in its books and records that its Receivables and the Related
Security associated therewith have been sold to the Purchaser and to respond to
any inquiries made by third-parties as to the ownership of the Receivables and
Related Security so sold that such Receivables and Related Security have been
sold to the Purchaser.

(c) Notwithstanding any other provision of this Agreement to
the contrary, the Purchaser shall not purchase from any Seller, nor shall any
Seller sell to the Purchaser, any Receivable or any Related Security associated
therewith from and

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after the time of any bankruptcy filing by or against such Seller or against
the Purchaser.

(d) To the extent that, notwithstanding the provisions of the
immediately preceding clause (b), the Purchases hereunder are deemed for any
reason not to constitute valid "sales of accounts" and such associated Related
Security as set forth above, this Agreement shall also be deemed to create a
security interest (within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect in all applicable jurisdictions) in favor of the
Purchaser in all of the applicable Seller's rights, title and interest in, to
and under the Purchased Assets. Upon each such Purchase, the applicable Seller
hereby grants such a security interest to the Purchaser in the Purchased Assets
which are the subject of such Purchase, and this Agreement shall constitute a
security agreement within the meaning of Article 8 and Article 9 of the UCC of
all applicable jurisdictions.

SECTION 2.02. Payment for the Purchases. (a) The Purchase
Price for the Receivables and the other Purchased Assets sold by each of the
Sellers under this Agreement shall be payable in full in cash by the Purchaser
to the applicable Seller, in each case on the date of each such Purchase,
except that (A) to the extent that the Purchaser has insufficient funds to pay
the Purchase Price for any Receivables and other related Purchased Assets to be
purchased by it on any date, such remaining portion of the Receivables and
other Purchased Assets of each Seller for which the Purchase Price has not been
received in cash shall (subject to the limitations thereon described in Section
2.02(c)) be paid for by an increase in the outstanding principal balance of
such Seller's Subordinated Note to the extent of such unpaid Purchase Price and
(B) the Purchaser may, with respect to any Purchase, offset against such
Purchase Price (i) any amounts shown on an Investor Report as owing from the
applicable Seller to the Purchaser and which remain unpaid or (ii) any other
uncontested amounts owed by such Seller to the Purchaser hereunder and which
remain unpaid.

(b) On each Business Day, each Seller shall deliver to the
Collection Agent a report (a "Daily Report") in the form attached hereto as
Exhibit B, which Daily Report shall set forth, among other things, (i) with
respect to the Direct Billed Receivables existing on such date which have not
been previously sold to the Purchaser hereunder, the aggregate amount of
minutes of phone services provided by such Seller giving rise to such Direct
Billed Receivables, the Estimated Rating Factor at such time, the Estimated
Outstanding Balance of the Direct Billed Receivables being sold to the
Purchaser by such Seller on such date and the Purchase Price owed to such
Seller on such date in respect of such Receivables, and (ii) with respect to
any Qualified LEC Receivables being sold on such day, the aggregate Outstanding
Balance of all such LEC Receivables and the Purchase Price owed to such Seller
on such date in respect thereof. The

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applicable Purchase Price (the "Purchase Price") payable to any Seller on any
Business Day shall be calculated to equal the sum of the aggregate Outstanding
Balances (or Estimated Outstanding Balances, as applicable) of the new Direct
Billed and Qualified LEC Receivables noted on such Daily Report (i.e.,
Receivables existing as of the close of business of such Seller on the Business
Day immediately preceding the date of such Daily Report and not previously sold
to the Purchaser hereunder) times the respective applicable percentage (the
"Applicable Purchase Price Percentage") then in effect pursuant to the
remaining provisions of this Section 2.02(b) with respect to such Receivables.

From the Closing Date until the first Report Date thereafter,
the Applicable Purchase Price Percentage for the Direct Billed Receivables
shall equal 90.02%. Thereafter, the Applicable Purchase Price Percentage with
respect to such Receivables shall be calculated in accordance with the
following formula:

APPP = 100% - (DBLD + PDRR)

where:

APPP = the Applicable Purchase Price Percentage in
effect on such day;

DBLD = from and after each Report Date, the "Direct
Billed Loss Discount" (expressed as a
percentage) calculated in the most recent
Investor Report to equal the greater of (i)
one-fifth of one percent (0.20%) and (ii) 1.5
times the average of the Direct Billed
Loss-to-Liquidation Ratios for the six (6)
calendar months most recently ended, as such
amount shall be set forth in the Investor
Report for the most recent such calendar
month; and

DBPDRR = from and after each Report Date, the "Direct
Billed Purchase Discount Reserve Ratio"
(expressed as a percentage) calculated in the
most recent Investor Report in accordance
with the following formula:

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15

DBPDRR = ADBCP X DR
----------
360

where:
DBPDRR = the Direct Billed Purchase Discount Reserve
Ratio in effect on such day;

ADBCP = the average of the Direct Billed Average
Collection Periods for the preceding six (6)
calendar months most recently ended, as such
average shall be set forth in the Investor
Report for the most recent such calendar
month; and

DR = the "Discount Rate" calculated in the most
recent Investor Report to be equal to the sum
of (i) the Base Rate as of the last Business
Day of the most recently ended calendar
quarter (or, until September 30, 1996, as of
the Closing Date), (ii) .50%, and (iii) the
amount, if any, by which the per annum rate
in effect for calculating the Servicing Fee
exceeds 1.00%.

From the Closing Date until the first Report Date thereafter,
the Applicable Purchase Price Percentage for the Qualified LEC Receivables
shall equal 94.20%. Thereafter, the Applicable Purchase Price Percentage with
respect to such Receivables shall be calculated in accordance with the
following formula:

APPP = 100% - (LLD + LPDRR)

where:

APPP = the Applicable Purchase Price Percentage in
effect on such day;

LLD = from and after each Report Date, the "LEC
Loss Discount" (expressed as a percentage)
calculated in the most recent Investor Report
to equal the greater of (i) one-fifth of one
percent (0.20%) and (ii) 1.5 times the
average of the LEC Withholding Ratios for the
six (6) calendar months most recently ended,
as such amount shall be set forth in the
Investor Report for the most recent such
calendar month;

LPDRR = from and after each Report Date, the "LEC
Purchase Discount Reserve Ratio" (expressed

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as a percentage) calculated in the most
recent Investor Report in accordance with the
following formula:

LPDRR = ALCP X DR
---------
360

where:
LPDRR = the LEC Purchase Discount Reserve Ratio in
effect on such day;

ALCP = the average of the LEC Average Collection
Periods for the preceding six (6) calendar
months most recently ended, as such average
shall be set forth in the Investor Report for
the most recent such calendar month; and

The Applicable Purchase Price Percentages shall be calculated on each Report
Date and set forth in the Investor Report and such calculation shall be
utilized in the calculation of the Purchase Price owed under this Agreement for
all Purchases occurring from and after such Report Date until (but not
including) the next Report Date; provided, however, that with respect to the
initial Purchase of any LEC Receivables which are covered under a LEC Agreement
in respect of which no Qualified LEC Receivables covered thereunder had
previously been Purchased pursuant to this Agreement, the Purchase Price
payable for such Qualified LEC Receivables shall be reduced by an amount
determined by the Collection Agent to be equal to the estimated amount by which
the Collections realized on all such Qualified LEC Receivables covered by such
LEC Agreement will be reduced in respect of LEC True-Ups relating to LEC
Receivables transferred to the applicable LEC party to such LEC Agreement prior
to the Applicable Initial LEC Receivable Cut-Off Date for such LEC Agreement
(such adjustment being the "Estimated Initial LEC True-Up"); it being
understood and agreed, that such adjustment may exceed the Purchase Price to be
paid on such date with respect to such Qualified LEC Receivables and any
unapplied true-up amount shall be applied as a reduction of the Purchase Price
for future Purchases of Receivables from such Seller, provided, that if any
portion of such true-up remains unapplied as aforesaid within 10 days after the
initial Purchase of such newly Qualified LEC Receivables, the applicable Seller
shall pay the Purchaser the

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amount of any remaining unapplied true-up in cash on the date occurring 10 days
after the date of such initial Purchase (or, if earlier, on the Termination
Date).

(c) On each Business Day, to the extent that the Purchaser
receives either Collections or proceeds from any Incremental Transfers, which,
in any case, it is not required to hold in trust for, or remit to, the
Collection Agent or the Agent pursuant to the TAA or otherwise hold in trust
pursuant hereto or the TAA (including funds required to be deposited into the
Equalization Account), then the Purchaser shall remit such funds to the Sellers
(net of any funds needed to pay existing expenses of the Purchaser which are
then accrued and unpaid (other than Dilution Adjustments, Initial LEC True-Up
Adjustments, Direct Billed Receivables Adjustments or Post-Termination Date LEC
True-Up Reimbursement Obligations) in the following order of priority and
application: first to pay the Purchase Price for any Receivables Purchased
from the Sellers on such Business Day, second, to pay any Direct Billed
Receivable Adjustments, Initial LEC True-Up Adjustments and Post-Termination
Date LEC True-Up Reimbursement Obligations not previously incorporated into the
balance of the Subordinated Note as described in Section 2.03(c) below, and
third to pay amounts owed by the Purchaser to the Sellers under the
Subordinated Notes described in Section 2.02(d) below. All such payments shall
be made ratably according to the amounts in each such category owed to each of
the Sellers. If, on any day, the amount of cash available to pay for all
Purchases of Receivables to be made on such day is less than the Purchase Price
owing therefor, then the Purchaser shall, with notice to the applicable
Sellers, pay such remaining part of the Purchase Price by borrowing a revolving
loan (each a "Seller Loan") under its Subordinated Note issued in favor of such
Seller, and each Seller shall have irrevocably agreed to advance, and shall be
deemed to have advanced, a Seller Loan in the amount so specified by the
Purchaser; provided, however, that no such Seller Loan shall be made to the
Purchaser to the extent that, after giving effect thereto, the Purchaser's net
worth (calculated (i) after giving effect to all such Purchases and Seller
Loans to be made on such date and (ii) without giving effect to any Receivables
that are not included in the Net Receivables Balance at such time) would be
less than 8% of the aggregate Outstanding Balance of all Receivables at such
time.

(d) The Seller Loans shall be subordinated to the prior right
and payment in full of the Aggregate Unpaids, the Post-Termination Date LEC
True-Up Reimbursement Obligations, the Initial LEC True-Up Adjustments and the
Direct Billed Receivables Adjustments and any other obligations of the
Purchaser arising under the TAA. The Purchaser shall allocate the payment of
the Purchase Price, including the amount of Seller Loans made on any day,
ratably among all of the Sellers according to the respective Purchase Prices
owing thereto for all Receivables sold on such date. The Seller Loans advanced
by each Seller shall be

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evidenced by, and payable in accordance with the terms and provisions of, a
promissory note (each, a "Subordinated Note") payable to such Seller in the
form of Exhibit A attached hereto. To the extent practicable, the Purchaser
shall allocate payments of principal and interest on the Subordinated Notes
ratably among all of the Sellers according to the outstanding principal amounts
thereof.

(e) If, after giving effect to all allocations of cash and
Seller Loans provided for in Section 2.02(c), the Purchase Price payable by the
Purchaser to the Sellers on any Business Day is not paid in full as a result of
the limitation on the amount of the Subordinated Notes, then Purchase
Termination Date shall be deemed to have occurred hereunder and under the TAA.

(f) In addition to the Daily Reports, each of the Sellers
shall deliver any other information reasonably requested by the Collection
Agent to facilitate its preparation and delivery of the Interim Reports for
each week. The Collection Agent shall retain all copies of the Daily Reports
and such other information delivered to it by the Sellers and, upon the request
of the Purchaser or the Agent, shall make the same available for review by the
Purchaser, the Agent or any designee or agent thereof.

SECTION 2.03. Settlement Procedures on each Report Date. (a)
With respect to each calendar month, the Collection Agent shall prepare and
deliver, by the following Report Date, an Investor Report, in the form required
under the TAA, to each Seller, the Agent and each Bank Investor, which Investor
Report shall include, among other things, (i) the Dilution Adjustment, if any,
due to the Purchaser from any of the Sellers for such calendar month, (ii) the
Initial LEC True-Up Adjustments, if any, due to the Purchaser and/or any of the
Sellers as of such Report Date, (iii) the Direct Billed Receivable Adjustments
due to the Purchaser and/or any of the Sellers, and (iv) after the Termination
Date, the aggregate amount of any Post-Termination Date LEC True-Up
Reimbursement Obligations due to the Purchaser and/or any of the Sellers during
such month (collectively, the "Adjustments").

