Exhibit 10.1

 

___________________________________

ASSET PURCHASE AGREEMENT
BY AND AMONG
ACCERIS COMMUNICATIONS INC.,
ACCERIS COMMUNICATIONS CORP.,
COUNSEL CORPORATION,
ACCERIS MANAGEMENT AND ACQUISITION LLC,
AND
NORTH CENTRAL EQUITY LLC
_________________________________

Dated as of May 19, 2005
________________________________________

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ASSET PURCHASE AGREEMENT
 
This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 19, 2005 (the
“Execution Date”), is by and among Acceris Management and Acquisition LLC, a
Minnesota limited liability company (the “Buyer”), North Central Equity LLC, a
Minnesota limited liability company (“Guarantor”), Acceris Communications Inc.,
a Florida corporation (“ACI”), Acceris Communications Corp, a Delaware
corporation (the “Company,” and together with ACI, the “Sellers”) and Counsel
Corporation, an Ontario corporation (the “Parent,” and together with the
Sellers, the “Seller Parties”).

W I T N E S S E T H:
 
WHEREAS, the Company desires to sell, transfer and otherwise convey, and the
Buyer desires to purchase and assume, the Acquired Assets and the Assumed
Liabilities of the Business, on the terms and subject to the conditions of this
Agreement; and
 
WHEREAS, ACI’s board of directors has adopted resolutions approving the
transactions contemplated by this Agreement and recommended that ACI’s
stockholders approve and adopt this Agreement and the transactions contemplated
hereby and the Parent’s board of directors has adopted resolutions approving the
transactions contemplated by this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing premises and the respective
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
 
SECTION 1. DEFINITIONS.
 
As used in this Agreement, the following terms shall have the following
meanings:
 
“ACC Website” - See the Section 5.1(e).
 
“ACI” - See the Preamble hereto.
 
“ACI Website” - See Section 5.1(e).
 
“Acquired Assets” means all of the Company’s right title and interest in, to and
under all of the assets (other than the Excluded Assets) that are owned by, used
or in any way related to the Business, including without limitation the
following: (a) the Financial Assets; (b) real property, leaseholds,
subleaseholds, improvements, fixtures, fittings, easements, rights-of-way and
other appurtenants; (c) tangible personal property, including machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, computers, automobiles,
trucks, tractors, trailers, tools, jigs and dies, wherever located; (d)
Intellectual Property, associated goodwill, licenses and sublicenses, remedies
against infringements, and rights to protection of interests under any Law; (e)
leases and subleases; (f) agreements, contracts, indentures, mortgages,
instruments, security interests, guaranties and other similar arrangements; (g)
accounts, notes and other receivables; (h) securities, except for the capital
stock in its subsidiaries; (i) claims, deposits, prepayments, refunds, causes of
action, choses in action, rights of recovery, rights of set off and rights of
recoupment (including any such item relating to the payment of Taxes); (j)
Licenses and Permits to the extent legally transferable; (k) customer
agreements, customer lists, books, records, ledgers, files, documents,
correspondence, lists, plats, architectural plans, drawings and specifications,
creative materials, advertising and promotional materials, studies, reports and
other printed or written materials; and (l) all of the assets specified as
Acquired Assets on Schedule 1.1.
 
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“Action” - See Section 3.14.
 
“Affiliates” means, with respect to a Person, any Person directly or indirectly
controlling, controlled by or under common control with the Person specified.
 
“Affiliated Group” means an affiliated group as defined in Section 1504 of the
Code (or any analogous combined, consolidated, or unitary group defined under
state, local, or foreign income Tax Law).
 
“Assumed Liabilities” means only the following liabilities of the Company, none
of which include any of Seller Parties’ income tax Liabilities: (a) the Company
Liabilities; (b) all liabilities incurred by the Company in the ordinary course
of business between the Effective Date and the Closing Date; (c) the costs
incurred between the Effective Date and the Closing Date related to the
management and operations of the Company (including litigation related costs and
expenses but excluding the Excluded Litigation); and (d) all of the liabilities
specified as Assumed Liabilities on Schedule 1.2, but not in excess of the
amount of such liabilities set forth on Schedule 1.2.
 
“Agreement” - See the preamble hereto.
 
“Benefit Plans” - See Section 3.16(a).
 
“Break Up Fee” - See Section 5.11(a).
 
“Break Up Fee Loan Documents” means the following documents executed and
delivered in connection with this Agreement: (a) a promissory note made jointly
and severally by the Sellers in the amount of the Break Up Fee substantially in
the form attached hereto as Exhibit A; (b) a security agreement between the
Company and the Buyer substantially in the form attached hereto as Exhibit B;
and (c) a guaranty of the Parent in favor of the Buyer in substantially the form
attached hereto as Exhibit C.
 
“Business” means all of the business activities of the Company, including
without limitation the Company’s broad-based communications business that serves
residential, small and medium-sized businesses and large enterprise customers in
the United States by providing them a range of products and services from
domestic and international long distance voice services to managed and
integrated data and enhanced services.
 
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“Business Day” means a day other than a Saturday, Sunday or other day on which
banks in the State of Minnesota are not required or authorized to close.
 
“Business Employee” - See Section 3.16(a).
 
“Business Intellectual Property” means all of the Intellectual Property owned by
the Company including without limitation any and all of the Company’s rights in
and to the name “Acceris” and any derivative and variation thereof.
 
“Buyer” - See the preamble hereto.
 
“Buyer Indemnitees” - See Section 7.2.
 
“Closing” - See Section 2.5.
 
“Closing Date” - See Section 2.5.
 
“COBRA” means the requirements of Part 6, Subtitle B, Title I of ERISA and Code
§ 4980B and of any similar state law.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Communications Act” means the Communications Act of 1934, as amended.
 
“Company” - See the preamble hereto.
 
“Company Balance Sheet” - See Section 3.5.
 
“Company Liabilities” means the Liabilities of the Company (but excluding the
Excluded Liabilities) which are related to the Business that appear on the
Company Balance Sheet.
 
“Confidential Information” means the following: (a) in the possession of the
Buyer, all information relating to the Seller Parties that is not an Acquired
Asset, including without limitation information concerning the Excluded Assets
and Excluded Liabilities and ACI’s financial results, strategic plans, research
and development, products, services, technology, marketing and sales; and (b) in
the possession of the Seller Parties, all information relating to the Buyer and
its Affiliates and all information that is an Acquired Asset, including without
limitation information concerning the Acquired Assets and Assumed Liabilities
and the Buyer’s and its Affiliates’ financial results, strategic plans, research
and development, products, services, technology, marketing and sales.
Notwithstanding the foregoing, Confidential Information shall not include
information which (i) is already published or available to the public other than
by a breach of this Agreement, (ii) is rightfully received from a third party
not in breach of any obligation of confidentiality, (iii) is independently
developed by personnel or agents of one party without use of the other party’s
Confidential Information (“use” shall not be deemed to include use of
Confidential Information that may be retained in the unaided memories of the
receiving party’s employees or agents who have otherwise rightfully accessed
Confidential Information), or (iv) is produced in compliance with applicable law
or a court order, provided that the receiving party first gives the disclosing
party reasonable notice of such law or order and gives the disclosing party an
opportunity to defend and/or attempt to limit such production; provided that it
shall not be necessary for ACI to give Buyer notice with respect to disclosures
that it makes in its required filings with the SEC.
 
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“Consent” means each consent, notice, waiver, authorization or approval of any
Governmental Entity or of any other Person that is required in connection with
the execution and delivery or performance by the Seller Parties of this
Agreement and the Transaction Documents.
 
“Contract” means all contracts, subcontracts, agreements, leases, licenses,
commitments, loan agreement, mortgage, security agreement, trust indenture,
sales and purchase orders, statements of work, and other instruments,
arrangements or understandings of any kind, including any amendments or
alterations thereto, to which the Company is a party to or by which any of its
assets, properties or the Business are bound.
 
“Debt” means all liabilities or obligations, whether primary or secondary or
absolute or contingent (a) for borrowed money, including outstanding checks and
overdrafts, (b) evidenced by notes, bonds, debentures, guaranties or similar
obligations, (c) secured by a Lien on any assets, other than Permitted Liens, or
(d) under or pursuant to any capital lease arrangements.
 
“Effective Date” means April 30, 2005.
 
“Environmental Laws” means all federal, state, and local Laws, rules and
regulations, orders, decrees, directives, permits and licenses relating to
Releases of Hazardous Materials or otherwise relating to the generation,
treatment, storage, transport or handling of Hazardous Materials.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” - See Section 3.16(a).
 
“Excluded Assets” means only the following: (a) the Company’s corporate charter,
qualifications to conduct business as a foreign corporation, arrangements with
registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock
certificates and other documents relating to the organization, maintenance and
existence of any of the Seller Parties as an entity; (b) any of the rights of
the Seller Parties under this Agreement (or under any side agreement between the
parties entered into on or after the date of this Agreement); (c) any of the
capital stock, membership interests or other equity securities of Transpoint
Holdings Corporation and Solomon Datatransport, Inc.; and (d) all of the assets
specified as Excluded Assets on Schedule 1.1.
 
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“Excluded Liabilities” means all of the Liabilities of the Seller Parties or
their Affiliates except for the Assumed Liabilities, including without
limitation the following: (a) any Liability for Taxes, including without
limitation any Liability with respect to income Taxes and Taxes attributable to
the Acquired Assets for taxable periods, or any portion thereof, ending on or
before the Effective Date (except to the extent that such liabilities are
specifically included in the Assumed Liabilities); (b) any Liability for the
unpaid Taxes of any Person under Treas. Reg. Section § 1.1502-6 (or any similar
provision of Law), as a transferee or successor, by contract, or otherwise
(except to the extent that such Liabilities are specifically included in the
Assumed Liabilities); (c) any obligation to indemnify any Person (including the
Seller Parties or their Affiliates) by reason of the fact that such Person was a
director, officer, employee or agent of any of one of the Seller Parties or
their Affiliates, or was serving at the request of the entity as a partner,
trustee, director, officer, employee or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses or otherwise and whether such indemnification is
pursuant to any Law, charter document, bylaw, agreement or otherwise); (d) any
Liability of for costs and expenses incurred in connection with this Agreement
and the contemplated transactions; (e) any Liability or obligation under this
Agreement (or under any side agreement between the Seller Parties or their
Affiliates on the one hand and the Buyer entered into on or after the date of
this Agreement); (f) any other unknown, asserted or unasserted obligation or
Liability of any of the Seller Parties or their Affiliates or any other Person
not specifically included within the definition of Assumed Liabilities; (g) the
Excluded Litigation; (h) any Liability arising after the Effective Date related
to the actions of the Seller Parties or their Affiliates before the Effective
Date not specifically included in the definition of Assumed Liabilities; and (i)
all of the Liabilities specified as excluded liabilities on Schedule 1.2
including any Liabilities considered Excluded Liabilities by the parties in
accordance with Section 2.4(c).
 
“Excluded Litigation” means any Liability related to litigation involving the
Company which: (a) arises from a transaction or occurrence which occurred prior
to the Execution Date, including without limitation the litigation identified on
Schedule 3.14; (b) is initiated by a shareholder, employee or the Affiliates of
a shareholder or employee of ACI challenging the transactions contemplated by
this Agreement, and (c) is initiated by an employee of the Company that asserts
a Liability under a Benefit Plan other than a claim for unpaid benefits and
which arose or allegedly arose from the conduct of the Sellers.
 
“Execution Date” - See the preamble hereto.
 
“FCC” means the Federal Communications Commission.
 
“Final Company Balance Sheet” See Section 2.4(b).
 
“Financial Assets” means the cash, accounts receivable, prepaid items and
prepaid deposits of the Company that appear on the Company Balance Sheet or that
are otherwise held by the Company as of the Closing Date. The Company Balance
Sheet indicates the amount of the Financial Assets is equal to $14,435,246.
 
“Financial Statements” - See Section 3.5.
 
“Foothills” means Wells Fargo Foothill, Inc. a California corporation or any of
its successors or Affiliates.
 
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“Foothills Loan” means all outstanding amounts due and owing by the Company to
Foothills under the secured credit facility memorialized by that certain Loan
and Security Agreement originally dated December 10, 2001 between ACI, the
Company and Foothills, as amended.
 
“GAAP” means U.S. generally accepted accounting principles applied on a
consistent basis.
 
“Governmental Entity” means any federal, state, municipal or foreign
governmental, court, governmental, administrative or regulatory or other public
body, agency or authority (including self-regulatory organizations), domestic or
foreign.
 
“Guaranteed Obligations” - See Section 5.17.
 
“Guarantor” - See preamble hereto.
 
“Hazardous Materials” means any dangerous, toxic or hazardous pollutant,
contaminant, chemical, waste, material or substance as defined in or governed by
any Law or other requirement relating to such substance or otherwise relating to
the environment or human health or safety, including without limitation any
petroleum and petroleum products, asbestos and asbestos containing products or
PCBs or other matter which might subject the Company or the Business to any
imposition of costs or liability under any Environmental Law.
 
“HIPAA” means the Health Insurance Portability and Accountability Act of 1996,
as amended, and the regulations promulgated thereunder, including the Standards
for Privacy of Individually Identifiable Health Information at 45 Code of
Federal Regulations Parts 160 and 164.
 
“Indemnitee” - See Section 7.5(a).
 
“Indemnitor” - See Section 7.5(a).
 
“Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements, and all patents, patent
applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations;
(b) all trademarks, service marks, trade dress, logos, trade names, slogans,
Internet domain names, Internet addresses, corporate names and rights in
telephone numbers, together with all translations, adaptations, derivations and
combinations and including all associated goodwill, and all applications,
registrations and renewals; (c) all copyrightable works, all copyrights, and all
applications, registrations and renewals; (d) all mask works and all
applications, registrations and renewals; (e) all trade secrets and confidential
business information, including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals;
(f) all computer software, including all source code, object code, executable
code, firmware, development tools, files, records, data, data bases and related
documentation, regardless of the media on which it is recorded, and all Internet
sites (and all contents of the sites); (g) all advertising and promotional
materials; (h) all other proprietary rights; (i) all copies and tangible
embodiments of any of the foregoing (in whatever form or medium); and (j) claims
or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing.
 
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“IRS” means the Internal Revenue Service.
 
“Knowledge of the Sellers” or “Sellers’ Knowledge” means the actual knowledge
(or knowledge that such person reasonably should have had given the facts and
circumstances) of Allan C. Silber, Kelly D. Murumets, Gary M. Clifford, James
Ducay, Kenneth L. Hilton, David Silverman and Stephen Weintraub.
 
“Laurus” means Laurus Master Fund, Ltd. a Cayman Islands company or any of its
successors or Affiliates.
 
“Laurus Interest” means the Lien on the Acquired Assets held by Laurus.
 
“Laws” means all applicable laws of any country or any political subdivision
thereof, including, without limitation, all federal, state and local statutes,
regulations, ordinances, codes, orders or decrees or any other laws, common law
theories or reported decisions of any court thereof.
 
“Leases” - See Section 3.9.
 
“Liability Cap” - See Section 7.4(a).
 
“Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes or reasonable attorneys’, accountants’ and experts’ fees
and interest and penalties.
 
“Licenses and Permits” - See Section 3.12.
 
“Lien” means any charge, claim, lien, option, pledge, security interest, right
of first refusal, or encumbrance.
 
“Material Contract” - See Section 3.15.
 
“Organizational Documents” means articles of incorporation, certificate of
incorporation or charter, bylaws, articles of organization, certificate of
formation, operating agreement, limited liability company agreement and all
similar documents adopted, or filed in connection with the creation, formation,
or organization of a Person, including any amendments thereto.
 
“Parent” - See preamble hereto.
 
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“Parent Stock” - See Section 5.2(c).
 
“Pension Plans” - See Section 3.16 (a).
 
“Permitted Liens” means (a) mechanics’, carriers’ non-contractual, workmen’s,
repairmen’s or similar Liens arising or incurred in the ordinary course of
business which involve obligations that are not due and payable, (b) statutory
liens for Taxes (other than local, state and federal income Taxes) and other
charges and assessments by any Governmental Entity that are not yet due and
payable or are being contested in good faith and adequate reserves for which are
contained in the Financial Statements and which are listed on Schedule 1.3 (c)
Liens related to any Assumed Liability, (d) Liens related to the Contracts
entered into by the Company in the ordinary course of business, and (e) any
bonds, letters of credit and similar items posted or provided in accordance with
regulatory requirements.
 
“Person” means any individual, corporation, company, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity.
 
“Personal Property Lease” - See Section 3.10.
 
“Proxy Statement” means the proxy statement to be sent to ACI’s stockholders in
connection with the ACI Stockholders Meeting.
 
“PUCs” means all state telecommunications regulatory agencies.
 
“Release” means the spilling, leaking, disposing, discharging, emitting,
depositing, ejecting, leaching, escaping or any other release of any Hazardous
Materials that is a violation of Environmental Law.
 
“Required ACI Stockholder Vote” means the affirmative vote by the holders of the
outstanding shares of ACI’s capital stock representing the voting power of ACI’s
capital stock required to vote on and approve this Agreement and the
transactions contemplated by this Agreement.
 
“Revised Company Balance Sheet” See Section 2.4(a).
 
“Schedule 13D/A” - See Section 3.24.
 
“Schedules” means the schedules delivered by the Seller Parties to the Buyer and
by the Buyer to the Seller Parties on the Execution Date and as corrected to the
extent necessary to comply with the requirements of Section 5.4, as applicable,
which, among other things, set forth certain exceptions to the representations
and warranties contained in this Agreement. Each reference in this Agreement to
any numbered Schedule is a reference to that numbered Schedule in the Schedules;
provided, however, that a matter disclosed in one Schedule shall be deemed
disclosed with respect to other Schedules to which such disclosure would be
reasonably deemed related if it is reasonably apparent on the face of the
disclosure of such matter that such matter also pertains another Schedule or
Schedules.
 
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“SEC” means the Securities and Exchange Commission.
 
“Seller Indemnitees” - See Section 7.3.
 
“Sellers” - See preamble hereto.
 
“Seller Parties” - See preamble hereto.
 
“Tax” or “Taxes” means all federal, state, local or foreign taxes, charges,
levies, or other like assessments, including, without limitation, income, gross
income, gross receipts, production, excise, employment, sales, use, transfer, ad
valorem, profits, license, capital stock, franchise, severance, stamp,
withholding, Social Security, employment, unemployment, disability, worker’s
compensation, payroll, utility, windfall profit, custom duties, personal
property, real property, registration, value-added, alternative or add-on
minimum, estimated and other taxes, or like charges of any kind whatsoever,
including any interest, penalties or additions thereto, imposed by any
Governmental Entity. This definition includes any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person.
 
“Tax Return” means any return, report, information return or other similar
document or statement (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment or collection of any Tax or the administration of any
Laws, regulations or administrative requirements relating to any Tax, including,
without limitation, any information, return, claim for refund, amended return or
declaration of estimated Tax and all federal, state, local and foreign returns,
reports and similar statements.
 
“Termination Restriction Date” means the day on which both of the following have
occurred: (a) a third party, on terms and conditions that are reasonably
acceptable to the Buyer and the Seller Parties, either directly or through a
party to this Agreement, (i) closes on a loan of $3,000,000 or more to the
Company, or (ii) accepts an assignment of all amounts due and owing under the
Foothills Loan; and (b) to the extent that the Company’s borrowing capacity is
in excess of $3,000,000 under the terms and conditions of a loan made in
accordance with (a)(i) or an assignment made in accordance with (a)(ii), as the
case may be, such excess amount is delivered by the Company to the Buyer in an
amount necessary to repay any unreimbursed advances made by the Buyer to the
Company to the full extent permitted by the terms and conditions of such loan or
assignment.
 
“Third Party Claim” - See Section 7.5(b).
 
“Transaction Documents” means all documents and agreements to be entered into by
one or more of the parties to this Agreement in connection with the transactions
contemplated by this Agreement.
 
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“USAC” - See Section 9.10.
 
“WARN Act” means the Worker Adjustment and Retraining Notification Act, 29
U.S.C. §§ 2101 et. seq. and any corresponding state laws that could be applied
to any Business Employee.
 
SECTION 2. BASIC TRANSACTION.

2.1    Sale of Acquired Assets. On the terms and subject to the conditions of
this Agreement, at the Closing the Company shall sell, transfer, convey and
deliver the Acquired Assets to the Buyer, free and clear of all security
interests, liens, claims, charges, restrictions or encumbrances of any kind
(except for the Permitted Liens), in exchange for the Buyer’s acceptance of the
assignment of the Assumed Liabilities from the Company set forth in Section 2.2.
 
2.2    Assumption of Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, at the Closing the Buyer agrees to assume and
become responsible for the Assumed Liabilities in exchange for the Company’s
transfer, conveyance and delivery of the Acquired Assets set forth in Section
2.1. The Buyer will not, however, assume or otherwise be obligated for the
Excluded Liabilities or any other Liability.
 
2.3    Post-Effective Date Adjustment and Payment. In order to adjust the
consideration under this Agreement for changes to the Company’s financial
condition in the period between the Effective Date and the Execution Date, on or
before the Execution Date ACI shall have paid the Company $496,155 which shall
be deemed to be Acquired Assets.
 
2.4   Adjustment to Company Balance Sheet.
 
(a) As soon as practicable following the Execution Date, the Buyer will review
the Company Balance Sheet. If the Buyer determines that the Company Balance
Sheet contained material errors or omissions which affect the amount and type of
Assumed Liabilities, as soon as reasonably practicable following the Execution
Date the Buyer will deliver to the Seller Parties a revised Company Balance
Sheet which accurately reflects the Company’s balance sheet at and as of April
30, 2005 (the “Revised Company Balance Sheet”). The Buyer, in conjunction with
its regular outside accountants, will prepare the Revised Company Balance Sheet
in accordance with GAAP.
 
(b) If the Seller Parties have any objections to the Revised Company Balance
Sheet, they will deliver a detailed statement describing their specific
objections to the Buyer within 20 days after receiving it. The Buyer and the
Seller Parties will then use reasonable efforts to resolve any such objections
themselves through good faith negotiation. If the parties do not obtain a final
resolution of such a dispute within 30 days after the Buyer has received the
statement of objection(s), however, the Buyer and the Seller Parties will select
a mutually acceptable, nationally-recognized accounting firm to resolve any
remaining objections. The Buyer shall pay 50% and the Seller Parties shall pay
50% of the costs and expenses of any accounting firm so used. The determination
made by such accounting firm will be set forth in writing and will be conclusive
and binding upon the parties. For purposes of this Agreement, “Final Company
Balance Sheet” means the Revised Company Balance Sheet, together with any
revisions made pursuant to this Section 2.4(b).
 
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(c) Within ten days after the Final Company Balance Sheet has been determined in
accordance with Section 2.4(b), if the Final Company Balance Sheet indicates
Financial Assets less than $14,435,246, or Assumed Liabilities in excess of
$24,264,569 , the Parent or ACI will either (i) pay to the Company, by wire
transfer or delivery of other immediately available funds, an amount equal to
such deficiency or excess, as applicable, or (ii) accept a reduction to the
Assumed Liabilities equal to such deficiency or excess, as applicable.
 
2.5    The Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place as soon as reasonably practicable
after satisfaction or waiver of all of the conditions set forth in Sections 8
and 9 at the offices of Gray, Plant, Mooty, Mooty & Bennett, P.A., 500 IDS
Center, Minneapolis, Minnesota 55402, at 10:00 a.m. local time or at such other
place and at such time as may be mutually agreed to by the parties (the “Closing
Date”).
 
2.6    Deliveries at the Closing. At the Closing the parties will do the
following: (a) the Seller Parties will execute, acknowledge (if appropriate) and
deliver to the Buyer any certificates, instruments and documents, including
those referred to in Section 9 of this Agreement, as the Buyer and its counsel
may reasonably request; and (b) the Buyer will execute, acknowledge (if
appropriate) and deliver to the Seller Parties any certificates, instruments and
documents, including those referred to in Section 8 of this Agreement, as the
Seller Parties and their counsel may reasonably request.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.

The Seller Parties hereby jointly and severally represent and warrant to the
Buyer that the statements contained in this Section 3 are correct and complete
as of the Effective Date, or such other date that is stated; and, if
specifically stated in a representation or warranty, such representation or
warranty will be correct and complete at and as of the Closing Date:

3.1    Organization, Qualification and Power. Each of the Seller Parties is, and
will be on the Closing Date, a corporation duly organized, validly existing and
in good standing under the Laws of the State or Province set forth in the
preface above. Except as set forth on Schedule 3.1, the Company is as of the
Execution Date and will be on the Closing Date, duly authorized to conduct
business and is in good standing under the Laws of each jurisdiction where such
qualification is required. The Company has, as of the Execution Date and will
have on the Closing Date, full corporate power and authority and all Licenses
and Permits necessary to carry on the businesses in which it is engaged and in
which it presently proposes to engage and to own and use the properties owned
and used by it.

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3.2    Authority. Subject to the Required ACI Stockholder Vote and receipt of
all necessary Consents, the Seller Parties have (and on the Closing Date will
have) all requisite corporate power and authority to execute and deliver this
Agreement and the Transaction Documents to which they are a party, to perform
their obligations hereunder and thereunder, and to consummate the transactions
contemplated herein and therein. This Agreement and the Transaction Documents to
which any of the Seller Parties are a party, have been (or, to the extent
executed as of the Closing, will be at the Closing) duly and validly executed
and delivered by such Seller Party and, assuming this Agreement and such
Transaction Documents have been duly authorized, executed and delivered by the
other parties thereto, this Agreement and the Transaction Documents to which
they are a party, constitute the valid and binding agreements of the Seller
Parties, enforceable against the Seller Parties in accordance with their terms
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to or
affecting creditors’ rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at Law or in
equity). The Seller Parties’ execution, delivery and performance of this
Agreement and the Transaction Documents to which any of them are a party have
been duly authorized by all necessary corporate action on the part of the Seller
Parties other than the Required ACI Stockholder Vote.

3.3    No Conflict or Violation; Consents.

(a)    Subject to the receipt of all necessary Consents, the execution and
delivery by the Seller Parties of this Agreement and the Transaction Documents
to which the Seller Parties are parties, and the performance of their
obligations hereunder and thereunder do not (i) violate any provision of any
Organizational Document of the Seller Parties, (ii) materially violate any
provision of Law, (iii) violate, result in a breach of or constitute (with or
without notice or lapse of time or both) a default under any Contract in any
material respect, (iv) result in the creation or imposition of any Lien upon any
of the assets, properties or rights of the Company, including without limitation
the Acquired Assets, or (v) result in the cancellation, modification, revocation
or suspension of any License.

