2. Proposed Transaction

Under the proposed merger transaction, ANPI will be merged into a Delaware limited liability company, called ANPI, LLC, which is a wholly owned subsidiary of ANPI Holding, Inc. (ANPI Holding). As a result of the transaction, the current ANPI shareholders will become shareholders of ANPI Holding. Similarly, Zone will be converted into a limited liability company called Zone Telecom, LLC, wholly owned by Zone USA. Pursuant to a Contribution Agreement, ANPI Holding and Zone USA each will contribute 50% of their holdings to, and own 50% of, ANZ. The ownership of the two parent companies will be merged through their joint (50/50) ownership of ANZ. ANZ will own 100% of each operating company, ANPI, LLC and Zone Telecom, LLC.

The CPCN currently held by ANPI will be transferred to ANPI LLC. The CPCN currently held by Zone will be transferred to Zone Telecom, LLC. Both operating companies will serve their customers under their current names and will continue to provide interexchange telecommunication services in California.

Applicants represent that the proposed transfer of control will be transparent to their shareholders and customers. Applicants state that they will maintain their current management teams and that their operations and finances will be unaffected. They assert that the transaction will give ANPI and Zone greater access to capital, resources, and shared expertise. In addition, Applicants assert that the transaction will bring increased competition to the California telecommunications market, benefiting their customers and shareholders.