Promptly after the end of each calendar month, the Sellers
shall provide to the Collection Agent, as applicable, all information necessary
for each such party to calculate the foregoing matters and to prepare the
Investor Report within the time frame specified herein.

(b) On each Report Date, to the extent the net amount of the
applicable Adjustments as between the Purchaser and a Seller for the period
preceding such Report Date shall be owing to the Purchaser from such Seller,
the Purchaser and such Seller shall credit all such amounts against the
Purchase Price which would otherwise be owing to such Seller on such Report
Date in

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respect of the Receivables to be Purchased from such Seller by the Purchaser on
such date and any remaining portion of such Adjustments owing to the Purchaser
shall be payable by such Seller to the Purchaser in cash on such date.

(c) On each Report Date, to the extent that the net amount of
the Adjustments as between the Purchaser and a Seller for the period preceding
such Report Date shall be owing by the Purchaser to any such Seller, the
Purchaser shall pay such Seller such amount in cash, provided, that such
amounts shall be payable only out of cash available to the Purchaser at such
time (including, without limitation, with respect to the Post-Termination Date
LEC True-Up Reimbursement Obligations, money in the LEC True-Up Reserve Account
and available for withdrawal for the payment thereof pursuant to the TAA) and
not otherwise required to be paid to or held in trust for the payment of the
Aggregate Unpaids under and pursuant to the TAA and the other Transaction
Documents or used to make Purchases hereunder (such available funds being the
"Available Funds") and to the extent such obligations exceed the amount of the
Available Funds at such time, then the applicable Sellers shall, subject to the
limitations thereon set forth in the last sentence of Section 2.02(c), be
deemed to have made an additional Seller Loan to the Purchaser and the
Purchaser and such Sellers shall increase the principal balances of the
respective Subordinated Notes between the Purchaser and each such Seller. In
paying the above-described Adjustments, the Purchaser shall allocate Available
Funds ratably among those Sellers entitled to the distribution thereof (it
being acknowledged and agreed that funds in the LEC True-up Account or payable
out of Collections for Post-Termination Date LEC True-Up Obligations shall be
available to the Purchaser only for the payment of Post-Termination Date LEC
True-Up Obligations and the Purchaser shall, upon notice of the accrual of any
such obligation from any Seller, withdrawal from such account, or cause the
Collection Agent to allocate from Collections pursuant to Section 2.6 of the
TAA, Available Funds in the amount of any such obligation and the Purchaser
shall set-aside or cause the Collection Agent to set-aside such amounts on such
date for the payment of such obligations on the succeeding Report Date).

SECTION 2.04. Payments and Computations, Etc. All amounts to
be paid by the Sellers or the Collection Agent to the Purchaser or by the
Purchaser to the Sellers hereunder shall, in each case, be paid in accordance
with the terms hereof no later than 1:00 P.M. (New York time) on the day when
due in Dollars in immediately available funds to (x) in the case of payments to
the Purchaser, a Lock-Box Account to be specified by the Purchaser from time to
time in writing or (y) in the case of payments to any of the Sellers, to such
account as such Seller shall specify therefor from time to time to the
Purchaser. Payments received after such time shall be deemed to have been
received on the next Business Day. In the event that any payment becomes due
on a day

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20
which is not a Business Day, then such payment shall be made on the next
succeeding Business Day. Any amounts not paid by any party when due hereunder
shall, to the extent permitted by law, accrue interest at 2% per annum above
the Base Rate in effect on the date such payment was due, which interest shall,
subject to same payment and availability limitations applicable to the
principal amounts upon which it accrues, be payable upon the demand of the
party entitled thereto; provided, however, that such interest rate shall not at
any time exceed the maximum rate permitted by applicable law. All computations
of interest payable hereunder shall be made on the basis of a year of 360 days
for the actual number of days (including the first but excluding the last day)
elapsed.

SECTION 2.05. Transfer of Records to the Purchaser. (a) In
connection with the Purchases of Receivables hereunder, each Seller hereby
severally sells, transfers, assigns and otherwise conveys to the Purchaser all
of the applicable Seller's right and title to and interest in the Records
relating to all Receivables included in the Purchased Assets, without the need
for any further documentation in connection with any Purchase. In connection
with such transfer, each Seller hereby grants to each of the Purchaser and the
Collection Agent (including, without limitation, any successor Collection Agent
appointed in accordance with the TAA) an irrevocable, non-exclusive license to
use, without royalty or payment of any kind, all computer software and
equipment now or hereafter used by such Seller to administer, collect and/or
monitor the Receivables, to the extent necessary to administer, Collect and/or
monitor the Receivables, whether such computer software or equipment is owned
by such Seller or is owned by others and used by such Seller under license
agreements with respect thereto; provided, that if such computer software or
equipment is owned by another Seller, such Seller hereby grants the Purchaser
and the Collection Agent an irrevocable, non-exclusive license to use such
computer software and equipment as aforesaid. Each Seller hereby represents
that the rights to use such computer software and equipment (whether or not
owned by such Seller) is freely assignable by such Seller to the Purchaser and
the Collection Agent (including, without limitation, any successor Collection
Agent) without the consent of any Person, or if such consent is required, such
consent shall have been obtained and evidence thereof in the form of Exhibit C
(executed by the licensor thereof) shall have been delivered to the Purchaser
and the Agent. The license granted hereby shall be irrevocable, and shall
terminate on the Collection Date.

(b) Each Seller shall take such action requested by the
Purchaser and/or the Collection Agent (including any successor Collection Agent
appointed in accordance with the TAA), from time to time hereafter, that may be
reasonably necessary or appropriate to ensure that the Purchaser (and any
assignees thereof) has (i) an enforceable ownership interest in the Records
relating to the Receivables purchased from such Seller hereunder

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and (ii) an enforceable right (whether by license or sublicense or otherwise)
to use all of the computer software and equipment used to administer, collect
and/or monitor the Receivables and/or to recreate such Records.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Agreement. This
Agreement is subject to the conditions precedent that (i) each of the
conditions precedent to the execution, delivery and effectiveness of each other
Transaction Document (other than a condition precedent in any such other
Transaction Document relating to the effectiveness of this Agreement) shall
have been fulfilled to the satisfaction of the Purchaser and the Agent, and
(ii) the Purchaser and the Agent shall have received each of the following, on
or before the Closing Date, each (unless otherwise indicated) dated as of the
Closing Date or such other recent date acceptable to the Purchaser and the
Agent and each in form and substance satisfactory to the Purchaser and the
Agent:

1. Resolutions. A copy of the resolutions of the Board of
Directors of each Seller, certified by its Secretary or Assistant
Secretary, approving this Agreement and the other Transaction
Documents to be delivered by it hereunder and the transactions
contemplated hereby and thereby and addressing such other matters as
may be reasonably required by the Purchaser and/or the Agent;

2. Good Standing Certificates of the Sellers; Certificates as
to Foreign Qualification of the Sellers. Good standing certificates
for each of the Sellers issued by the applicable Secretaries of the
State of the respective states in which such Seller is incorporated or
organized and in which its chief executive office and principal place
of business is located and of any other state in which such Seller
transacts business, is required to be in good standing and where the
failure to be in good standing could reasonably be expected to have a
Material Adverse Effect;

3. Certificate of Secretary or Assistant Secretary. A
certificate of the Secretary or Assistant Secretary of each of the
Sellers substantially in the form of Exhibit K-2 to the TAA.

4. Other Transaction Documents. Original copies, executed by
each of the parties thereto in such reasonable number as shall be
specified by the Purchaser and the Agent,

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of each of the other Transaction Documents to be executed and
delivered in connection herewith;

5. Opinions of Counsel. Opinions of Counsel as set forth in
Section 4.1 of the TAA;

6. Officer's Certificates. Original copies of a certificate
for each of the Sellers executed by the Chief Financial Officer, the
President or a Vice President of such Seller certifying the accuracy
of its representations and warranties hereunder, under the TAA and
under the other Transaction Documents to which it is a party, that no
Termination Event or Potential Termination Event has occurred and is
continuing under the TAA and that all conditions precedent and
covenants required to be complied with or performed on or prior to the
Closing Date by such Seller have been so complied with or performed,
which certificate shall be in the form of Exhibit M-2 to the TAA and
dated as of the Closing Date;

7. Attornment Agreements. Fully-executed original
copies of attornment agreements relating to each of the computer
software and equipment license agreement and the Billing Agent
agreements described on Exhibits C and D;

8. Lock-Box Agreements. Fully-executed original copies of
Lock-Box Agreements relating to each of the Lock-Box Accounts and the
Lock-Boxes described on Schedule 4.01(o);

9. LEC Consents and UCC 9-318 Notices. Fully-executed copies
of each of (i) the consents, waivers and/or approvals relating to the
Qualified LEC Agreements set forth on Schedule 4.01(v) hereto
(together with opinions of counsel of the type referred to in the
definition of "Qualified LEC Agreement" to the extent that such
matters are not otherwise addressed in any of the other opinions of
counsel referred to in this Section 3.01) and (ii) the notices under
UCC Section 9-318 sent to each LEC that is party to any LEC Agreement
covering any LEC Receivables that are identified as being Eligible
Qualified LEC Receivables, together with evidence of the mailing of
such notices to each such LEC;

10. Revolving Credit Agreement Amendment. A fully-executed
copy of an amendment to the Revolving Credit Agreement permitting the
execution, delivery and performance of the Transaction Documents by
the Sellers, the Parent and the Purchaser of this Agreement, the
Receivables Purchase Agreement, the Parent Support Agreement and the
other Transaction Documents; and

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11. Other Documents. Such other documents, instruments,
certificates and opinions as the Purchaser or the Agent shall
reasonably request.

SECTION 3.02. Conditions Precedent to Ongoing Purchases. The
obligation of the Purchaser on any Business Day to accept and pay for the
transfers of Receivables under this Agreement is subject to the conditions
precedent that the representations and warranties contained in Article IV are
true and correct in all material respects as of such Business Day. Each
Seller, by accepting the Purchase Price paid for each Purchase of Receivables
generated by such Seller and the Related Assets of such Seller, shall be deemed
to have certified, with respect to the Receivables and the Related Assets paid
for on such day, that its representations and warranties contained in Article
IV are true and correct on and as of such day, with the same effect as though
made on and as of such day.

SECTION 3.03. Effect of Payment of Purchase Price. Upon the
payment of the Purchase Price for any Purchase (whether in cash or by an
increase in the applicable Seller's Subordinated Note), title to the
Receivables and the Related Assets included in such Purchase shall vest in the
Purchaser, whether or not the conditions precedent to such Purchase were in
fact satisfied; provided, however, that the Purchaser shall not be deemed to
have waived any claim it may have under this Agreement for the failure by any
Seller in fact to satisfy any such condition precedent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Sellers.
Each Seller represents and warrants that as of the Closing Date and (except for
representations and warranties which relate to a specific date only) and on
each date thereafter until the Collection Date:

(a) Corporate Existence and Power. Such Seller is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted, except where the failure to have obtained or received any such
governmental license, authorization, consent or approval could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Such Seller is duly qualified to do business in, and is in
good standing in, every other jurisdiction in which the nature of its business
requires it to be so qualified, except where the failure to be so

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qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect.

(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by such Seller of this Agreement and
the other Transaction Documents to which it is a party (including, without
limitation for purposes of the immediately succeeding clause (iii), the
delivery of PAR Statements by such Person as and to the extent required
pursuant to Section 5.1(a)(vii)) (i) are within such Seller's corporate powers
and have been duly authorized by all necessary corporate and shareholder
action, (ii) require no action by or in respect of, or filing with, any
Official Body or official thereof (except as contemplated by Section 5.01(a)),
(iii) do not contravene, or constitute a default under, any provision of
applicable law, rule or regulation or of any agreement, judgment, injunction,
order, writ, decree or other instrument binding upon such Seller (after, in the
case of any agreement or any applicable Tariff to which such Seller is a party
or to which it or its Receivables are subject, giving effect to any necessary
consents, waivers, approvals or other agreements obtained or delivered
thereunder and except to the extent that the provisions of Section 9-318 of the
UCC as in effect in all applicable jurisdictions would render any such such
violated or contravened provision ineffective), except where any such
contravention or default could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (iv) do not
contravene the charter or Bylaws of such Seller, or (v) do not result in the
creation or imposition of any Adverse Claim on the assets of such Seller
(except as contemplated hereunder).