(b)    Schedule 3.3 identifies each Contract that satisfies each of the
following criteria: (i) it required the payment or indicated the receipt by the
Company of more than $250,000 during calendar year 2004, (ii) it requires the
Consent of a third party for assignment to Buyer, and (iii) failure to obtain
such Consent would have a material adverse effect on the Company.

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3.4    Acquired Assets and Assumed Liabilities.

(a)    Except for the Permitted Liens, at Closing the Sellers shall have good
and marketable title to or a valid leasehold interest in or license to the
Acquired Assets, free and clear of any Lien or restriction on transfer. The
Acquired Assets constitute all of the assets used in the Business that are not
specifically identified as Excluded Assets. Except for the Acquired Assets, no
other assets will be transferred to the Buyer in connection with this Agreement,
the Transaction Documents and the transactions contemplated by this Agreement
and the Transaction Documents.

(b)    The Assumed Liabilities represent all of the Liabilities assumed by the
Buyer in accordance with this Agreement, the Transaction Documents and the
transactions contemplated by this Agreement and the Transaction Documents.
Except for the Assumed Liabilities, no other Liabilities will be transferred to
the Buyer in connection with this Agreement, the Transaction Documents and the
transactions contemplated by this Agreement and the Transaction Documents.
 
3.5    Financial Statements.  The (a) audited balance sheets of ACI at and as of
December 31, 2002, December 31, 2003 and December 31, 2004, and the related
statements of income and cash flow for ACI for the fiscal years then ended, and
(b) the unaudited balance sheet for the Company at and as of April 30, 2005 (the
“Company Balance Sheet”), the related statements of income for the Company for
the four month period ended April 30, 2005 and the related statement of income
for the Company for the one month period ended April 30, 2005 are set forth on
Schedule 3.5 (all of the foregoing statements, collectively, the “Financial
Statements”). The Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis during the respective periods and fairly
present in all material respects the financial position of ACI and the Company,
respectively. The Financial Statements accurately reflect, respectively, the
results of ACI’s or the Company’s operations and changes in cash flow at the
respective dates thereof and the results of operations of ACI or the Company for
the respective periods covered by the statements of income contained therein,
subject to normal year-end adjustments and lack of footnotes and other
presentation items.  The Company Balance Sheet and the related statements of
income for the Company for the four month period ended April 30, 2005 accurately
reflect in all material respects the assets, liabilities, costs and expenses of
the Company as they relate to the business of the Company and are in all
material respects accurate, complete, correct and in accordance with the books
of account and records of the Company.

3.6    Absence of Certain Changes or Events. Since the Effective Date and up to
the Execution Date there has been no material adverse change in the properties,
assets, condition (financial or otherwise), liabilities or operations of the
Company that has not been adjusted for pursuant to Section 2.3 or 2.4.

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3.7    Absence of Undisclosed Liabilities. There are no Liabilities with respect
to the Business or the Acquired Assets for which the Buyer may become obligated
or otherwise responsible other than the Assumed Liabilities.

3.8    Tax Matters.  Except as set forth on Schedule 3.8 or except to the extent
it is an Excluded Liability:

(a)    The Company has filed all Tax Returns required to be filed prior to the
Effective Date, and all such Tax Returns were correct, complete and accurately
reflect all Liability for Taxes for the periods covered thereby, in all material
respects. The Company has paid all Taxes due and payable by Company (whether or
not shown on a Tax Return). Without limiting the foregoing, none of the Tax
Returns contains any position that is, or would be, subject to penalties under
section 6662 of the Code (or any corresponding provisions of state, local or
non-U.S. Tax law). The Company has not waived any statutes of limitation in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency which waiver or extension remains in effect. No action,
suit, proceeding, or audit is pending against or with respect to the Company
regarding Taxes.

(b)    No federal, state or local examination or administrative or judicial
proceeding currently exists or is outstanding and unresolved with regard to
Taxes or Tax Returns of the Company. To the Knowledge of Sellers, there is no
reason to believe that a Tax authority may assess any additional Taxes against
the Company with respect to a pre-Effective Date Tax period for which Tax
Returns have been filed. There is no material dispute or claim concerning any
Tax liability of the Company asserted by any Taxing authority in writing. The
Company (i) is not a party to any Tax sharing, Tax indemnity, Tax allocation or
other agreement or arrangement with any entity and (ii) is not a party to or
bound by any closing agreement or offer in compromise with any Taxing authority.
 
(c)    There is no Tax Lien (other than Permitted Liens) against the Acquired
Assets.
 
(d)    True, correct and complete copies of all income Tax Returns, income Tax
examination reports and statements of deficiencies assessed against, or agreed
to with respect to the Company with the IRS in the one year period preceding the
Effective Date and any similar items requested by Buyer have been delivered to
the Buyer.

(e)    The Company (or predecessor thereof) (i) is not and never has been a
member of an Affiliated Group other than the ACI Affiliated Group, and (ii) does
not have any liability for the Taxes of any Person under Treasury Regulation
Section 1.1502-6 (or similar provision of state, local or non-U.S. law) as a
transferee or successor, by contract or otherwise.

(f)    Neither of the Sellers is a “foreign person” as that term is referred to
in Code § 1445(f)(3).

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(g)    The ACI Affiliated Group has filed all income Tax Returns required to be
filed prior to the Effective Date and all such income Tax Returns were correct,
complete, and accurately reflect all Liability for income Taxes for the periods
covered thereby, in each case in all material respects. The ACI Affiliated Group
has paid all income Taxes due and payable by the ACI Affiliated Group (whether
or not shown due on a Tax Return). ACI’s only consolidated Tax Returns are for
income Taxes.

(h)    No federal, state or local examination or administrative or judicial
proceeding exists or to the Sellers’ Knowledge has been initiated with regard to
income Taxes or income Tax Returns of the ACI Affiliated Group. There is no
material dispute or claim concerning any income Tax liability of the ACI
Affiliated Group asserted by any Taxing authority in writing.
 
3.9    Real Property. The Company does not own any real property. Schedule 3.9
lists all real property leases to which Company is a party (each a “Lease” and,
collectively, the “Leases”). All of the Leases are valid and in full force and
effect, and the Company is not in default thereunder nor to the Knowledge of
Sellers has any such breach been asserted in writing or otherwise.

3.10    Personal Property. True and correct copies of all leases for personal
property, except for leases having future minimum lease payments of less than
$50,000 in any twelve-month period, (each a “Personal Property Leases”) used or
employed by the Company are listed on the attached Schedule 3.10, which includes
the name of the lessor, the address of the lessor, the term of the lease, and
the start date of the lease. All of the Personal Property Leases are valid and
in full force and effect, and the Company is not in default thereunder nor to
the Knowledge of Sellers has any such breach been asserted in writing or
otherwise. The Acquired Assets related to the Company’s “switching” facilities
are each free from defects (patent and latent), have been maintained in
accordance with normal industry practice, are in good operating condition and
repair (subject to normal wear and tear), and are suitable for the purposes for
which they are presently used.

3.11    Intellectual Property.

(a)    Schedule 3.11(a) sets forth a complete and correct list of (i) all
patents, registered trademarks, service marks, trade names, copyrights and
applications for any of the foregoing included in the Business Intellectual
Property, and (ii) all material Intellectual Property which is licensed by the
Company from any third party. The Business Intellectual Property, together with
all other Intellectual Property licensed by the Company, constitutes all of the
proprietary rights used in the operation of the Business as currently conducted.

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(b)    Except as set forth on Schedule 3.11(b), the Company has not received any
written claim from or to the Knowledge of Sellers been advised by any Person
that (i) the Company does not own or have the right to use any Business
Intellectual Property, (ii) any governmental action to prohibit use of the
Business Intellectual Property, or (iii) the use of any Business Intellectual
Property infringes upon the Intellectual Property rights of a third party. The
Company is not a party to any Action alleging infringement or misuse of any
Intellectual Property. To the Knowledge of Sellers, no third party is infringing
any Business Intellectual Property.

(c)    Notwithstanding any provision of this Agreement to the contrary, none of
the Seller Parties makes any representation or warranty that any Intellectual
Property, including the Business Intellectual Property, does not infringe the
rights or any third party.

3.12    Licenses and Permits. Schedule 3.12 of this Agreement sets forth all
material licenses, permits, franchises, authorizations and approvals issued or
granted for use by the Company or in the Business by any Governmental Entity,
including, but not limited to, the FCC and the PUCs (collectively, the “Licenses
and Permits”), and all pending applications therefore. Each License and Permit
has been fully paid for and is held by the Company and is valid and in full
force and effect, and is not subject to any pending or, to the Knowledge of
Sellers, threatened administrative or judicial proceeding to revoke, cancel,
suspend or declare such License and Permit invalid in any respect or subject to
any fine or penalty or civil penalty. The Company has all of the Licenses or
Permits required of it to permit the continued lawful conduct of the Business in
the manner now conducted and the ownership, occupancy and operations of its
assets for their present use. The Company is not in violation in any material
respect of any of the License or Permit requirements. 

3.13    Compliance with Laws. The Company is in compliance in all material
respects with all applicable Laws. None of the Sellers has received written
notice, or to the Knowledge of Sellers has been advised of any violation of any
such Law that could give rise to a material obligation or Liability of the
Company or the Business. The Company is not in default in any respect with
respect to any order, writ, judgment, award, injunction or decree of any
Governmental Entity or arbitrator, material to the operations of the Business. 

3.14    Litigation. Except for consumer complaints lodged in the ordinary course
of business and as otherwise disclosed in Schedule 3.14, there is no action,
claim, suit, proceedings, demand, litigation, arbitration, mediation or other
proceeding by or before any Governmental Entity (each, an “Action”) pending or,
to the Knowledge of the Sellers, threatened by or against the Company.

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3.15    Contracts.
 
(a)    Schedule 3.15 sets forth the party names and effective date of any
Contract that requires the receipt or payment by the Company of more than
$100,000 in the twelve months following the Effective Date (each, a “Material
Contract”), including without limitation any of the following types of Contracts
that is a Material Contract: (i) any mortgage, indenture, security agreement,
pledge or other Contract relating to the borrowing of money or extension of
credit; (ii) any employment, severance, bonus, retention, employee plans,
employment and labor agreements or material consulting Contract; (iii) any
distributor, agency, reseller, sales, license, carrier, vendor or similar
Contract; (iv) any Contract which (A) provides for the performance of services
for customers of the Company, or (B) the sale of products by the Company; (v)
intercompany Contracts to which the Company is a party or to which the Company
is otherwise bound and that will continue following the Effective Date; (vi) any
Contract where the counterparty is a Governmental Entity; (vii) any service and
other similar contracts; (viii) any Lease; and (ix) any personal property
leases; (x) any Benefits Plans; (xi) agreements and other arrangements for the
sale of any assets, property or rights other than in the ordinary course of
business or for the grant of any options or preferential rights to purchase an
assets, property or rights; (xii) documents granting any powers of attorney with
respect to the affairs of the Company; (xiii) suretyship, contracts, performance
bonds, working capital maintenance or other forms of guaranty agreements; (xiv)
contracts or commitments limited or restraining the Sellers or their Affiliates
from engaging or competing in any lines of business or with any person, firm or
corporation, (xv) any partnership or joint venture agreement; and (xvi) material
licenses, including but not limited to material software licenses.. 
 
(b)    With respect to each such Material Contract: (i) it is legal, valid,
binding, enforceable and in full force and effect; (ii) assuming all necessary
Consents are obtained, it will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the consummation of
the transactions contemplated hereby; (iii) Company is not and to the Knowledge
of Sellers no other party is in breach or default; (iv) no event has occurred
that, with notice or lapse of time, would constitute a material breach or
default, or permit termination, modification, or acceleration, under the
Material Contract; and (v) Company has not and to the Knowledge of Sellers no
other party has repudiated any provision of the Material Contract.

3.16    Employee Plans
 
(a)    The attached Schedule 3.16 sets forth the following: (i) all “employee
welfare benefit plans,” as defined in Section 3(1) of ERISA, sponsored or
maintained by the Company or to which contributions are made by the Company on
behalf of current employees of the Company (such employees are collectively
referred to as the “Business Employees”) or with respect to which the Company or
any ERISA Affiliate has any Liability or potential Liability (the “Welfare
Plans”); (ii) all “employee pension benefit plans,” as defined in Section 3(2)
of ERISA, sponsored or maintained by the Company or any trade or business
(whether or not incorporated) which is or has ever been under control or treated
as a single employer with the Company under Section 414(b), (c), (m) or (o) of
the Code (“ERISA Affiliate”) or to which the Company or any ERISA Affiliate has
contributed on behalf of the Business Employees or any former employee of the
Company or with respect to which the Company or any ERISA Affiliate has any
Liability or potential Liability (the “Pension Plans”); and (iii) all other
employee benefit arrangements, programs, policies or payroll practices,
including without limitation all severance pay, sick leave, vacation pay, salary
continuation for disability, retirement, deferred compensation, bonus,
hospitalization, medical insurance, cafeteria, life insurance, tuition
reimbursement and scholarship programs sponsored or maintained by the Company or
to which contributions are made by the Company on behalf of Business Employees
or with respect to which the Company or any ERISA Affiliate has any Liability or
potential Liability (collectively, such programs, policies and practices,
together with the Welfare Plans and Pension Plans, are referred to as the
“Benefit Plans”).