(c) Binding Effect. Each of this Agreement and the other
Transaction Documents to which such Seller is a party constitutes the legal,
valid and binding obligation of such Seller, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws affecting the rights of creditors generally.

(d) Perfection of Ownership Interest. Immediately preceding
each Purchase hereunder, such Seller shall be the owner of all of its
Receivables, free and clear of all Adverse Claims. On or prior to each
Purchase and on each day thereafter, all financing statements and other
documents required to be recorded or filed in order to perfect and protect the
Purchased Assets (to the extent that the Purchaser's ownership interest therein
may be perfected against or protected by the recordation or filing of financing
statements or any such other documents) against all creditors of such Seller
will have been duly filed (and continued and/or amended, as applicable) in each
filing office necessary for such purpose and all filing fees and taxes, if any,
payable in connection with such filings shall have been paid in full.

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(e) Accuracy of Information. All information heretofore
furnished by such Seller to the Purchaser and the Agent for purposes of or in
connection with this Agreement, any other Transaction Document to which such
Seller is a party or any transaction contemplated hereby or thereby is, and all
such information hereafter furnished by such Seller to the Purchaser and the
Agent will be, in each case, true and accurate in every material respect, on
the date such information is stated or certified.

(f) Tax Status. Such Seller has filed all tax returns
(federal, state and local) required to be filed and has paid or made adequate
provision for the payment of all taxes, assessments and other governmental
charges, except any such taxes, assessments and/or other governmental charges
which such Seller is contesting in good faith and by appropriate proceedings
and in respect of which (x) such Seller has established and maintains adequate
reserves on its books and records and (y) no Adverse Claim on any of the
Purchased Assets has resulted from the non-payment thereof.

(g) Action, Suits. Except as set forth on Schedule 4.01(g)
hereof, there are no actions, suits or proceedings pending, or to the knowledge
of such Seller threatened, against or affecting such Seller, any Affiliate of
such Seller or any of the foregoing's respective properties, in or before any
court, arbitrator or other body, which, individually or in the aggregate, could
be reasonably be expected to have a Material Adverse Effect.

(h) Place of Business. The principal place of business and
chief executive office of such Seller are located at the address of the Seller
indicated in Section 8.02 hereof and the offices where the Seller keeps all its
Records, are located at the address(es) described on Schedule 4.01(h) or such
other locations notified to the Purchaser and the Agent in accordance with
Section 5.02(h) hereof in jurisdictions where all action required by Section
6.05 hereof has been taken and completed. The Federal taxpayer identification
numbers of each of the Sellers is set forth on Schedule 4.01(h) hereto or, with
respect to any Person that becomes a Seller after the date hereof, has
otherwise been notified to the Purchaser and the Agent in writing.

(i) Good Title. Upon each Purchase from such Seller, the
Purchaser shall acquire a first priority perfected ownership interest in each
of such Seller's Receivables and the Related Assets relating thereto, free and
clear of any Adverse Claim and no such Purchased Assets shall constitute
property of such Seller. No effective financing statement or other instrument
similar in effect covering all or any part of such Purchased Assets shall be on
file in any filing or recording office except as may be filed in favor of the
Agent (as assignee of the Purchaser) pursuant to the Transaction Documents.

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(j) Tradenames, Etc. As of the date hereof: (i) such Seller
has no Subsidiaries other than those disclosed on Schedule 4.01(j) hereto and
(ii) such Seller has, within the last one (1) year, operated only under the
tradenames identified on Schedule 4.01(j) hereto and, except as disclosed on
Schedule 4.01(j) hereto, has not changed its name, merged with or into or
consolidated with any other corporation or been the subject of any proceeding
under the Bankruptcy Code. Such Seller has not incurred any indebtedness or
granted any Adverse Claims under any names other than its proper corporate name
as set forth on its charter (as in effect from time to time).

(k) Nature of Receivables; Sellers' Duty to Monitor Coverage.
Each Receivable purchased from such Seller by the Purchaser hereunder shall be
an "eligible asset" as defined in Rule 3a-7 under the Investment Company Act,
of 1940, as amended, and, except as disclosed each month to the Collection
Agent in accordance with the second paragraph of 2.03(a), shall not be a
Noncomplying Receivable. Such Seller, to the extent that it is then acting as
the Collection Agent or a Sub-Collection Agent, represents and warrants that,
on each day prior to the Termination Date upon which any Purchases are made
hereunder, the Coverage Percentage shall be less than or equal to the Maximum
Coverage Percentage.

(l) Credit and Collection Policy. Since the Closing Date,
there have been no material changes in the Credit and Collection Policy of such
Seller other than as permitted hereunder and under the TAA.

(m) Not an Investment Company or a Public Utilities Holding
Company. Such Seller is not, nor is it controlled by, an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. Such
Seller is not a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of a "holding company," in each case, within the
meaning of the Public Utilities Holding Company Act of 1935, as amended.

(n) ERISA. Except as set forth on Schedule 4.01(n), neither
such Seller nor any of its ERISA Affiliates maintains any Benefit Plans. Such
Seller and its ERISA Affiliates are in compliance in all material respects with
ERISA and no Adverse Claims exist in favor of the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor on any of the Receivables or on the
assets or properties of such Seller or any of its ERISA Affiliates.

(o) Lock-Box Accounts; Permitted Unblocked Accounts. The
names and addresses of all of the Lock-Box Banks of such Seller, together with
the account numbers of the Lock-Box Accounts and the numbers of the related
Lock-Boxes at such Lock-Box Banks are specified on Schedule 4.01(o) hereto (or
at such

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other Lock-Box Banks and/or with such other Lock-Box Accounts as have been
notified to the Purchaser and the Agent and for which Lock-Box Agreements have
been executed in accordance with Section 5.02(f) hereof and delivered to the
Agent). The names and addresses of all of the banks at which any Permitted
Unblocked Accounts are maintained, together with the account numbers of any
such Permitted Unblocked Accounts and the numbers of the Lock-Boxes related
thereto, are specified on Schedule 4.01(o) hereto. Except as otherwise
permitted pursuant to Section 5.01(i) or Section 5.02(g), (i) such Seller has
instructed all of its Obligors to make payments on the Receivables directly to
a Lock-Box Account or to a Lock-Box related thereto and (ii) only Collections
of such Seller's Receivables and Related Security are deposited into the
Lock-Box Accounts and the Permitted Unblocked Accounts.

(p) Bulk Sales. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.

(q) Material Adverse Change. Since May 15, 1996, there has
been no material adverse change in the ability of such Seller, to the extent
then acting as Collection Agent or a Sub-Collection Agent, to service and
collect the Receivables (or portion thereof to which its duties relate). Since
December 31, 1995, there has been no material adverse change in the business,
properties or condition (financial or otherwise) of such Seller or its
Subsidiaries.

(r) Preference; Voidability. Each Receivable transferred by
such Seller to the Purchaser hereunder shall have been transferred in exchange
for reasonably equivalent value to the Seller, and no such Purchase shall have
been made for or on account of an antecedent debt owed by such Seller to the
Purchaser. No such Purchase from any such Seller is voidable under any Section
of the Bankruptcy Reform Act of 1978 (11 U.S.C. Sections 101 et seq.), as
amended. At the time of each Purchase by the Purchaser from such Seller
hereunder, such Seller has assets having a value in excess of the amount of its
liabilities, is generally able to pay its debts as they become due and is
adequately capitalized in light of the businesses in which it engages.

(s) Regulatory Matters. The FCC Licenses and PUC
Authorizations under which such Seller operates are valid and in full force and
effect without conditions except (A) for such conditions as are generally
applicable to holders of such FCC Licenses and PUC Authorizations and (B) where
the failure of any such FCC License or PUC Authorization to be in full force
and effect could not reasonably be expected to have a Material Adverse Effect.
Such Seller has no knowledge of the occurrence and continuance of any event
which could reasonable be expected to (A) result in the imposition of a
material forfeiture or the revocation, termination or adverse modification of
any such FCC

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License or PUC Authorization or (B) materially and adversely affect any rights
of such Seller, the Purchaser, the Parent or any of the foregoing's respective
Affiliates thereunder. Such Seller has no reason to believe and has no
knowledge that any such FCC Licenses and/or PUC Authorizations will not be
renewed in the ordinary course.

(t) Environmental Matters. (i) None of the properties of
such Seller and its Subsidiaries contain, or, to the best of its knowledge,
have previously contained, any Hazardous Materials in amounts or concentrations
which (A) constitute or constituted a violation of, or (B) could give rise to
liability under, applicable Environmental Laws, except for any violation or
liability that could not reasonably be expected to have a Material Adverse
Effect;

(ii) Such properties and all operations conducted in
connection therewith are in material compliance, and have in the last five
years been in material compliance, with all applicable Environmental Laws, and
there is no contamination at, under or about such properties or such operations
which could materially interfere with the continued operation of such
properties or materially impair the fair saleable value thereof;

(iii) Neither such Seller nor, to the best of such Seller's
knowledge, any Affiliate thereof has received any notice of material violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of their properties or the operations conducted in connection therewith, nor
does such Seller have knowledge or reason to believe that any such notice will
be received or is being threatened;

(iv) Hazardous Material have not been transported or disposed
of from the properties of such Seller or, to the best of such Seller's
knowledge, any of its Affiliates in violation of, or in a manner or to a
location which could give rise to material liability under, Environmental Laws,
nor have any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of such properties in material violation of, or in a manner
that could give rise to material liability under, any applicable Environmental
Laws;

(v) No judicial proceedings or governmental or administrative
action is pending, or, to the knowledge of the such Seller, threatened, under
any Environmental Law to which such Seller or, to the best of such Seller's
knowledge, any Affiliate thereof is or will be named as a party with respect to
such properties or operations conducted in connection therewith, nor are there
any consent decrees or other decree, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding
under any

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Environmental Law with respect to such properties or such operations; and

(vi) There has been no release, or to the best of such
Seller's knowledge, the threat of release, of Hazardous Materials at or from
such properties, in violation of or in amounts or in a manner that could give
rise to material liability under Environmental Laws.

(t) Billing Terms. None of such Seller's Contracts relating
to the Receivables contain billing terms pursuant to which the Obligor
thereunder is billed less frequently than once a month.

(u) Computer Software and Equipment Licenses and Billing Agent
Agreements. All of the computer equipment and software license agreements
pursuant to which such Seller licenses the use of any computer software or
equipment used in the billing, monitoring and/or collection of the Receivables
are either (i) specified on Schedule 4.01(u)(1) or (ii) have otherwise been
notified to the Agent and in respect of which computer software or equipment
license attornment agreements substantially in the form of Exhibit C relating
thereto have been executed by the applicable licensor thereunder have been
delivered to the Agent prior to or concurrently with the effectiveness of any
such computer software or equipment license agreement not so specified on such
Schedule. All of the agreements between the Purchaser and/or any of the
Sellers and any Billing Agent relating to the billing and collection of the
Receivables are either (i) specified on Schedule 4.01(u)(2) or (ii) have
otherwise been notified to the Agent and in respect of which Billing Agent
attornment agreements substantially in the form of Exhibit D executed by the
applicable Billing Agent have been delivered to the Agent prior to or
concurrently with the effectiveness of any such agreement with any such Billing
Agent not so specified on such Schedule.

(v) LEC Agreements. Schedule 4.01(v) sets forth the complete
list of those LEC Agreements constituting Qualified LEC Agreements as of the
Closing Date. With respect to each such Qualified LEC Agreement (other than
with respect to the Maryland Obligors under the LEC Agreement between LCI and
Bell Atlantic, as described in the first proviso to the definition of
"Qualified LEC Receivable" in the TAA), as well as each other additional LEC
Agreement hereafter approved by the Agent as being a Qualified LEC Agreement,
(i) such Seller (to the extent it is a party to such LEC Agreement) has
received and obtained all necessary consents, waivers, approvals and other
agreements, if any, from the applicable LEC under such LEC Agreement and any
applicable PUCs or other Official Bodies for the execution and delivery by such
Seller and the Purchaser of this Agreement, the TAA and the other Transaction
Documents and each such Persons' performance of the transactions contemplated
thereby and (ii) the execution and

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delivery by such Seller and the Purchaser of this Agreement, the TAA and the
other Transaction Documents and such Persons' performance of the transactions
contemplated therein do not, in any case, violate or contravene any of the
terms of any such Qualified LEC Agreement or any applicable Tariff (after
giving effect to any such consents, waivers, approvals or other agreements
delivered by the respective LEC thereunder and except to the extent that the
provisions of Section 9-318 of the UCC as in effect in all applicable
jurisdictions would render any such violated or contravened provision
ineffective), the Communications Act of 1934, as amended (together with the
rules, regulations and published policies of the FCC thereunder) or any rules,
regulations or published policies of any applicable PUCs.

(w) Corporate Separateness. Such Seller acknowledges
that it is entering into the transactions contemplated by this Agreement and
the other Transaction Documents in reliance upon the Purchaser's identity as a
separate legal entity from the Parent and each of the Parent's other
Subsidiaries and Affiliates.

Any document, instrument, certificate or notice delivered to
the Transferor or the Agent hereunder shall be deemed a representation and
warranty by any such Seller delivering the same.

SECTION 4.02. Representations and Warranties of the
Purchaser. The Purchaser represents and warrants that as of the Closing Date
and (except for representations and warranties which relate to a specific date
only) as of the date of each Purchase:

(a) Corporate Existence and Power. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate power and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business in each jurisdiction in which its business is now
conducted, except where the failure to have obtained any such government
license, authorization, consent or approval could not reasonably be expected to
have a Material Adverse Effect. The Purchaser is duly qualified to do business
in, and is in good standing in, every other jurisdiction in which the nature of
its business requires it to be so qualified, except where the failure to be so
qualified or in good standing could not reasonably be expected to have a
Material Adverse Effect.

(b) Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Purchaser of this Agreement and
the other Transaction Documents to which it is a party are (i) within the
Purchaser's corporate powers, have been duly authorized by all necessary
corporate action, (ii) require no action by or in respect of, or filing with,
any Official Body or official thereof (except as contem-

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plated by Section 2.8 of the TAA), (iii) do not contravene, or constitute a
default under, any provision of applicable law, rule or regulation or of any
agreement, judgment, injunction, order, writ, decree or other instrument
binding upon the Purchaser, except where any such default, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (iv) do not contravene the Purchaser's Certificate of Incorporation or
By-Laws, or (v) result in the creation or imposition of any Adverse Claim on
the assets of The Purchaser (except as contemplated by Section 2.8 of the TAA).

(c) Binding Effect. Each of this Agreement, the Subordinated
Notes and the other Transaction Documents to which the Purchaser is a party
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally.

ARTICLE V

GENERAL COVENANTS OF THE SELLERS

SECTION 5.01. Affirmative Covenants of the Sellers. At all
times from the date hereof to the Collection Date, unless the Purchaser, the
Agent and the Majority Investors shall otherwise consent in writing:

(a) Financial Reporting. Each Seller shall maintain, for
itself and each of its respective Subsidiaries, a system of accounting
established and administered in accordance with GAAP, and furnish to the
Purchaser and the Agent:

(i) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of such Seller (ifother than
the Parent), copies of all financial statements, reports and proxy
statements so furnished.

(ii) S.E.C. Filings. Promptly upon the filing thereof, if any,
copies of all registration statements and annual, quarterly, monthly
or other regular reports which such Seller or any of its Subsidiaries
files with the Securities and Exchange Commission.

(iii) Notice of Termination Events, Potential Termination Events or
Collection Agent Defaults. As soon as possible, and in any event
within two (2) Business Days after becoming aware of the occurrence of
any Termination Event, Potential Termination Event or Collection Agent
Default, a statement of the chief financial officer or chief
accounting officer of such Seller setting forth details of such
Termination

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Event, Potential Termination Event or Collection Agent Default.

(iv) Change in Credit and Collection Policies and Debt Ratings.
Within ten (10) days after the date any material change in or
amendment to such Seller's Credit and Collection Policy, a copy of
such Credit and Collection Policy then in effect indicating such
change or amendment. Within five (5) days after the date of any
change in such Seller's public or private debt ratings, if any,
written notice of such change and such Person's credit rating after
giving effect to such change.

(v) Credit and Collection Policy. Within ninety (90) days after the
close of each Fiscal Year, a complete copy of such Seller's Credit and
Collection Policy as then in effect.

(vi) ERISA. Promptly after the filing or receiving thereof, copies
of all reports and notices with respect to any Reportable Event (as
defined in Title IV of ERISA) which such Seller or any of its ERISA
Affiliates files under ERISA with the Internal Revenue Service, the
Pension Benefit Guaranty Corporation or the U.S. Department of Labor
or which such Seller or any of its ERISA Affiliates receives from the
Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor.

(vii) LEC Agreements. As soon as practicable (and, in any event,
within three (3) Business Days) after its receipt thereof or its
acquiring actual knowledge thereof, as applicable, (x) copies of any
notices of any default or breach by any Seller under, or the
termination of, any LEC Agreement, (y) any default or breach by a LEC
under any Qualified LEC Agreement, or (z) any repudiation or rejection
of any notice delivered to any LEC pursuant to Section 9-318 of the
UCC. Upon the request of the Purchaser or the Agent, such Seller
shall provide the Purchaser or the Agent, as applicable, (or any
designee thereof) with copies of any or all of the PAR Statements
relating to any of such Seller's Qualified LEC Receivables or any
Qualified LEC Agreement relating thereto.

(viii) Other Information. Within a reasonable time after the request
therefor by the Purchaser or the Agent (such time to be determined and
specified by the Purchaser or the Agent, as applicable, after
consultation with such Seller), such other information (including
non-financial information) as the Purchaser, the Agent or the
Administrative Agent may from time to time reasonably request with
respect to such Seller or any of its Subsidiaries and, with respect to
the LEC Receivables, the disclosure of which information would not
violate the confidentiality provisions of any applicable LEC
Agreement; it being understood and agreed, that such

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Seller shall use commercially reasonable efforts to provide the
Purchaser, the Agent or the Administrative Agent, as applicable, with
any such restricted information through any reasonable alternative
methods which would not violate the confidentiality provisions of any
such LEC Agreement.

(b) Designation of New Collection Agent. At any time after
the designation of a Collection Agent (other than an affiliated Entity)
pursuant to Section 6.1 of the TAA, each of the Sellers hereby authorizes the
Agent and the Collection Agent to take any and all steps in such Seller's name
and on behalf of such Seller necessary or desirable, in the determination of
the Agent or the Collection Agent, as applicable, to collect all amounts due
under any and all Receivables, including without limitation, endorsing such
Seller's name on checks and other instruments representing Collections and
enforcing such Seller's Receivables and the related Contracts.

(c) Conduct of Business. Each Seller shall (i) carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as conducted on the Closing Date or in fields of
enterprise involving the resale of local exchange, cellular, and paging
communications services and, in each of the foregoing cases, other fields of
enterprise reasonably related thereto, (ii) do all things necessary to remain
duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and (iii) maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted, except, in the case of this clause (iii) hereof, where
the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

(d) Compliance with Laws. Each Seller shall comply, and
cause each of its Subsidiaries to comply, with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees, awards, licenses and
authorizations (including, without limitation, FCC Licenses and PUC
Authorizations) to which it or its respective properties may be subject.

(e) Furnishing of Information and Inspection of Records.
Each Seller shall furnish to the Purchaser and the Agent from time to time such
information with respect to its Receivables as the Purchaser or the Agent may
reasonably request, including, without limitation, listings identifying the
Obligor and the Outstanding Balance for each Receivable and PAR Statements
relating to any Qualified LEC Receivable; it being understood and agreed that,
with respect to the LEC Receivables, the applicable Sellers may be unable to
provide certain information relating to those LEC Receivables in respect of
which the Transmission Date shall have already occurred, but will use its best
efforts to provide the Purchaser and/or the Agent, as applicable, with such
information regarding such matters as is

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reasonably available to or ascertainable by such Sellers. Each Seller shall
permit the Purchaser and the Agent, or either of the foregoing's agents or
representatives, at any time and from time to time during regular business
hours, (i) to examine and make copies of, and make abstracts from, all of such
Seller's Records and any PAR Statements relating to such Seller's Qualified LEC
Receivables and (ii) to visit the offices and properties of such Seller, for
the purpose of examining such Records and PAR Statements, and to discuss
matters relating to such Seller's Receivables or such Seller's performance
hereunder and under the other Transaction Documents to which such Seller is a
party with any of the officers, directors, employees or independent public
accountants of such Seller having knowledge of such matters; provided, that
with respect to any of the foregoing information relating to the LEC Agreements
and/or the LEC Receivables (but subject to Section 5.01(a)(vii), such Seller
shall not be required to furnish or make available any such confidential
information the disclosure of which would violate the terms of the LEC
Agreements to which it is a party.

(f) Keeping of Records and Books of Account. Each Seller shall
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing its Receivables
in the event of the destruction of the originals thereof), and, other than with
respect to the Qualified LEC Receivables, keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
collection of all of such Seller's Receivables (including, without limitation,
records adequate to permit the daily identification of each new Receivable and
all Collections of and adjustments to each existing Receivable). With respect
to the Qualified LEC Receivables, each Seller that is an Originator thereof
hereby represents and warrants that, to the best of its knowledge, the
applicable LECs keep and maintain books, records and other information referred
to in the immediately preceding sentence with respect to such LEC Receivables,
and that upon the termination of any LEC Agreement covering any Qualified LEC
Receivables, such Seller shall use its best efforts to deliver or cause to be
delivered to the Collection Agent copies of those records reasonably necessary
for the proper servicing and monitoring of such LEC Receivables previously
transmitted, transferred or otherwise conveyed to such LEC by such Seller.
Each Seller shall give the Purchaser and the Agent notice of any material
change in the administrative and operating procedures of such Seller referred
to in the previous sentence.

(g) Performance and Compliance with Receivables and Contracts.
At each Seller's expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by such Seller
under the Contracts related to its Receivables.

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(h) Credit and Collection Policy. Each Seller shall comply
in all material respects with its Credit and Collection Policy in regard to
each of its Receivables and the related Contracts.

(i) Collections; Permitted Unblocked Accounts. Each Seller
shall instruct all Obligors (other than the Obligors of any Qualified LEC
Receivables) and all LECs to remit all Collections and Associated LEC Payments,
as applicable, directly to a Lock-Box or Lock-Box Account; provided, however,
that, subject to the limitations set forth in this proviso, the Sellers shall
be permitted to direct the Obligors to remit Collections of Direct Billed
Receivables to one of the bank accounts described on Schedule 4.01(o) hereto
(or a Lock-Box relating thereto) in respect of which no Lock-Box Agreement has
been executed (each such bank account being a "Permitted Unblocked Account"),
provided that (A) the Obligors being so directed to remit such Collections to
any such Permitted Unblocked Account are either (x) existing Obligors that were
remitting such Collections to such accounts prior to the Closing Date or (y)
new Obligors that in accordance with the applicable Seller's past business
practices would have been directed to remit such Collections to such an
account, (B) the aggregate balances of all Permitted Unblocked Accounts shall
not exceed $600,000 at any time, (C) all such Collections deposited into any
such Permitted Unblocked Account shall be transferred to a Lock-Box Account
within the time specified therefor on Schedule 4.01(o) hereto, and (D) by no
later than March 31, 1997, (w) all such Permitted Unblocked Accounts and the
Lock-Boxes associated therewith, together with LCI's bank account and
Lock-Boxes maintained at Comerica Bank and described on Schedule 4.01(o), shall
be closed, (x) all Collections on deposit therein shall have been transferred
to other Lock-Box Accounts, (y) all Obligors shall have been directed to remit
Collections to other Lock-Box Accounts or the Lock-Boxes relating thereto, and
(z) effective as of such date (or, if earlier, the date the last Permitted
Unblocked Account is closed), there shall cease to be any Permitted Unblocked
Accounts; and provided, further, however, that in accordance with the past
business practices of the Seller and subject to the requirements of Section
5.01(i), each of the Sellers, so long as it is then acting as Collection Agent
or a Sub-Collection Agent, shall be permitted to direct certain Obligors of
Direct Billed Receivables that are Delinquent Receivables or Defaulted
Receivables to remit Collections of such Delinquent or Defaulted Receivables
directly to such Seller.