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(b)    The Company does not sponsor, maintain or contribute to or in any way
directly or indirectly (including, without limitation, indirect liability as a
member of a controlled group that includes an ERISA Affiliate that has any such
responsibility)(whether contingent or otherwise) with respect to any plan to
which the funding requirements of Section 412 of the Code apply or to any
“multiemployer plan” as defined in Section 3(37) or 4001(a)(3) of ERISA and has
not had any direct or indirect responsibility within the three years preceding
the date of the signing of this Agreement.

(c)    With respect to each Pension Plan that is intended to qualify under Code
Section 401(a), such Pension Plan and its related trust has received or has an
application pending for obtaining a determination letter from the IRS that it is
so qualified and that its trust is exempt from Tax under Section 501(a) of the
Code and no facts or set of circumstances exist that could reasonably be
expected to cause such plan and related trust to be disqualified or to be so
non-exempt from Tax. Each Pension Plan has been administered in accordance with
its terms and all applicable legal requirements. There have been no prohibited
transactions within the meaning of Code Section 4975 or breach of fiduciary duty
under ERISA and no investigations by any governmental agency or other actions or
written claims against or directly involving any Benefit Plan (except claims for
benefits payable in the normal operation of the Benefit Plans). With respect to
each Benefit Plan, all required reports and descriptions (including without
limitation Forms 5500 and summary plan descriptions) have been timely filed or
distributed in accordance with applicable Law.

(d)    All contributions (including all employer contributions and employee
salary reduction contributions) required to be made to or with respect to each
Benefit Plan with respect to the service of Business Employees or former
employees of the Company as of the Effective Date and all contributions for any
period ending on or before the Effective Date that are not yet due have been
made or have been accrued for in the books and records of the Company.

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(e)    The Company has complied with the health care continuation requirements
of Part 6 of Title I of ERISA and all similar state laws.

(f)    The Company does not maintain, contribute to or have an obligation to
contribute to, nor has any liability with respect to, any employee welfare
benefit plan providing health or life insurance or other welfare type benefits
beyond termination of employment or retirement other than in accordance with
COBRA.

(g)    None of the Benefit Plans is a deferred compensation plan within the
meaning of Code Section 409A.

3.17    Insurance. Schedule 3.17 lists all policies of insurance insuring the
Company, its assets, properties, employees, operations, and the Business. None
of the Seller Parties has received written notice of cancellation or adverse
modification of any such insurance.

3.18    Transactions with Sellers and Affiliates. Except as set forth on
Schedule 3.18, no officer or director of the Seller Parties (each a “Related
Party”), or, to the Knowledge of the Sellers, any individual related by blood,
marriage or adoption to any Related Party or any entity controlled by a Related
Party, is a party to any Contract with the Company.

3.19    Labor and Employment Matters.

(a)    The Company has complied in all material respects with all Laws relating
to employment, including without limitation all Laws concerning equal employment
opportunity, nondiscrimination, accommodations, leaves and absences,
immigration, classification of employees as exempt or non-exempt, payment of
wages, hours, unemployment taxes and benefits, other employment-related
benefits, including ERISA, HIPAA and COBRA, any and all Laws relating to
collective bargaining, the payment of social security and similar Taxes,
occupational safety and health and plant closing or layoffs.

(b)    Except as set forth on Schedule 3.19(b), the Company is not a party to or
bound by any collective bargaining agreement, nor has the Company experienced
any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Company has not committed any unfair labor practice.

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(c)    Except as listed on Schedule 3.14, the Company has no unresolved
employment-related charges, claims, lawsuits or other liabilities. Except as
listed on Schedule 3.14, there are no unresolved complaints from any current or
former employees concerning any matters relating to employment with the Company.
Except for the Assumed Liabilities, the Company has no liability for any
employment-related matters, including without limitation any claims for unpaid
wages, salary, bonuses, benefits, severance or other compensation due to current
or former employees, whether or not asserted.

(d)    The Company has not treated any Person who should have been treated as an
employee, under any Law or otherwise, as an independent contractor.

(e)    Except for the Assumed Liabilities, no current or former employee has,
and the Company has no liability for, any accrued and unpaid vacation, flexible
time off, paid time off or other similar benefits.

(f)    Except as listed on Schedule 3.19(f), the Company is not a party to any
agreement for the employment of any individual (other than pursuant to the
Company standard form of employment offer letter and related standard
documentation for at-will employment, which are attached to Schedule 3.19(f)
along with a list of all Persons who are subject to such letter and
documentation), and all of the current employees of the Company are employees
at-will and may be terminated by the Company at any time and for any or no
reason without any liability.

(g)    Schedule 3.19(g) sets forth a list of all Business Employees and their
positions, rates of pay and original hire dates. To the Knowledge of the
Sellers, none of the employees of the Company intend to voluntarily cease their
employment with the Company prior to the Effective Date or following the
Closing.

3.20    Environmental, Health and Safety Matters.
 
(a)    Each of the Company and its predecessors and Affiliates has complied and
is in compliance with all Laws concerning public health and safety, worker
health and safety, and pollution or protection of the environment, the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control or cleanup of any hazardous materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and in effect, now or in the
future, including without limitation all Environmental Laws. To the Knowledge of
the Sellers, there are no facts or circumstances that would give rise to any
Liability to Buyer under any such Laws.

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(b)    To the Knowledge of the Sellers, no portion of the real property now or
previously leased by the Company, including without limitation all real property
covered by any lease of real property, contains or contained any Hazardous
Materials or substances, tanks, lead paint, asbestos, any type of wells or
petroleum, nor is or was there any other release or disposal that has occurred
at such property during the Company’s occupancy that may violate any Laws.

3.21    Accounts Receivable; Accounts Payable.
 
(a)    Accounts Receivable. All notes and accounts receivable of the Company set
forth on the Company Balance Sheet which are included within the Acquired Assets
arose from the provision of services or the sale of goods in the ordinary course
of business and are valid and enforceable claims, are reflected properly on its
books and records, are valid receivables subject to no setoffs or counterclaims,
and are collectible at their recorded amounts net of reserves.
 
(b)    Accounts Payable. The accounts payable of the Company set forth on the
Company Balance Sheet which are included within the Assumed Liabilities
represent or will represent valid obligations arising from transactions actually
made or services actually performed in the ordinary course of the Business in
accordance with GAAP.

3.22    No Brokers. Except for any amounts owed by the Seller Parties to
Rebensdorf & Associates, Inc., the Seller Parties have not taken any action that
would give rise to a claim by any broker, finder or similar intermediary against
the Buyer for any broker’s, finder’s or similar fee or other commission in
connection with this Agreement, the Transaction Documents or the transactions
contemplated by this Agreement and the Transaction Documents. 

3.23    Customer Relations. To the Knowledge of the Sellers, there exists no
condition or state of facts or circumstances involving the customers, wholesale
carriers, vendors, suppliers, distributors or commissioned sales agents of the
Company that will result in the termination or material change in the business
relationship between the Company and such party or parties except for changes in
the ordinary course of business. To the Knowledge of Sellers, except as set
forth on Schedule 3.23, no material customer, wholesale carrier, vendor,
suppliers, distributors or commissioned sales agents has indicated that it will
stop or materially decrease the rate of business done with the Sellers except
for changes in the ordinary course of Company’s business.

3.24    Parent Stock. The Seller Parties are the registered and/or beneficial
owners of that number of shares of ACI’s common stock set forth in the Schedule
13D/A filed by the Parent and ACI with the SEC on February 16, 2005 (the
“Schedule 13D/A”). Except for the common stock set forth in Schedule 13D/A, none
of the Parent, ACI or their Affiliates own or hold any rights to acquire any
additional securities of ACI.

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3.25    Qualifications. EXCEPT AS SET FORTH IN SECTION 3, SELLERS MAKE NO AND
DISCLAIM ALL REPRESENTATIONS AND WARRANTIES INCLUDING ANY IMPLIED WARRANTY OF
NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

SECTION 4.  REPRESENTATIONS AND WARRANTIES OF THE BUYER.
 
The Buyer hereby represents and warrants to the Sellers that the statements
contained in this Section 4 are correct and complete as of the Effective Date,
or such other date that is stated; and, if specifically stated in a
representation or warranty, such representation or warranty will be correct and
complete at and as of the Closing Date:

4.1    Corporate Organization. Each of the Buyer and Guarantor is and will be on
the Closing Date a limited liability company duly organized, validly existing
and in good standing under the Laws of the State of Minnesota and have now and
will have on the Closing Date all requisite limited liability company power to
own their properties and assets and to conduct their business as now conducted.

4.2    Authorization. The Buyer and Guarantor have and on the Closing Date will
have all requisite limited liability company power and authority to enter into
this Agreement and the Transaction Documents, to carry out their obligations
hereunder and thereunder and to consummate the transactions contemplated herein
and therein. The execution and delivery of this Agreement and the Transaction
Documents and the performance of the Buyer’s and Guarantor’s obligations
hereunder and thereunder have been (or, to the extent executed as of the
Closing, will be at the Closing) duly authorized by all necessary action by the
governing body of the Buyer and Guarantor and no other proceedings on the part
of the Buyer or Guarantor are necessary to authorize such execution, delivery
and performance. This Agreement and the Transaction Documents have been duly and
validly executed and delivered by the Buyer and Guarantor and assuming they have
been duly authorized, executed and delivered by the other Persons who are
parties thereto, constitute the Buyer’s and Guarantor’s valid and binding
obligations, enforceable against the Buyer and Guarantor in accordance with
their terms except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now
or hereafter in effect, relating to or limiting creditors’ rights generally, and
general principles of equity (regardless of whether enforceability is considered
in a proceeding at Law or in equity).

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4.3    No Conflict or Violation. The execution, delivery and performance by the
Buyer and Guarantor of this Agreement and the Transaction Documents do not (a)
violate any provision of Organizational Documents of the Buyer or Guarantor, (b)
violate any provision of Law, or (c) violate or result in a breach of or
constitute (with or without due notice or lapse of time or both) a default under
any material contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Buyer or Guarantor
is a party.

4.4    Consents and Approvals. The execution, delivery and performance of this
Agreement and the Transaction Documents on behalf of the Buyer does not require
the consent or approval of, or filing with, any Governmental Entity or other
Person, except for those required under or in relation to the Communications Act
and any rules and regulations promulgated by the FCC or the PUCs.

4.5    No Brokers. The Buyer has not taken any action that would give rise to a
claim by any broker, finder or similar intermediary against the Seller Parties
for any broker’s, finder’s or similar fee or other commission in connection with
this Agreement or the transactions contemplated hereby.

4.6    Proxy Statement. None of the information supplied in writing by the Buyer
for inclusion or incorporation by reference in the Proxy Statement will, at the
date it is first mailed to ACI’s stockholders and at the time of the Required
ACI Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.

SECTION 5. COVENANTS OF THE PARTIES.

5.1    Restructuring Matters.
 
(a)    Insurance. Prior to the Closing Date, ACI will maintain the insurance
policies listed on Schedule 3.17 that are currently held by ACI. Effective on
the Closing Date, the Company will cease to be a beneficiary and/or insured
under any insurance policy maintained by Seller Parties. The Buyer shall be
entitled to any insurance premium or other refund related to the removal of the
Company from such insurance policies.

(b)    Assets. Notwithstanding any provision of this Agreement or the
Transaction Documents whatsoever, neither this Agreement or the Transaction
Documents transfers or grants to the Buyer or its Affiliates any right, title or
interest to or in any Intellectual Property of the Sellers or their Affiliates
other than the Business Intellectual Property.

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(c)    Counsel Corporation. On or prior to the Closing Date, the Buyer shall
provide all bonds and other security necessary to relieve the Parent and its
Affiliates other than Company of any obligation or liability under and related
to the items identified on Schedule 5.1(c) that are related to the Company’s
Licenses and Permits. On or prior to the Closing Date, the Buyer shall provide
all guarantees or other assurances necessary to relieve the Parent and its
Affiliates of any obligation or liability under and related to the guarantees of
the Company obligations identified on Schedule 5.1(c).

(d)    Acceris Name. Within sixty (60) Business Days after the Closing Date, the
Seller Parties shall make or cause their Affiliates or subsidiaries to make any
necessary filings with any Governmental Entity and take any other action
necessary to amend their respective Organizational Documents so that the name of
the Seller Parties and their Affiliates do not contain the word “Acceris” or any
derivative or variation thereof. The Company hereby grants the Buyer a license
to use the name “Acceris” or any derivative or variation thereof for the purpose
of and so long as necessary to allow the Buyer to give the Company’s customers
any notice of the transaction required by Law and for the purpose of
facilitating the Buyer’s making of required filings with Governmental Entities.
All use of the Company’s trademarks shall be in a manner consistent with the
Company’s prior use of such trademarks.

(e)    Website. Effective on the Closing Date and for a period of one-year
thereafter, the Buyer shall cause the website located at the URL www.acceris.com
(the “ACC Website”) to display a prominent hyperlink to a website to be designed
by ACI prior to the Closing (the “ACI Website”). The Buyer and ACI shall
cooperate to move all content related to ACI from the ACC Website to the ACI
Website effective on the Closing Date. Effective on the Closing Date, the Buyer
shall take control of the website located at URL www.acceris.com and own the ACC
Website.

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5.2    Stockholder Approval Mechanics.

(a)    Proxy Statement. As soon as reasonably practicable following the
Effective Date, the Seller Parties shall prepare and cause to be filed the Proxy
Statement with the SEC. The Seller Parties shall cause the Proxy Statement to
comply with the rules and regulations promulgated by the SEC and shall respond
promptly to any comments of the SEC or its staff. The Buyer and its counsel
shall be given an opportunity to review and comment on the Proxy Statement and
any comments thereto by the SEC or its staff prior to any filing with the SEC.
If the Seller Parties or the Buyer become aware of any information that should
be disclosed in an amendment or supplement to the Proxy Statement, then it shall
promptly inform the other thereof and the Seller Parties shall file such
amendment or supplement with the SEC and, if appropriate, mail such amendment or
supplement to the stockholders of ACI.

(b)    Stockholders’ Meeting. The Seller Parties shall take all action necessary
under all applicable Laws to call, give notice of and hold a meeting of the
holders of ACI’s capital stock to vote on a proposal to approve this Agreement
and the transactions contemplated by this Agreement (the “ACI Stockholders
Meeting”). The Seller Parties shall use commercially reasonable efforts to
solicit proxies in favor of the adoption of this Agreement, the Transaction
Documents and the transactions contemplated by this Agreement and the
Transaction Documents. The ACI Stockholders Meeting shall be held (on a date
selected by the Seller Parties ) within a reasonable time period after this
Agreement is executed by the parties.

(c)    Parent Stock. The Parent agrees that it will cause all of the shares of
capital stock of ACI beneficially owned by the Parent and its Affiliates, and
outstanding as the record date for any meeting of the stockholders of ACI called
to consider and vote to approve the transactions contemplated by this Agreement,
including any shares of ACI’s capital stock acquired after the Effective Date
(the “Parent Stock”), to be voted in favor of this Agreement and the
transactions contemplated buy this Agreement. The Parent further agrees that it
will not, and that it will cause its Affiliates not to, contract to sell,
encumber, sell or otherwise transfer or dispose of any of the Parent Stock or
any interest therein or securities convertible therein to or any voting rights
with respect thereto other than (i) following termination of this Agreement, or
(ii) with Buyer’s prior written consent. After the Execution Date and before the
record date for the ACI Stockholders Meeting, ACI shall not issue any additional
capital stock other than ordinary course issuances and under option plans that
would result in a change of control of ACI.

5.3    Outstanding Debt. On or prior to the Closing Date, the Seller Parties
shall satisfy those Debts of the Company that are set forth on Schedule 5.3 and
obtain releases of those Liens that are set forth on Schedule 5.3.

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5.4    Corrections to Schedules. Schedule 3.3 will be amended by the Seller
Parties and such amendment shall be delivered to the Buyer in the 20 Business
days following the Execution Date. If either party discovers that any of its
representations or warranties prior to the Closing was not true and correct in
any material respect when made, then such party shall promptly deliver to the
other a correction to the applicable Schedule specifying such change. Any such
correction made prior to the Closing shall be binding and shall be deemed to
supplement or amend the Schedules for the purpose of determining the accuracy of
any of the representations and warranties or other covenants made by such party
in this Agreement as of the Closing Date but shall not affect the rights of the
other party for the misstatement as of the Effective Date.

5.5    Covenant Not to Compete; Non-Solicitation.
 
(a)    For a period of three (3) years following the Closing Date, the Seller
Parties shall not (and the Parent will cause its Affiliates to not) directly or
indirectly, (i) own, manage, operate, control, support, financially or otherwise
(e.g., by providing consulting services to, or lending a service or trade mark
to), or participate in the ownership, management, operation, control or support
of, any business that directly or indirectly competes with the Business;
provided that nothing contained in this Agreement or the Transaction Documents
shall restrict the right of the Seller Parties or their Affiliates to exploit,
by way of sale, license or otherwise, the assets owned or licensed by the Seller
Parties or their Affiliates or continuing to engage in related research and
development activities, or (ii) induce or seek to induce any customer, supplier,
agent, licensee or other Person with a prior or current business relationship
with the Company to terminate or adversely change its business relationship with
the Buyer or interfere in such relationship in any way other than as necessary
to enforce the rights of the Seller Parties against any such customer, supplier,
agent, licensee or other Person.

(b)    For a period of twenty four (24) months following the Closing Date, none
of the Seller Parties or their Affiliates on one hand nor the Buyer and its
Affiliates on the other hand shall directly or indirectly encourage, induce,
attempt to induce, solicit or attempt to solicit, any employee of the other to
terminate his or her relationship with his or her employer; provided however
that each party and its Affiliates may publish solicitations for employees in
the general media in the ordinary course of its business. Notwithstanding the
foregoing, for a period of two (2) years following the Closing Date, neither the
Seller Parties nor Buyer shall, and shall cause their Affiliates to not,
directly or indirectly employ or otherwise engage in any manner any of their
respective employees that are listed on Schedule 5.5(b) attached hereto.

(c)    Each party acknowledges that the remedy at Law for breach of the
provisions of this Section 5.5 shall be inadequate and that, in addition to any
other remedy the party may have, it shall be entitled to an injunction
restraining any breach or threatened breach, without any bond or other security
being required and without the necessity of showing actual damages. If any court
construes the covenant in this Section 5.5, or any part of this Section 5.5, to
be unenforceable in any respect, the court may reduce the duration or area to
the extent necessary so that the provision is enforceable, and the provision, as
reduced, shall then be enforced.

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5.6    Compliance. The Buyer and the Seller Parties shall comply with the
requirements of applicable Law with respect to the operations of the Company
including preventing access to each other’s competitively sensitive information.

5.7    Consents.

(a)    Prior to the Closing, the Seller Parties shall use their commercially
reasonable efforts to obtain the third party Consents listed on Schedule 3.3. If
any consent is not obtained prior to the Closing despite the Seller Parties’
compliance with this Section 5.7(a), then to the extent it would not constitute
a violation of Law, the Buyer may, but is not required to, deliver to the Seller
Parties a written waiver of any condition to the Closing contained in Section
9.3 with respect thereto. If such a waiver is delivered to the Seller Parties,
the Seller Parties shall continue to use their commercially reasonable efforts
to obtain such consents for a period of 180 days following the Closing with the
full cooperation and participation of the Seller Parties to obtain such consent
within such one hundred eighty (180) day period. Notwithstanding the foregoing,
if any Consent listed on Schedule 3.3 is not or cannot be obtained, or if an
attempted assignment of the Contract for which such Consent is required would be
ineffective or would affect the applicable contracting party’s rights so that
the Buyer would not receive all of the benefits under the Contract for which
Consent is required, each party to this Agreement will use its respective
commercially reasonable efforts to provide the Buyer with the benefits and
relieve the Sellers of the burdens of the Contract for which Consent is
required, including without limitation enforcement for the benefit of the Buyer
of any and all rights of the Sellers (and the extinguishment of the burdens of
the Seller Parties) against a third party thereto arising out of the default or
cancellation by such third party or otherwise.

(b)    Each party hereby agrees (i) to file all necessary applications for all
Consents required under regulatory Law at the appropriate Governmental Entity
with respect to the transactions contemplated hereby as promptly as practical
after the Effective Date, and (ii) to file all necessary applications for
required consents with PUCs and the FCC jointly to the extent permitted under
applicable Laws and to the extent reasonably necessary under the circumstances.
Each party further agrees that (1) all such joint filings shall be prepared by
the Buyer in cooperation with the Seller Parties, and (2) with respect to all
filings, whether or not joint filings, each party shall have the right to review
and comment on in advance drafts of all communications, petitions, applications
and other filings made or prepared by the Buyer or the Sellers in connection
with obtaining the requisite Consents required under regulatory Law from the
appropriate Governmental Entity for the transactions contemplated hereby.

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(c)    Except with respect to counsel or other advisors retained by a party, for
which such party shall bear its own expenses, the Buyer on one hand and the
Seller Parties on the other hand shall share equally in all costs, including
attorneys fees, filings fees and the like, incurred in seeking and obtaining the
necessary Consents under regulatory Law.

5.8    Employee Benefit Matters.

(a)    The Sellers shall retain responsibility for any valid claim under a
Benefit Plan made by a Business Employee on or after the Effective Date arising
from a claim incurred on or before the Effective Date that is not an Assumed
Liability. Buyer shall not be responsible for any claim under a Benefit Plan
made by a Business Employee between the Effective Date and the Execution Date
that is outside the ordinary course of Company’s business consistent with the
history of the Benefit Plans, including but not limited to claims arising from
death or an extraordinary or catastrophic injury. For purposes of this Section
5.8(a), (i) a claim for life insurance is deemed incurred when the death occurs,
and (ii) a medical or dental claim is deemed incurred when the services are
rendered, the supplies are provided or medication is prescribed, and not when
the condition arose, except that claims relating to a hospital confinement that
begins before the Effective Date shall be treated as incurred on or before the
Effective Date. The Sellers shall retain responsibility for any Business
Employee who has begun to receive payments under the Sellers’ long-term
disability plans before the Effective Date.

(b)    Sellers shall retain responsibility for satisfying “continuation
coverage” requirements for all “group health plans” under COBRA with respect to
(i) each former employee of the Company who experienced a “qualifying event”
under COBRA on or before the Closing Date and any spouse, dependents or
beneficiary of such former employee, and (ii) Business Employees (and any
spouse, dependents or beneficiary of such employee or other employee) with
respect to qualifying events that occur on or before the Closing Date. The
Sellers shall also retain responsibility for satisfying continuation coverage
requirements with respect to Business Employees who are not hired by the Buyer
for any reason. It is the understanding and intention of the parties that, with
respect to Business Employees who are hired by the Buyer as of the Closing Date,
that the Buyer shall be a “successor employer” and such Business Employees shall
not have a “qualifying event” under COBRA.

(c)    After the Closing Date, the Sellers shall be solely responsible for all
of the Benefit Plans and all Liabilities arising under the Sellers’ Benefit
Plans that are not Assumed Liabilities. The Buyer shall not assume any of the
Benefit Plans or any of the Liabilities arising under the Sellers’ Benefit Plans
except the Assumed Liabilities.

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5.9    Employees.

(a)    The Sellers have provided to the Buyer Schedule 3.19(g) which identifies
all Business Employees. The Sellers will terminate the employment of each of the
Business Employees as of the Closing except those listed on Schedule 5.5(b). The
Buyer will have the right, but not the obligation, to hire any of such Business
Employees as of the Closing except those listed on Schedule 5.5(b). No later
than 60 days following the Effective Date, the Sellers shall cooperate in good
faith with the Buyer to transfer to the Buyer such data relating to Business
Employees that the Buyer determines is necessary for the Buyer to determine
which of the Business Employees the Buyer wishes to extend an offer of
employment. Such data shall be updated by the Sellers as of the Closing if
required by the Buyer. The Sellers shall permit the Buyer reasonable access to
the Business Employees for the purpose of conducting interviews and extending
offers of employment.
 
(b)    Nothing in this Agreement shall create any rights in favor of any person
not a party hereto, including the Business Employees, or constitute an
employment agreement or condition of employment for any employee of the Sellers
or their Affiliates.
 
(c)    On the Closing Date the Buyer shall pay to each Business Employee an
amount equal to any and all accrued compensation (including without limitation
salary, commission, bonus or incentive pay) and termination benefits (including
any earned and/or accrued and unused vacation pay, or paid time off pay), earned
by such Business Employee as of the Closing, consistent with the Sellers’
policies and procedures in effect as of the Closing.
 
(d)    The Sellers shall give any of the Business Employees notice under the
WARN Act if required, and agree to defend, indemnify and hold the Buyer
harmless, in accordance with Article 7 below, from and against any losses,
damages and expenses, including without limitation attorneys’ fees and other
costs of litigation, arising from or relating to any WARN Act claims by Business
Employees and any claims related to the Buyer’s lawful decision to hire or not
to hire any Business Employees.
 
5.10    [Intentionally Deleted] 

5.11    Break Up Fee.

(a)    If this Agreement is terminated other than pursuant to Section 10.1(c) or
the parties otherwise fail to close on the transactions contemplated by this
Agreement, the Buyer shall be entitled to receive from Sellers an amount equal
to the following and paid in accordance with the Break Up Fee Loan Documents:
(i) any advances made by the Buyer to the Company which were made in connection
with any written agreements between the Buyer and the Sellers, less the amount
of any such advances already recovered by the Buyer; plus (ii) an amount equal
to the net income of the Company from the period beginning on the Effective Date
and ending on the date this Agreement is terminated; plus (iii) an amount equal
to five percent of the net income of the Company from the period beginning on
the Effective Date and ending on the date this Agreement is terminated
(collectively, the “Break Up Fee”).

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(b)    As security for the payment of the Break Up Fee, on or before the
Effective Date the Buyer and the Seller Parties shall have entered into the
Break Up Fee Loan Documents. The Buyer and the Seller Parties shall comply with
their respective obligations under the terms and conditions of the Break Up Fee
Loan Documents.
 
5.12    PUC Consents. If the Buyer waives or in any way amends or alters the
condition precedent of the Seller Parties set forth in Section 9.3(ii) that all
of the PUCs that are required by Law must be obtained at or before the Closing
date, the Buyer, ACI and the Company will (a) terminate their existing
Management Services Agreement, and (b) enter into a new management services
agreement for any states where such PUC approval has not been obtained, which
shall comport with all applicable Laws and provide that the Buyer will service
the customers in those states where PUC Consents have not been obtained in
consideration of the revenue generated by such customers until such time as such
PUC approval is obtained at which time such new management services agreement
shall automatically terminate.