(j) Collections Received. Each Seller shall hold in trust,
and immediately, but in any event not later than two (2) Business Days after
such Seller's receipt thereof, deposit all Collections received from time to
time by it to one of the Lock-Box Accounts.

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(k) Separate Identity. Each Seller shall take all actions
reasonably required to maintain the Purchaser's status as a separate legal
entity, including, without limitation, (i) not misleading third parties as to
the Purchaser's identity as an entity with assets and liabilities distinct from
the Parent and the Parent's other Subsidiaries; (ii) not holding itself out to
be responsible for the debts or decisions or actions relating to the business
and affairs of the Purchaser; (iii) taking such other actions as are necessary
on its part to ensure that the covenants made by the Purchaser in Section
5.1(j)(ii) of the TAA are true and correct at all times; and (iv) taking such
other actions as are necessary on its part to ensure that the Purchaser's
corporate procedures required by its certificate of incorporation and by-laws
are duly and validly taken.

(l) Preservation of Corporate Existence; Separate
Business. Each Seller shall (x) preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its incorporation, and
(y) qualify and remain qualified in good standing as a foreign corporation in
each respective jurisdiction where the nature of its business requires it to be
so qualified, except where the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect.

(m) Unbilled Toll. With respect to any Direct Billed
Receivables, each Seller shall, and shall cause each of its respective Billing
Agents to, distribute Customer Statements to each of such Seller's Obligors
within ten (10) days after the applicable cut-off date of the billing cycle for
such Obligor.

(n) Payment to the Sellers. With respect to any Receivable
sold by any Seller to the Purchaser, such Seller shall effect such sale under,
and pursuant to the terms of, this Agreement, including, without limitation,
requiring the payment by the Purchaser (either in cash or by increase in the
amount of the Subordinated Note) to such Seller, in each case, of an amount
equal to the Purchase Price for each such Receivable so sold as required by the
terms of this Agreement.

(o) Accounting and Tax Treatment of the LEC Receivables.
Without taking into the account the effect of this Agreement and the TAA, each
Seller party to a LEC Agreement shall (x) treat the applicable LEC Receivables
covered thereunder as being owned by such Seller for all tax and accounting
purposes and (y) maintain its records and books of account in a manner which
clearly indicates and reflects such ownership.

SECTION 5.02. Negative Covenants of the Sellers. From the
date hereof until the Collection Date, without the written consent of The
Purchaser, the Agent and the Majority Investors:

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(a) No Sales, Liens, Etc. Except as otherwise provided
herein and the TAA, no Seller shall sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to (x) any of its Receivables or the Related Assets,
(y) any inventory or goods, the sale or lease of which may give rise to a
Receivable, except (i) where such Person in whose favor such Adverse Claim
exists has acknowledged in writing in form and substance satisfactory to the
Purchaser and the Agent that it does not claim, and thereby releases, any
Adverse Claim in such Seller's Receivables and the Related Assets, whether
arising as Proceeds of such Person's collateral or otherwise and (ii) that the
Sellers shall be permitted to sell and/or lease their inventory in the ordinary
course of their respective businesses, or (z) upon or with respect to any
Lock-Box, Lock-Box Account or Permitted Unblocked Account to which any
Collections of any Receivable are sent or deposited, or assign any right to
receive income in respect thereof

(b) No Extension or Amendment of Receivables. Except as
otherwise permitted in Section 6.03(b) hereof, no Seller shall extend, amend or
otherwise modify the terms of any Receivable, or amend, modify or waive any
term or condition of any Contract related thereto.

(c) No Change in Business or Credit and Collection Policy.
No Seller shall make any change in the character of its respective business or
in its respective Credit and Collection Policy, which change would, in either
case, impair the collectibility of any of its Receivable or otherwise could be
reasonably expected to have a Material Adverse Effect.

(d) No Mergers, Etc. No Seller shall (i) sell, lease or
transfer all or substantially all of its assets to any other Person or (ii)
consolidate or merge with or into any other Person, or acquire all or
substantially all of the receivables of any Person, except, in any case, where
such Seller shall be the surviving entity of such merger or consolidation and
no Termination Event or Potential Termination Event shall then be outstanding
or would result therefrom; provided, however, that any Seller may merge or
consolidate with, or acquire receivables from, any other Seller so long as no
Termination Event or Potential Termination Event shall then be outstanding or
would result therefrom; and provided, further, that no receivables of any such
entity with which any such Seller has so merged or consolidated (other than
another Seller) nor any receivables acquired by any Seller from any such other
entity shall, upon the purchase thereof by the Transferor, be deemed to be
Receivables hereunder unless and until (x) the Transferor and the Agent have
approved such receivables; it being agreed, however, that the Agent shall have
no right of approval with respect to the inclusion of any such receivables as
Receivables hereunder in connection with any such merger, consolidation or
acquisition if

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the Outstanding Balance of such Receivable to be so added, when aggregated with
the Outstanding Balances of any other Receivables of any of the Sellers added
hereunder pursuant to this proviso (without the approval of the Agent) in
connection with all other mergers, consolidations and/or acquisitions (other
than with any other Seller) within the same twelve month period as the subject
merger, consolidation or acquisition, would exceed an amount equal to two
percent (2%) of the aggregate Outstanding Balance of all Receivables as
determined on (and without giving effect to) (x) the date of the first addition
of any such Receivables pursuant to this proviso, and (y) thereafter on the one
year anniversary of the most recently occurring Determination Date (as
hereinafter defined) or, if later, the date of (but without giving effect to)
the next addition hereto of any such Receivables subject to the terms of this
proviso (any such date of determination being the "Determination Date"); it
being understood and agreed, that the initial addition of Receivables subject
to this proviso shall have occurred on the Closing Date (and such date shall be
the initial Determination Date for the succeeding twelve month (or longer)
period for purposes of this provision) by virtue of the inclusion of the
receivables of PACE as Receivables hereunder, (y) the Collection Agent shall
have submitted a revised Investor Report to the Purchaser and the Agent
recalculating all amounts set forth therein taking into account such
receivables (and their past performance), including, without limitation (to the
extent effected), the Direct Billed Loss-to-Liquidation Ratio, the Direct
Billed Loss Percentage, the Direct Billed Loss Reserve, the Direct Billed
Dilution Ratio, the Direct Billed Dilution Reserve, the Direct Billed
Delinquency Ratio, the LEC Delinquency Ratio, the LEC Dilution Ratio, the LEC
Dilution Reserve, the LEC True-Up Ratio, the LEC True-Up Reserve, the LEC
Withholding Ratio, the LEC Withholding Reserve, the Required LEC True-Up
Reserve Account Funded Amount and the Estimated Maturity Period, and (z) no
Termination Event or Potential Termination Event would then exist or result
from the inclusion thereof as Receivables.

(e) Assignment. No Seller shall assign any of its respective
rights or delegate any of its respective duties under this Agreement, the TAA,
or any of the other Transaction Documents to which such Seller is a party,
without the prior written consent of the Agent.

(f) Change in Payment Instructions to Obligors. No Seller
shall add or terminate any bank as a Lock-Box Bank, any account as a Lock-Box
Account or any lock-box as Lock-Box to or from those listed on Schedule 4.01(o)
hereto or, except as otherwise permitted pursuant to Section 5.01(i) of this
Agreement, make any change in its instructions to Obligors regarding payments
to be made to any Lock-Box, Lock-Box Account or Permitted Unblocked Account,
unless, in each case, (i) such instructions are to deposit such payments to
another existing Lock-Box or Lock-Box Account of such Seller or (ii) the Agent

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shall have received written notice of such addition, termination or change at
least 30 days prior thereto and the Agent shall have received a Lock-Box
Agreement executed by each new Lock-Box Bank or an existing Lock-Box Bank with
respect to each new Lock-Box Account or Lock-Box, as applicable.

(g) Deposits to Lock-Box Accounts and Permitted Unblocked
Accounts. No Seller shall deposit or otherwise credit, or cause or permit to
be so deposited or credited, to any Lock-Box, Lock-Box Account or Permitted
Unblocked Account any cash or cash proceeds other than Collections of
Receivables; provided, however, that collections of Non-Qualified LEC
Receivables and/or the Related Security associated therewith may be deposited
into the Lock-Box Accounts from time to time hereafter until such time (but not
later than December 31, 1996) as the applicable Seller can make arrangements
with the applicable LECs and/or the applicable Lock-Box Banks to divert such
payments to other accounts or sub-accounts, and until such time, the applicable
Seller shall notify the Collection Agent of the deposit thereof to any such
Lock-Box Account within one Business Day after such Seller's acquiring
knowledge of the deposit thereof into any such Lock-Box Account; and provided,
further, however, that if any such cash or cash proceeds other than Collections
are inadvertently deposited or credited to any Lock-Box Account or Permitted
Unblocked Account, such Seller shall notify the Purchaser and the Collection
Agent immediately, but in any event within one (1) Business Day, after such
Seller shall have become aware thereof or shall have received notice thereof.
Each Seller hereby represents and warrants that the Associated LEC Payments
relating to such Seller's Qualified LEC Receivables are readily identifiable
and distinguishable from those pavements relating to such Seller's
Non-Qualified LEC Receivables.

(h) Change of Name, Etc. No Seller shall change its name,
identity or corporate structure (within the meaning of Section 9-402(7) of the
UCC as in effect in the State of New York and the State in which such Seller's
chief executive office and principal place of business is located) nor the
location of its chief executive office or any office where Records are kept,
unless at least 30 days prior to the effective date of any such change such
Seller delivers to the Purchaser, the Agent and the Collateral Agent (i) such
documents, instruments or agreements, executed by such Seller as are necessary
to reflect such change and to continue the perfection of the Purchaser's, the
Agent's and the Collateral Agent's ownership interests or security interests in
the Receivables and the Related Assets and (ii) new or revised Lock-Box
Agreements executed by the Seller's Lock-Box Banks which reflect such change
and enable the Agent to continue to exercise its rights with respect thereto.

(i) Actions Inconsistent Herewith. No Seller shall take any
action under this Agreement that shall have a material

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adverse effect on the Purchaser, the Agent, the Company or any Bank Investor or
which is inconsistent with the terms of this Agreement or the TAA.

(j) ERISA Matters. No Seller shall, nor permit any of its
ERISA Affiliates to, (i) engage in any prohibited transaction (as defined in
Section 4975 of the Code and Section 406 of ERISA) for which an exemption is
not available or has not previously been obtained from the U.S. Department of
Labor; (ii) permit to exist any accumulated funding deficiency (as defined in
Section 302(a) of ERISA and Section 412(a) of the Code) or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan; (iii) fail to
make any payments to any Multiemployer Plan that such Seller or any of its
ERISA Affiliates is required to make under the agreement relating to such
Multiemployer Plan or any law pertaining thereto; (iv) terminate any Benefit
Plan so as to result in any liability; or (v) permit to exist any occurrence of
any reportable event described in Title IV of ERISA which represents a material
risk of a liability to such Seller or any of its ERISA Affiliates under ERISA
or the Code, if such prohibited transactions, accumulated funding deficiencies,
payments, terminations and reportable events occurring within any twelve month
period, in the aggregate, involve a payment of money or an incurrence of
liability by such Seller or any of its ERISA Affiliates, in an amount in excess
of $5,000,000. Without limiting the foregoing in any manner whatsoever, such
Seller shall, and shall cause any such ERISA Affiliate, as applicable, to (i)
satisfy any such liability in excess of $100,000, in the aggregate, and to
remedy the circumstances giving rise thereto, in each case, in each case,
within 10 days after such Person acquires or should have acquired knowledge
thereof and (ii) satisfy any such other liability or obligation and remedy the
circumstances giving rise thereto, in each case, as soon as practicable
(exercising commercially reasonable efforts) after such Person acquires actual
knowledge thereof.