5.13    Further Assurances.
 
(a)    Upon the terms and subject to the conditions contained herein, each of
the parties agrees, both before and after the Closing Date, (i) to use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement
and their Management Services Agreement, including using its reasonable best
efforts to satisfy the conditions precedent to each party’s obligations
hereunder, (ii) to execute, or cause to be executed, any documents, instruments
or conveyances of any kind which may be reasonably necessary or advisable to
carry out any of the transactions contemplated hereunder or under their
Management Services agreement, and (iii) to reasonably cooperate with each other
in connection with the foregoing.

(b)    To the extent the parties determine after the Closing that any of the
assets of a party or its Affiliates are held by the other party or its
Affiliates then they shall cause the holder of such assets to transfer such
assets to their rightful owner without additional consideration and, upon
request, to execute and deliver a bill of sale or other instrument of transfer
evidencing such transfer.

5.14    Confidentiality. Following the Closing Date, Buyer and the Seller
Parties agree to and to cause their Affiliates to: (a) maintain all Confidential
Information in confidence; (b) not, directly or indirectly, make known or
communicate the Confidential Information to any third party; and (c) protect the
Confidential Information from loss or theft.

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5.15    Lien Releases and Debt Restructuring Matters. On or before June 25,
2005, the Seller Parties shall deliver the following to the Buyer: (a) a written
agreement from Laurus that the Laurus Interest will be released on or before the
Closing; (b) a written agreement from Laurus that the Foothills Loan (i) can be
assigned to the Buyer without the consent of Laurus, and (ii) if the Foothills
Loan is paid off in full and replaced with another credit facility, such a
credit facility will have a collateral position that has priority over the
Laurus Interest; and (c) a written agreement from Foothills that upon
satisfaction of the Foothills Loan, at the option of the Buyer Foothills will
assign any rights it has in the Foothills Loan to the Buyer or a third party
designated by the Buyer, including without limitation the collateral position of
the Foothills Loan.

5.16    Proxy to Vote Shares. On the Execution Date, the Parent and its
applicable Affiliates shall deliver an irrevocable proxy (which shall be
considered coupled with an interest) to the Buyer signed by any necessary
officer of the Parent or such Affiliates to vote the shares identified on the
Schedule 13D/A in favor or the Required ACI Shareholder Vote. 

5.17    Guaranty. Guarantor hereby guarantees to the Seller Parties the full and
prompt performance and payment of the Buyer’s obligations under this Agreement
and the Transaction Documents (collectively, the “Guaranteed Obligations”). Any
act of the Seller Parties consisting of a waiver of any of the terms, covenants
or conditions of the Guaranteed Obligations, or the giving of any consent to any
matter or thing relating to the Guaranteed Obligations, or the granting of any
indulgences or extensions of time to the Buyer or Guarantor, may be done without
notice to Guarantor and without releasing the obligations of Guarantor
hereunder. The obligations of Guarantor hereunder shall not be released by any
of the Seller Parties’ receipt, application or release of any security given for
the payment, performance and observance of any of the Guaranteed Obligations.
Similarly, the obligations of Guarantor hereunder shall not be released by any
modification of any of the terms of the Guaranteed Obligations made by the
Seller Parties and the Buyer, but in the case of any such modification, the
liability of Guarantor shall be deemed modified in accordance with the terms of
any such modification. The liability of Guarantor hereunder shall in no way be
affected by (a) the release or discharge of the Buyer in any creditors’
receivership, bankruptcy or other proceedings, (b) the impairment, limitation or
modification of the liability of the Buyer or the estate of the Buyer in
bankruptcy, or of any remedy for the enforcement of any of the Guaranteed
Obligations resulting from the operation of any present or future provision of
the Federal bankruptcy law or any other statute or the decision of any court,
(c) the rejection or disaffirmance of any instrument, document or agreement
evidencing any of the Guaranteed Obligations in any such proceedings, (d) the
assignment or transfer of any of the Guaranteed Obligations by the Seller
Parties, (e) the cessation from any cause whatsoever of the liability of the
Buyer with respect to the Guaranteed Obligations. This is a guaranty of payment
and performance and not of collection. The liability of Guarantor hereunder
shall be direct and immediate and not conditional or contingent upon the pursuit
of any remedies against the Buyer or any other person, nor against any
collateral available to the Seller Parties. Guarantor hereby waives any right to
require that an action be brought against Buyer or any other person or to
require that resort be had to any collateral in favor of the Seller Parties
prior to discharging its obligations hereunder.

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SECTION 6. TAX MATTERS.
 
6.1    Transfer Taxes. Notwithstanding any other provision of this Agreement,
the Seller Parties shall be responsible for (without any right to be reimbursed
by the Buyer) up to $60,000 and the Buyer shall be responsible for the remainder
of any and all sales, transfer, document and stamp, bulk sale, or similar Taxes
and any conveyance fees and charges resulting from the consummation of the
transactions contemplated by this Agreement and the Transaction Documents.

6.2     Tax Returns and Contests.

(a)    Any claim as a result of a notice from a Tax authority shall be treated
as a Third Party Claim subject to the provisions of Section 7.5 hereof. In
applying those provisions, neither the Buyer nor the Seller Parties shall
resolve, settle, compromise, or abandon any issue or claim without the prior
written consent of the Buyer or the Seller Parties, as applicable, if such
action would materially and adversely affect the Tax liabilities of the Buyer or
the Seller Parties, as applicable, in any period after the Closing Date
(including the imposition of any income Tax deficiencies, the reduction of asset
basis on cost adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions or the reduction
of loss or credit carryforwards). Such consent shall not be unreasonably
withheld.

(b)    The Buyer and the Seller Parties shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the filing of
all Tax Returns and any audit, litigation, or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the request of any
other party) the provision of records and information that are reasonably
relevant to any Tax Return of the Company, audit, litigation, or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. The Buyer and the Seller Parties agree (i) to retain all books and
records with respect to Taxes or Tax matters pertinent to the Company relating
to any taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and any extension thereof) of the respective taxable
periods, and (ii) to give the other party reasonable written notice before
transferring, destroying, or discarding any such books and records and, if the
other party so requests, to allow the other party to take possession of such
books and records. The Buyer and Seller Parties further agree, upon request, to
use their commercially reasonable efforts to obtain any certificate or other
document from any Governmental Entity or other Person as may be necessary to
mitigate, reduce, or eliminate any Taxes that could be imposed (including with
respect to the consummation of the transactions contemplated herein).

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(c)    The consideration paid for the Acquired Assets shall be allocated among
the Acquired Assets in accordance with a schedule to be mutually agreed upon by
Buyer and Seller Parties within 60 days following Closing. The parties intend
such allocation to be in accordance with the provisions contained in Treasury
Regulation Section 1.1060-1T(d) and the parties agree to report the acquisition
for federal income tax purposes in accordance with such allocation. In
furtherance of the foregoing, the parties agree to execute and deliver Internal
Revenue Service Form 8594 reflecting such allocation.

SECTION 7. INDEMNIFICATION.
 
7.1    Survival. Each of the representations and warranties set forth in this
Agreement shall survive the Closing for a period terminating twelve months after
the Closing Date; provided, however, that the representations and warranties set
forth in Sections 3.1 (Organization, Qualification and Power), 3.2 (Authority),
3.3 (No Conflict or Violation; Consents), 3.4 (Acquired Assets and Assumed
Liabilities), 3.7 (Absence of Undisclosed Liabilities), 3.8 (Tax Matters), 3.16
(Employee Plans), 3.19 (Labor and Employment Matters), 3.20 (Environmental,
Health and Safety Matters) 3.21 (Accounts Receivable and Accounts Payable) and
Section 4 (Buyer Representations) shall survive until the expiration of the
applicable statute of limitations. No Action arising out of or related to a
breach of a representation or warranty under this Agreement shall be asserted by
any indemnified party after the expiration of the applicable time period, if
any, unless notice of such claim or action is given to the indemnifying party
prior to the expiration of such applicable time period. The covenants and
agreements of the parties contained in this Agreement shall survive
indefinitely.

7.2    Indemnification by the Seller Parties. The Seller Parties shall jointly
and severally indemnify defend and hold harmless the Buyer and its Affiliates,
directors, governors, officers, managers, employees, agents and representatives
(collectively, the “Buyer Indemnitees”) from any direct damages arising out of
or related to third party claims and Liabilities incurred by any Buyer
Indemnitee, to the extent such Liabilities arise out of or result from any one
or more of the following:

(a)    any breach of any representation or warranty of the Seller Parties
contained in Section 3 of this Agreement;

(b)    any breach of or default in the performance of any covenant or agreement
of the Seller Parties contained in this Agreement or the Transaction Documents;
or

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(c)    any Liabilities arising from or related to the Excluded Assets or the
Excluded Liabilities.

In no event shall the Seller Parties be required to indemnify the Buyer
Indemnitees from any type of indirect damages, including, but not limited to
special, incidental or consequential damages or lost profits.

7.3    Indemnification by the Buyer. The Buyer shall indemnify, defend and hold
harmless the Seller Parties and their Affiliates, directors, officers,
employees, agents or representatives (collectively, the “Seller Indemnitees”)
from any direct damages that arise out of or relate to third party claims and
Liabilities incurred by any Seller Indemnitee, to the extent such Liabilities
arise out of or result from, any one or more of the following:

(a)    any breach of any representation or warranty of the Buyer contained in
Section 4 of this Agreement;

(b)    any breach of or default in the performance of any covenant or agreement
of the Buyer contained in this Agreement or the Transaction Documents; or

(c)    any Liabilities arising from or related to the Acquired Assets or the
Assumed Liabilities, other than the Excluded Liabilities.

In no event shall the Buyer be required to indemnify the Seller Indemnitees from
any type of indirect damages, including, but not limited to special, incidental
or consequential damages or lost profits.

7.4    Limitations on Indemnification. The rights of the Buyer Indemnitees or
the Seller Indemnitees to indemnification under Section 7.2(a) or 7.3(a), as the
case may be, shall be limited as follows:

(a)    The aggregate amount of indemnification obligations for all Liabilities
under Section 7.2(a) or 7.3(a) shall not exceed $2,000,000 (the “Liability
Cap”);

(b)    The Seller Parties and Buyer shall not be liable for Liabilities under
Section 7.2(a) and 7.3(a), respectively, unless and until such Liabilities
exceed an amount equal to $200,000 in the aggregate, at which point the other
party, shall be liable for all Liabilities from the first dollar of such loss
amount.

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(c)    Notwithstanding anything else in this Agreement to the contrary, the
amount of any Liabilities shall be reduced to the extent of any indemnitee’s
insurance coverage for such Liabilities and such indemnitee shall be obligated
to seek recovery from any available insurance.

7.5    Procedures for Indemnification.
 
(a)    Whenever a claim for Liabilities shall arise for which one party (the
“Indemnitee”) shall be entitled to indemnification hereunder, such Indemnitee
shall notify the other party (the “Indemnitor”) in writing within thirty (30)
days of the first receipt of notice of such claim; provided, however, that the
failure to give notice as herein provided shall not relieve the Indemnitor of
its obligation to indemnify the Indemnitee except to the extent that the
Indemnitor shall have been prejudiced in its ability to defend such claim. Such
notice shall describe the nature of such claim, the facts and circumstances that
give rise to such claim and the amount of such claim if reasonably ascertainable
at the time such claim is made, and if not then a good faith estimate thereof.
If the Indemnitor shall be duly notified of such dispute and such dispute is not
a Third Party Claim, the parties shall attempt to settle and compromise the
same, or if unable to do so within twenty (20) days of the Indemnitee’s delivery
of notice of a dispute, the parties may seek whatever remedy they may have in
Law or equity to enforce such indemnification obligations. Any rights of
indemnification established by reason of such settlement, compromise or Action
shall promptly thereafter be paid and satisfied by the Indemnitor.

(b)    Upon receipt by the Indemnitor of a notice from the Indemnitee with
respect to any claim of a third party against the Indemnitee (a “Third Party
Claim”), for which the Indemnitee seeks indemnification hereunder, provided that
the Indemnitor has acknowledged in writing its indemnification obligations with
respect to such Third Party Claim within thirty (30) days of the first receipt
of such notice, the Indemnitor shall have the right to assume the defense of
such Third Party Claim, at its cost and expense, with counsel reasonably
satisfactory to the Indemnitee, and the Indemnitee shall cooperate to the extent
reasonably requested by the Indemnitor in defense or prosecution thereof. If the
Indemnitor in a timely basis elects to assume the defense of such Third Party
Claim, the Indemnitee shall have the right to employ its own counsel in any such
case, and the fees and expenses of such counsel shall be at the expense of the
Indemnitee; provided that in the case that the Indemnitor assumes the defense of
a Third Party Claim and Indemnitor’s legal counsel determines that it has a
conflict under applicable ethical or legal rules in representing both the
Indemnitor and the Indemnitee in such matter, then the Indemnitee shall have the
right to employ its own counsel in such matter, and the fees and expenses of
such counsel shall be at the expense of Indemnitor. If the Indemnitor does not
in a timely basis assume the defense of a Third Party Claim and/or disputes the
Indemnitee’s right to indemnification, the Indemnitee shall have the right to
assume control of the defense of such Third Party Claim through counsel of its
choice, the reasonable costs of which shall be at the Indemnitor’s expense in
the event that the Indemnitee’s right of indemnification is ultimately
established through settlement, compromise the Indemnitee, the Indemnitor shall
not have the right to settle any Third Party Claim for which indemnification has
been sought and is available hereunder without the prior written consent of the
Indemnitee, such consent not to be unreasonably withheld, conditioned or
delayed, except for any such settlement that would have an adverse effect upon
Buyer or the Sellers, in which case the party believing (in its sole discretion)
that the settlement would have any adverse effect upon it must consent to such
settlement. If the Indemnitor has not assumed the defense of a Third Party Claim
but the Indemnitee intends to or attempts to hold the Indemnitor liable, the
Indemnitee will not have the right to settle such Third Party Claim without the
prior written consent of Indemnitor, such consent not to be unreasonably
withheld, conditioned or delayed.

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7.6    Character of Payments. Any payments made pursuant to this Section 7 shall
be treated by the Buyer and the Seller Parties as adjustments to the Purchase
Price for all purposes.

7.7    Cooperation. Notwithstanding anything to the contrary contained in this
Section 7, the parties shall cooperate with each other in connection with any
Action for indemnification hereunder, including keeping each other reasonably
informed with respect to the status of any Action and to obtain the benefits of
any insurance coverage for Third Party Claims that may be in effect at the time
a Third Party Claim is asserted. Each Indemnitee shall make commercially
reasonable efforts to mitigate any claim or liability that such Indemnitee
asserts under this Agreement. In the event that an Indemnitee shall fail to make
such commercially reasonable efforts to mitigate any claim or liability, then
notwithstanding anything else to the contrary contained herein, the Indemnitor
shall not be required to indemnify such Indemnitee for that portion of any Loss
that could reasonably be expected to have been avoided if such Indemnitee had
made such efforts. The parties specifically acknowledge that the litigation
listed on Schedule 3.14 shall be considered Actions for which the Seller Parties
have agreed by signing this Agreement to be covered by the indemnity provisions
of this Agreement. The Seller Parties will defend such Actions. The Buyer shall
be free to hire its own legal counsel at its own expense; provided, however,
that in the event that defense of the Buyer is necessary and the legal counsel
for the Seller Parties determines it has a conflict under applicable ethical or
legal rules in representing both the Seller Parties and the Buyer in such
Actions, then the Buyer shall have the right to employ its own counsel in such
matter, and the fees and expenses of such counsel with respect to such Actions
(including all out of pocket costs and expenses, court costs, judgments or
settlement amounts of the Buyer related to such settlement or trial of such
Actions) shall be at the expense of the Seller Parties.

7.8    Exclusive Remedy. Except with respect to specific performance, the rights
of each Indemnitee under this Section 7 shall be the sole and exclusive remedies
of any Indemnitee and their respective Affiliates with respect to claims covered
by Section 7.2, 7.3 or otherwise arising out of or related to this Agreement.

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SECTION 8.   CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER PARTIES.

The obligations of Seller Parties to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, at or before the Closing Date, of
the following conditions, any one or more of which may be waived by Seller
Parties in their sole discretion:

8.1    Representations and Warranties of the Buyer. All representations and
warranties made by the Buyer in this Agreement shall be true and correct in all
material respects as of the date(s) specified in Section 4 hereof. 

8.2    Performance of the Obligations of the Buyer. The Buyer shall have
performed, in all material respects, all covenants, agreements and obligations
required under this Agreement to be performed by it on or before the Closing
Date, and Seller Parties shall have received a certificate to that effect dated
the Closing Date and signed by a manager of the Buyer.

8.3    Transaction Documents. The Buyer shall have executed and delivered to the
Seller Parties the Transaction Documents and such documents as the Seller
Parties may reasonably request in order to effect the transactions contemplated
hereunder.

8.4    No Violation of Orders. No preliminary or permanent injunction or other
order issued by any court or other Governmental Entity, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any Governmental
Entity that declares this Agreement invalid or unenforceable in any respect or
which prevents the consummation of the transactions contemplated hereby shall be
in effect; and no Action before any Governmental Entity shall have been
instituted or threatened by any Governmental Entity or by any other Person,
which seeks to prevent the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this Agreement,
and which in any such case has a reasonable likelihood of success in the written
opinion of counsel to the Seller Parties.

8.5    Required Consents. The following Consents shall have been obtained or
granted by and be in full force and effect on the Closing Date: (a) all Consents
that are required by the FCC under the Communications Act and the rules and
regulations promulgated thereunder by the FCC; and (b) the number of ACI stock
holders necessary under ACI’s Organizational Documents and applicable Law shall
have approved this Agreement, the Transaction Documents and the transactions
contemplated by this Agreement and the Transaction Documents pursuant to the
Required ACI Stockholder Vote.

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8.6    Buyer Legal Opinion. On or before the Closing Date the Seller Parties
shall have received a legal opinion from the Buyer’s counsel in form and
substance reasonably satisfactory to the Seller Parties and their counsel.

SECTION 9. CONDITIONS PRECEDENT TO PERFORMANCE BY THE BUYER.

The obligations of the Buyer to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, at or before the Effective Date and on
the Closing Date, of the following conditions, any one or more of which may be
waived by the Buyer in its sole discretion:

9.1    Representations and Warranties of Seller Parties. All representations and
warranties made by Seller Parties shall be true and correct in all material
respects as of the date(s) specified in Section 3 hereof.

9.2    Performance of the Obligations of Seller Parties. The Seller Parties
shall have performed, in all material respects, all covenants, agreements and
obligations required under this Agreement to be performed by them on or before
the Closing Date, and the Buyer shall have received a certificate to that effect
dated the Closing Date and signed by an executive officer of each of the Seller
Parties.

9.3    Required Consents. The following Consents shall have been obtained or
granted by and be in full force and effect on the Closing Date: (i) all Consents
that are required by the FCC under the Communications Act and the rules and
regulations promulgated thereunder by the FCC; (ii) the PUCs that are required
by Law; (iii) the number of ACI stockholders necessary under ACI’s
Organizational Documents and applicable Law shall have approved this Agreement,
the Transaction Documents and the transactions contemplated by this Agreement
and the Transaction Documents pursuant to the Required ACI Stockholder Vote; and
(iv) the consents described on Schedule 3.3. 

9.4    Transaction Documents. The Seller Parties shall have executed and
delivered to the Buyer the Transaction Documents and such documents as the Buyer
may reasonably request in order to effect the transactions contemplated
hereunder.

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9.5    No Violation of Orders. No preliminary or permanent injunction or other
order issued by any court or other Governmental Entity, nor any statute, rule,
regulation, decree or executive order promulgated or enacted by any Governmental
Entity that declares this Agreement invalid or unenforceable in any respect or
which prevents the consummation of the transactions contemplated hereby shall be
in effect; and no Action before any Governmental Entity shall have been
instituted or threatened by any Governmental Entity or by any other Person,
which seeks to prevent the consummation of the transactions contemplated by this
Agreement or which challenges the validity or enforceability of this Agreement,
and which in any such case has a reasonable likelihood of success in the written
opinion of counsel to the Buyer.

9.6    Seller Parties’ Legal Opinion. On or before the Closing Date the Buyer
shall have received a legal opinion from the Seller Parties’ counsel in form and
substance reasonably satisfactory to the Buyer and its counsel.

9.7    Tax Clearance Letters. The Buyer shall have received Tax clearance
letters from the applicable state Taxing agencies of the states of California,
Florida, New York, New Jersey and Pennsylvania.

9.8    FIRPTA Affidavit. The Sellers shall have delivered to the Buyer an
affidavit they are not “foreign persons” in the form and substance required by
the Treasury Regulations pursuant to Code Section 1445.

9.9    Seller Party Liens. The Seller Parties shall have delivered releases and
terminations of any Liens held by any of the Seller Parties or their Affiliates
on the Acquired Assets on or before the Closing.

9.10   USF Settlement.  The Company and/or the Buyer and the Universal Services
Administrative Company (the “USAC”) shall have entered into a settlement
proposal with USAC for approval by the FCC and the FCC petition to approve a
written settlement agreement on such terms shall have been filed for approval
with the FCC on terms reasonably acceptable to the Buyer with respect to amounts
owed to the USAC by the Company which are included within the Assumed
Liabilities. If the term of repayment of the final FCC approved written
repayment agreement is more than 24 but less than 36 months from the Execution
Date, the Seller Parties shall loan to the Buyer the difference monthly of the
amount due to USF under the written settlement agreement versus the amount due
monthly to USF if the repayment term were 36 months at such time of the written
settlement agreement to be repaid by the Buyer to the Seller Parties at 9%
interest upon such terms as the Buyer and Seller Parties so agree such that the
cash flow effect of the actual USF repayment plan and the repayment of the
Seller Parties loan is the same cash flow as if the USF written settlement
agreement provided for 36 monthly payments.

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SECTION 10. TERMINATION.

10.1    Termination Before Termination Restriction Date. Notwithstanding
anything to the contrary contained herein, this Agreement may be terminated at
any time before the Termination Restriction Date only:

(a)    By mutual consent of the Seller Parties and the Buyer;
 
(b)    By the Buyer, if the Seller Parties have materially breached any
representation, warranty, covenant, obligation or agreement contained in this
Agreement and have not, in the case of a material breach of a covenant or
agreement, cured such material breach within twenty (20) Business Days after
written notice to the Seller Parties;
 
(c)    By the Seller Parties, if the Buyer has materially breached any
representation, warranty, covenant, obligation or agreement contained in this
Agreement and has not, in the case of a material breach of a covenant or
agreement, cured such material breach within twenty (20) Business Days after
written notice to the Buyer;
 
(d)    By the Buyer if: (i) there shall be an order or administrative ruling of
the FCC, a PUC, or a federal or state court in effect preventing the
consummation of the transactions contemplated hereby; or (ii) there shall be any
final action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any Governmental Entity which would make consummation of the
transactions contemplated hereby illegal;
 
(e)    By the Seller Parties if the Closing Date shall not have been consummated
by December 31, 2005;
 
(f)    By the Buyer if the Closing Date shall not have been consummated by
September 30, 2005; provided, however, that this shall not be exercised if the
Seller Parties comply with the terms of 10.2(c) below on or prior to September
30, 2005; or

 
(g)    By the Buyer or the Seller Parties, if the ACI Stockholders Meeting
(including any adjournments and postponements thereof) shall have been held and
ACI’s stockholders shall have taken a final vote on a proposal to adopt this
Agreement and this Agreement shall not have been adopted by the Required ACI
Stockholder Vote.
 
(h)    By the Buyer, if any of the Seller Parties liquidates or voluntarily
files, or has filed against them involuntarily, a petition under the United
States Bankruptcy Code, the Canadian bankruptcy code or a similar state
statutory scheme.
 
41

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(i)    By the Buyer, if the Seller Parties are unable to comply with their
obligations under Section 5.15 of this Agreement.

10.2    Termination After Termination Restriction Date. Notwithstanding anything
to the contrary contained herein, this Agreement may be terminated at any time
on or after the Termination Restriction Date only:

(a)    By mutual consent of the Seller Parties and the Buyer;
 
(b)    By the Buyer if: (i) there shall be an order or administrative ruling of
the FCC, a PUC, or a federal or state court in effect preventing the
consummation of the transactions contemplated hereby; or (ii) there shall be any
final action taken, or any statute, rule, regulation or order enacted,
promulgated or issued or deemed applicable to the transactions contemplated
hereby by any Governmental Entity which would make consummation of the
transactions contemplated hereby illegal;

(c)    By the Seller Parties or the Buyer, if the Closing Date shall not have
been consummated by December 31, 2005; provided that Buyer may terminate this
Agreement at any time after September 30, 2005, if the Seller Parties do not
arrange to fund and fund in advance the ordinary course expenses of operating
Company on a weekly basis after September 30, 2005; or

(d)    By the Buyer or Seller Parties if the ACI Stockholders Meeting (including
any adjournments and postponements thereof) shall have been held and ACI’s
stockholders shall have taken a final vote on a proposal to adopt this Agreement
and this Agreement shall not have been adopted by the Required ACI Stockholder
Vote.

(e)    By the Buyer, if any of the Seller Parties liquidates or voluntarily
files, or has filed against them involuntarily, a petition under the United
States Bankruptcy Code, the Canadian bankruptcy code or a similar state
statutory scheme.
 
(f)    By the Buyer, if the Seller Parties are unable to comply with their
obligations under Section 5.15 of this Agreement.

10.3    Effect of Termination. In the event of the termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Seller Parties or the Buyer, or their
respective Affiliates, officers, directors, stockholders, partners or other
Persons under their control; provided, however, that any termination of this
Agreement pursuant to Section 10.1(b) or Section 10.1(c) shall not relieve the
defaulting or breaching party from any liability to the non-defaulting or
non-breaching party. Notwithstanding the foregoing, if this Agreement is
terminated other than pursuant to Section 10.1(c), Company shall pay the Break
Up Fee to the Buyer. In addition, a termination other than pursuant to Section
10.1(c) shall constitute an event of default under the Break Up Fee Loan
Documents that will enable the Buyer to avail itself to the remedies available
to it under the Break Up Fee Loan Documents and under applicable Law.