(k) Sale Treatment. No Seller shall account for (including
for accounting and tax purposes), or otherwise treat, the transactions
contemplated by this Agreement in any manner other than as a sale of such
Seller's Receivables by such Seller to the Purchaser, except to the extent
otherwise required by GAAP or applicable law. In addition, No Seller shall
fail to disclose (in a footnote or otherwise) in all of its respective
financial statements (including any such financial statements consolidated with
any other Persons' financial statements) the existence and nature of the
transaction contemplated hereby and the interest of the Purchaser hereunder.

(l) Tariffs. No Seller shall file or consent to the
filing of any Tariff relating to any Receivable or any amendment to any such
Tariff with any Official Body which would cause such Tariff to conflict with
the terms relating to Tariffs set forth

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in Schedule 5.02(l) hereto or otherwise be inconsistent with the terms of, or
adversely affect the interests of the Purchaser, the Agent, the Company, or the
Bank Investors under, this Agreement, the TAA or any of the other Transaction
Documents.

(m) Amendments to Qualified LEC Agreements or Tariffs. No
Seller shall agree to make or make any material amendment, modification or
change to any of the Qualified LEC Agreements or any Tariff relating to any of
the Receivables which shall adversely affect the collectibility of the
Receivables covered thereby or the Related Security relating thereto or the
interest of the Purchaser or the Agent therein; or terminate any Qualified LEC
Agreement, except for any such termination that does not affect or relate to
any Qualified LEC Receivable that was outstanding on the date of such
termination.

ARTICLE VI

ADMINISTRATION AND COLLECTION

SECTION 6.01. Collection of Receivables. (a) Each Seller
hereby acknowledges and agrees that the Agent has the exclusive ownership and
control of each Lock-Box and Lock-Box Account maintained by such Seller at a
Lock-Box Bank, and each Seller hereby agrees to take any further action
necessary or that the Agent or the Purchaser may reasonably request to evidence
and/or effect such ownership and control. If the Collection Agent or any
Seller or its agents or representatives shall at any time receive any cash,
checks or other instruments constituting Collections, such recipient shall
immediately, but in any event within two (2) Business Days after its receipt
thereof, remit such Collections, duly endorsed or with duly executed
instruments of transfer, to a Lock-Box Account. At any time after the
occurrence of a Termination Event:

(x) the Purchaser (or its assignees) may notify any or
all of the Obligors of the ownership of Purchased Assets by the
Purchaser (or any such assignee) and may direct any or all of the
Obligors of Receivables included in the Purchased Assets to pay all
amounts payable under any such Receivables directly to the Purchaser
(or any such assignee) or its designee;

(y) at the Purchaser's (or any such assignee's) request
and at such Seller's expense, each Seller shall give notice of the
Purchaser's (or any such assignee's) ownership of Purchased Assets
purchased from such Seller to each Obligor and/or LEC thereunder and
direct that payments with respect to the Receivables be made directly
to the Purchaser (or any such assignee) or its designee and assemble
all Records of such Seller, and make the same available to the

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Purchaser (or any such assignee) or its designee at a place selected
by the Purchaser (or its assignee) or its designee; or

(z) at the Purchaser's or the Agent's request, each
Seller shall (A) assemble all of the Records, and shall make the same
available to the Agent or its designee at a place selected by the
Agent or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections
of Receivables in a manner acceptable to the Purchaser and the Agent
and shall, promptly upon receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of
transfer, to the Agent or its designee.

Each Seller hereby authorizes the Purchaser and/or the Collection Agent, on
behalf of the Purchaser, and gives each of the Purchaser and the Collection
Agent its irrevocable power of attorney, which authorization shall be coupled
with an interest, to take any and all steps in such Seller's name and on behalf
of such Seller, which steps are necessary or desirable, in the reasonable
determination of the Purchaser and/or the Collection Agent, to collect all
amounts due under the Purchased Assets, including, without limitation,
endorsing such Seller's name on checks and other instruments representing
Collections and enforcing such Receivables and the related Contracts.

(b) The Purchaser shall, or shall cause the Collection
Agent to, following notification that collections of any receivable or other
intangible owed to any Seller or any Affiliate thereof, which is not a
Purchased Asset, have been deposited into a Lock-Box Account, segregate all
such collections and, after such misapplied collections have been reasonably
identified to the Purchaser, the Purchaser shall, or shall cause the Collection
Agent to, turn over to such Seller or such Affiliate, as applicable, all such
collections less all reasonable and appropriate out-of-pocket costs and
expenses, if any, incurred by the Purchaser or the Collection Agent in
collecting such receivables. All amounts deposited in a Lock-Box Account
during any calendar month which are not identified prior to the succeeding
Report Date as collections on receivables or intangibles not included in the
Purchased Assets shall be irrevocably deemed to be Collections of the
Receivables and the property of the Purchaser.

SECTION 6.02. Designation of Collection Agent. (a) The
servicing, administering, enforcement and collection of the Receivables and the
Related Assets shall be conducted by the Person (the "Collection Agent")
designated pursuant to Section 6.1 of the TAA. Until the Purchaser gives
notice to the Sellers of the designation of a new Collection Agent as
prescribed in the TAA, LCI is hereby designated as, and LCI hereby agrees to
perform the duties and obligations of, the

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Collection Agent in accordance with this Agreement, the TAA and the other
Transaction Documents. The Collection Agent will have responsibility for the
management of the servicing and receipt of Collections in respect of the
Receivables and will have the authority to make any management decisions
relating to the Receivables to the extent such authority is granted to the
Collection Agent hereunder or under the other Transaction Documents; and it
being further understood that for so long as any Affiliated Entity acts as
Collection Agent or Sub-Collection Agent, such Person (x) performs its duties
hereunder for the benefit of the Purchaser and its assignees and (y) holds all
Receivables, Related Assets, Records and Collections which it receives in its
capacity solely as Collection Agent or Sub-Collection Agent, as applicable, and
claims or retains no legal or beneficial title or interest therein or thereto.
Subject to the terms of the TAA, the Agent may at any time designate any Person
(including itself) to replace LCI or any successor Collection Agent as
Collection Agent. The Collection Agent may, with the prior written consent of
the Agent, subcontract with any other Person (including, without limitation,
the LECs) for the servicing, administering or collecting of the Receivables
(any such Person with which the Collection Agent may so sub-contract being a
"Sub-Collection Agent" and collectively, the "Sub-Collection Agents");
provided, however, that the Collection Agent shall remain liable for the
performance of the duties and obligations of the Collection Agent and
Sub-Collection Agents pursuant to the terms hereof; it being understood and
agreed, that (i) the Agent may at any time after the occurrence of any
Collection Agent Default, with respect to such Sub-Collection Agent, terminate
or cause the Collection Agent to replace any Sub-Collection Agent and (ii)
unless otherwise specified by the Agent, each Sub-Collection Agent's
appointment hereunder shall automatically terminate upon the resignation or
removal of the Collection Agent that appointed such Sub-Collection Agent; and
it being further understood and agreed that the appointment of each of the
Collection Agent and the Sub-Collection Agents shall terminate on the
Collection Date. In connection therewith, the Collection Agent hereby appoints
each Seller as, and each Seller hereby agrees to act as, a Sub-Collection Agent
under the TAA and this Agreement. Each such Seller will be responsible, as
directed by the Collection Agent, for the servicing and administration of only
the Receivables originated by it. The Agent hereby consents to the appointment
of each of the Sellers as Sub-Collection Agents as aforesaid. To the extent
permitted by applicable law, each of the Sellers (to the extent such Person is
not then acting as Collection Agent or Sub-Collection Agent hereunder) hereby
grants to any Collection Agent appointed pursuant to the terms hereunder and
under the TAA, an irrevocable power of attorney to take any and all steps in
such Seller's name and on behalf of the Seller necessary or desirable, in the
reasonable determination of the Collection Agent, to collect all amounts due
under any and all of the Receivables, including without limitation endorsing
such Seller's name on checks and

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other instruments representing Collections and enforcing such Receivables and
the related Contracts.

(b) Resignation of the Collection Agent. Neither the
Collection Agent nor any of the Sub-Collection Agents (to the extent any of the
foregoing are Affiliated Entities) shall resign from the obligations and duties
imposed on it as Collection Agent or Sub-Collection Agent, as applicable,
except upon such Person's determination that (i) the performance of its duties
hereunder is no longer permissible under applicable law and (ii) there is no
reasonable action which the Collection Agent or Sub-Collection Agent, as
applicable, could take to make the performance of its duties hereunder
permissible under applicable law. No resignation by the Collection Agent or
Sub-Collection Agent shall become effective until a successor Collection Agent
or Sub-Collection Agent, as applicable, satisfactory to the Agent shall have
assumed the responsibilities and obligations of the Collection Agent or the
Sub-Collection Agent, as applicable, in accordance with the terms hereof and
with the terms of any other Transaction Document to which such Person is a
party.

SECTION 6.03. Duties of the Collection Agent. (a) Duties of
Collection Agent in General. The Collection Agent shall service and administer
the Receivables and the other Purchased Assets and, subject to the terms and
provisions of this Agreement, shall have full power and authority to do any and
all things in connection with such collection and administration which it may
deem necessary or appropriate. The Purchaser and/or each Seller, as
applicable, shall execute and deliver to the Collection Agent any powers of
attorney or other instruments or documents that the Collection Agent may
reasonably deem necessary or appropriate to enable the Collection Agent to
carry out its collections and administrative duties hereunder. The Collection
Agent shall take or cause to be taken all such action as may be necessary or
advisable to collect each Receivable from time to time, with reasonable care
and diligence, and all in substantial compliance with applicable law and in
accordance with the applicable Credit and Collection Policies.

(b) Modification of Receivables, Etc. The Collection Agent
may (x) so long as no Termination Event shall have occurred and be continuing,
extend the maturity of any Receivable, but not beyond thirty (30) days, or
adjust the Outstanding Balance of any Receivable as, in either case, the
Collection Agent may determine to be appropriate in accordance with the
applicable Credit and Collection Policy in order to maximize Collections
thereof, and (y) with respect to any LEC Receivable, the applicable LEC may
adjust or extend the maturities and/or the Outstanding Balances of such
Receivables in accordance with, and as permitted pursuant to, the applicable
LEC Agreement; provided, however, that, in either case, such extension or
adjustment shall not alter the status of such Receivable as a Delinquent
Receivable or a Defaulted Receivable.

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(c) Documents and Records. The Collection Agent shall
maintain at all times complete books, records and accounts relating to the
Receivables and the other Purchased Assets as are necessary for performance of
its obligations hereunder and under the TAA, and shall hold all such books,
records and accounts constituting Records in trust for the Purchaser; it being
understood and agreed, that in accordance with the Sellers' ordinary courses of
business with respect to the LEC Receivables, certain of the above-described
books, records and accounts are being held by the LECs, but all books, records
and accounts maintained by the Collection Agent with respect to such LEC
Receivables shall be prepared and kept in accordance with such Seller's current
business practices and shall be subject to the terms of this provision. Copies
of such books, records and accounts maintained by the Sellers shall promptly be
delivered to the Purchaser or its agents, representatives or assignees upon
request, including, without limitation, the Agent. Upon the appointment of any
successor Collection Agent, or upon the request of the Agent from and after a
Collection Agent Default, the Collection Agent shall, at its own expense,
deliver all such Records and copies of such other books, records and accounts
to such successor Collection Agent and/or the Agent, as applicable.

(d) Certain Duties to the Sellers. The Collection Agent, if
other than an Affiliated Entity, shall, as soon as practicable after a demand
by a Seller, and at the expense of such Seller, deliver to such Seller all
documents, instruments and records in its possession that evidence or relate to
receivable of such Seller or other Persons that are not Receivables or
Purchased Assets, and copies of all documents, instruments and records in its
possession that evidence or relate to Receivables and Purchased Assets
originated by such Seller.

(e) Grant of Power of Attorney. The Purchaser hereby grants
to the Collection Agent an irrevocable power of attorney, with full power of
substitution, to take in the name of the Purchaser all steps which are
reasonably necessary or appropriate to endorse, negotiate, deposit or otherwise
realize on any writing of any kind held or transmitted by the Purchaser in
connection with any Receivable or Purchased Asset.

(f) Turnover of Collections. If the Collection Agent shall
at any time receive any cash, checks or other instruments constituting
Collections, the Collection Agent shall segregate such payments and hold such
payments in trust for, and in a manner acceptable to the Purchaser and
otherwise as may be required under the TAA and shall, promptly upon receipt
(and in any event within two (2) Business Days following such receipt), remit
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to a Lock-Box Account.