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SECTION 11. MISCELLANEOUS.

11.1    Successors and Assigns. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be directly or indirectly assigned (by
change of control, operation of Law or otherwise) without the prior written
consent of the other party hereto. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and assigns. Any purported
assignment in violation of this Section 11.1 shall be null and void and of no
force or effect.

11.2    Governing Law, Jurisdiction. This Agreement shall be construed,
performed and enforced in accordance with, and governed by, the Laws of the
State of Illinois, without giving effect to the conflict or choice of Law rules
thereof. Each of the parties submits to the exclusive jurisdiction of any state
or federal court sitting in Cook County, Illinois, in any action or proceeding
arising out of or relating to this Agreement or the Transaction Documents and
agrees that all claims in respect of the action or proceeding shall be heard and
determined there. Each party also agrees not to bring any action or proceeding
arising out of or relating to this Agreement in any other court. Each of the
parties waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety or other security
that might be required of any other party. Each party agrees that a final
judgment in any action or proceeding so brought will be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or in
equity.

11.3    Expenses. Except as otherwise expressly provided in this Agreement, all
of the fees, expenses and costs (including legal, accounting or other advisor
fees and costs and court costs) incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party hereto incurring
such fees, expenses and costs.

11.4    Severability. Each provision of this Agreement is intended to be
severable. Should any provision of this Agreement or the application thereof be
judicially, or by arbitral award, declared to be or become illegal, invalid,
unenforceable or void, the remainder of this Agreement will continue in full
force and effect and the application of such provision to other Persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties.

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11.5    Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
(i) on the date of service if served personally on the party to whom notice is
to be given; (ii) on the day of transmission if sent via facsimile transmission
to the facsimile number given below, with confirmation of receipt and followed
by notice given pursuant to any of the other methods permitted by this Section
11.5; (iii) on the day after delivery to Federal Express or similar overnight
courier or the Express Mail service maintained by the United States Postal
Service; or (iv) on the fifth calendar day after mailing, if mailed to the party
to whom notice is to be given, by first class mail, registered or certified,
postage prepaid and properly addressed, to the party as follows:
 
If to any Seller Party:
Acceris Communications Corp.
 
c/o Counsel Corporation
 
Scotia Plaza, Suite 3200
 
40 King Street West
 
Toronto, Ontario M5H 3Y2
 
Canada
 
Attn: Chief Executive Officer
 
Facsimile: 416-866-3061
   
Copy to:
Harwell Howard Hyne Gabbert & Manner, P.C.
 
315 Deaderick Street, Suite 1800
 
Nashville, TN 37238-1800
 
Attn: Curtis Capeling
 
Facsimile: (615)-251-1059
   
If to the Buyer:
Acceris Management and Acquisition LLC
 
c/o North Central Equity LLC
 
60 South Sixth Street, Suite 2535
 
Minneapolis, MN 55402
 
Attn: Elam Baer and Drew S. Backstrand, Esq.
 
Facsimile: (612) 455-1022
   

 
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Copy to: 
Gray, Plant, Mooty Mooty & Bennett, P.A.
 
500 IDS Center
 
80 South Eighth Street
 
Minneapolis, MN 55402
 
Attn: J.C. Anderson, Esq.
 
Facsimile: (612) 632-4444

 
Any party may change its address for the purpose of this Section by giving the
other party written notice of its new address in the manner set forth above.

11.6    Amendments; Waivers. This Agreement may be amended or modified, and any
of the terms, covenants, representations, warranties or conditions hereof may be
waived, only by a written instrument executed by the parties hereto, or in the
case of a waiver, by the party waiving compliance. Any waiver by any party of
any condition, or of the breach of any provision, term, covenant, representation
or warranty contained in this Agreement, in any one or more instances, shall not
be deemed to be nor construed as a further or continuing waiver of any such
condition, or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.

11.7    Public Announcements. Except as may be required by applicable Law, no
party to this Agreement shall, or shall allow any of its Affiliates, to make any
public announcements in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without prior
consent of the other party, and the parties shall cooperate as to the timing and
contents of any such announcement.

11.8    Entire Agreement. This Agreement shall not constitute or evidence a
binding agreement between the parties until it has been executed and delivered
by the parties. This Agreement and the Transaction Documents contain the entire
understanding among the parties hereto with respect to the transactions
contemplated hereby and supersede and replace all prior and contemporaneous
agreements and understandings, oral or written, with regard to such
transactions. All schedules hereto are expressly made a part of this Agreement,
as fully as though completely set forth herein and shall constitute part of any
representation or warranty, covenant or agreement stated by the party providing
such schedules under the Agreement.

11.9    Parties in Interest. Nothing in this Agreement is intended to confer any
rights or remedies under or by reason of this Agreement on any Persons other
than parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement is intended to relieve or discharge the obligations or
liability of any third Persons to the Seller Parties or the Buyer. No provision
of this Agreement shall give any third parties any right of subrogation or
action over or against the Seller Parties or the Buyer.

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11.10    Section and Paragraph Headings. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.

11.11    Counterparts; Facsimile Signatures. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same instrument. This Agreement, the Stockholder Support
Agreement and the Management Services Agreement and any other document or
agreement executed in connection herewith (other than any document for which an
originally executed signature page is required by Law) may be executed by
delivery of a facsimile copy of an executed signature page with the same force
and effect as the delivery of an originally executed signature page. In the
event any party delivers a facsimile copy of a signature page to this Agreement,
the Management Services Agreement or any other document or agreement executed in
connection herewith, such party shall deliver an originally executed signature
page within three (3) Business Days of delivering such facsimile signature page
or at any time thereafter upon request; provided, however, that the failure to
deliver any such originally executed signature page shall not affect the
validity of the signature page delivered by facsimile, which has and shall
continue to have the same force and effect as the originally executed signature
page.

11.12    Interpretation. Except as otherwise provided or if the context
otherwise requires, whenever used in this Agreement, (a) any noun or pronoun
shall be deemed to include the plural and the singular, (b) the terms “include”
and “including” shall be deemed to be followed by the phrase “without
limitation,” (c) unless the context otherwise requires, all references to
Articles and Sections refer to Articles and Sections of this Agreement, all
references to Schedules are to Schedules attached to this Agreement, and all
references to Exhibits are to Exhibits attached to this Agreement, each of which
is made a part of this Agreement for all purposes, (d) the words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular Section or other subdivision, (e)
any definition of or reference to any Law, agreement, instrument or other
document herein will be construed as referring to such Law, agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified, (f) any definition of or reference to any statute will be
construed as referring also to any rules and regulations promulgated thereunder,
and (g) any use of “Dollars” or “$” shall refer to United States dollars and any
component thereof. The parties hereto have participated jointly in the
negotiations and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

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11.13    Specific Performance. Each of the parties acknowledge and agree that
the other party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agree that the other
party is entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement in any
action instituted in any court of the United States or any state having
jurisdiction over the parties and the matter (subject to the provisions set
forth in Section 11.2 above), in addition to any other remedy to which it may be
entitled, at law or in equity.

REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
 
SIGNATURE PAGE FOLLOWS
 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and made effective as of the Execution Date.
 

        BUYER:    
ACCERIS MANAGEMENT AND ACQUISITION LLC
 
   
   
  By:   /s/   

--------------------------------------------------------------------------------

Name: Elam Baer   Title:   Chief Executive Officer

 

        SELLER PARTIES:       COUNSEL CORPORATION  
   
   
  By:   /s/   

--------------------------------------------------------------------------------

Name:   Title:

 

      ACCERIS COMMUNICATIONS INC.  
   
   
  By:   /s/   

--------------------------------------------------------------------------------

Name:   Title:

 

      GUARANTOR:       NORTH CENTRAL EQUITY LLC  
   
   
  By:   /s/   

--------------------------------------------------------------------------------

Name: Elam Baer   Title:   Chief Executive Officer

 
[Signature Page to Asset Purchase Agreement]
 
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TABLE OF CONTENTS

Section 1
Definitions
1
     
Section 2
Basic Transaction
9
2.1
Sale of Acquired Assets
9
2.2
Assumption of Assumed Liabilities
10
2.3
Post-Effective Date Adjustment and Payment
10
2.4
Adjustment to Company Balance Sheet
10
2.5
The Closing
10
2.6
Deliveries at the Closing
11
     
Section 3
Representations and Warranties
11
3.1
Organization, Qualification and Power
11
3.2
Authority
11
3.3
No Conflict or Violation; Consents
12
3.4
Acquired Assets and Assumed Liabilities
12
3.5
Financial Statements
12
3.6
Absence of Certain Changes or Events
13
3.7
Absence of Undisclosed Liabilities
13
3.8
Tax Matters
13
3.9
Real Property
14
3.10
Personal Property
14
3.11
Intellectual Property
14
3.12
Licenses and Permits
15
3.13
Compliance with Laws
15
3.14
Litigation
15
3.15
Contracts
15
3.16
Employee Plans
16
3.17
Insurance
18
3.18
Transactions with Sellers and Affiliates
18
3.19
Labor and Employment Matters
18
3.20
Environmental, Health and Safety Matters
19
3.21
Accounts Receivable; Accounts Payable
19
3.22
No Brokers
19
3.23
Customer Relations
20
3.24
Parent Stock
20
3.25
Qualifications
20
     
Section 4
Representations and Warranties of the Buyer
20
4.1
Corporate Organization
20
4.2
Authorization
20
4.3
No Conflict or Violation
21
4.4
Consents and Approvals
21

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4.5
No Brokers
21
4.6
Proxy Statements
21
     
Section 5
Covenants of the Parties
21
5.1
Restructuring Matters
21
5.2
Stockholder Approval Mechanics
22
5.3
Outstanding Debt
23
5.4
Corrections to Schedules
23
5.5
Covenant Not to Compete; Non-Solicitation
23
5.6
Compliance
24
5.7
Consents
24
5.8
Employee Benefit Matters
25
5.9
Employees
26
5.10
[Intentionally Deleted]
26
5.11
Break Up Fee
26
5.12
PUC Consents
27
5.13
Further Assurances
27
5.14
Confidentiality
27
5.15
Lien Releases and Debt Restructuring Matters
27
5.16
Proxy to Vote Shares
28
5.17
Guaranty
28
     
Section 6
Tax Matters
28
6.1
Transfer Taxes
28
6.2
Tax Returns and Contests
29
 
   
Section 7
Indemnification
29
7.1
Survival
29
7.2
Indemnification by the Seller Parties
30
7.3
Indemnification by the Buyer
30
7.4
Limitations on Indemnification
31
7.5
Procedures for Indemnification
31
7.6
Character of Payments
32
7.7
Cooperation
32
7.8
Exclusive Remedy
33
     
Section 8
Conditions Precedent to Performance by the Seller Parties
33
8.1
Representations and Warranties of the Buyer
33
8.2
Performance of the Obligations of the Buyer
33
8.3
Transaction Documents
33
8.4
No Violation of Orders
33
8.5
Required Consents
33
8.6
Buyer Legal Opinion
34

 
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Section 9
Conditions Precedent to Performance by the Buyer
34
9.1
Representations and Warranties of Seller Parties
34
9.2
Performance of the Obligations of Seller Parties
34
9.3
Required Consents
34
9.4
Transaction Documents
34
9.5
No Violation of Orders
34
9.6
Seller Parties’ Legal Opinion
35
9.7
Tax Clearance Letters
35
9.8
FIRPTA Affidavit
35
9.9
Seller Party Liens
35
9.10
USF Settlement
35
     
Section 10
Termination
35
10.1
Termination Before Termination Restriction Date
36
10.2
Termination After Termination Restriction Date
36
10.3
Effect of Termination
37
     
Section 11
Miscellaneous
37
11.1
Successors and Assigns
37
11.2
Governing Law, Jurisdiction
37
11.3
Expenses
38
11.4
Severability
38
11.5
Notices
38
11.6
Amendments; Waivers
39
11.7
Public Announcements
39
11.8
Entire Agreement
39
11.9
Parties in Interest
39
11.10
Section and Paragraph Headings
40
11.11
Counterparts; Facsimile Signatures
40
11.12
Interpretation
40
11.13
Specific Performance
40

 
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EXHIBITS AND SCHEDULES

Exhibit A - Secured Promissory Note
Exhibit B- Security Agreement
Exhibit C - Guaranty of Counsel Corporation

Schedule 1.1 - Acquired Assets and Excluded Assets
Schedule 1.2 - Assumed Liabilities and Excluded Liabilities
Schedule 1.3 - Permitted Liens
Schedule 3.1 - Good Standing
Schedule 3.3 - Consents
Schedule 3.5 - Financial Statements
Schedule 3.8 - Tax Matters
Schedule 3.9 - Leases
Schedule 3.10 - Personal Property Leases
Schedule 3.11(a) - Intellectual Property
Schedule 3.11(b) - Infringement
Schedule 3.12 - Licenses and Permits
Schedule 3.14 - Litigation
Schedule 3.15 - Material Contracts
Schedule 3.16 - Benefit Plans
Schedule 3.17 - Insurance
Schedule 3.18 - Related Party Contracts
Schedule 3.19(b) - Labor Matters
Schedule 3.19(f) - Employment Agreements
Schedule 3.19(g) - Employees
Schedule 3.23 - Customer Relations
Schedule 5.1(c) - Guarantees
Schedule 5.3 - Debts and Liens
Schedule 5.5(b) - Restricted Employees
 
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