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(g) Successor Collection Agent. In the event that either the
Purchaser, pursuant to its rights hereunder, or the Agent, pursuant to its
rights under the TAA, shall appoint a successor Collection Agent, the
Collection Agent agrees to cooperate with the Purchaser or the Agent, as
applicable, and such successor Collection Agent in effecting the transfer of
the responsibilities and rights of the Collection Agent hereunder to such
successor Collection Agent.

SECTION 6.04. Responsibilities of the Sellers. Anything
herein to the contrary notwithstanding:

(a) Each Seller shall (i) perform all of its obligations
under the Contracts related to the Receivables sold by it hereunder to the same
extent as if such Receivables had not been sold hereunder and the exercise by
the Purchaser (or any of its assignees) of its respective rights hereunder
shall not relieve such Seller from such obligations and (ii) pay when due any
taxes, excise taxes and/or surcharges relating to the origination and sale of
the Receivables and the other Purchased Assets, except any such taxes, excise
taxes and/or surcharges which such Seller is contesting in good faith and by
appropriate proceedings and in respect of which (x) such Seller has established
adequate reserves on its books and records and (y) no Adverse Claim on any of
the Purchased Assets has resulted from the non-payment thereof.

(b) Neither the Purchaser nor any of its assignees shall
have any obligation or liability with respect to any Contract related to any
Receivable, nor shall the Purchaser or any such assignee be obligated to
perform any of the obligations of the applicable Seller thereunder.

(c) Each Seller, to the extent it is then acting as the
Collection Agent or a Sub-Collection Agent, may continue to hold for the
benefit of (and in trust for) the Purchaser, the Agent, the Company and/or the
Bank Investors, all Records that evidence or relate to such Seller's
Receivables and other Purchased Assets conveyed to the Purchaser under this
Agreement, and shall, upon the request of the Purchaser, any of its assignees
(including the Agent) or the Collection Agent, deliver to the Purchaser, any
such assignee and/or the Collection Agent, as directed, any or all such Records
(other than any such items held by any LEC at such time).

SECTION 6.05. Further Action Evidencing Purchases. (a) Each
Seller agrees that at any time and from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and take
all further action that may be reasonably necessary to perfect, protect or more
fully evidence the Purchaser's, the Agent's, the Company's and/or the Bank
Investors' respective interests in the Purchased Assets, or to enable The
Purchaser, the Agent, the Company or any of the

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Bank Investors to exercise or enforce any of their respective rights hereunder.
Without limiting the generality of the foregoing, each Seller will:

(i) execute and file such financing statements (which
statements may be in any form, including in the form of a carbon,
photographic or other reproduction of this Agreement) continuation
statements or amendments thereto or assignments thereof as may be
requested by the Agent, the Purchaser, the Company or any of the Bank
Investors;

(ii) mark its master data processing records and, upon the
Purchaser's, the Agent's, any Bank Investor's or the Company's
request, its Contracts and other documents with a legend (in form and
substance satisfactory to the Agent) describing the conveyance
hereunder to the Purchaser and the Agent, for the benefit of the
Company and the Bank Investors, of the Purchased Assets; and

(iii) obtain additional search reports as may be reasonably
requested by the Purchaser, the Agent, the Company or any of the Bank
Investors in order to perfect or protect their respective interests in
the Purchased Assets.

Each of the Sellers hereby authorizes and appoints each of the Agent and the
Collection Agent as its attorney-in-fact, to the fullest extent permitted by
applicable law, to sign and file UCC financing statements, continuation
statements and amendments thereto and assignments thereof without the Seller's
signature. A carbon, photographic or other reproduction of this Agreement or
any financing statement covering the Purchased Assets or any part thereof,
shall be sufficient as a financing statement.

(b) If any Seller fails to perform any of its agreements
or obligations under this Agreement, following expiration of any applicable
cure period, the Purchaser (or any assignee thereof) may (but shall not be
required to) perform, or cause performance of, such agreement or obligation,
and the reasonable expenses of the Purchaser (or any such assignee) incurred in
connection therewith shall be payable by such Seller upon the Purchaser's (or
any such assignee's) written demand therefor (which demand shall itemize such
expenses in reasonable detail).

SECTION 6.06. Application of Collections. Any payment by an
Obligor in respect of any indebtedness or other obligations owed by such
Obligor to a Seller shall, except as otherwise specified by such Obligor or
otherwise required by law, be applied as a Collection of any Receivable of such
Obligor purchased hereunder (in the order of the age by invoice date of such
Receivables, starting with the oldest such Receivable) to the extent of any
amounts then due and payable thereunder before being applied to (i) any
Receivable arising subsequent to the

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Termination Date which is not purchased hereunder or (ii) any other
indebtedness of such Obligor to the Seller.

SECTION 6.07. Servicing Compensation. Pursuant to the TAA,
the Company or the Bank Investors shall pay to the Collection Agent a Servicing
Fee, as full compensation for servicing activities performed by the Collection
Agent under this Agreement, the TAA and the other Transaction Documents, as
more fully described in (and subject to the limitations set forth in) (x) the
definition of "Servicing Fee" set forth in the TAA and (y) Sections 2.5 and 2.6
of the TAA. The Servicing Fee payable pursuant to the TAA shall be paid to the
Collection Agent who shall then allocate such fee among itself and the
Sub-Collection Agents as the Collection Agent and such Sub-Collection Agents
may determine as among themselves. None of the Company, the Agent or the Bank
Investors shall have any liability for the payment of any Sub-Collection Agent
unless each such party shall have agreed to be so bound in writing.

SECTION 6.08. Collection Agent Liability. The Purchaser and
the Agent shall have the absolute and unlimited right to direct the Collection
Agent (whether the Collection Agent is an Affiliated Entity or any other
Person) to commence or settle any legal action to enforce Collection of any
Receivable or to foreclose upon or repossess any Purchased Assets; provided,
however, that neither the Purchaser nor the Agent shall have any such rights to
give any such directions to any of the LECs unless it would be permitted to do
so pursuant to the applicable LEC Agreement; and provided, further, however,
that the Collection Agent shall not make the Agent, the Company, any Bank
Investor or any of the foregoing's Affiliates a party to any litigation or
proceeding without such Person's express written consent.

ARTICLE VII

INDEMNIFICATION

SECTION 7.01. Indemnities by the Sellers. Without limiting
any other rights which the Purchaser may have hereunder or under applicable
law, the Sellers each hereby jointly and severally agree to indemnify the
Purchaser and any successors and permitted assigns and their respective
officers, directors, employees and agents (collectively, "Indemnified Parties")
from and against any and all damages, losses, claims, liabilities, costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them in any action
or proceeding between any of the Sellers (including, in such Person's capacity
as the Collection Agent or a Sub-collection Agent) and any of the Indemnified
Parties or between any of the Indemnified Parties and any third party or
otherwise arising out of or as a result of any

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of the following, excluding, however, (i) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of an
Indemnified Party, (ii) recourse (except as otherwise specifically provided in
this Agreement) for Receivables which are uncollectible for credit reasons, or
(iii) any breach by the Purchaser or any Collection Agent or Sub-Collection
Agent (in either case, if other than an Affiliated Entity) of any of such
Person's representations, warranties, covenants or undertakings hereunder or
under any of the other Transaction Documents:

(i) any representation or warranty made by any of the
Sellers (including in such Person's capacity as the Collection Agent
or a Sub-Collection Agent) or any officers of the Seller (including in
such Person's capacity as the Collection Agent or a Sub-Collection
Agent) under or in connection with this Agreement, any of the other
Transaction Documents, any Investor Report delivered by the Collection
Agent (if an Affiliated Entity) or any other information or report
delivered by the Seller or the Collection Agent on such Seller's
behalf (and based on information provided by such Seller) pursuant
hereto, which shall have been false or incorrect in any material
respect when made or deemed made; it being understood and agreed, that
for purposes of determining the veracity of any representation or
warranty for purposes of this clause (i) and the existence of an
indemnifiable claim hereunder, any limitation contained in any
representation or warranty relating to the occurrence or reasonable
expectation of the occurrence of a Material Adverse Effect shall be
disregarded;

(ii) the failure by any of the Sellers (including in such
Person's capacity as the Collection Agent or a Sub-Collection Agent)
to comply with any applicable law, rule or regulation with respect to
any Receivable or the related Contract, or the nonconformity of any
Receivable or the related Contract with any such applicable law, rule
or regulation;

(iii) the failure to vest and maintain vested in the
Purchaser or to transfer to the Purchaser, legal and equitable title
to and first priority perfected ownership of, the Receivables and the
Related Assets, which are sold, conveyed or otherwise transferred by
a Seller hereunder, free and clear of any Adverse Claim (other than
Adverse Claims created under the other Transaction Documents);

(iv) the failure to file, or any delay in filing,
financing statements, continuation statements, or other similar
instruments or documents under the UCC of any applicable jurisdiction
or other applicable laws with respect to any of the Receivables or the
Related Assets;

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(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such
Receivable or the related Contract not being legal, valid and binding
obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale or lease of
goods, inventory or merchandise or services related to such Receivable
or the furnishing or failure to furnish such goods, inventory,
merchandise or services;

(vi) any failure of the Collection Agent (if an Affiliated
Entity) to perform its duties or obligations in accordance with the
provisions hereof;

(vii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of
whatever sort arising out of or in connection with goods, merchandise,
inventory or services which are the subject of any Receivable or
Contract;

(viii) the failure by any of the Sellers (individually or as
Collection Agent or a Sub-Collection Agent) to comply with any term,
provision or covenant contained in this Agreement or any of the other
Transaction Documents to which such Seller is a party or to perform
any of its respective duties under the Contracts; it being understood
and agreed, that for purposes of determining such compliance for
purposes of this clause (viii) and the existence of an indemnifiable
claim hereunder, any limitation contained in any covenant or
undertaking relating to the occurrence or reasonable expectation of
the occurrence of a Material Adverse Effect shall be disregarded;

(ix) the failure of any of the Sellers to pay when due or
to collect any taxes, including without limitation, sales, excise or
personal property taxes or surcharges payable in connection with any
of the Receivables;

(x) any repayment by an Indemnified Party of any amount
previously distributed which such Indemnified Party believes in good
faith is required to be made (other than as a result of the discharge
in bankruptcy of the Obligor on any Receivable);

(xi) the commingling by any of the Sellers or the Collection
Agent (if an Affiliated Entity) of Collections of Receivables at any
time with other funds;

(xii) any investigation, litigation or proceeding related to
this Agreement, any of the other Transaction Documents, the use of
proceeds of Purchases by the Seller, the ownership or maintenance of
any interest in the

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Purchased Assets of or any Receivable, Related Security or Contract,
other than any of the foregoing related to (x) any such Indemnified
Party's (or any "Indemnified Party's" under (and as such term is
defined in) the TAA) authority, ability, capacity or qualification to
enter into the transactions contemplated hereunder and under the other
Transaction Documents to which such Indemnified Parties or
"Indemnified Parties" are a party or (y) any costs, fees or expenses
incurred in connection with any proceeding for the collection of any
Receivable from the Obligor thereof;

(xiii) the failure of any Lock-Box Bank to remit any amounts
held in the Lock-Boxes or the Lock-Box Accounts pursuant to the
instructions of the Collection Agent (if an Affiliated Entity), the
Agent, the Purchaser or any Seller (to the extent such Person is
entitled to give such instructions in accordance with the terms hereof
and of any applicable Lock-Box Agreement) whether by reason of the
exercise of set-off rights or otherwise;

(xiv) any action taken by the Seller, or the Collection Agent
(if an Affiliated Entity) or any LEC in the enforcement or Collection
of any Receivable;

(xv) the sale of any Noncomplying Receivable by any of the
Sellers to the Purchaser;

(xvi) the amendment, modification or termination of any LEC
Agreement or any Tariff relating thereto or affecting any Receivable
in existence prior to the effective date of any such amendment,
modification or termination, unless previously consented to by the
Agent and the Purchaser;

(xvii) any failure by any Seller to perform its obligation
under any LEC Agreement to which it is a party;

(xviii) any set-off against any of the Purchased Assets by any
LEC other than in respect of the non-collection of any delinquent or
defaulted Receivables;

(xix) the inability to collect any Government Receivable or
the Related Security with respect thereto from any Government Obligor
as a result of the non-compliance by the applicable Seller, the
Purchaser or the Agent with the Assignment of Claims Act , 31 U.S.C.
Sections 3727 et seq. (1982) and 41 U.S.C. Sections 15 et seq. (1982)
(in each case, as amended), whether or not compliance therewith is
required hereunder; or

(xx) the inability to obtain jurisdiction over or enforce any
Foreign Receivable against the Obligor thereon.

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ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Waivers; Amendments. No failure or delay on the
part of the Purchaser (or any assignee thereof) in exercising any power, right
or remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any
other further exercise thereof or the exercise of any other power, right or
remedy. The rights and remedies herein provided shall be cumulative and
nonexclusive of any rights or remedies provided by law. Any provision of this
Agreement may be amended if, but only if, such amendment is in writing and is
signed by the Purchaser, the Agent and, unless expressly otherwise provided
herein, the Majority Investors.

SECTION 8.02. Notices. Except as provided below, all
communications and notices provided for hereunder shall be in writing
(including telecopy or electronic facsimile transmission or similar writing)
and shall be given to the other party at its address or telecopy number set
forth below or at such other address or telecopy number as such party may
hereafter specify for the purposes of notice to such party. Each such notice
or other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified for such Person and
confirmation is received, (ii) if given by mail, three (3) Business Days
following such posting, postage prepaid, U.S. certified or registered, (iii) if
given by overnight courier, one (1) Business Day after deposit thereof with a
national overnight courier service, or (iv) if given by any other means, when
received at the address specified on the signature pages hereof.

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If to the Purchaser:

LCI SPC I, Inc.
8180 Greensboro Drive
Suite 900
McLean, Virginia 22102
Attention: Karen Perry
Telephone: (703) 610-4840
Telecopy: (703) 714-1733

Payment Information:
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
ABA No.: 071-000-013
Account No.: 5563925
Reference: LCI SPC I, Inc.

With a copy to:

Willkie, Farr & Gallagher
One CitiCorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Richard Sammis, Esq.
Telephone: (212) 821-8263
Telecopier: (212)821-8111

If to a Seller, at its address set forth on the signature
pages hereto

If to the Collection Agent or a Sub-Collection Agent, to the
Collection Agent at:

LCI International Telecom Corp.
8180 Greensboro Drive
Suite 900
McLean, Virginia 22102
Attention: John J. Dillon
Telephone: (703) 848-4490
Telecopy: (703) 918-4660

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With a copy to:

Willkie, Farr & Gallagher
One CitiCorp Center
153 E. 53rd Street
New York, New York 10022
Attn: Richard Sammis, Esq.
Telephone: (212) 821-8263
Telecopier: (212)821-8111

If to the Agent, the Company or any of the Bank Investors, to
the Agent at:

NationsBank, N.A.
NationsBank Corporate Center--10th Floor
Charlotte, North Carolina 28255
Attention: Michelle M. Heath--
Structured Finance
Telephone: (704) 386-7922
Telecopy: (704) 388-9169

SECTION 8.03. Effectiveness; Binding Effect; Assignability.
(a) This Agreement shall become effective on the Closing Date and shall, from
and after such date, be binding upon and inure to the benefit of each of the
Sellers and the Purchaser and their respective successors and permitted
assigns. None of the Sellers may assign any of their rights or delegate any of
their duties hereunder or any interest herein without the prior written consent
of the Agent. No provision of this Agreement shall in any manner restrict the
ability of the Purchaser (or the Company or any Bank Investor as assignees of
the Purchaser) to assign, participate, grant security interests in, or
otherwise transfer any of their rights or remedies hereunder.

(b) Without limiting the foregoing, each of the Sellers hereby
acknowledges that, contemporaneously herewith, the Purchaser is selling,
assigning, transferring and conveying to the Agent (for its benefit and for the
benefit of the Company, the Bank Investors, and each of the foregoing's
respective assignees) under the TAA, all of the Purchaser's right and title to
and interest in, among other things, the Purchased Assets and this Agreement,
including all of the Purchaser's rights, remedies, powers and privileges, and
all claims of the Purchaser against the Sellers, under or with respect to this
Agreement (whether arising pursuant to the terms of this Agreement or otherwise
available at law or in equity), including (i) the rights of the Purchaser and
the obligations of the Sellers hereunder and (ii) the right, at any time, to
give or withhold consents, requests, notices, directions, approvals, demands,
extensions or waivers under or with respect to this Agreement or the
obligations of the Sellers hereunder, in each case, to the

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same extent as the Purchaser may do so. Each of the Sellers hereby consents to
such sale, transfer, assignment and conveyance to the Agent and acknowledges
and agrees that the Agent, as the assignee of the Purchaser for the benefit of
the Company, the Bank Investors and each of the foregoing's respective
assignees, including but not limited to the Collateral Agent, shall be a third
party beneficiary of the rights and remedies of the Purchaser arising hereunder
and under the other Transaction Documents to which any of the Sellers is a
party.

(c) Each of the Sellers hereby agrees to execute all
agreements, instruments and documents, and to take all other action, that the
Purchaser or the Agent reasonably determines is necessary or appropriate to
evidence the assignments described in clause (b) immediately above. To the
extent that the Purchaser, individually or through the Collection Agent, has
granted or grants powers of attorney to the Agent under the TAA, each Seller
hereby grants a corresponding power of attorney on the same terms to the
Purchaser. Each Seller hereby acknowledges and agrees that the Purchaser, in
all of its capacities, shall assign to the Agent for the benefit of the
Company, the Bank Investors, and each of the foregoing's respective assignees,
such powers of attorney and other rights and interests granted by each Seller
to the Purchaser hereunder and agrees to cooperate fully with the Agent in the
exercise of such rights.

(d) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall
remain in full force and effect until the Collection Date; provided, however,
that (i) the rights and remedies with respect to any breach of any of the
provisions of Section 8.06, (ii) the indemnification and payment provisions of
Article VII and Section 8.05 and (iii) the provisions of Section 8.09, shall,
in each case, be continuing and shall survive any termination of this
Agreement.

SECTION 8.04. GOVERNING LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL.

(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS DISTINGUISHED FROM THE CONFLICT OF LAW
PROVISIONS) OF THE STATE OF NEW YORK. EACH OF THE SELLERS AND THE PURCHASER
HEREBY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH OF THE SELLERS AND THE PURCHASER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT THEY MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH THEY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING

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IN THIS SECTION 8.04 SHALL AFFECT THE RIGHT OF THE PURCHASER TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY SELLER OR ITS PROPERTY IN THE COURTS OF OTHER
JURISDICTIONS.

(b) EACH OF THE SELLERS AND THE PURCHASER HEREBY WAIVES ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH,
RELATING TO OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.

SECTION 8.05. Costs and Expenses. In addition to the rights
of indemnification under Article VII hereof, the Sellers agree to pay the
Purchaser on demand all costs and expenses (including without limitation,
reasonable counsel fees and expenses) in connection with the enforcement of the
covenants, agreements, liabilities and obligations of the Sellers and the
Collection Agent under this Agreement and the other Transaction Documents.

SECTION 8.06. Confidentiality. (a) The Purchaser hereby
acknowledges that the Records and other information which the Sellers must
assign and/or deliver to the Purchaser hereunder may contain information in
which the Sellers have a proprietary interest and which may not, at the time of
assignment and/or delivery, be generally available to and known by the public.
The Purchaser hereby agrees to maintain as confidential all such information
obtained from the Sellers which is not otherwise generally available to the
public and not to disclose such information to any other Person, provided,
however, that nothing in this Section 8.06 shall prevent the Purchaser or its
assignee from disclosing such information (i) to any permitted assignee of the
Purchaser or its assignees, in each case, so long as such Person is made aware
of the confidential nature thereof; (ii) to the Purchaser's or such assignee's
(and such assignees') employees, agents, attorneys and accountants; provided
such Persons are made aware of the confidential nature thereof; (iii) any
Official Body having jurisdiction over such party, (iv) which has been obtained
from any Person other than the Purchaser or its assignees, any Seller or a
party hereto, (v) in connection with any pending or threatened litigation among
the parties to the Transaction Documents; (vi) to any national rating agency
rating the securities of any such Person, (vi) to the extent already in the
public domain (other than as a result of the breach of the terms of this clause
(a) by the Purchaser), any other Person, or (viii) as otherwise expressly
contemplated by this Agreement.

(b) Notwithstanding the foregoing, each of the Sellers hereby
consents to the disclosure of any non-public information with respect to it
received by the Purchaser to any of the Company, the Agent, any nationally
recognized rating agency rating the Company's Commercial Paper, the
Administrative Agent,

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the Collateral Agent, any Bank Investor or potential Bank Investor, the
Liquidity Provider, any potential participant in the Liquidity Provider
Agreement or the Credit Support Provider in relation to the TAA.

(c) Each of the Sellers hereby agrees that it will not
disclose the contents of the TAA, this Agreement or any other proprietary or
confidential information of the Company, the Agent, the Administrative Agent,
the Collateral Agent, any Liquidity Provider or any Bank Investor to any other
Person except (i) such Seller's auditors and attorneys, employees or financial
advisors (other than any commercial bank) and any nationally recognized rating
agency, provided such auditors, attorneys, employees, financial advisors or
rating agencies are informed of the highly confidential nature of such
information, (ii) as otherwise required by applicable law (including, the
filing of any such agreement with the Securities Exchange Commission to the
extent reasonably deemed to be required in accordance with the Securities
Exchange Act of 1934, as amended) or order of a court of competent
jurisdiction, or (iii) to the extent any such information is already in the
public domain (other than as a result of a breach by any of the Seller of the
provisions of this clause (c)), any other Person.

SECTION 8.07. Execution in Counterparts; Severability. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 8.08. Purchase Termination. (a) The agreements of
the Sellers to sell Receivables hereunder may be terminated at any time by the
Sellers by giving written notice thereof to the Purchaser and the Agent of the
Sellers' election to terminate this Agreement, in which event the Purchase
Termination Date shall thereafter occur on the date specified therefor by the
Sellers' in such notice, but in any event not less than 60 days after the
Agent's receipt of such notice.

(b) Notwithstanding any such termination described under
paragraph (a) above, all other provisions of this Agreement shall remain in
full force and effect as provided in Section 8.03. On or after the termination
of this Agreement, the Purchaser will, at the request and the joint and several
expense of the Sellers, execute and deliver to the Sellers such UCC termination
statements and other documents as the Sellers may reasonably request to
evidence such termination.

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SECTION 8.09. No Proceedings. (a) Each of the Sellers hereby
covenants and agrees that, prior to the date which is one year and one day
after the payment in full of all outstanding Commercial Paper or other
indebtedness of the Company, it will not institute against, or join any other
Person in instituting against, the Company any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any other state of the United States.

(b) Each of the Sellers and the Collection Agent (including
any Sub-Collection Agents) hereby agrees that it will not institute against the
Purchaser, or join any other Person in instituting against The Purchaser, any
proceeding of the type referred to in the definition of "Bankruptcy Event", so
long as any Aggregate Unpaid shall be outstanding or there shall not have
elapsed one year plus one day since the last day on which any such Aggregate
Unpaid shall have been outstanding. The foregoing shall limit the rights of
any Seller under any and all agreements it may have with the Purchaser but
shall not limit the right of any Seller to file any claim in or otherwise take
any action with respect to any insolvency proceeding that was instituted
against the Purchaser by any Person other than a Seller or any Affiliate
thereof.

SECTION 8.10. Entire Agreement. This Agreement, together
with the other Transaction Documents, including the exhibits and schedules
hereto and thereto, contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all previous oral statements and other
writings with respect thereto.

SECTION 8.11. Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the Closing Date, the initial Purchase
and each subsequent Purchase and shall continue in full force and effect until
the Collection Date.

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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

LCI SPC I, INC.

By: /s/ JOHN J. DILLON
-------------------------
Name: John J. Dillon
Title: Vice President

LCI INTERNATIONAL TELECOM CORP.,
individually and as the initial
Collection Agent

By: /s/ JOHN J. DILLON
-------------------------
Name: John J. Dillon
Title: Vice President - Finance
and Treasurer
8180 Greensboro Drive
Suite 900
McLean, Virginia 22102
Attention:
Telephone:
Telecopy:

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